Our Generation’s TestMarch 20, 2020
I’ve been through several crises.
1987: Dow crashes 22.6%. It was my first week of my first job after graduating UCLA. A bunch of the analysts went down from the 44th floor to the trading floor on the 17th, at 1251 Avenue of the Americas (Morgan Stanley), to witness what our boss said was a “historic event.” A low-carbonated crisis, really, as I didn’t have enough to worry about losing anything. That night we went to The Tunnel (NYC club in an abandoned subway station).
AIDS Crisis: I lived in SF from 1990 to 2000. I found out I had gay friends in college only after college. My freshman roommate — gone. Fear, suffering, and tragedy everywhere.
9/11: I had just moved to New York. I saw the second plane hit and both towers go down. I remember thinking, “I’ll never see anything like this again.” Rivers of people flowed uptown from the Financial District. A shocked, muted feeling the next two weeks in the city. Felt surreal, like watching a movie, but didn’t rattle me.
The Great Recession: I had something to lose. Instinct kicked in — felt responsible for my first son, who had the poor judgment to emerge from my girlfriend in 2007. Economic stress was, well … stressful. The markets bounced back fast, a speed bump. A big one, but a speedbump.
COVID-19. This is visceral on many levels. Being contagious without having symptoms. Hospitals already facing dire supplies shortages. Tests still unavailable. Doctors getting infected in large numbers. Ventilators being scarce. Younger adults accounting for 40% of hospitalizations. This being both a health and an economic crisis. Three years of a bull market wiped out in seven days. Unemployment claims up 30%.
We haven’t been tested the same way previous generations have. Poor leadership and the ability to outsource most crises to the young (the wars in Iraq or Afghanistan) has resulted in a collection of responses vs. a collective effort. Congressmen are telling you to go to the pub while young people are in ICU. The administration keeps giving V-Day speeches that should be D-Day speeches.
The Spanish Flu killed between 50 and 100 million people but received little attention. David Brooks wrote that we are embarrassed about how we behaved as a nation and, as a result, we don’t speak of it. We were feral, selfish, and apoplectic, and there (again) was a lack of trust in our leaders — they tried to quell panic via censorship.
Primal instincts compel us to behave differently at times of panic. Yet how you act when nobody’s looking, under stress or during a crisis, is the ink over the outline of your behavior when things are good. Remaining cool, calm, collected allows us to make strategic choices. During the Flu Pandemic of 1918, Philadelphia threw a parade despite the flu. Within 3 days, 117 people died. In contrast, St. Louis closed schools, churches, courtrooms, and libraries, and banned gatherings larger than 20 people. Death tolls were significantly lower.
A decent question: How do each of us want to be remembered, years after this crisis? Near all of us will talk about this in grand terms one day. This is historic. What will be each of our roles in this moment of history?
In my home state of Florida, this week, people were going to concerts, bars, and partying. It reflects a lack of comity of man. Admittedly, I’m not sure I would have behaved differently at that age. What I do know is that, looking back, young people will wish they were the concerned, uncool ones. The ones who decided any threat to the vulnerable and to our nation demanded an overreaction. I’ve been on 3 board calls in the last 72 hours, and I’m now “that guy” who may be having an outsized reaction. Fine then.
In my NYU Brand Strategy course, I teach these three pillars of crisis management:
The reason Johnson & Johnson is one of the most valuable companies in the world is in 1982 they didn’t say the poisoning of the Tylenol bottles in the Midwest was an isolated incident. They cleared all the shelves of Tylenol across North America. Was it an overreaction? Yes. Did it assure the health of the public and restore the credibility of the company? Yes and yes.
A World Health Organization expert put it well: “If you need to be right before you move, you’ll never win. Perfection is the enemy of the good when it comes to emergency management. Speed trumps perfection. The problem right now is everyone is afraid of making a mistake.”
What’s difficult about overreacting is it’s disproportionate to the problem at present. It’s deeply uncomfortable, because you are devising a solution to a problem that doesn’t yet exist and whose future scale you are guessing. Throwing vast resources at a guess is risky and hard to justify, yet if you wait long enough for the scale to unfold, it will be too late.
A key issue post corona will be how our nation responded in time of crisis. It’s unclear what the verdict will be. I’m still hopeful. We may be the people who got their act together and drove the virus from our shores. We may be the nation that finds and shares a vaccine or a cure.
Aim to be the daughter, boss, manager, dad, government employee who is action-oriented, organized, and disciplined during this crisis. You’ll be one of the people, calm under pressure, whose actions helped beat back this American generation’s biggest test.
Life is so rich,
P.S. My new podcast, The Prof G Show, premiered yesterday — spoke to finance legend Professor Aswath Damodaran about the markets in a time of corona. Have a listen on Spotify, Apple, or anywhere else you get your podcasts.
Scott, you captured this time and moment with friggin’ brilliance. As a USC Trojan, I thought I would never say this to a Bruin….Love you man!
Overcorrect??? It is great when you pay with other people’s monies, great leadership! Who do we think will pay for the current ‘overcorrection’? It will be all of us who try to save for our retirement, and your children, and your children’s children. Not the ‘leaders’, politicians and bureaucrats who are ‘overcorrecting’ the current crisis.
Scott, I am an entrepreneur and teach in the the business management program at Fashion Institute of Design and Merchandising assisting students to achieve their Bachelors or Masters in Business Management with an emphasis on Creativity and Innovation. Tom
Scott. What would it take for a group of independent professors to get together to form our own university and be accredited? Tom
I found you through my very favorite podcast, Sam Harris…I listened 3 times to that one, as I shared with others. Now I’m a true blue fan of your stand-alone podcast and the one with Kara…love the dynamic and info. I’m 67, an incessant Gardner (mango, avocado, carambola, cherries, banana, veggies etc) for 40 years here in Boca. Welcome to Gulfstream, up the road a piece. I also, after retiring, taught myself to paint…well, I entered in a juried show, and out of 150 entrants, I came in 3rd place…very exciting. Point is, I’d like to give you one of my pieces as a THANK YOU for your fabulous free content. I have over 600 pieces I’ve made (obviously I’m type A in learning, exploring and experimenting)…go look on my FB acct…wendy Madan perkins…if nothing suits you there, I’ll custom do a piece for you. It’s my way of showing appreciation for a great teacher (from one to another, I taught handicapped children). Love & blessings (as an atheist can I say blessing)…much love wendy
hmmm. very different than your previous post on my corona.
Was introduced to you via Sam Harris’ pod, and found the first ep of Prof G show super inspiring. Ordering your book now, thanks for it all.
10-4 kimo sabe
I suggest looking at how Singapore and South Korea addressed COVID-19: they didn’t lock down everyone, but they did do extreme tracking of all potential COVID-19 exposed people (and quarantined only them) plus mass testing. This would seem to be a lot cheaper than a $1 trillion stimulus bill which will probably not even come close to making up for the economic losses.
Last week you couldn’t wait to please your ego by flying to SXSW and telling us that we should all take risks despite the coronavirus, and now you’re telling us that we should overreact?
And blaming millenials now for not caring.
So now we’re giving each person a thousand dollars instead of a coronavirus test…
In Ireland, citizens can avail of €203 a week for 6 weeks if they state that their job has been impacted by the virus. A temporary measure, but I’m curious as to what sort of an impact it will have on the Irish Economy? Any thoughts?
Agree BUT you are missing a critical step. In the context requires it you have to start building your exit ramp immediately. Tylenol exit ramp was simple rebuild trust through broad spectrum marketing campaign so that everyone knows what you did in step #3. Thats it. BUT in this covid case that will not get you off the road we are on which if stays the course leads to self assured destruction of our society with nearly everyone except the wealthy being a ward of the state. Why? Because eradication of the issue cannot be simply removed from the shelves. It is requires perpetual acts not just in your town but every town simultaneously ALL OVER THE WORLD. Last I checked India is not reporting much of anything, Russia much the same. Latin America? African nations? So has the clock even started for our lock down if the goal is to ‘take it off the shelves’? No, there needs to be an exit ramp from this course that involves living with this virus for the foreseeable future. That requires massive effort that should start a month ago. Korea is already executing such a plan. They have test result time down to 7 minutes and can be done inside a telephone booth sized box. Get these inside of every airport before or in replace of security checks now; entry at all nursing homes and hospitals, entry to all schools, replace all toll roads with mandatory check from your car. a system of checking and granted permission to enter office buildings. Would this slow things down? heck yeah, but at least things move forward and do not fall into a level of depression we will have never seen in recorded history that will most certainly kill more people than this virus might have ever. No Professor you are missing a key 4th step.
True. Excellent point.
We don’t have Balto either.
I want to thank Stephanie Ruhle for introducing you. What I hope you will consider as we navigate this catastrophe is the bravery and ingenuity we will see as our response is mounted. I consider this #ourtopstory and am proposing an economic experiment in which the audience makes the case to the best news organizations that they should provide excellent coverage of excellence. I want your audience to recognize that we have a voice in how this turns out for each of us and all of us. We can use that voice to ask that we be exposed to the best in ourselves wherever it is found in this story. We have an opportunity to build an inspiration system on the truth of achievement reported in exquisite detail by the best news organizations. I offer details in an unfolding work of philosophy entitled “managementality” and hope your audience will consider my proposal. I invite everyone who wants producer credit on #ourtopstory to claim it by posting your pitch to the best news platforms on the facebook page of Our Top Story.
Henceforth I shall: 1. Take responsibility 2. Acknowledge the issue 3. Overcorrect 4. Have another gourmet beer while the supply lasts
Dang. I think I remember a cluster of first-year analysts hanging around while we tried to keep the Davoxes going. And while you guys were yukking it up that night we struggled to load all the day’s trades into the mainframes… Thank you for your thoughts, videos and podcasts. And best wishes for you and your family in the future.
I saw a separate piece earlier this morning from which I was trying to write a post that concurs with Scott’s, here: Comparing Israel’s preparedness for dealing with the “Wuhan Virus 2019” vs America’s preparedness. “Most people don’t believe something can happen until it already has. That’s not stupidity or weakness, that’s just human nature,” Israeli spy Jurgen Warmbrunn says in Max Brooks’s 2006 novel World War Z. “I happened to be born into a group of people who live in constant fear of extinction. It’s part of our identity, part of our mindset, and it has taught us through horrific trial and error to always be on our guard.” NERI ZILBER TEL AVIV SPECIAL TO THE GLOBE AND MAIL PUBLISHED 22 HOURS AGO
This isn’t going to be 1918 flu even if the US achieves Italy levels of mortality. However, the economic impact is going to be Great Depression-like. I looked at the BLS household spending – 14.6% of spending is: eating out, entertainment, non-car travel. Let’s say 1/3 gets spent anyway on takeout food. Add back in the guaranteed spend reduction due to fear/uncertainty. Now compare: US GDP fell 30% between 1929 and 1933 – the height of the Great Depression. And note that the US economy is a lot more vertically complex than 1929 – $1 not spent on a convention trip involves a lot more GDP dollars than the convention host, airlines and nearby restaurants/bars.
Brilliant post Scott.
Yes, a pivot perhaps, from the commentor above, but now on the page. Welcome aboard, and spread the word. Like your life depends on it; it possibly will. We’re contemporaries. Yes, all watershed moments. As an immunologist, only early in the HIV crisis have I seen such confusion and anxiety of transmissibility. We as a society got over that. Tony Fauci is our modern C. Everett Koop. To co-op a phrase, “It’s the droplets, stupid”. HCW are in critical need of n95 masks, in order to obtain NP swabs, intubate, suction. These brave souls are exposed to droplets. We need POC tests and PPE including n95 masks – please don’t waste them.
Solve this crisis: Impress every company that can contribute to making test kits. Send multiple test kits to every household. Everyone tests themselves. A few days later test again. Then everyone back to work.
P. Galloway March 6 2020 post: “Nothing wonderful happens without taking an uncomfortable risk. I’ll be dead soon, regardless — it’s all going so damn fast. Every night I put my sons to bed, I ask a nonexistent god where the pause button is. So, next week I choose to travel to SXSW in a tube with recirculated air, and discuss media trends with Katie Couric and Jim Bankoff in a (hopefully) packed hall — people love Katie. Before and after our session, I will eat Tex-Mex, go to crowded bars, and shake fewer hands. I’ll have a price-gouged Purell in my back pocket.”
Shallow comment: what app does he use to make all these cool charts?
He has a designer who does it all for him. He works with him on plenty of stuff, including his books
@Emillio The Dude thanks
Just a small note – it is 2020. When there is a problem – it is a global problem. Part of the reason there is a global pandemic at all is the globalization. No need for the extra patriotism in the post.
Great post Scott. Love your new podcast!
What has been lost in the response to this pandemic is perspective. Calmer heads must prevail and the biggest risk isn’t the virus itself, it’s fear. I live in Tokyo and when Abe closed the schools, I thought it was a knee-jerk overreaction (which it likely was) but in hindsight, it was the right thing to do. While the healthcare system here has been strained, it’s held up and resources are for the most part, being appropriately allocated. The virus will be contained (visa via Singapore, S. Korea and Japan) but the effects from the alleged government leaders and central banks will be felt long after the virus is gone. The latter was 100% avoidable with proper leadership. The real issue is the lack of medical resources which is still not being addressed. Got to love the US, it’s okay to socialize the financial market but not healthcare…
You sir, are brilliant.
Can’t agree with more. The JNJ case is a very good one that the current leadership should reflect upon. When it’s matter to life or death, every life counts albeit elderly or 3%. The most ignorant comment is to try to downplay the problem with a mathematics number. The other day one CEO had a comment that “ if we don’t shut down offices, our economy just shed a few bps and we just gonna have bunch of people die”. ??!! Another comment I came across is that “ it’s not that there are thousands of people died, but one person died and this event has repeated thousands of times”
I have been investing for over 55 years. Started as a paper boy when a customer took me under his wing. Before and including the 1987 crash I loss money every single time the market corrected. Then I read lots of books and examined my loses in detail. Since then have made nice gains from every correction. Market corrections are a money making opportunity. First most can be seen well in advance. Yes Corona could not be seen but at first it was only a trigger to an overvalued market. Now a force that might disable our economy for months maybe but unlikely years. What could be seen was how much the market was overvalued. I dumped most of my growth stocks for value and a little cash over a year ago. Yes it cost me 3 ~ 4 % in 2019 but still did very well. Even as recently as yesterday I was planning and doing sales not to get out but to be ready for recovery. Also did one buy. We will all come up with our own metrics but mine are new corona cases and deaths falling back. When that happens I will jump back in with exuberance. Spending time now investigating buy opportunities for when time is correct. My only advice is when FOMO “Fear Of Missing Out” puts a knot in your stomach do nothing. Settle down Think, do research, Come up with a plan, test the plan with others. Then wait for the correct signals to appear, I am a retired engineer not any sort of adviser. I have a major problem with any adviser that is saying don’t worry and don’t sell. Think, plan, sell and have a solid plan for buying back in at the right time. Do not worry about catching bottoms far better to buy after bottoms when things are looking up. I usually miss bottoms but buying rising stocks in a rising market always works. For example the transportation industry will be one of the hardest hits. Do some research and decide who may recover the fastest. Then patiently wait.
Loved the Podcast. What a great interview.
agree wholeheartedly Prof Galloway….but can you please PLEASE stop saying ‘gal’. (it’s slang for girl) You are allowed to use guys as an inclusive term. Or just use “person”.
Great post, as always. Honest curious question for the team. Are we certain the prescribed overreaction doesn’t have a negative effect? What if (hypothetically) Tylenol was needed to save more lives than we thought? J&J kept ‘x’ from being harmed by bad Tylenol, ‘y’ suffered as a result. If ‘y’ became greater than ‘x’, that overreaction may not have aged as well. 28% of Americans don’t have enough savings to cover one month of expenses, ~44 million are uninsured. Is it possible to credibly look at the potential effects of adding many millions of Americans into poverty? I can imagine the addiction, mental health issues, lack of healthcare and consequent homelessness will also create a death toll. What if there is a tipping point and we realize we pulled the trolley lever too hard to one direction we now have a train pointing at a larger group? Sadly, that larger group in this scenario would be the poorest and, historically, most ignored.
Thank you. Clear and clam. I’ll be sharing this solid reflection and template. We may not be able to change all the bad leaders, but we can grow those leaders who want to learn.
Scott, I feel inspired. I wish I’m the guy from the last paragraph … keep posting, I’ve been enjoying it for years, learning and having fun. Take care.
A+ from a former Professor G Brand Strategy student
I don’t even like Gavin Newsom much, but he is showing leadership at the moment with “overcorrection” locking down the state. BTW, loved the first episode of the podcast!
Takeaway: ALWAYS, crisis or not Aim to be the daughter, boss, manager, dad, government employee who is action-oriented, organized, and disciplined during this crisis. You’ll be one of the people, calm under pressure, whose actions helped beat back this American generation’s biggest test.
Scott: You need to add a 4th pillar: “ASK FOR AND ACCEPT HELP FROM THE BIG BOYS” My firm, which is a leading provider of usability optimization for complex systems was essentially wiped out on 9/11 due to proximity to the North Tower. There were hundreds of small software development firms, research groups and other creative agencies in lower Manhattan whose businesses were essentially trashed that morning. It was only the incredible foresight of Michael Bloomberg and his immediate allotment of support grants to designated small businesses that saved most creative firms in lower Manhattan. We are talking about grants to pay rent, staff and rebuild. The point simply is that there will (likely) be relief and it is essential that all small businesses keep their eye on those offerings and go after such support as aggressively as possible. Doing so will mean the difference between life and death in terms of business going forward.
We need to overcorrect. Here is the historical context: The world is at war with an invisible killer spreading through careless hands. All we have to do to win is to stay home and stay clean. Did our parents generation of WW2 or our grandparents of WW1 complain about the sacrifices asked of them? They would be ashamed of any of us complaining about what is not a hardship. The USA waited almost too long to get into WW2. If they’d joined Canada and the UK in 1939, fascism would have been defeated in less than 2 years. Instead, it took a nearly-decisive sneak attack on Dec 7 1941 to wake up those Americans who were sleep-walking. Thank goodness FDR had been building massive bases in Newfoundland in early 1940 (with the Canadians and the Brits) or Hitler might have tried his own sneak attack on the East Coast. FDR’s overcorrection saved the day.
Thank you for your insight Scott. I have become a huge fan over the last couple months. Wether your self-deprecation will allow you to accept or not; I appreciate your thoughtful, measured comments and opinions. Side Note- I was just talking with my wife. There’s a lot of information coming out now that this virus may have been among us for months now. Remember a few weeks back when Kara Swisher got really sick and she described it as a different kind of sickness? I thought it was odd how it affected her voice on the pod cast for so long. Could she have already had it?
oh my god, you’re right. kara was even absent during one week
LOVE Pivot, and LOVED the first episode of Prof. G! Keep going.
One thing I’ve learned now; nobody likes to hear the words calm down even though we all need to calm down:) #gestalt
Thank you for this Scott. I’m 44 now, and wish I had an opportunity at NYU Stern to listen and learn from you. This type of historical view and reflection is called: Leadership.