Entrepreneurship, Uncertainty, and Navigating the COVID-19 Pandemic
The COVID-19 pandemic has unquestionably changed the business world, both in the short term but also in some potentially permanent ways. To better understand how entrepreneurs navigate uncertainty in times of crisis, our team at the Rowan Center for Innovation and Entrepreneurship team posed some questions to Dr. Eric Liguori, Professor and Rohrer Chair of Entrepreneurship in Rowan’s William G. Rohrer College of Business. Liguori is the co-author of The Entrepreneur’s Guide to Risk and Decisions and has been researching the pandemic’s impact on entrepreneurship and education since the pandemic began.
How have you seen different business ventures adjust business models to deal with change in uncertainty?
Entrepreneurs live their lives under conditions of uncertainty. While today we are experiencing an above average level of uncertainty, overall, successful entrepreneurs are familiar with navigating uncertainty and adjusting their business models accordingly. Airbnb entered the market and pretty rapidly became disruptive, both by helping create an abundance of supply that didn’t exist in the past, and doing so at a cost point that in many ways undercut the hotel industry. Fast forward to 2018 and we see Marriott conduct a small trial program which led to them launching a new home rental division in 2019 to compete with Airbnb. Now, in the midst of the COVID-19 pandemic, both of these organizations are again working to adapt their business models in response to the continued uncertainty still present today as a result of the pandemic.
Those are good examples, but both are large global brands. What about smaller businesses? Do you have any examples of how they have worked to navigate uncertainty over the past year?
I’ve been pretty closely following business model shifts undertaken by several small and medium sized enterprises, but two in particular come to mind. The first is Broadway Media Distribution, a leading theater technology company, that primarily provides animated scenic backgrounds to schools, colleges, and community theaters. Under their pre-COVID model if live in-person performances did not take place the need for their products and services would be virtually zero. The second is Revel Nail, a leading manufacturer of nail care products. Under their pre-COVID business model a significant portion of their revenue came from nail care salons that were almost universally classified as non-essential businesses and forced to close during the crux of the pandemic.
To counteract the lack of live in-person performances happening during the COVID-era Broadway Media Distribution went the strategic partnership route, partnering with MTI, one of the largest theater licensing groups in the world, and ShowTix4U, a major ticketing company. Together the three organizations launched an all-in-one platform for arts organizations to stream productions online in a seamless and dynamic manner. This partnership approach enables all three organizations exploit their individual strengths while also empowering the performing arts community to generate revenue needed for survival — it’s potentially a win-win-win-win scenario.
Revel Nail pivoted their business model a little differently, to much success, by launching a new direct-to-consumer website. In essence, they pivoted a B2B business model to a B2C business model near-instantly, shifting their focus away from solely selling to salons and now also selling directly to consumers who still needed nail care. This changed how they approached not just distribution, but likely also other key elements of their operations including packaging, marketing, and staffing. In August, Revel Nail was recognized by EY as Entrepreneurs of the Year for the Greater Philadelphia Area, calling them the ‘comeback story of the year’ and lauding their ‘courage, resilience, and ingenuity’.
One of the most important things to remember as you think about business model innovation in times of uncertainty is agility. Airbnb launched in 2007 and really started to explode in the 2009–2012 timeframe. It wasn’t until 2018, 6 years later, Marriott piloted their competitor concept and 2019 when they launched the division to more fully compete. While this is likely a bit of an oversimplification, it does drive the point that agility is a critical aspect of business model innovation — entrepreneurs succeed in part because they stay agile enough to quickly adapt their business models to navigate, counteract, and sometimes even exploit uncertainty. Agility is exactly what both Revel Nail and Broadway Media Distribution demonstrated well this year.
Do you think we can go back to the old-normal once the vaccine is widely adopted, or what do you believe the new normal will look like for small businesses?
Innovation never sleeps, so even if the pandemic never happened, I would expect some norms that existed in 2019 to be different in 2022. Ultimately, what will drive a large part of what returns from the past and remains from the present is the consumer. Many small businesses invested in new technology for more contactless ordering and payment, optimized their ecommerce presences, socially distanced their physical spaces, and increased sanitation efforts in almost every regard. Slowly, as the vaccine is more widely adopted, I do expect consumers to more fully respond to all the changes and let businesses know their preferences. Smart businesses will listen to consumers and work to meet their expectations. For me personally, I’m enjoying the contactless menus I can access at restaurants via QR codes, and the restaurant owners I’ve spoken with about it like this new ability to update their menus and pricing with the click of a button without having to print, stuff, and sanitize physical menus. I’m also enjoying the drastically improved ecommerce websites many small businesses have deployed.