Valeria Alterman, assistant professor of management for Miami Herbert, was curious to know how industry leaders were leading through this time. To better understand the conditions leaders across different industries faced during the onset of the pandemic, and their decision-making process, she, alongside researchers and former colleagues at the University of Florida launched a research project, funded by the National Science Foundation.
From the onset of the pandemic, Alterman and her colleagues have been in touch with more than 50 leaders across different industries. It was no easy feat given the novelty and fluidity of the pandemic.
“It was actually easier to catch them during the first wave of interviews because most businesses, except essential businesses, were shut down and they were planning re-opening and recovery strategies,” Alterman said. “During the second wave, we’ve had a bit of difficulty because they are busy trying to reopen and recover. However, once we have them on the phone or over Zoom, we’ve been sharing what we’ve found across industries, and you can hear the light bulbs going on on the other end.”
This exchange of information has bridged the academic strategies you read about in literature and real-life, real-time business strategies. All this data will inform the design of an agent-based model with which computational simulations are conducted to run what-if experiments.
The model will have different agents (representing our interviewees) and each agent will operate in a different environment. Each will have different environmental, financial, health factors that affect them, and each will engage in strategies for recovery. Then the model will show the consequences of the strategy considering the “landscape” (environment) that the agent was in.
“This research has given me so much perspective in terms of the different paths one takes given the same scenario, in this case, a once in a lifetime scenario, a pandemic,” she said. “I’m very interested to see what it’s all going to look like down the line when the dust settles.”
How each business creates value hasn’t changed. The biggest changes were seen in each of the companies’ business models. When determining how to restructure its costs, revenue generation, the scope of activities, resources, etc., five strategies emerged.
Preservation
The most common strategy is basing decisions on maintaining the status quo – preservation. “People are concerned with keeping the lights on not only through the end of the month but through the end of the year,” Alterman said. “They learned how to preserve cash flows, human capital (where possible) while hunkering down to its core value and mission.”
Retrenchment
In light of the evolving pandemic, many businesses have suffered sharp declines in volume and revenue causing them to aggressively cut costs, streamline product lines and services, and implement layoffs – all in an effort to preserve the core business.
Innovation
Many companies had to pivot in real-time when the pandemic hit and find innovative ways to continue delivering their products or services so they can continue to “keep the lights on.” They had to resort (sometimes begrudgingly) to innovation and doing things completely different than what they were used to.
Exit
In terms of businesses eliminating in-house departments and outsourcing them. Alterman’s research hasn’t seen this yet, but she thinks they may start seeing it during the third wave of interviews. “Many companies are slashing entire teams that they don’t need right now. These are teams that are nice to have but not necessary to run the day-to-day. They’re not looking to expand right now, they’re looking to survive.”
Collective Action
Surprisingly, the research is seeing companies collaborate a lot more and even collaborating with competitors. Leaders are realizing that there is strength in numbers, and they are helping each other so that they can all emerge from the pandemic stronger and in turn, help rebuild the community after the pandemic. “These are permanent relationships that will probably last long after COVID is gone.”
