Gennaro is the founder of FourWeekMBA, a leading source on business model innovation.
Quarantined in a country that has been locked entirely (I’m based in Italy), it’s interesting to notice a few things.
To give you a bit of context, the official spread of the virus in Italy started a couple of weeks back, when an entire local community in northern Italy was found positive to Coronavirus.
I was expecting this moment to happen.
Each day I stocked the groceries and food that would keep my family and me for a month.
I got psychologically prepared for it as I knew it was coming. I didn’t panic because I was prepared.
I also gathered the books I wanted to read and organized to work remotely.
At this moment it’s interesting to notice a few trends here in Italy. Some of them are related to forced digitalization. Italian schools that have been using a traditional model developed at the beginning of the 20th century had to adapt to this new normal swiftly.
And how, while some industries (travel, and physical leisure) are struck, some other industries might actually benefit from this crisis (all the digital businesses related to entertainment, education, and remote working).
Beyond those trends, I want to emphasize here a few principles that, given the urgency, I had to internalize quickly to prepare myself for this crisis and go through it at best.
This is a moment where being a hero as an individual means avoid any contact, isolate yourself physically, and wait. Indeed, as a person, you might also be the host of the virus, thus helping it spread further.
In short, this crisis is emphasizing the value of inaction.
Some of the lessons I’ve learned so far during this period will be with me for my entire life, and I want to summarize them below:
In an hyper-connected world, many still think in terms of actions.
But actions are just the first order of a chain of events. Instead, you want to shift your mindset toward interactions.
In short, when you take action, are those actions triggering a set of interactions? If so, what might be the consequence of those interactions? Think dynamically, not statically!
In the virus case, when you get out of your home, if you are a potential host, a single action (going out) might represent a chain of interactions (all the people you meet, and the people that in turn, they will meet) with potentially negative consequences for the collective.
Thus, to prevent this from happening, the most effective strategy is isolation.
This is an example of a single action that might trigger a series of interactions with negative consequences.
In business, though, also the opposite is exact. What are those single actions that can trigger a positive chain of interactions?
The fact that I anticipated the moment where we would all be locked in, I also prepared for it slightly before anyone else.
This precaution made me shop, for instance, when none was doing it. Thus when everyone else panicked, I could stay home, ready for what was coming next.
I didn’t act way before than the rest, I just slightly anticipated what moment moving somewhat sooner than the mass was and it was a huge, exponential advantage.
When crises are coming, there is a tipping point, where it seems everyone gets worried at the same time. Anticipating that moment slightly, it will give you a massive advantage.
On the opposite side, being just a bit late in anticipating a crisis will put you in a much much worse situation, where you’ll find yourself stuck panicking with anyone else.
Therefore, there is a point in which things get worse so rapidly that any further delay in action will be much much worse, like a negative spiral that strengthens.
But how do you anticipate a crisis in the first place? This leads us to the next critical point.
When uncertain times are coming, you can try to be smart in two ways: one is to predict exactly what’s coming, the other is just apply the precautionary principle.
The former requires you maximum precision in understanding what’s happening and anticipating it. Therefore, a small mistake in forecasting will mean a huge drawback as you will take proportional action based on the foreseen risk.
The latter instead is way more effective. You don’t need numbers, statistics, or knowing in which measure will the risk materialize.
All you have to do is to prepare as the worst possible scenario was coming. Of course, you might be wrong as well, as things might be even worse than you thought, but thinking in those terms will already put you ahead of anyone else, thus reducing drastically the chances of being hit.
In short, precaution itself is the most extreme form o intelligence in uncertain circumstances.
And the interesting thing is you don’t need to know what’s coming or being able to exactly anticipate, you only need to be extremely conservative, even though that might seem paranoid or irrational.
As business people, we value action as the basis for our success. These uncertain scenarios though teach us that we need to learn how inaction can benefit us.
In this crisis, isolation and patience are the most important virtues. But this also connects to business. When growing a company we’d like to see it grow steadily and linearly, which makes us optimize for growth.
While this process might smooth our revenues over time, it might also make our business riskier when hard times come. In this, inaction means to let your business also grow organically, aware of the fact that there is no particular action you can take in the short term to smooth this process.
For a full picture of what might come next, read this paper by Nassim Nicholas Taleb.
Previously published at https://fourweekmba.com/business-principles-at-times-of-coronavirus/
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