The coronavirus pandemic has shattered and shuttered businesses. Here, three Olin experts offer insights into potential opportunities as businesses struggle to emerge from the economic storm.
“The biggest question businesses are learning to ask themselves is, ‘Are we essential?’” said Doug Villhard, professor of practice in entrepreneurship and academic director for entrepreneurship. “If that answer was recently proven to be ‘no,’ then now is the time to form strategies to make your organization ‘essential’ in the future.”
How will businesses change because of the pandemic?
Minyuan Zhao, associate professor of strategy: “Businesses may have to rethink their value propositions. Before the pandemic, a nail salon was there just because women were ‘supposed’ to have their nails done, a florist was in business because flowers were ‘supposed’ to be at various events, and retailers invested in second-day delivery because consumers were ‘supposed’ to like fast delivery. The crisis will change all this. Collectively, we will redefine what is truly essential to our lives, and what we can do without.”
Peter Boumgarden, professor of practice in strategy and organization: “It’s important for businesses to think hard about the ways in which their short-term demand is impacted both by general consumer confidence, which is likely to be down in the short-run, and the social proximity people need to receive your products or services, which is potentially impacted due to changing social norms around public gathering.
“Think of a concert venue or a restaurant. They might want to creatively plan for some kind of viable model of reduced operations.”
What opportunities could exist as we emerge from the crisis?
Villhard: “Look for ways to solve the biggest problems you and your customers are now facing. It will be one of two things: supply or demand. Work quickly to become essential in one of these areas.”
Boumgarden: “Organizations should think hard about how to develop the flexibility to ramp up or down operations more quickly and seamlessly if a second wave of the virus forces a similar social distancing. Think of a hospital system that is opening up for elective services but also wants to be ready to move back to a COVID-19 response set-up. I can see new opportunities for those who can help organizations do this transition planning more effectively.”
Zhao: “The most obvious opportunity is the online businesses: virtual meetings, virtual classes, virtual concerts, virtual tourism, etc. But I think the opposite is also true: street corner coffee shops where you can say hi to the neighbors and connect with the offline world.
“The new business models also create demand for robust infrastructure, especially the digital infrastructure in data storage, transfer and security.”
What can businesses do to position themselves for opportunity?
Zhao: “It’s probably too early to make costly strategic moves, but businesses can start to reassess their business models and all the assumptions that support their business models. It’s shocking how many assumptions are now in question.”
Villhard: “Re-read your website and marketing materials. You’ll immediately be able to tell if those concepts are suddenly ‘dated’ in light of the crisis. Revise them to speak to the new challenges your customers now face. The world changed overnight. Your organization needs to adapt as well, and you need to show you are a thought-leader in the new world.”
Boumgarden: “I would encourage business leaders to find ways to run mini-experiments during this time. Use these as an opportunity to tease out creative hypotheses with your customers that you might not have done previously. If you can do this in inexpensive ways now, this is a great opportunity to learn.”
Villhard: “In entrepreneurship we teach to ‘start with empathy.’ Put yourself in the mindset of the problems your customers are now facing. If you do so, an unprecedented number of new ideas will immediately emerge for you.”
Do some businesses currently have an advantage over others?
Villhard: “If your solutions are both domestic and/or virtual/digital you are extremely well-suited. And if they are not, work quickly to get them there.”
Boumgarden: “I see leaders having to wrestle with new types of problems. Imagine trying to figure out the Paycheck Protection Program as you consider whether or not your loan will be forgiven. Or trying to predict the likelihood of viral reoccurrence and its impact on your supply chain. Many organizations do not have this expertise internally and have to look outside for support. Organizations and individuals with strong social networks can tap into new forms of expertise outside their own walls.”
Anything you recommend for business owners/managers to read?
Villhard: “Refresh on the classic book Innovators Dilemma. If you are an established company, you are about to be attacked by dozens of startups. And many of them will now be run by recently laid-off workers who have been sitting on an innovative idea in your industry for years and now find themselves in a perfect opportunity to strike against the establishment.”
Boumgarden: “I’m really enjoying a new rhythm of a weekly reading of The Economist. This is for two reasons. First, I find that a daily newspaper (like the New York Times or Wall Street Journal) makes me too attuned to the ups and downs of the news. A weekly is more emotionally digestible. Second, I find that in offering stories from around the globe, The Economist expands my understanding of the interconnectedness of our global economy.”
Zhao: “I’ve found it very helpful to look back into history and reflect on the big picture—how we came to where we are. More to that point, I find it helpful to write in addition to read. Write about how we see the world, and sometimes you’ll be surprised by what’s on your mind.”
She recommends the following: The Deluge: The Great War, America and the Remaking of the Global Order, 1916-1931, by Adam Tooze; The Last Kingdom, by Bernard Cornwell; The Great Influenza: The Epic Story of the Deadliest Plague in History, by John M. Barry; and The Silk Roads: A New History of the World, by Peter Frankopan.