Coronavirus, Wuhan, and the truth

Originally published in Jan 2020

It’s hard to go anywhere without hearing my friends discuss the Coronavirus spreading throughout China and into other countries. And while widespread fear hasn’t arisen yet in the United States, it’s important for everybody to be cautious and prepared for the worst.

To give some credit to China, the government seems to have learned from the SARS disaster and done a better job providing the international community with updates from health workers on the ground. And while I do acknowledge their effort, I’m hesitant to give the country full credit for its response due to continued concerns about officials handling the fallout from the situation.

For me, to understand people is to understand incentives. What drives someone to do something and what is your motive? China’s political structure is built in a way where government leaders are effectively incentivized to keep a spotless profile, deliver positive results, and most importantly, avoid bad attention. Viral stories showcasing negative headlines can single-handedly derail career advancement for municipal-level officials, and pandemics, by nature, spread fear expeditiously among the populace. So while I’m not accusing officials of misleading reporting, it is, hence, hard for me to trust Chinese officials not to downplay the numbers of infected patients. If they are doing so, here are some thoughts.

A few days ago, I stumbled across an article called “How to Tell the Truth” by the venture capitalist, Ben Horowitz. In the piece, he assumes a majority of people would describe themselves as honest. But he lists several scenarios where it’d be challenging to do so. Let’s take a look at some of his examples:

• Sales are not going well. If you tell the company the truth, employees might rightly worry about the viability of the company and leave to go to another company. If they leave, you will surely continue to miss your numbers and introduce a spiral of under performance and attrition.
• The expense structure is too large for the business and you will likely have to do a layoff. The company isn’t doomed, but if you do a layoff, the press will write that you are doomed and employees will read it. If they read it, they will worry and leave and then you really will be doomed.
• An important executive just quit. If you tell the truth, people will wonder why and if they might have better options too.
• The product has a serious flaw that is causing customers to fail and causing you to lose deals. If your employees learn this, they may wonder why they are working for the number 2 company and not the company that’s beating you.
• The valuation on the last round was too high and you are looking at a down round. Your managers sold new hires on the promise of the old, higher stock price going even higher.

Let’s add: Your city of 11M people has fallen ill due to a potentially global health epidemic. The world is watching. You don’t have the resources needed to treat everyone who might be sick. If anybody hears the number of sick are significantly higher, pandemonium will occur.

I’d be remiss to equate startup failure with losing hundreds of lives but I believe lessons can be gleaned from these two situations. Horowitz lays out a three-step solution:

1. State the facts clearly and honestly  —  Don’t try to say that you needed to clean up performance issues or that the company is better off without the people that you so painstakingly hired. It is what it is and it’s important that everyone knows you know that.
2. If you caused it, explain how such a bad thing could occur  –  What was the decision process that you used to expand the company faster than you should have? What did you learn that will prevent it from happening again?
3. Explain why taking the action is essential to the larger mission and how important that mission is — A layoff, if done properly, is a new lease on life for the company and an action that was necessary to fulfill the prime directive and mission that everyone signed up for. As the leader, it’s your job to make sure that the company does not let those people lose their jobs for nothing. Something good needs to come out of it.

Startup founders and provincial leaders alike can apply these steps to foster transparency. Sharing bad news is scary but finding a larger purpose behind everyday efforts can encourage those who are afraid to face those fears with purpose. To prove his point, Horowitz chooses Abraham Lincoln’s Gettysburg Address as a historical example. With the reaffirmed notion that all men are created equal, Union soldiers persevered their fight and all Americans today attribute that idea as a fundamental life value.

I understand leading Wuhan today isn’t an enviable position to hold. But the Coronavirus also presents China with the opportunity to shed some of the past criticisms associated with its government. Demonstrating better honesty allows the country to affirm its self-confidence in the Xi Jinping-era and shed its insecurities as a poor, weak country. China would be better off for it.