Business Professors Around the World Identify Crisis Strategies
By Tima Bansal
The day before our university closed its classrooms, my MBA students debated the price that the company that discovers the COVID-19 vaccine should charge. None of us expected the university to shut down in-person classes indefinitely the next day.
Two months later, we were still talking about the implications of the pandemic. Earlier this month, my students and I discussed the long-term implications of the U.S. and Canada COVID-19 stimulus packages. But now we discussed the question virtually, not in person.
I’m not the only business professor talking about COVID-19 with my students. Business professors worldwide are considering the impact of COVID-19 on business and society. As businesses fail and markets slide, business professors have insights into how companies can manage such crises and avoid them in the future.
This article highlights the contributions made in blogs by professors from over 50 business schools over the last six weeks. These professors have applied their many years of research to the COVID-19 challenge. Because no one can resist a good list, I have grouped the ideas into six recommendations for business.
1. Respond quickly in a crisis.
Businesses need to act quickly to meet society’s basic needs when a disaster first occurs. These are opportunities for companies — especially first responders — to build their reputation and differentiate themselves from others.
One research team calls this rapid responsible innovation. Companies need to stay calm in crises: exhibiting confidence, retaining their employees, and helping victims. As examples: Spanish companies produced medical products and designed new mobile apps. Nigerian companies replaced cash, a vector for spreading the disease, by offering cashless transactions. Many manufacturers have retooled to provide equipment—sanitizers, personal protective equipment—to slow the transmission of the pandemic.
2. Don’t just manage risks, build resilience.
Ideally, businesses would prepare for potential crises. However, businesses are unlikely to prepare for major events, such as pandemics and climate change, because they find it difficult to understand “large, complex systems and all the interrelationships.” It’s the Goldilocks syndrome: Businesses are paralyzed if the disaster is major and imminent, yet they are apathetic if the disaster is slow and distant. The disaster has to be “just right” to catalyze firms to act.
But, there is an answer to this paralysis. Rather than preparing for a specific disaster, some advocate for building resiliency. This is the ability to respond and adapt quickly to any new situation. Paths to resilience include:
- Building strong cross-sectoral business relationships.
- Creating redundancies and maintaining higher cash reserves.
- Scenario planning rather than forecasting.
3. Scrutinize global supply chains; strengthen local ones.
As supply chains face massive disruption, businesses need to protect and strengthen their sources of supply and distinguish between global and local suppliers.
Global, opaque supply chains often involve hidden risks. Companies need to ensure that their suppliers meet ethical standards and ensure safe working conditions for employees. Business professors are also advocating for local supply chains to build stronger communities.
4. Build strong cross-sectoral relationships.
The pandemic has highlighted the importance and opportunities for business, civil society, and government to work together. The strongest long-term outcomes for individuals occur when the collective good prevails over individual short-term interests.
Trust is critical, as government and NGOs are often skeptical of partnerships with business. Building deep, trusting relationships takes time but will yield large rewards during a crisis. In Nigeria, businesses, government, and high net worth individuals are collectively and collaboratively shouldering costs — offering money, goods, services, or time — and helping to protect the community from COVID-19.
5. Don’t retreat, innovate.
People are consuming less during this pandemic, so business earnings are falling. With many businesses struggling to meet their basic expenses, some business owners are retreating.
However, numerous companies are taking the crisis as an opportunity to reposition themselves. Companies are now using technology to grow their online business and meet new and growing customer demand.
6. Let the light in through the cracks.
“There is a crack in everything. That’s how the light gets in.” Canadian songwriter and poet Leonard Cohen reminds us that something that appears broken may actually open the door to something better. COVID-19 doesn’t just reveal faults in business and society — it also is a source of opportunities. More than ever, COVID-19 has shown us the power of connection and the importance of looking at problems in different ways.
Tima Bansal is a professor of strategy at the Ivey Business School and the executive director and founder of the Network for Business Sustainability.
A version of this article was published by the Network for Business Sustainability. B the Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
Observations from the (Virtual) Classroom: 6 Priorities for Companies During COVID-19 was originally published in B The Change on Medium, where people are continuing the conversation by highlighting and responding to this story.