Baylor Expert Shares Tips for Entrepreneurs, Small Business Owners Navigating “Shock” of COVID-19 Crisis
- The impact of the COVID-19 public health crisis is acutely felt by entrepreneurs and the nearly 60 million people employed by small businesses across the U.S. (Getty Images)
- Matthew Wood, Ph.D., associate professor and holder of the Ben Williams Professor of Entrepreneurship in Baylor University’s Hankamer School of Business. (Matthew Minard, Baylor Marketing & Communications)
Research guides entrepreneurs toward a deliberate, communal response, Baylor entrepreneurship expert says
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By Derek Smith, Senior Brand Strategy Specialist, Baylor Marketing and Communications
WACO, Texas (March 31, 2020) – The impact of the COVID-19 public health crisis is acutely felt by entrepreneurs and the nearly 60 million people employed by small businesses across the U.S. As communities have sheltered in place and closed all but the most essential businesses, many entrepreneurs find themselves in survival mode amidst uncertain waters, seeking to keep their business afloat and retain employees.
“Management scholar Karl Wieck said the cognitive reaction to crisis and its associated triggering event can be a situation of fundamental surprise so severe that individuals question aspects of the world as rational and orderly,” said Matthew Wood, Ph.D., associate professor and holder of the Ben Williams Professor of Entrepreneurship in Baylor University’s Hankamer School of Business.
“Many entrepreneur small business owners are likely shocked. Research indicates that these feelings are to be expected, but it also suggests that going into ‘crisis mode’ and rapidly taking action to restore order can lead to decision errors,” Wood said.
The professor offered the following observations and suggestions to help “mitigate the odds of exasperating the negative impact of current events.”
1. It’s OK to make sense of the crisis before taking action.
Wood: “Crises are characterized by ambiguous cause-and-effect relationships and interruptions to the routines that enable business to operate with high reliability. Leaders try to figure out ‘what is going on’ and how to respond.
Survival is the number one priority and, counterintuitively, inaction is a viable early response toward that objective. Entrepreneurs tend to be problem-solvers who are highly action-oriented. In a crisis, their first instinct is to take decisive action to at least mitigate or, more optimistically, eliminate the negative effects of the crisis. Entrepreneurs simply want to fix the problem and fix it fast. The research, however, indicates that this can be problematic because old methods are used to solve new problems and the mismatch can make things worse by taking small issues and amplifying them.
2. Beware of optimistic messages that sidestep the reality of the situation.
Wood: During the crisis, optimistic evaluation should be tempered to avoid self-deception and the inability to see what is really unfolding.
Expression of optimistic evaluations is a double-edged sword. During a crisis, they tend to create blind spots, while after a crisis they can fuel opportunities for renewal and productive change. In the former case, business owners may want to calm the fear of employees, customers and other stakeholders via optimistic expressions that things ‘will be better soon’ or ‘will be just fine,’ but this can result in self-deception that blocks understanding of an unfolding situation and resultant ideation about how to best adapt to it. As we come out of the COVID-19 shutdowns, owners may amp up optimistic evaluations as a way to encourage organizational members and stakeholders and enable post-crisis renewal.
3. Create shared meaning. Don’t go it alone.
Wood: Entrepreneurs must make sense of what is happening and what it implies for the future in order to discern the best path of action. Research indicates that in crisis situations, this is best achieved through collective interpretation and negotiation. Making sense of crisis requires multiple perspectives and when individuals try to be “hero,” their judgment is often clouded by overemphasis on goal achievement, leading negative outcomes. These dynamics have been documented in Mount Everest, Chernobyl and other disasters.
Involve employees, customers and suppliers in the sensemaking process to promote coordination of information and the ability to create a shared understanding of the situation. This shared understanding will fuel short-term survival and will be central to post-crisis renewal.
ABOUT BAYLOR UNIVERSITY
Baylor University is a private Christian University and a nationally ranked research institution. The University provides a vibrant campus community for more than 18,000 students by blending interdisciplinary research with an international reputation for educational excellence and a faculty commitment to teaching and scholarship. Chartered in 1845 by the Republic of Texas through the efforts of Baptist pioneers, Baylor is the oldest continually operating University in Texas. Located in Waco, Baylor welcomes students from all 50 states and more than 90 countries to study a broad range of degrees among its 12 nationally recognized academic divisions.
ABOUT HANKAMER SCHOOL OF BUSINESS AT BAYLOR UNIVERSITY
At Baylor University’s Hankamer School of Business, integrity stands shoulder-to-shoulder with analytic and strategic strengths. The School’s top-ranked programs combine rigorous classroom learning, hands on experience in the real world, a solid foundation in Christian values and a global outlook. Making up approximately 25 percent of the University’s total enrollment, undergraduate students choose from 16 major areas of study. Graduate students choose from full-time, executive or online MBA or other specialized master’s programs, and Ph.D. programs in Information Systems, Entrepreneurship or Health Services Research. The Business School also has campuses located in Austin and Dallas, Texas. Visit www.baylor.edu/business and follow on Twitter at twitter.com/Baylor_Business.