John Moore is chair of the finance and economics department at Walsh College
The COVID-19 pandemic presents a unique opportunity for all business faculty to create a “living case study” for their students. It highlights the importance of critical thinking skills and prudent decision-making. This matters because important crisis-driven decisions can determine business survival or failure.
The coronavirus caught business leaders by surprise. Military theorists have long considered a concept known as “friction.” The simplified explanation of friction is that you can spend all sorts of time and analysis putting together a plan, but there are external influences that immediately begin the compromise and degrade the plan once the battle begins. An effective military organization requires thoughtful flexibility, where quick — but well-reasoned — decisions can be put into use as circumstances change.
The same principles apply to the business world. COVID-19 represents a “friction” event. American businesses and markets have done well over the past several years. They are now confronted by a dramatically changed reality.
Foundational teaching methods in American business schools include textbooks, case studies, simulations and other tools. They impart technical skills but represent highly controlled scenarios where the learning objective involves a preordained single, neat answer.
What makes COVID-19 a living case study is that the constraints of a class setting are set aside. This real-life, dynamic situation is filled with lots of “frictional” uncertainty. Students can be asked how, if they were an executive, they would formulate a coherent response to the issues facing American businesses right now.
This exercise requires refined critical thinking skills. There are no answers from a teacher’s manual. Instead, it’s all about the process of framing a business question, figuring out where to access credible data, turning that data into valuable information, constructing a menu of choices and then determining the process and criteria for choosing one alternative versus others. In fact, during my remote learning sessions this semester, I’ve dedicated vastly more class time to students discussing in real time how they would handle various scenarios and encouraging them to think creatively — yet swiftly.
There are countless business issues where crisis planning can be applied. There are a few steps that American businesses reacting to COVID-19 can apply after careful consideration: 1. Adjust capital structure to address liquidity issues. 2. Convert traditional face-to-face commerce to e-commerce. 3. Find alternate solutions due to supply chain disruption. There are no stock answers to these newfound obstacles. In fact, critical thinking skills are dependent on process more so than pat answers.
We need to expect the unexpected. Many small businesses have been caught short of liquidity. Educational institutions need to figure out how to deliver education without physical classrooms. Pharmaceutical companies are faced with the realization that foreign sources may be unable to deliver product.
In school, students have time to find answers. In situations like the COVID-19 pandemic, we don’t have the luxury of time. Business leaders must be voracious information consumers to be prepared when crises happen. They should be allocating daily quality time to stay knowledgeable so that when the unexpected happens, they will be ready.
The COVID-19 situation, like the Spanish flu of 1918 and the Great Recession of 2008, will pass. By working with students in making it a living case study, they will develop those key criticial thinking skills. When another crisis comes (and it will) they will be prepared to both handle the crisis wisely and also be prepared to take advantage of the business opportunities that invariably present themselves during every economic rebound. The emotional impact and industry disruption is very real, but it is possible for college students to amass essential knowledge during this time. They are seeing first-hand how important it is to adapt to changing circumstances and to look for a way forward.
While things may seem challenging right now, this pandemic will end. And, when it’s time for our college students to assume key leadership positions later in their career, they will emerge more flexible and adept at what it’s like to ride through crisis. And this is a reason for optimism for the ability of future businesses to navigate crisis.