As the historic event and effects of the global novel coronavirus outbreak continue to send shock waves through all levels of modern life --- two business management experts offer insights to what the 21st Century business model may become once the spread of COVID-19 is curtailed.
With millions of people reportedly out of work on a national level, officials at the Arizona Department of Economic Security report historic claims and millions of dollars in unemployment payments made to those in need.
On April 20, the Department of Economic Security announced $150.9 million in unemployment compensation delivered the week ending Friday, April 17. Also, the department announced $74 million in additional unemployment payments Monday, April 20.
Those numbers include $600 in additional weekly compensation provided by the CARES Act, officials say.
“These payments are higher than DES has ever made before,” said Tom Betlach, director of the Arizona Department of Economic Security. “We continue to enhance our staffing and systems to get Arizonans the benefits they need.”
Data points offer a staggering look at the week ending April 18 as it saw 72,103 unemployment claims of which there are 226,793 continued claims from weeks prior. Department officials say more than 20,000 of those claims have been met as of Monday, April 20.
But as employment numbers and projections appear bleak, solutions can be found through innovation and taking the next step toward the digitization of modern American life, experts say.
The companies best-suited to survive and thrive during uncertain economic times, they say, are those who embrace the digital landscape, can pivot to new operational structures and take the next step in technology through tools already available.
Clinical Assistant Professor and Senior Director of Innovation and Research at the Thunderbird School of Global Management, Patrick Lynch, contends typical metrics to identify the economic state of affairs have gone haywire.
“In some of the research we are doing around consumer behavior and consumer trends, the traditional kinds of things that we could expect such as unemployment numbers, we are really in uncharted waters,” he said of data points not telling the full story due to the nature of the global economic crisis.
“The kinds of things you would expect to see in unemployment levels --- from what I am hearing across the board --- there is great uncertainty about how reliable those numbers are. We haven’t seen anything like this before in anyone’s lifetime.”
A division of the ASU Enterprise, The Thunderbird School of Global Management, which is based in downtown Phoenix, has been in existence since 1946 and is nationally recognized for renowned business education.
Mr. Lynch teaches multiple courses including big data analytics in the global economy for Thunderbird master’s programs and has expertise in leadership, data analytics, social media, big data, entrepreneurship, marketing and big-data analytics.
“In the macro, behaviors, there are changes in buying behavior --- what we are willing to buy,” he said of consumer metrics. “There are some unique opportunities for some businesses to even grow during this time, but that is being driven by a number of things. There really is an opportunity story that can be told here.”
Mr. Lynch explains pent-up desires to consume has many seeking new opportunities to do old things.
“People are really jonesing for the opportunity to get out again,” he said.
“The kinds of macroeconomic indicators that we pay attention to may not paint the whole picture. It is back to the future in a sense as cities and municipalities here in Arizona are counting windshields. At the municipal senior levels, they are looking to understand the numbers they are seeing.”
While many businesses are struggling, typical indicators of just how bad are hard to find, Mr. Lynch explains.
“One of the biggest items you would want to look at locally in Arizona would be new-car sales --- things are down, but they are not absolute zero,” he said. “There is caution on what is happening, but perhaps things are not as bad they could be.”
Mr. Lynch explains the initial economic upheaval boils down to a “last-mile” problem many small businesses can solve.
“Digital transformation can be as simple as online ordering --- and that helps to solve that ‘last-mile’ problem,” he pointed out. “Those businesses that can make that shift faster may be doing better or not as bad as if they couldn’t. Closing the digital sales divide, perhaps. But not the digital divide in the traditional sense --- the difference is between the haves and the have-nots.”
The role of the American government, Mr. Lynch contends, will be historic as the global pandemic continues to unfold.
“Government --- both at the federal and local levels --- play a bigger role maybe more than ever in the stabilization of the artificial dip in demand,” he said. “Maybe government will play an outsized role. I don’t know; there really is a lot of uncertainty.”
Glenn Edens, professor of practice at the Thunderbird School of Global Management, says the last time humanity saw a virus impact society at such a magnitude was about 100 years ago.
But just as the Spanish Flu of 1918 passed, so will the novel coronavirus of 2020, Mr. Edens estimates.
“Are we looking at a future with a global pandemic forever? No. The big question: will we recover from this in one, two, three or five years?” he opined. “We will get back to something of that normal we all remember, but in the short-term, it is a lot more difficult to know until we have a treatment or a vaccine. Like all viruses --- unless totally unique --- gets weaker as it spreads. If they didn’t, humanity probably wouldn’t be here today.”
But just as Americans survived the Great Depression, so will they COVID-19, Mr. Edens says.
“We will get back to a version of life, just like we survived the Great Depression,” he said. “The big question is how long is that going to take --- that is what is so hard to predict. Clearly, the big issue is the unemployment rate and the fact that transactions have come to a figurative standstill in many industries. You are going to see what I call trickle-up economics: the cascades of businesses that cannot pay rent then it goes to larger institutions. We are going to see an updraft of issues.”
Mr. Edens contends the American small business will have to evolve into the digital landscape already afoot for many industries.
“Yes, unfortunately, there are businesses that will not survive, there are some that will thrive, and many, many businesses that will have to go away or be reformed. A business leveraging its ability to digitize can be a big advantage,” he said. “This may also create chances for creating small businesses that are far more resilient.”
For both Mr. Edens and Mr. Lynch this new phase of the American economy will largely have to focus on the close of the “ecommerce digital divide.”
“This is the most serious situation we have had economically since the stock market crash of 1929,” Mr. Edens said. “Regardless of your government feelings, we are at a point that federal and state government working together is the only originations that have the resources to ease the pain,” he said. “But maybe today they are not as organized now as they probably ought to be.”