One of the business pivots I have always admired was the story at Intel. Founded 1968, the company’s first hit product was actually in memory chips, or RAM. Their 1103 chip was the best-selling memory chip in the world in 1972, and Intel dominated the space for most of the ’70s. But by the early ’80s, Japanese companies were eroding Intel’s market dominance with capable and competitively priced chips of their own.
The team at Intel had a massive discussion about how to respond: Some wanted to invest in their memory chip business, others wanted to target niche markets, while others wanted to focus on their newer product line, the microprocessor, which was only a fraction of their total revenue.
In 1985, with memory chip market share down 97% and their U.S. competitors going under left and right, cofounder Andy Grove and CEO Gordon Moore had a crucial conversation in one of the office cubicles. As the story goes, Grove mused that they might get replaced by the board with a new executive. “What would the new guy do?” they wondered.
The answer was clear: They’d get Intel out of the memory business.
So the two decided to make that decision themselves. The decision had painful consequences: Moore and Grove laid off a third of their workforce (7,000 employees) and chose to double down on the nascent CPU business. From January 1985 to January 2000, the stock price grew by 99,300%, and today Intel is still the dominant microprocessor manufacturer in the world.
As I’ve previously written, resilience can be seen as three interrelated skills rather than as a fixed trait or capacity. The first skill of resilience, responding pragmatically, involves facing difficult situations directly and taking decisive action to prevent further harm or decline.
While seemingly obvious, one of the most difficult things to do during a period of adverse change and hardship is to confront reality. To seek out the truth, stare it in the face, and make decisions based on facts, not wishful thinking. That’s what Grove and Moore did while facing an onslaught of competition. They looked at the competitive landscape, their company’s strengths, and recognized that the moment called for a hard choice to exit a market they could not succeed in. This called for situational awareness.
Mind your surroundings
Many years ago, in grad school, I took a yearlong emergency medical technician (EMT) course. An EMT shows up when you call an ambulance and provides immediate care to patients and keeps them stabilized if they need hospitalization. Even though I never went on to work as an EMT professionally, the course was full of lessons on responding to crises.
Situational awareness is taught to EMTs through the idea of “scene safety.” When called to assist in an emergency, a person’s first instinct might be to rush toward the first person who looks like they need help. But well-trained EMTs always start by analyzing the environment they’re being deployed into. Are there any hazards like fire or broken glass? How many patients require assistance? Do they have a safe and accessible path to reach and exfiltrate those patients? What protective or medical equipment should be brought in?
These questions continue into the emergency room. Just as an EMT shouldn’t rush into a gun fight to treat patients, situational awareness is crucial for doctors. Dr. Dylan Carney, a former classmate who’s now an emergency physician in San Francisco, noted how treating patients in the era of COVID-19 is “the equivalent of thousands of invisible gun fights.” Without taking the right precautions, a medical provider risks turning themselves into a patient themselves, unable to help others. “Grit in this scenario doesn’t mean pushing through pain or symptoms,” Dr. Carney told me. “It’s using impeccable caution.”
The same is true in a business setting. The first step of confronting reality is therefore to notice the early warning signs of something going wrong. This can help you react to a rapidly spiraling problem before it’s too late.
The dangers of delusion
Our minds are quite good at maintaining a sense of complacency, keeping us from noticing a descent into disaster. In How the Mighty Fall, business researcher Jim Collins identified five stages of organizational decline. In stage three, termed “Denial of Peril and Risk,” he found that teams would often ignore internal warning signs and negative data points. According to Collins, these institutional failures were driven by a lack of “vigorous, fact-based dialogue that characterizes high-performance teams.” This is a challenge that can be addressed through confronting reality.
We’ve seen this with how slowly certain governments, particularly here in the United States, have been in responding to COVID-19. President Trump downplayed the threat, de-emphasized testing, and engaged in wishful thinking about how the virus would simply “disappear one day, like a miracle.”
But a blindness to reality is not just reserved for the current administration. Though not as deadly, the disastrous initial rollout of President Obama’s Heathcare.gov website was marked by delusional thinking. While critical risks of the project and the technical systems had been identified by third-party auditors such as McKinsey and an independent software verification firm, they were not surfaced to executive leadership prior to launch. On September 29, the day before launch, the White House Chief of Staff Denis McDnounough would write in an email, “Based on the reports I’m getting I think we’re going to knock your socks off tomorrow.”
Instead, 250,000 people visited the site the next day and a mere six individuals successfully registered for insurance on the government’s $300 million website. In the following days, government officials struggled to understand how and why the site was going down. According to one administrator, “Nobody could even tell us if the system was up as we were sitting there, except by taking out laptops and trying to go on it.”
Make problems visible
Confronting reality means accepting hard truths. In the case of Healthcare.gov, the numerous contractors and government agencies involved meant it wasn’t clear who was accountable for confirming the system would work. In the case of COVID-19, there was more of a deliberate attempt by Trump and other officials to hide information and misled the public. In both cases, the inability or even refusal to assess the situation led to serious consequences. The first lesson for leaders who want to uncover solutions in a crisis is simple: Make problems visible.
Healthcare.gov began to turn a corner once the team began to make their problems visible. Obama empowered his chief technology officer, Todd Park, to take on the challenge, and Park assembled a ragtag group of technologists dubbed the “Rescue Team.” Their first major victory was simply building a real-time dashboard of all the key metrics of the site so everyone could see what part of the site was struggling most.
Over a period of months, daily standups focused on truth-seeking and fixing the site’s most critical bugs helped nearly 1 million people register for health insurance by December of 2013 and millions more the following year.
After initially botching his state’s response to the pandemic, New York Governor Andrew Cuomo began holding daily press briefings around coronavirus in March 2020. Even as cases grew, peaking at 18,825 hospitalizations in April, he held forth with “facts, directives and sobering trends,” according to The New York Times. While his decisions around the pandemic weren’t perfect, his briefings were a huge hit for many. For instance, my mom, who doesn’t even live in New York, tuned into CNN every day to hear from Governor Cuomo and get an update on the situation.
Countries like South Korea took it further, scaling up systems to rapidly test large numbers of people at once. “Testing is central because it leads to early detection,” said Kang Kyung-wha, South Korea’s foreign minister, said in a BBC interview. “It minimizes further spread and it quickly treats those found with the virus.”
Instead of recoiling from the harsh truths of the situation, the country faced it, having tested 260,000 individuals by mid-March. The result: a total of 23,516 infections and 399 deaths by late September, minuscule numbers for a nation of 51 million.
Meanwhile Trump’s delusion was maintained within the White House and GOP leaders for months, even as infection rates rose across the country. But in early October, reality struck back as senators, White House staffers, and the President and First Lady all tested positive for the virus.
So how can we confront reality in our own lives? Here are three ways you can avoid delusion and make problems visible in your own moments of crisis.
Ask the right questions. Going back to the EMT’s scene survey, ask yourself what the most important facts of the situation are, and how you can answer them. If you’re diagnosed with a serious illness, instead of going to the worst-case scenario, learn about the rate of false positive test results (often higher than you think), what the pros and cons of various forms of treatment are, and whether you can connect with other patients with the same condition.
Review the tape. Sometimes, the issue isn’t getting the information, it’s actually going through it. As a nationally ranked gymnast, I would watch tapes of my performance after every competition. It could be painful to relive my mistakes on replay, but I invariably saw where I could improve. Watching the footage again also reminded me of where I was doing well and served as a counter balance to the negative feedback. If you’re in a tough spot financially, you may want to review the last six months of income and expenses. Is there anything missing? Where might you be able to cut or recover funds?
Be realistic. A study on reducing physician burnout found that resilient doctors were able to “refrain from wishful thinking and to accept external realities.” In other words, they were realistic. Every founder wants to believe they’re building the next tech giant. And while optimism is fine, knowing the base rates of success is important. A Harvard Business School study of startups that had received at least $1 million in venture funding found that 75% failed to produce a positive ROI to their investors, with nearly half of them returning nothing. While we may lionize the visionaries who take a second mortgage to keep their company alive, this kind of risk-taking backfires more often than not.