{"id":1204,"date":"2021-02-16T08:59:03","date_gmt":"2021-02-16T08:59:03","guid":{"rendered":"http:\/\/janbosch.com\/blog\/?p=1204"},"modified":"2021-02-16T08:59:05","modified_gmt":"2021-02-16T08:59:05","slug":"prepare-for-the-worst","status":"publish","type":"post","link":"https:\/\/janbosch.com\/blog\/index.php\/2021\/02\/16\/prepare-for-the-worst\/","title":{"rendered":"Prepare for the worst"},"content":{"rendered":"\n
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Image by Jerzy Gorecki from Pixabay<\/figcaption><\/figure>\n\n\n\n

Recently, the Netherlands experienced some inclement weather including snowfall and strong winds. Interestingly, the entire country shut down with trains not running, highways closed off and recommendations of staying at home. It led to a bit of hilarity in our Swedish household as we experience this kind of weather regularly during the winter months and we just go about our business without blinking an eye. However, Northern Europe had a few very mild winters recently and people started to expect those to become the new norm.<\/p>\n\n\n\n

The pattern of assuming that the most recent data points can be used \nto accurately predict the future is a deeply human trait that we can see\n everywhere. A dry summer causes people to complain about global warming\n changing the climate. A successful quarter or two causes companies to \nassume that the next quarter will be as successful. Typically, we expect\n today to be like yesterday and tomorrow to be like today. The main \nconclusion has to be that human intuition simply sucks at applying \nstatistical principles. It doesn\u2019t mean that changes aren\u2019t happening, \nbut it does mean that we typically need a lot more data points before we\n can conclude anything definite beyond chance.<\/p>\n\n\n\n

The primary defense against this is summarized in the proverb \u201chope \nfor the best; prepare for the worst.\u201d On the personal side, the Stoics \npractice a habit that I think can be incredibly helpful. Promoted by \nSeneca, the idea is that you daily imagine the worst thing that could \nhappen to you and try to experience and live through it in your head. \nThis helps you build up the mental fortitude for the situation where \nsomething bad does happen so that you don\u2019t collapse under the weight of\n what life throws at you. And, of course, it also helps you feel \ngrateful when bad things do not happen. A second habit of the Stoics is \nto, once per month, wear the most basic of clothes, eat the simplest \nfood and sleep in the most rudimentary bed to experience what life would\n be like if you were to be down on your luck and lose everything. And to\n do all this, asking yourself that if this was the worst that could \nhappen, is it really that bad?<\/p>\n\n\n\n

In business, the key challenge very often is the focus on efficiency.\n It\u2019s inefficient to put resources aside for cases outside a very narrow\n band for which companies optimize as these resources aren\u2019t utilized \nsufficiently. So, companies often fail to proactively prepare for bad \nsituations and need to scramble to respond whenever the market or \nsociety suddenly shifts. The ongoing pandemic is a great example of how \nmany were caught off guard.<\/p>\n\n\n\n

However, the main victim of the focus on efficiency typically is innovation. Innovation is by its very nature inefficient. As a team, you develop hypotheses of what might help develop and grow the business, but the fact is that you\u2019re most likely wrong and will only find out after having spent resources on testing and validating the hypothesis. The very nature of innovation is such that the majority of innovative ideas don\u2019t pan out and it\u2019s the few that do that have to pay for all the failed ones. Of course, principles such as those defined in the lean startup or our research<\/a> aim to minimize the resources invested in each idea by creating multiple proof points that need to be met to invest more. But the fact remains that innovation is inefficient by the metrics of modern companies.<\/p>\n\n\n\n

The main concern of assuming that tomorrow will be like yesterday and\n today is that you\u2019re woefully unprepared for \u201cblack swan\u201d events and \nbecome extremely fragile as a business. Some companies invest \nsignificant effort in scenario planning where multiple more likely and \nless likely scenarios of how the future might unfold are evaluated and \nresponses are developed for each of these scenarios. The scenarios \nthemselves will never occur as predicted, but they\u2019ll inform and \naccelerate the response to what will happen and help in the case of \nunexpected events.<\/p>\n\n\n\n

Human intuition is extremely poor at statistical analysis and companies tend to suffer from \u201crecency bias.\u201d This makes them fragile and brittle, causing them to break and fail in the face of unexpected situations. As the future is fundamentally unpredictable, we need to protect ourselves from ourselves by balancing efficiency and preparedness, conducting scenario planning to have clear playbooks to use and investing in innovation. As Alan Kay famously said, the best way to predict the future is to create it. No matter how inefficient and resource consuming it may be. Remember: prepare for the worst while hoping for the best!<\/p>\n\n\n\n

To get more insights earlier, sign up for my newsletter at <\/em>jan@janbosch.com<\/em><\/a> or follow me on<\/em> janbosch.com\/blog<\/em><\/a>, LinkedIn (<\/em>linkedin.com\/in\/janbosch<\/em><\/a>), Medium<\/a> or Twitter (<\/em>@JanBosch<\/em><\/a>).<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Recently, the Netherlands experienced some inclement weather including snowfall and strong winds. Interestingly, the entire country shut down with trains not running, highways closed off and recommendations of staying at home. It led to a bit of hilarity in our Swedish household as we experience this kind of weather regularly during the winter months and … Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"generate_page_header":"","footnotes":""},"categories":[8,10],"tags":[],"_links":{"self":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1204"}],"collection":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=1204"}],"version-history":[{"count":1,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1204\/revisions"}],"predecessor-version":[{"id":1206,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1204\/revisions\/1206"}],"wp:attachment":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=1204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=1204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=1204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}