Apr 2, 2020
The Latest: Our Faculty on the Coronavirus, Business, and the Economy
Consumer spending will be the key to economic recovery. Hotels can turn into temporary hospitals.
The COVID-19 global health pandemic has quickly and drastically changed how businesses operate—even whether they can operate at all.
As events unfold, Kellogg faculty are weighing in on the challenges facing organizations and individuals, and we’re keeping tabs on what they have to say. We are updating this page to share new information as it is published around the web.
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Consumer spending will be the key to economic recovery
With so many consumers observing shelter-in-place orders, spending has dropped among households and across industries. Phil Braun, clinical professor and associate chair of the finance department, connects the dots between the coronavirus outbreak in the U.S., the economic downturn, employment, and consumer confidence. As he explains, the high levels of uncertainty surrounding the spread of the virus and the depth of the economic downturn will mean reviving the economy will take time. (Forbes, March 25, 2020)
Hotels can turn into temporary hospitals.
The city of Chicago is initiating a plan to use empty hotels as supplemental hospital space for patients suffering from COVID-19. According to finance professors Efraim Benmelech, Carola Frydman, and Dimitris Papanikolaou, other cities would be wise to follow suit. They looked at the benefits of redeploying these vast, available resources—including hotels left vacant from dried-up tourism and recently unemployed hospitality and restaurant workers—and concluded that such shifts could serve as a win–win for hospitals, governments, hotels, and workers. (Market Watch, March 24, 2020)
Virtual negotiations require careful preparation
Negotiating via videoconference is less than ideal. According to Leigh Thompson, professor of management and organizations, those who attempt to strike a deal online are less likely to succeed. But Thompson has some practical advice for improving your odds of success—including getting your adversary to agree to the process before you commence negotiations, so that neither party is surprised. Also, be sure you know how and when to suggest taking breaks in order to ease tensions or recalibrate if you find yourself at a disadvantage. (Fast Company, March 23, 2020)
Let’s see more competitive collaboration.
Paul Earle, an adjunct lecturer of innovation and entrepreneurship, reminds us that competitors can be our best allies. Just as rival labs around the world are collaborating to develop vaccines and treatments, there “could be a hugely net positive impact on people if corporate innovation leaders more widely adopted similar practices,” he says. (Forbes, March 18, 2020)
You need a new marketing plan.
That plan you had to acquire and serve customers before this crisis? Unfortunately, it’s not going to work anymore. Your carefully honed message is probably now out-of-touch. Your plans to increase foot traffic are on-hold, if not history. So it’s time to go back to the drawing board. Fortunately, Tim Calkins has some tips for how to create a new marketing plan. “It is a challenging time to be a marketing leader but doing nothing isn’t an option,” he says. (Strong Brands, March 18, 2020)
A cashless society
A cashless society (where everyone works from home) may be closer than ever. The threat of infection from COVID-19 will not last forever. But when it comes to adopting new technologies, even temporary shocks can lead to lasting behavior changes. A temporary cash crunch in India, for instance, had a “persistent effect on use of electronic payments,” says associate professor of finance Nicholas Crouzet. (Read more about this research, with Filippo Mezzanotti, here.) The researchers believe that other remote technologies such as the popular teleconferencing platform Zoom could see a similarly permanent uptick in adoption. (CNBC, March 16, 2020)
Social distancing is necessary; economic distancing is not.
Dean Karlan, a professor of finance and economics, offers ideas for how people with secure paychecks can help make life a little less challenging for the economically vulnerable among us. Take GiveDirectly, which sends money to low-income families via mobile transfer. It just might be “the perfect socially distant/economically close charity for the occasion.” (Washington Post, March 16, 2020)
What Zoom Brings to the Online-Presenting Equation
For business leaders who are now required to present to teams through virtual platforms like Zoom, which is the preferred online teaching forum of Mohanbir Sawhney, clinical professor of marketing, there are several critical considerations. As he carefully details, presenters must attend to equipment and setup, content and presentation, and interaction and discussion. One helpful tip? Pretend the camera is your favorite student or colleague. (LinkedIn Pulse, March 16, 2020)
Estonia Has a lot to Teach Other Countries about How to Handle the Crisis
Robert Wolcott, clinical professor of innovation and entrepreneurship, uncovers six lessons the United States could learn from Estonia’s handling of the pandemic, which include a hack-a-thon, “Hack the Crisis.” Using rapid experimentation to confront the challenge, digitally transforming all government services, and finding new ways to improve the mechanisms connecting the public and private sectors, there’s much to be gleaned from Estonia’s mobilization in the face of the pandemic. (Forbes, March 15, 2020)
When Moving to Online Training, Don’t Focus Entirely on Tech
According to Joel Shapiro, clinical professor of data analytics, online training is less about technology than trainee engagement and ensuring that everyone involved—including those with visual or hearing impairments or who live in other time zones—can participate fully. As he notes, careful consideration of non-tech details just might “elevate the learning experience.” (LinkedIn Pulse, March 15, 2020)
Running your first virtual meetings?
Craig Wortmann, a clinical professor of innovation and entrepreneurship, offers a few simple but effective tips for having them go as smoothly as possible. For instance, he advises, “Close five minutes early and ask for one thing that you did well and one thing that you could do differently. Remember, feedback is a gift!” (Linked In Pulse, March 13, 2020)
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