This blog first appeared as Steve Wunker’s piece for Forbes
By: Steve Wunker
Pandemic prediction has fast become a cottage industry, but ridiculous forecasts abound. Leaving aside predictions about how the coronavirus crisis will medically progress and ultimately resolve, assertions about how business will respond can range from well-grounded to unhinged. Unfortunately, the press often doesn’t distinguish between the two, treating all future-gazing as credible.
It isn’t. As someone whose career is staked on predicting how industries will evolve, I couldn’t survive for long without having clear criteria about how and why business change actually happens. Here’s what these lessons mean for how business will alter in response to COVID-19.
First, look for the fallacies in reasoning. There are three common ones underlying bad predictions about how the coronavirus pandemic will affect business going forward:
1. Wrong timeframe: Hotels will not be re-architected to avoid small elevators. Airports will not re-engineer check-in counters to be on moving sidewalks so that travelers are naturally spaced-out. These things take a lot of time (and money), and thankfully the pandemic will not last that long even in the direst models. If the change can’t be made and benefits realized within about a year, and if the change is being made for the pandemic alone and not for more sustained reasons, it’s not going to happen.
2. Radical shifts in taste: We are not going to stop going to good restaurants because we’ve discovered that we really prefer pizza delivery. Tastes seldom transform overnight. We may find that we really like some new behaviors (my seventh grader has realized that virtual learning avoids much of the social awkwardness of middle school!). But new likings typically intermingle with older ones to create evolutions, not revolutions, in preferences.
3. Dependencies: The more decision-makers involved in making a change, the slower it will happen. This is one reason why airport terminals are not going to be fundamentally redesigned to achieve social distancing – consider how many committees would need to agree on a plan like that! A retailer moving to curbside pickup can largely just do it and get on with business, but predictions involving many stakeholders need to take into account that more voices mean longer timeframes. Not-so-incidentally, this is a big reason why change proceeds so slowly in the healthcare industry.
Now that you know how to spot the warning signs of bad predictions, here are four signals of good ones:
1. Framing context based on scenarios: We can seldom forecast the future with certainty, but that’s no reason to give up. With the coronavirus, we can plot some key scenarios such as a W-shaped recovery, gradual emergence of effective treatment, and broadening immunity due to either widespread exposure or safe but not entirely effective vaccines. Solid forecasts would look at how businesses might react, and what company incentives would be, under each context, realizing that different parts of a country or the world may be experiencing scenarios at distinct times.
2. Understanding of how behavior change happens: Humans almost never change their preferences overnight – even in these times. Rather there are clear principles governing how behavior change actually happens. Use them!
3. Addressing fundamental economic drivers: Few businesses wish to transform their customer experience for COVID only to change back after the coronavirus crisis passes. These moves are hard to make, and they create all kinds of financial and operational risk. However, some changes play into a longer-term roadmap of how a firm seeks to evolve, and they become integral to The Great Reboot of an enterprise. For instance, moving from in-person to virtual sales representatives could significantly lower costs, and enabling more self-service could reduce expenses as well. Propositions that offer a long-term payout are far more likely to take root compared to those which are for pandemic times only.
4. Displaying insight into sustained motivation: My seventh-grader’s fondness for virtual learning isn’t driven by the presence of COVID, but rather largely by the perennial existence of middle school anxieties. Our appreciation of Zoom calls with aging parents stems from a long-term desire for close connection. If predictions grasp which motivations will sustain after the threat of the virus passes, they are far better grounded than those framed around the current context.
Forecasting the future is always a hazardous endeavor, but – as in any dangerous sport – there are key watch-outs for failure and leading indicators for success. Spotting those in business predictions about the coronavirus will put you in far better position to thrive during our inherently uncertain future.
Click for a series of working papers on managing an organization through the coronavirus crisis.
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