9/11 to COVID-19. Business Lessons.
One of the great lessons from 9/11 as we take on the challenges of the Coronavirus, is that every market and every economy must bend its knee to the human condition.
Folks that know my work in engagement and growth strategy might be surprised to learn that I spent a portion of my career within corporate risk management. What will not surprise them is that the thing that fascinated me the most about that space, is just how the human condition is so fundamental to enabling corporate systems of control.
And disabling them pretty quick too!
The same human condition that I study now through the lens of growth, is that which renders risk management, crisis response, and brand position effective or otherwise – especially in times of distress such as these.
In fact, all the great failures of risk management systems, our most famous catastrophes, and our ability to manage crisis, can be directly laid at the feet of feelings.
Yeah – you read that right. Feelings. The gooey part of people that greater corporate wisdom has always demanded that we somehow amputate from our professional selves.
Yet for all the best practice standards development and process models (think: COSO, ISO etc) expounded on with furrowed brow and with great gravitas; for all the learned presentations at audit industry and risk management conferences around the world; they are all rendered utterly useless in the face of messy human behavior.
Think about this for a moment.
Y2K. Computerworld's 1993 three-page "Doomsday 2000" article by Peter de Jager spooked pretty much everyone. The world expected every computerized system to fail as clocks rolled over to the year 2000. The US alone spent over $100 billion in preparing, but as Rafiq Dossani wrote, “A credit card mistake here. A satellite blackout there. But no lives lost. No global economic catastrophe…”. See, it was not the glitch (albeit real) that was the true story. It was our fear that ruled the world across 1999.
BP and the Gulf of Mexico. In 2010 BP dropped 210 million US gallons (780,000 m3) of crude oil into the Gulf of Mexico. Chief among the findings of resulting investigations, was that there were cultural issues which pointed to apathy and its companion boredom – and this created a failure in controls deployment and monitoring by the folk that were tasked with that oversight.
Global Financial Crisis. In a period of history where company valuations were increasingly decided by exotic instruments that had nothing to do with traditional measures of performance, financial institutions became entranced by the temporary economic windfalls. They allowed their risk appetite to exceed their financial point of tolerance, and in doing so ignored the inherent risks in favour of greed.
Are you picking up what I'm laying down?
Interestingly, we write about events as if they happened in isolation – as if they're some kind of being with a free will. What rubbish. War didn’t erupt in Europe. Mankind erupted in Europe.
So here we are – early 2020 - and in the midst of the Coronavirus. Streets are deserted, office blocks silent, the heavy machinery of manufacturing lies prone, restaurants and malls are shuttered, and we are locked away in our homes.
Waiting. Hoping. Praying. And Zooming.
Yet we are lucky. My grandparent’s generation were sent off to war for half a decade, many to die in horrendous conditions in far away lands. By contrast, my generation is being asked to watch Netflix. I think we’ll cope.
And we know mankind will prevail. It always does. But for many vulnerable in our societies this is a real and terrifying threat to their very lives. Many have lost them already, over 100,000 as I write this. And with each heartbreaking story our fear and anxiety levels increase.
It is always human emotion that causes an event, or allows it to occur. It’s always our emotion that amplifies it, and always our capacity for emotional control that places our hands back upon the rudder.
Take our current predicament.
This was borne largely from a culture of pride, inherent in the Chinese government that could not bring itself to admit the nature and scale of the problem that was exploding in Wuhan. It wanted to try and solve it before suffering any embarrassment. Of course they never, ever, in a million years wanted to be the unwitting exporter of this horrible virus.
To quote a quite popular book, pride cometh before a fall. And to quote it again, let us not cast the first stone. China is not alone.
Fear over losing our way of life and convenience, diminished early responses of Western governments around the world. Large portions of it seems an inherently selfish population (let's reflect on that shall we?) were offended at the idea of losing freedoms, even temporarily. Media images of Australians packed onto Bondi Beach just days after the country’s Prime Minister pleaded for social distancing fill the memory. Those images embarrassed a country and angered the government into a much harder line approach.
Of course in the personality led world of US politics, its federal leadership and conservative media at first diminished the global pandemic as nothing more than a “liberal hoax” (political anxiety) and dismissed the WHO’s offer of testing kits as “unnecessary” (confusion), then later claimed to have recognized the crisis as a pandemic even before the WHO (pride and defensiveness). In all the twists and turns since, officials have clamored to find solutions as the death toll has mounted (horror), especially in the numbers seen in New York (deep sadness).
The point of origin in China and the tribulations in the US may be an easy source of illustration, but no country has a monopoly on pride or fear or any other emotion that invades the halls of power. We've seen versions of it from Italy and Spain, to London and to Australia: everywhere for that matter. Elected officials are human. Cultural and national context overlaid with human bias, predisposition, and indeed – feelings – as leaders transition their mindset to new realities. They have a very tough gig right now.
Thankfully, feelings work in our favor too. All out global war is being waged on the curve. This globalization of sentiment, a common fight against a common foe, may yet forge a better humanity. That feeling of being united, exemplified in the trending hashtag:
So what exactly did 9/11 teach us for COVID-19?
Well, having laid the foundation that feelings are in fact central to every crisis, let's now talk about their role in powering our recovery - at least in businesses - and perhaps beyond.
In the aftermath of 9/11, companies of all types and sizes were devastated. They lost the most precious thing of all, human beings. The weight of that grief, and the terror and trauma of those days will likely never leave them.
In business terms, those companies are now defined in two distinct categories. Those that made it – and in doing so defeated the terrorists stated intent which was to cripple the US economy – and those that did not. So hear this.
Those that did make it, not only survived, but thrived. And they did so by virtue of the feelings that they inspired in their constituents.
And I'll prove it.
The George Washington University Institute for Crisis, Disaster, and Risk Management published a unique evaluation of financial impacts on large corporations, post 9/11. The study considered corporate preparedness, disaster recovery and business continuity strategies procedures, and technology.
The ultimate measure? Cold, hard company valuations, courtesy of the performance of their stock price.
What the researchers found was that in addition to those that simply vanished through no real response capability, those with a limited capability saw their share price fearfully diminished. Their value, their presence, their logo’s; all obliterated or hobbled. There’s no surprise in that, right?
But hold the phone. This is where is gets interesting. I promise.
The companies that did have a level of response preparedness, not only survived the attack, but their company values exploded. Literally. They were now worth more than they had ever been, and certainly more than on the fateful September day.
Here’s why I say this happened.
It wasn’t the function and discipline of sound crisis and communications management, but it was the effect of those things.
You see, when a company communicates clearly through such times, when the succession plans are made effective and ensure continuity of messaging and leadership, when their “channels” remain in place, and when the brand of those companies is made very human and very relevant in the most heightened of circumstances, then what happens is this:
People ascribe values to that brand in times of crisis that they would not in “normal” times.
Our lens shifts. Attributes that we just expect and take for granted in normal times, things we don’t even think about usually, become valued and respected, even admired.
Who has thanked the pizza delivery guy recently, with a heartfelt enthusiasm he is not used to? Who now thinks that our front line medical professionals are bonafide saints dressed in scrubs? Who now appreciates their Internet provider more than ever before in their lifetime? Who has Googled the word "Zoom", when never before being interested?
See what I mean?
When a brand keeps turning up in relevant (and even better, helpful) ways when the chips are truly down, they find that folk associate new ideals to them. Ideals such as resilience, trustworthiness, strength, openness, and assurance.
As a result of those values-based associations, they then feel admiration, adoration, appreciation, awe, calmness, excitement, interest, joy, relief, and satisfaction.
Make no mistake, all markets bend their knee to human emotion. The economic benefits follow because when people feel good about a company, the value of that company increases. It really is that simple.
When customers feel good about a brand, it generates higher lifetime value.
When employees feel good about a company, they stay longer and are more productive.
When partners feel good about an institution, they extend better terms and good faith.
When shareholders feel good about a stock, company value increases.
When a board feels good about its CEO, they keep their job for longer and a company has better stability.
When a procurement officer feels more connected to one equivalent supplier over the other, they award the bid to them.
Oh hey, I think I see a trend… And now to bring it home:
The market distinguished between surviving companies (those who engaged their market well and those who didn't) who were resident in one of the two towers on 9/11, by as much as 100 percentage points on their share price.
There. Told you I would prove it.
Feelings are an intrinsic part of the fabric of humanity and therefore everything that humanity does. Like, business.
And look, this isn't some murky unknown world. For instance, we know that there are 27 human feelings, and 175 known bias' that permeate our psychology and emotional architecture, and that these in turn drive actual behavior (ergo, markets and economies).
To that end, feelings will always be at the heart of our well being and our economics, and they now hold the key to our recovery. But like the leading brands that survived the attack on the twin towers, let's not just recover.
PS. Let’s make sure that we take every opportunity to tell our health professionals that they are awesome, that we all admire them and respect them, that we hold them up as our protectors and among the most honored in our society, and that we are so proud of them. Because guess what? We can truly help to power these special people through their days, simply by the feeling that they will get by knowing how we feel about them.