Discussion with Costantza Sbokou Constantakopoulou, Phil Angelides, Stelios Papadopoulos, Grigoris Zarifopoulos and Andreas Stavropoulos

Continuing its webinar series which aim to shed light on various facets of the Coronavirus emergency, Endeavor Greece invited its Chairwoman, Costantza Sbokou Constantakopoulou, Co-owner & CEO of Phāea Resorts and Senior Architect of T.E.M.E.S, Grigoris Zarifopoulos, Deputy Minister of Digital Governance, Phil Angelides, former California state treasurer and renowned finance expert, and Stelios Papadopoulos, Chairman of Biogen, an American multinational biotechnology company with $12 billion in revenues, to discuss the development of this crisis and next steps for the world and Greece. The discussion was moderated by Andreas Stavropoulos, Partner of Threshold Ventures.

An Extraordinary Crisis

Andreas Stavropoulos opened the panel discussion by talking about the origin of the word “crisis”, which stems from the Greek word “κρίσις” – making judgements. The word also refers to times of intense difficulty, during which we are forced to make decisions. “I’ve been a venture capitalist for the past 20 years and I’m in the business of taking risk. Most of the people attending this webinar are also, in some capacity, in the business of taking or managing risk.” During regular times, the standard risk management framework we rely on requires identifying risks, assessing their likelihood and consequence, and then making decisions on how best to manage them. The problem during times of crisis is that our ability to estimate both the consequences and likelihood of risks decreases and the traditional framework goes out the window. “We go from a tractable risk zone to an intractable risk zone.” In times like these, what matters is leaders and processes.

“This is a crisis of extraordinary proportions. There is a common inclination that when a crisis of this magnitude arrives, we react by undervaluing the risk”, stressed Phil Angelides. In his opening remarks, he drew lessons from the 2008 financial crisis, warning us against repeating the mistakes of the past. “Despite warning signs and the eruption of the crisis in 2007, the belief was that it could be contained. When it started to metastasize, the policy reaction was too small and too slow, resulting in a longer, slower and more uneven recovery.”

Stelios Papadopoulos spoke of the many unknown factors that characterize this pandemic. “This is a health crisis about an agent we know very little about”, he observed, adding that this lack of knowledge has serious ramifications. “The Greek government has done an outstanding job in containing this epidemic, but the real challenge is yet to come”, he warned. We have a tendency to under-react, then correct-course, before we relax again. The real challenge will come when we begin to relax the measures. To do that right, we need to have reasonably good testing. We need to be prepared to learn more about this virus and we have to be extremely careful with asymptomatic carriers. “We could be in a real crisis if we relax the measures too soon”, he added.

“This is a crisis of extraordinary proportions. There is a common inclination that when a crisis of this magnitude arrives, we react by undervaluing the risk.” Phil Angelides

“Everything has been frozen in the travel and tourism industry”, remarked Costantza Sbokou Constantakopoulou. “The situation is shaping up to be somewhat binary. I don’t see people willing to risk their health to go travelling in an unregulated environment”, she pointed out. In terms of travelling restrictions, the EU has to act as one government, if they want to reboot travelling, taking the lead in the creation of the appropriate protocols. “We cannot have every country or every airport making its own decisions on how to apply measures”, she warned. “Once these are in place, the private sector can suggest additional measures to help the industry restart.” What is required is strong leadership and a positive attitude, which will be key in getting people to go back into the economy and start spending again.

On his part, Grigoris Zarifopoulos stressed the uniqueness of this crisis. “It does not compare because of one element, and that is fear at the highest possible level, since it has to do with our lives. People are dying as we speak on a very large scale, which makes us worry about our lives and the lives of our loved ones.” In terms of the reaction of the Greek government, he spoke of an early realization on the part of the government that what was at stake were the lives of its citizens – they prioritized saving lives, over the economy. “There was no second thought about what the priorities should be. The government moved really fast with specific measures to protect the lives of citizens and give the healthcare system time to prepare.” According to him, this crisis has the potential to bring about a new culture in the relationship between citizens and the state. “For the first time in years, Greeks trust their government. We should take advantage of that moving forward. It is a win for politics in Greece. Even a few months ago, this would have seemed inconceivable.”

The Stockdale Paradox

During crisis, the usual hierarchies tend to become more fluid. In such difficult times, Mr. Stavropoulos stressed the importance of values being communicated through processes. “The process has to be the answer, through which you communicate your values in times of uncertainty.” He also spoke of the “Stockdale paradox” as an interesting insight to guide our reaction to this crisis. James Stockdale, former US vice-presidential candidate, was held captive as a prisoner of war in Vietnam for over seven years. During this period, Stockdale was repeatedly tortured and yet he found a way to stay alive by embracing both the harshness of his situation and some optimism. “You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they might be”, he explained following his ordeal. In other words, the people with the best shot at survival are neither too optimistic nor too pessimistic.

Using this same idea in the context of the current crisis, Mr. Stavropoulos stressed the importance of leaders being “brutally honest to the people who depend on them for answers, but also providing a rational basis for hope at the same time”. Mr. Angelides also echoed the importance of “hearing the truth, but seeing a path forward” and commended the reaction of the Greek government to the crisis so far. He also spoke of a restoration of a sense of trust in government, which may help bring more qualified people in it, putting an end to the decades-long political dynamic whereby capable people stayed away from public service. Mr. Papadopoulos agreed that “if there is any glimmer of hope in this situation, it is this restoration of faith in government. If we can get away with a renewed confidence in our leaders, that would be a great success”.

Mr. Zarifopoulos drew attention to three leadership attributes currently in display by the Greek government, which are key to this trust and optimism we are experiencing in Greece: pragmatism, humility and the reliance on expert advice. “The government was very clear, very direct and very transparent in saying that we don’t know where this is going, but we are following expert advice and taking appropriate measures. No one came out and said this will magically go away. We don’t know how this situation will pan out and we need to be humble about that. Optimism stems from seeing a government and a Prime Minister display these leadership qualities. A government that is taking care of us and will take care of us when this crisis is over.”

Markets & Recovery

In terms of the reaction of the capital markets to the pandemic, given the fiscal and monetary loosening necessitated by the crisis, Mr. Stavropoulos asked if there were risks of debasement of money or inflationary pressures down the road. How should we be thinking of capital market risks at this juncture? 

“Coming out of the 2008-2010 crisis, there was a lot of concern about inflation etc. The biggest challenge we face is not doing enough, not doing too much”, remarked Mr. Angelides. “Greece got it right from a moral standpoint, but also an economic standpoint. If the EU cannot bind together in the face of such an attack against humanity, I don’t know when it will come together. Our hard focus should be in keeping people employed, paying them to stay home and keeping supply lines secure. The concern is we might not do enough.”

“Habits will change, budgets will change and so will the way we do business” Costantza Sbokou Constantakopoulou

Mr. Papadopoulos replied that the stock market has not done too badly, considering the magnitude of the crisis. “There is the looming issue of unemployment and the ballooning national debt, but at the same time, this is a market that is looking for reasons to go back up, so I suspect it will manage okay. I’m a lot more concerned about unemployment and the way businesses will be able to reinvent themselves going forward.” One big change that needs to happen, according to him, is moving from a sick-care healthcare system to one which places the emphasis on early diagnosis and prevention – all the things we need to do well before we need to hospitalize a patient.

On the topic of climate change and how high tackling this looming threat should be in the global recovery agenda, Mr. Stavropoulos asked the panelists if they saw sustainable growth as a possible a path forward or as an impediment that would take resources away from more acute needs. Mr. Angelides stressed that sustainability could be a catalyst for recovery and an important vehicle for job creation. At the same time, realizing the importance of public sector competence and the value of science to inform public policy responses is likely to be useful in a range of areas going forward, especially in dealing with climate change.

In light of all the uncertainty that characterizes this crisis, Mr. Stavropoulos mentioned the importance of setting up processes and organizations that can be responsive to new facts as they emerge. “That is more important than trying to predict the exact timing of the recovery. We simply don’t know.”

A Change is Gonna Come

Other than the “gloom and doom” scenarios, are there any causes for optimism in particular sectors or geographies? Capital controls in Greece taught people to use credit cards. The SARS virus made e-commerce explode in China. What will Covid-19 bring that is positive and which sectors might recover faster?

On the travel industry side, Ms. Sbokou Constantakopoulou predicted that leisure will come out faster than city tourism or conferences. “Habits will change, budgets will change and so will the way we do business. We might need to rethink tourism in general, perhaps through a shift to different markets. It will take us 2 years to get back to where we were before this crisis.”

Likewise, Mr. Zarifopoulos spoke of the ways in which the current crisis has accelerated the use of technology to facilitate transactions between state and citizens on a daily basis. “We have digitized services, allowing citizens to remotely deal with the state. We will not go back to the bureaucracy of the past; everyone understands that this is the way forward. We will see more digitization.” He also expects to see a boom in sectors like healthcare and telemedicine. “Anything to do with healthtech and prevention will become a big priority for companies and governments.” Harnessing the power of data through AI and machine learning will also be a big trend going forward. “Anything that allows us to take advantage of data so that we can be faster in our response to the next crisis.”

Finally, he spoke of the ways in which this crisis has helped put things in perspective, in terms of what is really important. “There is value in that.” Ms. Sbokou Constantakopoulou also sees this crisis as an opportunity for us to slow down, spend some time on our own and in our families and rethink our plans. “This crisis is opening a blank page for a new beginning, allowing humanity to reset its values. It could be a great opportunity; a time for us to breathe. Mr. Papadopoulos pointed to the human element of camaraderie that we see following crises as an important short-term effect, also predicting that certain measures are likely to remain, long after the crisis is over. He pointed to the example of security measures in cities and airports following 9/11. “These things started then and remain into effect until today.”

Wrapping up the discussion, Mr. Stavropoulos once again stressed the various unknowns of this crisis. “With traditional risk frameworks out the window, don’t look for specific answers. Be humble, be honest, but also rational. Any plan you make today you may have to change tomorrow. Instead of looking for the answers, you should be looking for the process to be able to react to new information. Are we likely to see the undoing of some of the benefits of globalization? I can offer my personal opinion: I don’t think so. A lot of regional differences have been set aside. People are stepping up to the challenge and we always underestimate the resilience of a global economy that is so interconnected, which is why in the long-run, I’m optimistic.”