Engagement and Outreach Spotlight

Right now, everyone is encouraging businesses to innovate to survive in the pandemic economy. What does that mean, exactly? What advice do you have for businesses to innovate right now?

Ajay Vinzé
Dean and Professor, Robert J. Trulaske, Sr. College of Business, MU

We are going to have to innovate our way through this post pandemic economy. Innovation is like a set of four concentric rings. At its core, innovation is driven by technology and how can it can be utilized. Technology is a critical infrastructure that changes how we function and communicate daily. Technology translates differently for various sectors such as health care, agriculture or education. The next ring of innovation is product and service innovation, which are ways that we reimagine technology to serve our purposes. Examples of this during the pandemic would range from Zoom for communication, telehealth for medicine, remote learning education, as well as creating electronic markets. The third ring is process innovation, which describes how we change and work on a day-to-day basis using base technology and the products and services we are developing. Finally, the outermost ring of innovation, and the most impactful, is business model innovation. This involves change at the institutional level.

My advice for businesses now is to figure how to replicate experiences. This involves thinking about what we have come to expect from our institutions, banks, grocery stores, hospitals, educational institutions. We also need to think about what changes need to be made at these institutions so they can deliver the kind of experiences that we as customers and citizens have come to expect from them.

As a follow up to business model innovation, we have a question about how supply chains are adapting – what lessons are we learning from other countries and other states that can be helpful to Missouri businesses?

Keng Siau, Ph.D.
Department Chair and Professor, Business and Information Technology, Missouri S&T

First of all, most companies are not prepared to deal with a pandemic and are not adapting well. In the US itself, one study found 5 million companies are impacted by upstream issues; which is getting the raw materials or parts for your products from your suppliers. A lot of the issues in the supply chain are due to transportation disruptions. Most foreign borders have been closed and raw materials cannot get to the US. Many auto assembly plants in Europe had to shut down because they were not able to receive components or materials to do production.

To minimize the impact on production and operation, businesses must practice process innovation. For example, Samsung electronics in South Korea shifted part of the domestic phone production from South Korea to Vietnam and arranged transportation to move parts to Vietnam manufacturing operations.

Now look at the downstream part of the supply chain, your customers and their distributors. In the food industry, many restaurants were quick to change and expand their take-out services, their online ordering services and provide free delivery to achieve social distancing requirements.

One lesson we can learn from the current pandemic is that it is good to have some domestic and local suppliers in case of a crisis – in other words, globalization localization. Do not rely completely on one supplier, because they may not be able to supply you during a crisis. Also, when selecting your suppliers, think about their ability to be crisis and pandemic proof.

The second lesson that we can learn is to have continuity, resilience and recovery plans for your businesses. Make sure it is safe for your workers to continue operations, and review your insurance coverage in case of an issue.

The third thing we can learn from this, you need to understand your customers, their needs and their concerns. You want to manage your productivity and be prepared to adjust and adapt quickly.

Charles Hoffman
Dean, College of Business Administration, UMSL

What is currently happening shows us the glaring gaps in the supply chain in our country. In talking with businesses in St. Louis, I spoke to Scott Schnuck, owner of Schnuck Markets, a grocery chain. In the second week of the shutdown, his business was up 85 percent and it's been a pretty steady 25 or 30 percent since then. However, consumption demand from households has been unprecedented, and he admits the suppliers just can't keep up. Now, his suppliers are looking to keep up with demand even though high unemployment and consumer financial stress are still big problems in that supply chain.

A global example is Express Scripts, a huge pharmacy benefit manager whose headquarters are on the UMSL campus. 85 percent of the critical drugs needed each day to keep people alive are produced offshore, mainly in China and India. These life-saving suppliers are not able to keep up, making it a fragile supply chain. Businesses will have to change their procurement policies and probably stockpile more essential goods than they did in the past.

The current question in supply chain is whether or not it’s better to be prepared for events that don’t happen or unprepared for events that do. Risk must be part of business planning. Businesses will need to invest to make the supply chain more stable.

Our next question brings us to some of the new legal questions business owners are thinking through. What do you see on the horizon in terms of liability for businesses, employment law, real estate and leasing agreements during periods of closure, or other things?

Barbara Glesner Fines
Dean and Rubey M. Hulen Professor of Law, School of Law, UMKC

Right now, the biggest uncertainty tends to be with employers who have employees working from home. Questions like how to monitor work hours, how to manage the risks of worker compensation claims and injuries in a home environment, and how can you ensure that data and private information will remain secure when an entire household may be using the same computer.

The general advice for our business community from a legal perspective is you have to be willing to ask questions. To assess your legal risk, it is important to be willing to ask questions and look for answers to those questions.

Secondly, set a policy. As an example, for employees working from home, the rules regarding timekeeping must be clear. Remind them that the same rules apply as did when they were in the workplace. For me, I have a staff meeting every morning by Zoom at 9 o'clock to maintain a sense of regularity and get a good communication and reporting system going. The same goes for setting workplace conditions.

Some of the best protection against liability is to communicate policies in person and in writing. Then, make sure you enforce those policies both against your employees and against yourself. For example, I will no longer email any of my nonexempt employees after hours. Before, if I sent an email at 9 p.m., I would not expect a reply until they got to work the next day. However, in this new work-from-home environment, I do not want to communicate that I expect them to work around-the-clock.

In conclusion, general guidelines that will help to reduce legal risk are asking questions, creating the policy, documenting, communicating, and enforcing.

What is being seen in terms of insurance and real estate?

Lyrissa Lidsky
Dean and Jodge C.A. Leedy Professor of Law, School of Law, MU

It is important to note at the outset that the effect on the law is going to be vast and developing.

One issue you need to be watching for is what to do with closings when you can't meet in person. I know here in Boone County, the commercial lenders and the title companies have gotten creative with that issue. While you must sign a form to come into the building and wear a mask, people actually can go see their commercial lender. Title companies are having drive-up service where you sign the documents as they watch through a window.

Another rapidly developing change is laws regarding remote online notarization. The temporary executive order from Governor Parson allowing remote online notarization has expired, but there is federal legislation developing to allow for it permanently. If it passes, it will have tremendous implications for all businesses.

I also advise you to check your insurance coverages. Unfortunately, a lot of businesses are going to find that even if they have business interruption insurance, it may not cover the effects of the pandemic. Some business interruption insurance has a specific virus exclusion. Other insurances don’t have a specific virus exclusion, but in order to recover, there must be physical damage or a physical impact. There is going to be a lot of litigation over business interruption insurance and how to interpret it. It may come down to whether you closed because it was government mandated or just suggested.

One more issue I will flag for now is force majeure clauses both in commercial leases and in contracts, which affects the supply chain. Force majeure is something we usually we think of as a natural disaster. The question is if the pandemic is a force majeure that could excuse the performance of a contract and get people out of their contract liability. The interpretation of those clauses is going to be litigated, and it may hinge in part over whether the closure was government mandated or just suggested.

Along with that is how the CARES act will factor into contract litigation. We don’t know how or when people will have to pay rents and leases, and how that will factor into contract litigation.

The next question turns us to employee relations. Our viewers have asked what are the key issues to be aware of in terms of managing employees remotely, bringing people back to work, and what resources are available to employees. Dean Klaas, can you please take that one?

Brian Klaas, Ph.D.

Dean and Professor of Management, Henry W. Bloch School of Management, UMKC

Currently, we are faced with a situation where employees are coming back to work and how do we maintain the right relationship with these individuals. It’s particularly important because employees are feeling a lot of stress and worry, and as a consequence, all leader behavior has the potential to have a magnified impact on how employees behave and how they engage.

When employees start coming back to work, the issue is what communication should leaders to emphasize. Some of what you are seeing now is a lot of attention to the ‘why.’ People are coming back to work and there is a need to change policy, change approaches to how we are doing things. Some leaders may have already made decisions that have impacted workers, and there needs to be a discussion as to why all of these things occurred.

It's very tempting as an organizational leader to just assume that everybody understands what you are confronted with as a leader. But there is an incredible need for leadership at all levels to simplify and explain what challenges they are facing, the logic and difficulties they are confronted with, and the reason why they are taking the actions they are taking. Leadership should probably overcommunicate the ‘why’ for the actions that are being taken. If leaders don't communicate, then the likely scenario is different narratives of the situation start spreading throughout the organization.

Our best leaders in the region are setting goals daily such as reaching out to certain employees in a very intentional kind of way. That intentionality is so critical because everyone is overwhelmed with incredibly important and challenging difficulties that have huge resource applications. If you don't make it intentional and script it as part of your daily life, it won't really happen.

Some leaders are also doing a great job of emphasizing and acknowledging the uncertain situation, the challenges that we face and the fact that we cannot really predict how everything is going to unfold. Leaders are doing that for a couple of reasons. They are showing empathy by recognizing and acknowledging that their team is faced with challenges they have never faced before. They are legitimizing and acknowledging those feelings and showing empathy, which is critical to any effort in repopulating the work environment.

Leaders are also reframing expectations. We all want to go back to a stable situation where we know what our budgets are, what customers want and how to deliver it. The leaders who are most effective are those that are constantly reinforcing the message that we are in an uncertain world, and while we will get through this situation, this is also the reality we must cope with.

One of our viewers included a comment that they are looking forward to African American faculty being included in future discussions – something I know our panelists agree with. And we have a question about plans to recruit, develop, fund and ultimately do business with minority-owned businesses to supplement the supply chain for the university and the business community at large? How do we nurture the development, growth and success of new and diverse businesses in our state?

Ajay Vinzé

As for having more faculty with a diverse background speak with business leaders, we absolutely will, and are already speaking a great deal about global supply chains. One of the preeminent scholars in the Trulaske College of Business, Professor Anthony Ross, who is the chair of our management department and also a well-known specialist in the global supply chains, is available to speak with you.

Additionally, the Trulaske College of Business has a few programs that are preparing students so they can join your organizations and deal with diversity in a more direct way. The Vasey Academy and the Heartland Scholars Academy both look at diversity in a slightly different orientation, but help prepare students from diverse backgrounds.

The second part of the question is how to nurture development and ensure growth and the success of the diverse businesses in our state. A new degree has been put out by the Trulaske College of Business in partnership with every single college at the University of Missouri and with all businesses across the system. Students should not be tied to just one discipline or one notion in order to get diversity of thought and the diversity of individuals. These degrees are in a stackable certificate format, and students get basic core business understanding from our college, but then they can reach out to just about any college across Missouri or business schools across the system, from law and engineering to CAFNR and health care, to build true diversity into our educational or into the workforce diversity requirements. This allows us to provide you with diverse talent to meet your needs.

Many say there is no “new normal.” Instead we will have the “next normal,” and then the next. The pace of change will likely quicken, with each change more drastic. What does the near term “next normal” look like? And how will the town and gown partnership evolve?

Charles Hoffman

The impact on young adults in this current crisis is incredible. Two months ago, I was bragging that our graduates were receiving two or three job offers, but I am not saying that anymore because many of those job offers have been rescinded due to the pandemic. Young adults feel less in control of their future, so consumer spending will continue down and unemployment will be high for the foreseeable future. I fear that these young people will take less risks and spend less potentially for years, which will have big impacts on the economy.

This morning, I had a conversation with the head of a large architectural design firm. Just as higher education had to pivot to online and remote learning very quickly, he had to pivot his firm to more of a consulting practice focusing on hospitals and universities. He mentioned that a big hospital system, BJC HealthCare, has gone from 70 to 100 telemedicine encounters a month to 70,000. Medicine is changing, but he also sees a major cutback in capital projects, particularly with retail and higher education.

There are many shifts in the consumer market, also. People have taken to ordering online instead of going to a store in-person. Grocery store owners are hoping that people will realize that grilling a steak at home a lot cheaper than going to a steak restaurant, which will help the grocery industry. Bicycles, camping gear and outdoor stuff is hard to get now because people are going outside more.

Travel is changing. High schoolers who were nationally at universities are looking local now. Their families are not wanting to send their kids to a school in Chicago or New York.

I have already seen a lot of corporations less likely to give to capital projects, and much more interested in student scholarships, helping minority businesses grow and helping with community engagement. I think there will be interesting partnerships and we've got to support the local communities.

Brian Klaas, Ph.D.

In talking to business leaders, you note a certain enthusiasm for how people

have embraced new ways of doing things. For certain things that used to be done a specific way, we are now excited about the fact that we don't have to do it that way anymore.

I do believe that of there will be some real damage as a consequence of all of this, and it will be lasting. At the same time, you see individuals embracing new ways of doing things, being experimental and accepting a different approach without some of the concerns that once existed. You could point to enhanced efficiency arising from this, better service delivery, higher-quality to go along with the many harmful effects that are going to be there as well.

Keng Siau, Ph.D.
There are several things I believe will be part of the ‘new normal.’ Now that students and workers are getting used to telework and remote education, the teleworking will be somewhat of a new norm in the future. Technology and software tools will be developed that will help us to support telework and remote education.

We have been trying to promote remote conferencing for a long time. People still like to travel and fly for hours to go to another country to have a conference, but now we are forced to do remote conferencing and people are adjusting to that.

We are being forced to accept the technology advancement and possibilities. I think this will be sped up with the COVID-19 crisis.

Here’s a liability question for a small business. During this time, can a small business be held responsible if a customer believes they contracted the coronavirus at your place of business?

Barbara Gleisner Fines

Unfortunately, when it comes to premises liability for the kind of liability of the risk of infection, it depends. What employers need to understand is to not be afraid to plan for accidents, because accidents happen. An employer infecting a customer, an employee infecting a customer, or a customer infecting an employee, or however this virus might move through your workplace, you need to plan for that now.

What it comes down to on most of these negligence claims is reasonableness. Did you act reasonably? You can't be reasonably expected to foresee things that are unforeseeable. But we do know of some risks, and you can be expected to look, ask and plan.

The CDC has issued guidelines for businesses. Read those guidelines. Know what they are and follow them. You are less likely face real risk if you can say you did your best, looked for answers, followed the guidelines, and made the guidelines clear to everyone. Your best protection against risk is acting in a reasonable way.

But accidents happen, and this is where checking insurance coverage is important because that is why we have insurance. When it comes to employee illness, we have a system that takes that out of litigation into the worker compensation system, and that will be some protection. We have movements going on right now in the legislatures to provide immunity. For example, some businesses such as the University have a good deal of immunity because it is a state entity. But legislators are looking to extend some immunity for some of these unforeseen, unforeseeable problems that can arise.

You must ask, rely on the advice that you get and act reasonably, but also have good communication. A good leader will communicate those risks so everyone understands and is willing to act accordingly and calmly to address these risks.

Lyrissa Lidsky

The core is reasonableness and evolving with what we know, so watch what the CDC says about the kinds of precautions that are reasonable.

There is a piece of federal legislation that would potentially shield businesses from some COVID-19 related claims, so we will see what happens with that as it could have a dramatic effect on business.

Be sure to check your liability insurance for bodily injury coverage. Insurance policies usually cover bodily injury related to an occurrence. It is not clear whether that will cover bodily injury related to the COVID-19 claims. Remember, it's going to be difficult to prove causation if there are claims brought. Where did they get COVID-19, how will they prove they got it from you? There will be some litigation, there is already some litigation against cruise ships where people were infected, but ultimately, it's going to be hard to prove some of those lawsuits.

One final thing is some businesses may want to look into waivers or exculpatory clauses. They are not always going to be valid for this, but they can help deter people from suing because people will understand by signing them when they come onto your premises, they are assuming a risk by going out into society. You will want to talk to your attorney about whether a waiver of liability is going to help you.

• UMKC Entrepreneurship Scholars Program
• KCSourceLink
• UMKC Innovation Center
• Trulaske College of Business Center for Entrepreneurship and Innovation
• Trulaske College of Business new Master of Science in Business
• Supply Chain Risk and Resilience Research Institute.