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6 coronavirus insights from MIT Sloan Management Review


COVID-19 has upended everything from supply chains and the global economy to how people work. These insights from MIT Sloan Management Review can help guide leaders through uncertain times.

How to make better decisions about coronavirus 

Decision-making is even more important during times of crisis. It’s also more difficult in the face of high stress and an uncertain future. Cognitive biases are likely to negatively influence decisions during these times, writes Thomas Davenport, a Babson University professor and fellow at the MIT Initiative on the Digital Economy. One way to avoid faulty decision-making is being aware of common cognitive biases that might sway thinking about COVID-19. These include:

  • Status quo bias, in which people tend to view the current state of affairs as optimal and anything else as a loss.
  • Framing effect, in which decisions are influenced by how an issue is framed. Either/or framing, like contrasting shutting down businesses or saving the economy, masks other alternatives and hybrid solutions.
  • Normalcy bias, or the belief that things will be as they have been in the past, which leads to an unwillingness or inability to plan for future events. This explains lack of preparedness for a pandemic, despite the fact that pandemics have occurred previously and many experts predicted one, Davenport writes.

Three scenarios to guide your global supply chain recovery

The coronavirus pandemic has caused supply chain disruption around the world. MIT professor David Simchi-Levi posed a question that’s top of mind for many business leaders: How can a company create a recovery plan given huge uncertainties in both supply and demand? 

Simchi-Levi said companies should prepare for three possible future scenarios. In the worst-case, a COVID-19 vaccine is not available for a long time, requiring prolonged social distancing measures. In the best-case scenario, the pandemic would be significantly reduced through testing and social distancing, and life could return to normal by the end of June.

The most likely case, he said, includes potential second waves of infection and effects continuing into the summer and beyond. This will likely require reconfiguring supply chains and repositioning inventory. Simchi-Levi said companies should apply the following five steps to each possible scenario:

  1. Identify suppliers in affected regions and estimate the time it will take for them to come back online.
  2. Estimate demand and assess which products and facilities will be affected by these suppliers, and for how long.
  3. Determine when and for how long you should shut down or reduce manufacturing activities.
  4. Determine how to ramp up capacity by focusing on sales and operational planning, and allocate capacity and inventory only to products that allow you to achieve your objectives during the recovery period.
  5. Book logistics capacity as soon as possible.

Is the COVID-19 outbreak a black swan, or the new normal?

Many consider the coronavirus pandemic a “black swan” event — arriving without notice and unprecedented in its impact. But the challenges it presents also stand to become a kind of new normal, writes Andrew Winston, author of “Green to Gold” and “The Big Pivot.” Winston offered up “big picture thoughts” on exponential growth and planetary boundaries as well as near-term actions for business leaders:

  • Put people first. Do the very best by employees, but also assist the wider community, as when luxury leader LVMH converted three factories to make hand sanitizer to donate.
  • Value economic resilience over efficiency. Global supply chains that optimize for centralization and reduced costs have inherent weaknesses; companies should build in duplication and diversity in production and suppliers.
  • Rethink how employees interact and travel. “Like it or not, we’re embarking on a grand experiment with remote work and technology,” Winston writes.
  • Get off the policy and political sidelines. During systemic emergencies, business needs to use its political influence to drive change in government, Winston said.

Three proactive response strategies to COVID-19 business challenges

Organizations in vulnerable sectors have scrambled to secure supply chains, cut costs, reduce employee workloads, and apply for government support. Now, some organizations finally have time to think about capturing opportunities. Researchers Michael Wade and Heidi Bjerkan identified three response strategies that match organizational infrastructure with emerging market trends:

  1. Same (or similar) products, different channel. When Nike was forced to shut more than 5,000 of its 7,000 stores across China, its staff engaged with Chinese consumers digitally by offering at-home workouts.
  2. Same infrastructure, different products. Companies such as LVMH (perfumes), Pernod Ricard (alcoholic beverages), and Skyrora (rockets) are now producing hand sanitizer, while GM and Ford have modified some idle production lines to manufacture medical devices like ventilators.
  3. Same products, different infrastructure. Looking to hire an additional 100,000 employees, Amazon has partnered with Lyft, which has seen demand and fares fall dramatically.

A long time until the new economic normal

The idea that the economy will quickly return to normal once the pandemic is under control is unrealistic and even dangerous when it comes to long-term planning, according to Alec Levenson, a research scientist at the University of Southern California.

For example, consumer spending and behavior will likely change for a long period of time, as it did after the Great Depression and the Great Recession in 2008. Many Americans who were struggling even before the pandemic are now being pushed over the economic edge. Backlash against gig economy and freelance work had also begun before the coronavirus disruption, and will likely continue, Levenson predicted.

Declining or only somewhat successful businesses might not survive the downturn, Levenson said, and large areas of the economy are likely to be permanently disrupted, requiring shifts in labor and capital. New business models and industries that survive will have to adjust to working and interacting remotely, which creates challenges and, sometimes inefficiencies. 

Leaders who recognize and adapt to those changes quickly will be in the best positions, Levenson said. Companies and industries will also need to prepare for future pandemics, a process that will take years.

Managing stress and emotions when working remotely

Beyond disrupting supply chains and upending the economy, the coronavirus is changing the daily life and health of workers around the world. Liz Fosslein and Mollie West Duffy, who have spent four years studying remote workers and how emotions intersect with work, compiled their best tips for managing the challenges of remote work while dealing with stress and emotions. They include:

Be mindful of time zones. Make sure people in all time zones feel included, including scheduling companywide meetings at times when everyone can join and delaying decision-making until you’ve heard from everyone who should be involved.

Schedule time for informal conversation. Informal conversations at work, perhaps in the hallway or over lunch, often spark new ideas. To replicate this, allow time for informal discussion before or after meetings or phone calls. Virtual lunches and happy hours can help people feel connected.

Consider an after-work ritual. Remote work can make it hard to set boundaries between work and being off the clock. An end-of-work ritual can help you switch between mindsets. Some ideas include meditating, lifting weights, listening to music, or uttering a specific phrase.

Emotionally proofread messages. Before sending work messages, check them over for clarity and emotional tone. Direct messages can be misunderstood during times of heightened stress and without verbal or facial cues. When in doubt, the authors suggested a telephone or video chat. “Your colleague (who is probably also working from home) might be glad for the chance to talk.” 

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