On her recent visit to the London School of Economics, perhaps the Mecca for high-level economic innovation, the Queen of England, Queen Elizabeth II, asked an unaccustomedly embarrassing question. 

“Why did no-one foresee the crisis?” she asked. She meant: Why did none of you brilliant academic economists tell us this tsunami was coming, so we could prepare? And why can none of you brilliant academic economists tell us what in the world to do about it, to get us out of this mess?

On a scale of 1 to 10, the economics profession merits a minus 6, in its approach to the recession. 

What can managers do, when those whose profession it is to forecast the future, are able to forecast (as Nobel Laureate in economics Paul Samuelson once said) minus one year in advance. That is, economists are now saying the U.S. began a recession in December 2007. This ‘call’ was made exactly one year later. Now they tell us! They tell us what happened a year ago. How useful is that?  

A major problem is that of denial. Many of us tend to be optimists. This is highly positive. Entrepreneurs and innovators have optimism in their DNA. But optimism can lead to denial – to the inability to see dark clouds forming. And when the economists fail to see them as well, the world is in trouble.

As Gary Hamel noted in a famous HBR (2003) article on resilience, it is not the unknowable that is the problem – it is the unthinkable. We know what can happen. But we prefer not to think about it.

Solution? Perhaps, scenario analysis. Ask yourself: What is the worst thing that could happen to me and to my organization? What would I do if it happened. Think the unthinkable. Then, what it happens, perhaps you will be better prepared mentally to deal with it, without panic.