How long will it take us to recover from COVID-19? How I responded to my team's question.

Regardless of your role, working at any company over the past few months has been an emotional rollercoaster. At The Predictive Index (PI), it included going 100% remote, making the painful but necessary decision to do a layoff, and then restrategizing with our restructured teams. Since then, we've crafted and communicated updated plans, projections, and strategy materials to get teams aligned.

I also made a point to schedule one-to-one meetings with each PIoneer on the Sales & Marketing team over the last couple of weeks to show my gratitude and better understand the perception of how our leadership team has navigated the situation thus far. The good news is that the team's sentiment is generally positive. Although it was so sad to see some PIoneers go (we are 35 strong now in the Sales & Marketing dept), they appreciate the transparency we maintained no matter how uncertain or ambiguous the circumstances have been. I look forward to seeing this feedback validated company-wide via an employee engagement survey we'll run in the coming weeks.

My one-to-ones often ended with a question asked by a team member that is so hard to answer even though it is so expected. What do you think of COVID-19's impact on the future and how long do you think it will take us to recover?

No matter how well-read you are, trying to read the tea leaves on the trajectory of this unprecedented event, its impact on the economy and velocity at which we'll recover is an impossibility. New leaves are put before you just as you realize you've been presented a new set.

As leaders, it's our job to provide vision and a path forward. For most businesses, COVID certainly changed the short-term, but our north stars, our long-term goals and aspirations, and our big hairy audacious goals (BHAG) are still there.

And, it's not that there isn't a path. There is one - it's just layered with an awfully dense patch of fog. Whatever map we had is rendered useless. Our GPS is broken. Thankfully, we still have a compass that can keep us focused on that north star. And, although we don't have all the facts to accurately predict the terrain or distance we have to travel, we can at least attempt to paint a picture with the facts we know. We can maintain alignment during uncertain times by continuing to communicate and clarify our long-term vision.

What to say when your team asks you how long the COVID-19 recovery will take? Here's how I responded to my team's question about the economic recovery from COVID-19.

What you're about to read below is my detailed response to my team's question. In addition to sharing thoughts in my everyday conversations, team meetings, and one-to-ones, I also collected my thoughts and shared them via a 7-minute video. I am sharing this information in hopes to educate, share my perspective, and inspire others to engage their teams in constructive dialogue and conversations. I look forward to engaging in conversations with you as well to advance our collective thinking and lead through this together.

Over the last 100 years, the economy has seen several significant recessionary periods.

Some of us have worked long enough to have experienced a recession like the 2008 subprime mortgage crisis. As PI has outlined in our survival guide, in a downturn, companies have to adapt strategies, focus on survival, plan for worst-case scenarios, and hang on to cash - much like we are doing now. Although the current business environment may seem like past recessions, the economic environment created by COVID-19 is far from your typical recession.

Recessions are typically caused by mass uncertainty, lack of trust, or loss of confidence in a particular sector or economy. The government has tools at its disposal like adjusting interest rates, bailouts, and stimulus packages to fight inflation and spur productivity to prevent or treat recessions. Safety nets like unemployment, bankruptcy, the FDIC, COBRA, and other government assistance programs exist to keep us protected, to help us get back on our feet, and ultimately helps to maintain our faith in "the system." And - very important - in a typical recession, the economy remains open for business.

The COVID-19 crisis and the economic dip it's caused is far from your typical recession. I recently had the opportunity to listen to an exclusive talk by Cecilia Rouse, labor economist, Princeton Dean, and former member of the economic advisory council to President Obama. Rouse opined that it isn’t that the economy has softened, but that “the economy has been put on a medically induced coma.” There are massive sectors of our economy, like brick and mortar restaurants and retail who have been forced to shut down and couldn't conduct business even if they wanted to.

This is not your typical recession, where displaced workers would have alternatives to find a job. In this case, displaced workers have nowhere else to go. There is no recovering until shelter-in-place orders are lifted and businesses can open back up. It’s because of this "induced coma" that bailouts and stimulus package won’t work they are intended to as there isn’t much in productivity to spur. These packages are essentially being used to keep us afloat while we wait for the pandemic to die down

All of us have also undergone significant habitual and behavioral changes that will take more time than we probably realize to change again. Lastly, simply having no idea how the pandemic will play out leaves significant unknowns on the table

Although I don’t have anything close to an exact answer, I can share some insights and perspectives that I’ve found helpful in thinking about this.

Warren Buffett, Berkshire Hathaway CEO and legendary investor, provided some insight during their annual shareholder meeting two weeks ago. Buffet kicked off the meeting reminding shareholders that despite all of the uncertainty right now, one thing that is certain is the American spirit - our ingenuity, our drive, and our grit to move forward remains constant.

We’ve been sheltering in place and even though we certainly don’t have a handle on the virus, many of us are pushing for businesses and communities to reopen. If you're at all like me, these past two months have felt like years - no matter how high your patience is, the desire to move forward is part of our DNA.

If there were a historical economic event to compare this crisis to, Buffet used The Great Depression - where a lack of confidence in our banking system essentially caused the economy to go into a meltdown. The economy became stagnant and just couldn’t accommodate the employment needs of the population. This all came to a head in 1930, where the market collapsed.

How long did it take for us to recover from the Great Depression? Within the decade the US gross domestic product, or GDP, was bouncing back and the economy was starting to thrive. That said, a dollar invested just before the market crashed in 1930, was not fully recovered until 1954 - that’s 24 years! World War II obviously played a roll in this as well, but that's quite a long recovery nonetheless.

I don’t share this story to scare you into thinking that our recovery will be 20 years - we have so much more in the form of safety nets than we did then to maintain trust in our government and the markets. I do so more to provide context to think about how to approach the question of how long the economic recovery from COVID will take.

It’s helped me to think about recovery in two buckets - behavioral recovery and economic recovery.

Behavioral recovery is our attitude and outlook. The sooner businesses open up and we can get back to the office, the sooner we can acclimate to the situation, overcome anxieties and fears, and start building confidence that we’re not going to catch a fatal illness every time we leave the house. I recently heard Dan Ariely, a behavioral economist and author of the best-seller, Predictably Irrational, emphasized that changing the habits formed during this time can happen swiftly once a critical mass is able to muster up the confidence to get back out there.

We’ll start spending again, start going out again. GDP will start to recover. Now, the economic recovery can’t take place until the behavioral recovery is in full swing, which means nothing is happening until shelter-in-place mandates are lifted. But once they are, we’ll start to acclimate back and the economic recovery will begin.

Economic recovery from COVID-19 will be like traversing a set of switchbacks up a mountain.

I wanted to share an analogy with you that helped me process why it is very unlikely that the economy will bounce back quickly. Imagine you were on a hike, making swift progress, your group is staying together, the terrain is challenging, but not impossible. You’re approaching a crest up ahead - perhaps there’s a place to stop just beyond it to take a break, recharge, and get back swiftly on your way.

That’s how things felt leading up to COVID. Here we are (exhibit A in the picture above) just before COVID hit. Eyes on the prize. We have absolutely no idea that just over the crest is a cliff. So we walk swiftly over and we tumble down (exhibit B) losing resources, losing some people, and succumbing to some injuries along the way. When we hit the bottom and realize we just fell into a canyon and we look up.

There’s no way to climb right out and get back on the path. It’s a sheer cliff. We could try, but we're likely to lose it all in the process. So, we look for more feasible ways to make it up the other side. It’s this range that is our zone of possible recovery. Any predictability of our timeline also just went out the window. Luckily, we walk to the side of the mountain and find a new trail that continues to the summit. This new trail is not a cliff, it’s a series of switchbacks to get the top.

Switchbacks take impossible terrain and make it climbable. This is better for us since we have some to overcome our injuries and learn how to climb with the limited, gear, resources and team we have left. Although much longer than going straight up to the top, this path allows us to travel at a steady pace for longer. And, although the grade is still steep, it allows us to travel at a faster pace. There are more natural stopping points in which to collect ourselves and recharge. It’s more manageable to ascend with a group. Each time we traverse another switchback, our confidence increases, we learn better technique. We inevitably will find some tools and shortcuts along the way. (Using a switchback strategy for a business, in general, is not a new thought by the way.)

If you compare the aggregate distance of the switchbacks to the straight ascent, you’ll notice it’s much longer. In the case of understanding economic recovery, this analogy can provide meaningful context in which to think about the recovery timeline.

It will likely not be a matter of months, no matter how swiftly we move, there’s simply not enough time to cover the needed distance. This is an area, where looking back at historical data shows us that even swift recoveries take a couple of years - it’s because of the switchbacks.

There will absolutely be moments of ebb and flow on this new path, none of us have lived through a crisis like this. Inevitably, some companies will be able to recover faster than others, some revitalized from the experience, others will pivot to capitalize on the new environment and what it means for the future. There’s absolutely no reason to think that, with our amazing team, strong backing, and a highly relevant product, that PI can’t be one of those winning companies.

Let’s be prepared to charge forward, keep our eyes on our destination, and tackle whatever comes our way. I’m ready and hope you’re ready to do this with me.