Opinion | Coronavirus is opportunity for case study on business survival

John Moore

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.

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Comments

Kevin Grand
Mon, 05/04/2020 - 11:05am

Not getting too far off topic, but it would also be a good example to re-evaluate government decision making as well.

EVERY level of state government here in Michigan is looking at a significant financial hole due to the decision to quarantine with everyone, especially with those with no to low risk.

https://www.michiganradio.org/post/detroits-facing-348-million-budget-ga...

https://www.waynecounty.com/elected/executive/wayne-county-projects-mini...

https://www.freep.com/story/news/local/michigan/2020/04/02/michigan-stat...

They cannot just print more money. You either raises taxes or you cut spending. Those ARE your choices.

I haven't even gotten to those businesses that will never reopen again and those Michiganians permanently out of work.

Fear should no longer be considered as a viable management technique.

Bones
Tue, 05/05/2020 - 12:22pm

Actually, we could just print more money. But maybe our entire economic framework that is predicated on constant, needless consumption was in fact unsustainable and ill-advised this entire time, and has now been revealed as such but this Black Sea event. But you admitting we need higher taxes was more than I ever dreamed you'd admit to, so I suppose we should take the W and not press our luck

Kevin Grand
Tue, 05/05/2020 - 6:54pm

That's nothing even close to what I wrote, Bones.

Were talking STATE government here, not federal.

My take on the budget mess that Gov. Karen got us into, start slashing every entitlement. Once the state reopens, just like the 45-cent/gallon gas tax hike that went nowhere, people won't be very supportive of any tax hike she WILL want to implement.

Robin
Tue, 05/05/2020 - 8:41am

I guess the GOP has a little conscience, and believe in science enough to support her stay at home order, and only want to play politics after everyone follows her good advice and are well. This is horrible. Thank her for her leadership, and be a leader and show her some support and help.

A Yooper
Tue, 05/05/2020 - 9:14am

I recall back in the 1960's our small community had stores open on Friday night until 9:00 pm and the streets were packed.
Our grocery store delivered groceries in the morning and afternoon, free, and as far away as 7 miles!
Now in our neighboring community, many stores close at noon on Saturday and of course closed on Sunday. . Not much help for those who work 8-5 Monday through Friday.
I am the shopper. It is my money you small businesses want right? Then put the consumer first and survey us to find out what we need and want.
It's my $$$$ and I get to decide how much and where to spend it. Better start catering to the customers in your locale.

Arjay
Tue, 05/05/2020 - 11:46am

Not only business but people too. How many stories have we read that says EVERYONE should have a 6 month emergency fund. Instead people just think the governments will just open the coffers and get nothing in return. Even in the Great Depression look at all that the WPA built. Michigan should have filled a few potholes instead of giving out so much free stuff.

Obvious
Tue, 05/05/2020 - 7:08pm

What about conducting in-person business with much more caution?
Some customers are putting customers and employees in harm's way refusing to wear face masks and conduct themselves in a civil way.

In Michigan during the last couple weeks,
1) A customer refusing to wear a mask, wiped his nose on any employer.
https://www.cnn.com/2020/05/05/us/dollar-tree-wiping-face-trnd/index.html

2) A customer refusing to wear a mask, shot and killed a store security guard.
https://abcnews.go.com/US/wireStory/woman-arraigned-killing-security-gua...
https://www.washingtonpost.com/nation/2020/05/04/security-guards-death-m...

3) A customer refusing to wear a mask, spit on a police officer.
https://wwjnewsradio.radio.com/articles/news/woman-spat-on-cops-after-re...

They all face jail time, along with accomplices, but why are people feeling so entitled to enter private property and not comply with state and business owner rules?

Michigan clowns like these and the protesters really will ruin our state's reputation as a good place to live work and play. Bad optics for a business friendly environment.

A Yooper
Sun, 05/10/2020 - 9:31am

Spot on.