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The Long View

On a leafy street in suburban Washington, D.C., the houses are wooden and genteel. Wrap around porches invite long afternoons spent sipping lemonade. Beneath those porches lies a crawlspace to cool the house during the long muggy summers. This is the domain of insects, lost socks and small children.

Except at the home of Olga Jonas. In 2007, her crawlspace held a bucket of freeze-dried food. With a little bit of water and a good shake, you could produce blueberry pancakes or meatloaf. The approximate shelf life: 20 years.

This seemed, at the time, an expression of deep paranoia. What possible apocalyptic scenario could necessitate such a stockpile? Olga Jonas is an expert in pandemic risk. She knew in 2007 that sometimes it’s best to prepare for the worst.

We are our own carriers of disease

For as long as there have been people on this earth, there has also been disease. The Black Death emerged from the Gobi Desert to ravage most of the Old World. Preparedness was impossible. We didn’t know that caravans and crusaders spread contagion. There was only panic. Like war or revolution, a disease outbreak can level society. The rich become poorer and the poor marginally richer, at least for a while 1.

We have, thus far, assumed that modern medicine would save us from the next Black Death. Moreover, if a terrible disease were to erupt, it would be far away in the wet markets of South and East Asia, the bushmeat markets of Africa or under cover of the Amazonian rain forest as it cedes territory to development. We have long ignored the proliferation of such diseases (on average, 5.2 new ones each year) and their increased frequency.

Now we know that distance is no protection. We don’t need rats to spread infected fleas. We are our own carriers of disease. Jonas warns:

“A pathogen originating in a poultry flock or a goat herd in a remote village in Africa or Asia can reach major cities on all continents within 36 hours.” 2

The SARS outbreak in 2003 and MERS epidemic in 2015 dwarf in comparison to the scale and scope of COVID-19. Together, SARS and MERS infected 10,590 people in 57 countries. As of mid-June 2020, COVID-19 has spread around the world to infect almost 10 million people 3.

Black swans and ostriches

The last pandemic was the Spanish Flu. From January 1918 to December 1920, this strain of influenza infected one third of the world’s population (500 million cases) and killed an estimated 50 million worldwide. At the time, there was little understanding of how the disease was transmitted or where it had originated. Was it carried by American soldiers at a military camp in rural Kansas, civilians from a farm in northwestern France or Chinese workers deployed during World War I 4?

Without the means to analyze such a pathogenic onslaught, governments could not have prepared for its effects. So they resorted to non-pharmaceutical interventions like face masks, social distancing and quarantines. They improvised with lockdowns and re-openings 5.

We seem to have learned nothing from the Spanish Flu pandemic. We are as unprepared today as we were then. Governments experiment with contact tracing apps, ‘intelligent’ lockdowns and make-shift economic stimulus plans. The response to date looks more like panic than the execution of a well-conceived disaster preparedness plan.

And yet, we were warned. In the aftermath of the 2003 SARS epidemic, international organizations like the World Bank and the World Health Organization sounded the alarm. They told us in graphic terms what to expect. Jonas writes:

“Death will be only a part of the impact. Billions would suffer from illness and survive. Nearly all, ill or healthy, could face chaos and the effects of a global economic recession caused by people’s reaction to an invisible threat, high labor absenteeism, plummeting consumer and business confidence, and cascading service failures.” 6

For so long as the memory of SARS was still fresh in our minds, governments prepared. They stockpiled protective personal equipment. They drew up disaster preparedness plans and exercised them, too. Then policies changed and new priorities took precedence. We chose to forget.

Robert Meyer is co-director of the Wharton Risk Management and Decision Processes Center at the Wharton School of Business. While at a conference in New Orleans in 2008, Meyer decided to take a drive along the Louisiana coastline. He stopped to take in the view at a deserted stretch of shoreline. There, he found an ATM machine in the middle of the fields, the sole survivor of a shopping mall demolished by Hurricane Katrina.

Intrigued, Meyer dug into the history of this site. He learned that forty years earlier, another hurricane had demolished a condominium complex on the same spot. Did the mall owner know of this tragic past? Of course, he did but it had happened so long ago. It couldn’t happen again. Meyer asked, do you plan to rebuild? Yes, the former shopping mall owner said. Maybe condominiums this time.

Are we stupid? Cartoon ostriches stick their heads in the sand. Real ostriches deploy risk avoidance strategies like their great ground speed or formidable height to compensate for their inability to fly. Meyer and his co-author Howard Kunreuther believe that we should emulate the ostrich rather than mock it. If we, too, could acknowledge our limitations, we might then learn to adapt 7.

Optimism bias

One of our biggest limitations is our tendency to discount threats. The two hurricanes that wiped out Meyer’s condominium complex and shopping mall were dozens of years apart. The Spanish Flu was a hundred years ago. A low probability, high impact catastrophe is called a Black Swan. Nassim Nicholas Taleb writes:

“First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.” 8

If human nature prompts us to explain disasters after the fact, optimism prevents us from imagining such an event before the fact. First, we don’t believe that disaster is imminent. Second, if no one else is in a panic, why should I worry? See, for example, the Great Face Mask Debate. In countries where face masks have proven their value (Asia after SARS; Australia during the bush fires), locals adapted quickly to its use against COVID-19. The rest of the world has its knickers in a twist, trying to walk the fine line between acting responsibly and looking ridiculous.

Once we are finally convinced that, say, a tsunami could be fatal, we tell ourselves that it’s a bad thing that might happen to your beach cabana, but not to mine. So why should I prepare?

Not all of us are stuck with our heads in the sand. Some are hard at work to win the last battle. Taleb writes:

“The French, after the Great War, built a wall along the previous German invasion route to prevent reinvasion — Hitler just (almost) effortlessly went around it. The French had been excellent students of history; they just learned with too much precision.” 8

The trick to disaster preparedness – whether an invasion or an infectious disease outbreak – is not to imagine the worst thing that’s already happened. It’s to imagine those disasters yet to come. In the aftermath of the 2008 financial crisis, we learned that banks need reserves. We did not think to extend that concept to other business sectors, including those hardest hit by COVID-19: health care, vaccine development and social care.

If we confine our solutions to the narrow parameters of today’s crisis, we cannot prepare for the crises of the future. Many experts say that the attacks on September 11 could have been avoided. We had both the means and the manpower to prevent disaster from striking. What we lacked was the imagination to foresee such an event.

Tribal thinking

Failures of imagination compound when placed inside the context of an organization. After all, organizations are comprised of humans who are overly optimistic, opportunistic and literal. Even the smallest, most loosely structured organization – say, a neighborhood – is susceptible to silo-think. My house, my street, my sub-division.

The larger the organization, the more tribal it becomes. Success for one corporate division may cause disaster for another. And yet every company faces existential threats that demand an integrated defense. Think of a systemic failure in the supply chain, the collapse of a critical customer or the incapacitation of key personnel: all events that have occurred and will continue to occur as a result of COVID-19. As business risk management experts Michael Watkins and Max Bazerman note:

“Despite thoughtful managers and robust planning processes, even the best-run companies are frequently caught unaware by disastrous events – events that should have been anticipated and prepared for. Such predictable surprises, as we call them, take many forms.” 9

How then to avoid the predictable surprise? Watkins and Bazerman recommend a far more rigorous approach than an environmental scan or contingency plan. In order to recognize a potential threat, a company should include outsiders and unlikely scenarios, especially those with an outsized impact on the company. Threat preparedness must then be prioritized and the appropriate resources mobilized.

But even all that is not enough. As Olga Jonas, the pandemic expert, says: ‘Preparedness is great but accountability is key.’ 10

Whole-of-government

One form of accountability is the ballot box. When a government is perceived as incompetent, heads will roll. Take, for example, South Korea.

When SARS swept through Asia in 2003, South Korea emerged as the OECD’s model of disease containment. In 2009 with the H1N1 flu, Korea maintained its reputation. Then, in 2015, Korea stumbled badly.

A South Korean businessman came down with Middle East respiratory syndrome (MERS) after returning from a visit to three Middle Eastern countries. He was treated at three South Korean health facilities before he was diagnosed with MERS and isolated. By then, he had set off a chain of transmission that infected 186 and killed 36, including many patients hospitalized for other ailments, visitors, and hospital staff. Tracing, testing, and quarantining nearly 17,000 people quashed the outbreak after 2 months.” 11

The political fallout was intense. Only one year earlier, the Sewol ferry had sunk, killing 304 passengers, most of them high school students. President Park Geun-hye was seen as incompetent and her administration as bumbling. Joel Petersson Ivre is an East Asian security scholar at Yonsei University in Seoul. He believes that Park’s failures with the Sewol ferry and MERS contributed to her ultimate downfall. The OECD concurs:

“Recent OECD work on the drivers of trust in public institutions in Korea highlights how the failures in managing these disaster events contributed to lowering the level of trust in the government. [...] improving public health emergency preparedness should be seen as a strategic investment for both better health outcomes and reinforcing public trust.” 12

Pandemic expert Olga Jonas says the rule of thumb is three disasters. That’s how long it takes before a finance minister looks for a better way. In Korea, two disasters back-to-back were enough to spur action. It adopted the strategy advocated by WHO, the whole-of-government approach, which calls for public service agencies to collaborate across portfolio boundaries, to achieve a common goal. The aim is to achieve policy coherence and effectiveness rather than meet the individual targets of portfolio managers 13.

After MERS, Korea embarked on a wholesale re-haul of its disaster preparedness strategy. It redesigned the Korea Center for Disease Control. It conducted annual inspections and periodic exercises. The last such exercise took place on 17 December 2019. It featured a hypothetical South Korean family who contracts pneumonia during a visit to China and then spreads the disease among colleagues and health care workers.

Two weeks after the Korean exercise, China disclosed the existence of a mysterious viral strain. In five days, the KCDC established its testing methodology. Actual testing started on 9 January. By March, South Korea could process up to 20,000 tests a day.

The testing process was simple and effective. When researcher Joel Petersson Ivre came down with a dry cough in Korea last March, he went to a local medical clinic for a COVID-19 test. There was no line. A nurse asked him about travel history, symptoms and contact details. One swift jab of a swab into the nose and another swab down the throat and off Petersson Ivre went with instructions to avoid public transportation and shops until his test results came back. When he woke the next morning, a text message was waiting on his phone: test results negative.

In large part thanks to its whole-of-government approach, Korea avoided the fumbling and in-fighting that marred its past disaster responses. Korea recognized the threat of a new disaster, prioritized preparedness and executed its plan. Today, Korea has ‘the most expansive and well-organized testing program in the world’ 12 and may be the first country with ‘an efficient long-term strategy for containing pandemics’ 14.

But there is one other country whose COVID-19 response goes further: Taiwan.

Whole-of-society

Taiwan lies a mere 81 miles (130 kilometers) from mainland China. There are numerous air and sea connections. A significant portion of the Taiwanese live (850,000) or work (404,000) in mainland China. If a disease were to emerge from the wet markets of China, Taiwan would surely feel its effects.

Taiwan lies a mere 81 miles (130 kilometers) from mainland China. There are numerous air and sea connections. A significant portion of the Taiwanese live (850,000) or work (404,000) in mainland China. If a disease were to emerge from the wet markets of China, Taiwan would surely feel its effects.

Taiwan’s relationship with mainland China is moreover a troubled one. Under pressure by Beijing, the WHO does not recognize Taiwan as a member state. Since the election in 2016 of pro-independence President Tsai Ing-wen, Taiwan has also lost its observer status.

When SARS struck in 2003, Taiwan was among the hardest hit. Yet, its researchers could not access WHO data and samples or the diagnostic reagents needed to test. In order to contain the virus, the government resorted to quarantining 150,000 patients and barricading a hospital. In the end, 181 Taiwanese died.

Every adult over the age of 30 remembers SARS, according to Taiwan’s Digital Minister Audrey Tang. Since 2003, all of society – the government, the health care sectors and ordinary citizens – has been preparing for the next disaster.

To date, the Taiwanese response to COVID-19 has been remarkable. In the early hours of December 31, the head of Taiwan’s CDC read the notice posted by the whistleblower Dr. Li Wenjiang. By the time the Wuhan police were questioning Dr. Li for spreading false rumors and sowing panic, Taiwan had activated its disaster plan.

Like Korea, Taiwan has a central command structure, horizontal and vertical integration among national and local authorities, with measures in place to tackle possible hospital manpower shortages, medical supplies and development of antivirals. It takes a whole-of-government approach. But Taiwan also embraces a whole-of-society approach. This approach recognizes that

“no single organization has the knowledge or capacity to alone manage complex problems in a complex environment. Only through collaboration with local nonstate actors can a clearer picture of local conditions be reached. Furthermore, it is through cooperation with local actors that the best results can be achieved.” 15

For example, at the daily press briefings, the Taiwanese health minister makes a brief announcement. Then he opens the floor to questions by all present physically or via the livestream. The press briefing does not end until the health minister or other officials present have answered every question.

Digital Minister Audrey Tang believes that Taiwan’s whole-of-society approach is the key to its success with COVID-19. The government solicits information from its citizens on both problems and solutions, not unlike the manner in which outsiders can help a company identify threats. The various national and local Taiwanese agencies are also organized horizontally and vertically in an effort to break through silo-thinking. The radical transparency advocated by Tang fosters public trust and a shared purpose.

This level of transparency translates into an extraordinary level of public trust. 91% of the Taiwanese approves of the government’s handling of COVID-19. The remaining 9% is concerned that the temporary surveillance measures, the geofencing and video monitoring in particular, may turn into permanent fixtures of Taiwan life. Digital Minister Audrey Tang welcomes such comments. ‘They keep us honest,’ she says 16. In her view, the interface between government and civil society must be bidirectional. Tang is an advocate of radical transparency, inviting the public to see laws and policies as they are being made.

By contrast, China’s approach has been to quell dissent. Some Wuhan residents have created secret videos of life under lockdown. Those who dared to publish their accounts online have since disappeared. In their place arises a whitewashed narrative of how the Chinese government vanquished the invisible foe.

Paul Verhagen is a data analyst and co-author of a study comparing the digital tools deployed in China and Taiwan, among others. He describes Taiwan’s approach as the carrot and the stick. The carrots are transparency, two-way communication and the ask-until-you-drop press conferences. Sticks are the heavy fines and jail time imposed for non-compliance.

In China, there are only sticks. For example, the Alipay ‘Health Code’ is a QR system for contact tracing. It also functions as a gatekeeper, prohibiting the infected and the presumed infected from circulation. Payment traffic can be terminated for non-compliance. The approach to date has been effective but at the price of eroding public trust. Verhagen believes that carrots are more effective in the long term because they promote confidence in the government and encourage ongoing compliance.

Trust

When a constituency loses faith in its leader, the consequences are far-reaching. The United States and the United Kingdom are examples of an already divided society growing ever more atomized while lives are unnecessarily lost to COVID-19.

“Faced with a vulnerable public that distrusts, yet expects insufficiently resourced state institutions to protect them, responsible state actors must develop alternatives to the traditional, state-led approach.” 17

Leaders need trust in order to lead. Korea shored up its public trust by delivering a world-class COVID-19 testing program. Taiwan won voter confidence through maximum transparency.

What about trust at the company level? Is there a corporate equivalent to a bucket of freeze-dried food? Olga Jonas, the pandemic expert, recalls the method used by the government of Bermuda. The governor of Bermuda carries with him at all times a list of friends he can call in the event of an emergency: US aid organizations, NGOs, the British government. Of course, Jonas says, every organization should have a contingency plan in place. But it should also know the contingency plans of its key customers and suppliers.

Collaborative decision-making is part and parcel of the whole-of-society approach. Parties who engage in such a multi-layered decision-making process learn to trust, share with and rely upon each other. The end goal, after all, is a common one. An effective response to any disaster is resilience.

“Resilience incorporates four properties: robustness – the ability to resist an event without a significant loss of capacity; resourcefulness – the ability to apply material, information, and Human Resources to the event; redundancy – the extent of systems and institutions available to satisfy needs even if loss or disruption occurs; and rapidity – the ability to contain losses and restore prior conditions in a timely manner.” 17

When we emerge from the COVID-19 pandemic, there will be a society to rebuild. Some of us may be traumatized by the loss of loved ones, the suffering of the sick, the strain of lockdown or its economic fallout. Our bonds, our interconnectedness will need to be repaired or even re-forged. It will take time to win back the consumer confidence, not to mention public trust in the institutions and leaders so sorely tested by COVID-19.

Trust may be the new coin of the realm in a post COVID-19 world. Not the sort of blind trust that insists that disasters cannot recur. Experts already predict a second and third wave of infections. The Spanish flu surged and resurged for two full years. The trust we need in a post COVID-19 world is a clear-eyed one, science-driven, tested and shared. It is the only currency in which society can repay the sacrifices made.

Olga Jonas knew all along that her bucket of freeze-dried food was nothing more than a few weeks worth of peace of mind. The real solution to any disaster is cooperation. The farmer with a pathogen in his flock of chickens needs the health inspector. The animal health experts and medical doctors must pool their knowledge. If we can collaborate across our respective portfolio boundaries and around the world, we can imagine the unimaginable and prepare for it. Take the long view. There’s still time to decide that it’s always best to prepare for the worst.

Picture of Karen Kao

Karen Kao

Karen Kao once specialized in international mergers and acquisitions. She is now a published author, among others, of the novel The Dancing Girl and the Turtle. “The Long View” is her first feature article.

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