How does a change in mental model reflect on an entrepreneur's business?

Prof. Dr. Leila Keiko Canegusuco, Professor of Production Engineering at ESEG.

I know it's difficult to identify positive aspects in a crisis while we're going through it. However, among other things, we can learn from this pandemic the increased value placed on science, technology, and knowledge. Furthermore, despite appearances of hopelessness, entrepreneurs should seek changes in their business model.

Recognizing the role of healthcare professionals is the first point at this moment. Without having received data and scientific information about what this virus is, how the infection spreads, how it acts in our bodies, and how it can quickly overwhelm our healthcare system, we wouldn't know how to react.

So, I'd like to very quickly analyze this situation using the theory of Systems Thinking.

Dynamic Complexity System 

We are embedded in a vast system comprised of various subsystems: Health, Economic, Justice, among others. And they are all interconnected. The interactions between the system's agents over time generate behaviors that we cannot initially predict, behaviors that are not intuitive. This system possesses what is called dynamic complexity.

In solving this type of problem, it is difficult to know where the greatest leverage lies, that is, where to make a change that, with minimal effort, results in a significant and lasting improvement.

The alarm of the first subsystem

With the onset of the Covid-19 pandemic, the first alarm sounded in the healthcare subsystem! 

We were presented with the standard exponential growth curve of an epidemic and were told that the main action to take to flatten it is social isolation. The goal of this action is to prevent the collapse of our healthcare system. This action was followed by most people worldwide. The population stayed home!

After several days with people staying home, businesses of all sizes began to suffer from a lack of customers. Without revenue, many business owners requested an end to the social isolation measures.

The dynamics of complexity

This prompted another subsystem, the Economic one, to take several measures to support businesses. Therefore, to mitigate the impact, these actions will continue for the duration of the pandemic and isolation. However, the implementation of these actions cannot be delayed.

With this scenario, returning to our theory, we can see some characteristics of a dynamically complex system. They are:

• Strongly coupled – the agents in the system interact strongly with each other;
• Governed by feedback loops – because of the coupling between agents, actions feed back on themselves. Thus, when “A” takes actions that alter the state of the system, “B” reacts and creates new situations that will influence “A’s” next decisions.

You might be wondering why actions can't be delayed. Because when delays occur in a decision-making process, the agents in the system continue to intervene to correct the discrepancy between the actual and desired situation, leading to instability and oscillation in the system.

How can we solve this problem?

But ultimately, what should be done to solve a problem of dynamic complexity?

The solution lies in changing our mental models. It is the beliefs, opinions, values, and rules of behavior that we hold that influence how we see the world and act.

And how do you change your mental model? In simple terms, with 3 actions:

1. Clarification – by understanding what is happening, we can better accept the problem and become more open to finding a solution.
2. Collaboration – agents need to collaborate with each other to achieve a common goal.
3. Creativity – with creativity, we change the way we are used to performing actions.
4. 
   

And as an entrepreneur, what can I do?

The change in the entrepreneur's mindset must be reflected in their business model. Therefore, follow these three actions:

1. Try to clarify how you contact your customer and how you deliver your product or provide your service to them. During this time of social isolation, your customers will not be able to come to your store and your doors should be closed, except for essential services.
2. Ask for collaboration from your employees, your family, other business owners – including competitors – and Sebrae (Brazilian Micro and Small Business Support Service). Other perspectives will help you see how to keep your sales going during this period.
3. Use your creativity to the fullest to change your business model. If you're not already using social media to promote your products or services, start now. If you sell products and aren't yet selling online, start doing so. If you provide a service, offer a voucher with a promotional value for services that your clients pay for now and receive when the pandemic is over. If you own a restaurant and already deliver meals, see if some of your employees with free time can deliver meals. This way, you save on delivery costs, and the employees who previously served customers, for example, will be occupied. If you own a school, continue with distance learning. These are just a few examples.

If you have some free time, take care of your company's internal processes. Make the improvements you don't normally make. Whether in planning, marketing, layout, training, finance, or other areas.

The situation is serious, but health comes first. Therefore, entrepreneurs need to think about strategies to adapt to the crisis, so they can ultimately recover what they will lose during this period.

With that, I wish everyone strength, persistence, and faith to overcome this crisis.