Most people don’t understand exponential growth. It can be counterintuitive and is easily misinterpreted. Understanding it is particularly important right now around Covid-19.
The following eight-minute video is extremely well done and uses the historical Covid-19 data to help understand exponential growth.
There’s a magic number in this that we should be focusing on, but gets lost in the fog of hysteria. The math lesson starts at about 3:45.
The magic number is the growth factor, which is the change in new cases today divided by the change in new cases yesterday.
Right now we have a growth factor > 1, which is the fast-growing part of the exponential curve (the scary green part.) When the growth factor is < 1, we are on the slowing down part of the curve (red). We hit an inflection point when the growth factor = 1, which means that we are transitioning from rapid growth to slowing growth.
However, since we are dealing with the rate of change of new cases on a daily basis, the absolute number of cases obscures what is going on.
Look at the following table. The absolute number of change is scary, but if the growth factor hits 1, things are getting better.
Compare that to when the growth is 1.15 (15%). Note that the difference in the absolute numbers are not that significant, but the implication is dramatic.
When the growth factor is > 1, there may be orders of magnitude more growth ahead of us. When the growth factor is < 1, the most things with grow from there is 2x.
In addition, the growth rate from here has a huge outcome on number of cases. For example, if we are at a 15% growth rate from here (21,000 cases), in 61 days of 15% daily growth, we’ll be at over 100 million cases. But, if the growth rate decreases to 5% (a growth rate of 1.05, which is still > 1), in 61 days we’ll be at slightly over 400,000 cases.
The growth rate matters a huge amount right now. The more we can do to slow the growth rate, the better things will turn out. And, this activity is exponential, not linear, so massive change right now has an enormous impact on things.
If you want to track these numbers, the best three sites on the web that I’ve found that have these data and explanations organized are Our World in Data, Worldometer, and the Johns Hopkins Covid-19 site.
I was at a dinner event last night in Denver where, predictably, coronavirus (which I’ve been trying to call Covid-19, but everyone seems to default back to coronavirus) came up.
I’ve tried to avoid being “that person” who has a strong opinion because so much is changing so quickly. Instead, I’ve tried to have a “clear opinion” based on what I currently know and how it’s impacting my world. I was particularly sensitized to this since, at a board meeting earlier in the day where it came up, someone asked me directly, “How do you think coronavirus will impact things?” A few minutes later I realized I was stuck in exactly the kind of rant that I was trying to avoid.
Over the past year, as Ian Hathaway and I worked on our upcoming book The Startup Community Way, I’ve thought a lot about complex systems. We based our conceptual framework on the theory of complex adaptive systems (which we’ve shorted to complex systems in the book for ease of reading) and it has been a really enjoyable intellectual rabbit hole to go down with Ian.
How Covid-19 is playing out is a classic example of a complex system. One of the key attributes that we discuss is contagion – both positive and negative. And, with Covid-19, we are seeing negative contagion at multiple different levels, most notably biological and economic. But, there are several others including one I’ll label hysteria.
Here’s an example. When a large technology company in a city shuts down its offices, cancels all travel, and insists everyone works remotely from home, other large technology companies around the world and other companies in the city pay attention to this. Suddenly, there is a conversation going on everywhere that is the equivalent of “should we do the same thing?” The emotional cadence of this conversation is high, so companies over-index on trying to figure out the right answer, where there isn’t really one given the nature of a complex system. Rational thinking generally aligns with “we’ll do whatever the CDC is suggesting we do”, but anyone who either doesn’t trust the government or authority figures won’t be satisfied with this. They will become more agitated (negative contagion on hysteria), which will generate more conversations and potential actions. Regardless of the actions, the cost of the conversations will be high, generate more uncertainty and agitation, and the negative contagion will continue.
I’m not suggesting that Covid-19 is no big deal. I’m not asserting that companies shouldn’t shut down offices or people shouldn’t work for home. Rather, I’m giving an example of negative contagion on a dimension (hysteria) that is appearing in complex systems that I’m involved in.
Intellectually, it’s fascinating. Emotionally, it’s challenging.
Apparently everyone in the US is now talking about the threat of the coronavirus, which really should be referred to as Covid-19 since there are hundreds of different types of coronaviruses.
My guess is the 10% drop in the Dow woke people up. Or maybe it is because of the first known cases in the US.
As I was going through my random Sunday morning reading, I came across several good articles.
The best is by Bill Gates titled Responding to Covid-19 — A Once-in-a-Century Pandemic?
If you are looking for practical suggestions, the NYT opinion Here Comes the Coronavirus Pandemic has a few useful things in it.
If you don’t understand whether Covid-19 is scarier than the flu, read How Does the Coronavirus Compare With the Flu?
Finally, if you care about money and the economy, read Why a Coronavirus Recession Would Be So Hard to Contain.