Before we look back at the year that broke—well, everything—let’s take a moment to remember looking forward to it. Because looking forward to 2020 was a pretty big thing. If you’re old enough, you’ll remember looking forward to the turn of the millennium, which was the biggest thing of all. But everybody today can remember something of the run-up to that next milestone, the auspicious, and highly anticipated, year 2020.
Going back at least 19 years, many of the smartest minds in the world (if not the most creative) began devising long-term plans for the future of their businesses, programs, organizations, cities, etc., all called—wait for it—“Vision 2020”, each thinking how clever and original it was, while some of us began to think perhaps there had been an edict we missed.
Those with a moderately long-term view began this in 2001 or so; others eventually got to it by about 2018 (probably still thinking how clever they were). Personally I gave up trying to buck the trend and decided instead to concentrate on the plan’s contents, rather than its name—particularly when I took my first CEO job in 2015. In fact we managed to call our plan “Beyond 2020,” explaining that “One way we will achieve our goals is to look further into the future.” But about that….It turns out we couldn’t.
Indeed, almost nobody could. See the future clearly, that is—well enough to make a full-fledged, step-by-step, long-term business plan. What people could do however was to assess specific risks, such as the likelihood of, say, a pandemic, and make plans for mitigating them—and many did. So all this nonsense we keep hearing about the events of this year, to the effect that “Nobody could have imagined this” is simply that—nonsense. The most obvious evidence against this logic was the 2016 “pandemic playbook” drafted by Obama administration officials who were concerned about another Ebola- Zika-type virus. But there are business examples as well.
What, in particular, can a business do to mitigate risk? For starters, take out insurance against it. Many businesses take out “key executive” policies—essentially, life insurance on their top leaders so that the shareholders will have some recompense should one of those executives die prematurely. That’s easily and commonly done, but how useful is it really? More meaningful, if more complex, is insurance against disruptions in the business environment. These are bigger-ticket items, harder to find and often harder to justify. Still, they can pay off big time in the right (wrong?) circumstances. It seems, for example, that Wimbledon was the only major sports tournament to purchase pandemic insurance (after the SARS virus in 2003). The All England Club paid some $32 million in premiums over 17 years – and was reported to be receiving $142 million in payouts for this year’s cancelled tournament, making up for a significant portion of (though hardly replacing) its ~$360 million in lost revenue.
Having spent some 18 years in the UK, I’m not a bit surprised the All England Club did this. The idea of loss-prevention—indeed, of total avoidance of any and all risk—is deeply embedded in British culture. One could call it prudence. I think of it as institutionalized pessimism. (Of which Lloyds of London, the world’s oldest and pre-eminent insurance market, might be considered the main institution.) And it clearly serves a purpose.
So much of business—particularly, but hardly exclusively, in the US—optimistically assumes unfettered future growth. Indeed, optimism sometimes seems to pervade not only business, but humanity in general. Personality studies have shown that people more often score higher on optimism than pessimism. The problem is, however, that research says that while optimists get more done, pessimists do a better job of predicting the future. So all those very positive “Vision 2020” plans meant, in part, that pessimists are outnumbered.
Well, were. We are in significant part shaped by our experiences and their contexts. “Once burned,” etc. Perhaps the legacy of 2020 will be a decrease in optimism all round. Perhaps it will simply be that we take more notice of systemic risk, and plan better for disasters like those we now face.
So as we begin to take that traditional December look back (in anger?) at the year about to end, from impeachment gone south to coronavirus gone wild to leadership gone AWOL to civil rights gone missing to democracy gone on life support (almost), it’s worth remembering that we looked forward to it first. And for good reason—if not, for the most part, with adequate risk planning. The trick will be to look back and learn from the looking forward, to figure out, yes, how to do that better next time. Now that would be a 2020 hindsight worth seeing clearly.
Reference:
A version of this article appeared in
LinkedIn.
Dean of the George Mason University School of Business in Virginia
