Negotiating the Pandemic Like an Entrepreneur: Lessons from the Turbulent World of Start‐Up Ventures

For many organizations, the COVID‐19 pandemic has meant negotiating novel issues in an unfamiliar context. Particularly in places where the virus is not yet under control, such as the United States, organizational leaders face increased uncertainty, unpredictability, and stress as they attempt to negotiate existential issues such as whether, and how, to continue operating. At the same time, they may experience unexpected resource constraints due to reduced or suspended operations and unplanned pandemic‐related expenses associated with technological needs, heightened hygiene precautions, or other factors.

Much negotiation education and advice—at least in Western societies—presupposes a fairly stable social context with generally accepted norms, practices, and processes. The pandemic has upended that stability, rendering inadequate the typical organizational negotiation strategies. But there is another context in which people regularly negotiate consequential decisions amidst uncertainty, ambiguity, stress, and scarce resources: the entrepreneurial venture. Organizational leaders who adopt an entrepreneurial approach are likely to negotiate more effectively amid the turbulence of the pandemic.

Entrepreneurial thinking is most commonly associated with “nascent” ventures because of how nimble and adaptable they tend to be. A nascent venture is a business in its earliest stages of formation when one or more people have begun to commit time and resources to create the business, but the business is not yet operating and generating revenue (Reynolds and White 1997; Wagner 2006). The nascent venture has attracted special attention in the broader context of entrepreneurship because it is starkly different from an operational business. At the inception of a venture, risks are both high and inevitable. Roles and responsibilities are ill‐defined and, more often than not, evolve to meet changing exigencies (Staw 1991; De Mol, Ho, and Pollack 2018). Communication and organizational decision‐making processes are ambiguous (George, Erikson, and Parhankangas 2016; Bhawe, Gupta, and Pollack 2017) and resources such as financial capital and personnel are typically scarce (Grossman, Yli‐Renko, and Janakiraman 2012; Rutherford et al. 2017). Founders and early employees tend to invest high amounts of time, emotional and psychological capital, and other personal resources, which manifests as both passion and stress (Wincent and Örtqvist 2009; Shepherd et al. 2010; De Mol, Ho, and Pollack 2018). At the same time, entrepreneurs regularly negotiate major issues such as external funding, business plans, partnerships, and other matters that can profoundly affect the ultimate success or failure of the venture (Dinnar and Susskind 2018).

Of course, there are differences between a nascent venture and a pandemic, most notably that the former is undertaken by choice and the latter is not. Nonetheless, the features that distinguish a nascent venture from an established business parallel those that distinguish a society‐in‐pandemic from a “normal” society: elevated risk, ambiguity, uncertainty, lack of precedent, limited resources, and the concurrent need to negotiate major issues with long‐term—perhaps existential—consequences. Given these parallels, what can organizational leaders learn from entrepreneurs about negotiating in a pandemic?

A key concern for entrepreneurs is obtaining resources. Most start‐up ventures have limited resources in the earliest stages (Ries 2011). In addition to using their own assets, entrepreneurs identify, and negotiate for, both tangible and intangible resources within their extant networks. This requires creative thinking about what resources might be helpful and who might be willing and able to provide them: Whom among their prior colleagues could they tap to serve as a mentor or offer some technical advice over a (virtual) cup of coffee? Which of their former classmates might be willing to design a website in exchange for a professional reference? Which neighbors and family members might be sufficiently intrigued by the business idea to participate in a focus group and provide feedback? Which friend might be able to make an introduction to a potential funder or business partner? Entrepreneurs gather initial resources to get started; then they iterate and negotiate for the new resources that they need to grow their ventures (Powell and Baker 2017).

In the United States and elsewhere, the pandemic has been accompanied by an economic downturn. Not only do organizations find their financial resources diminished; they also face unexpected new demands regarding health, hygiene, logistics, technology, and fluctuating legal and regulatory requirements. In short, to stay in business during this pandemic, many organizations must do more with fewer resources than ever before.

With these pandemic‐induced resource constraints, even established businesses may need to negotiate “entrepreneurially” for new ways to use existing resources. A hotel with excess kitchen space might rent it out at a reduced rate to a chef whose restaurant has closed down (Kamin 2021). Working parents concerned about monitoring their children during remote learning might negotiate small “learning pods” with neighboring families, with each family taking responsibility for monitoring the pod one day per week (Blum and Miller 2020). Healthcare professionals might increase their use of an existing video‐based telehealth technology, which—though it cannot supplant in‐person visits for all purposes—can help reduce provider burnout while allowing patients to connect with a provider more quickly and efficiently than waiting for an in‐person visit (Reader 2021). This type of resource “reimagining” is typical of entrepreneurs (Sarasvathy 2020), and may be increasingly critical for organizational negotiators during the pandemic.

Consider the Arkelin Players Theater, operating in Needham, Massachusetts since 2009. After the pandemic forced the theater to postpone its 2020–2021 live production schedule, they—like many other theaters—turned to the Zoom® videoconferencing platform as a way to continue performances virtually. But artistic director Igor Golyak went further. In renegotiating plans for the 2020–2021 season, he and his partner Darya Denisova decided to stage a one‐woman show,^1. which Denisova would perform from their living room. Their living room walls served as the prison‐cell set, which they enhanced with computer‐generated animation. The team also leveraged the interactive opportunities offered by Zoom. They encouraged online chat among audience members before and after the show, conducted plot‐driven audience surveys, and broke the “fourth wall” with Denisova directly addressing the audience members (her “jurors”) by their names, which she could see on the Zoom screen (Siegel 2020). This low‐budget, creative exploitation of available resources was a resounding success. The performance has received extensive media attention (see, e.g., Phillips 2020), and the online platform allowed for far more attendees than their fifty‐seat physical theater.

Of course, not even the most creative resource reimagining and renegotiation will suffice for many businesses to survive the pandemic. Most start‐up ventures fail in the best of times—but those that do survive tend to creatively exploit and adapt the resources they have (Sarasvathy 2020).

For nascent ventures, the ways in which conflicts are handled tend to have greater consequences than in more established organizations (George, Erikson, and Parhankangas 2016). Conflict researchers have distinguished between task conflict (substantive disagreement about the work) and relationship conflict (disagreement based on personalities or values) (Jehn 1995). While relationship conflict is almost always detrimental (Lovelace, Shapiro, and Weingart 2001; Earley and Mosakowski 2008), task conflict can result in constructive outcomes for established teams or organizations (De Dreu and Weingart 2003). This makes intuitive sense: disagreement and debate about substantive issues can help avoid groupthink and result in better business decisions. In the nascent venture context, however, task conflicts are especially prone to morphing into destructive relationship conflicts (Weirup, Balachandra, and Manwaring 2019; Kozusznik, Aaldering, and Euwema 2020), with potentially long‐lasting negative consequences (George, Erikson, and Parhankangas 2016).

The pressure‐cooker start‐up environment—with its high‐stakes decisions, uncertainty, risk, passion, and stress—increases the likelihood that a venture team member will (mis)interpret a substantive disagreement as a personal attack, respond in kind, and escalate a simple task conflict into a more damaging relationship conflict (Weirup, Balachandra, and Manwaring 2019). Psychological biases and cognitive blind spots can exacerbate this negative conflict spiral (see Dinnar and Susskind 2018). Whether or not this risk materializes depends largely on how the conflict is handled. Recent research on conflict within nascent venture teams shows—unsurprisingly—that a “forcing” approach in which one party attempts to impose their preferred outcome is ineffective (Weirup, Balachandra, and Manwaring 2019; Kozusznik, Aaldering, and Euwema 2020). Notably, though, an avoiding approach, in which the conflict is minimized or ignored altogether, is just as ineffective as a forcing approach in this context.^2. When asked in interviews what advice they would give to other entrepreneurs, many entrepreneurs cited their own negative experiences with conflict avoidance and advised addressing conflicts directly and early, taking all stakeholders’ perspectives into account (Weirup, Balachandra, and Manwaring 2019).

There is a similar heightened risk that task conflicts occurring during the pandemic—another pressure‐cooker environment—become toxic relationship conflicts. Trying to impose a solution (forcing) or ignoring the conflict altogether (avoiding) will likely exacerbate this risk. Disagreements over substantive issues—such as whether a struggling organization should invest in a long‐planned infrastructure upgrade, whether a brick‐and‐mortar retail store should move to a fully online presence, or whether a small business should apply for governmental funding rather than raise prices—would be most constructively resolved with a direct problem‐solving approach that takes all of the stakeholders’ interests and perspectives into account. While problem‐solving is generally a constructive conflict management approach in non‐pandemic conditions, lessons from nascent ventures suggest that the risks of not following this approach are heightened when negotiating during a pandemic.

Consider the Chicago public school system—the third‐largest in the United States—which shifted to fully remote learning in March 2020 as the pandemic took hold. Over the ensuing months, the district administration and the teachers’ union became embroiled in a bitter dispute about whether, when, and under what circumstances to resume in‐person learning (Nierenberg and Pasick 2020). In theory, this negotiation involved a classic—albeit high‐stakes—task conflict, with differing opinions about a substantive decision. In practice, it escalated into a “completely disrespectful and counterproductive” relationship conflict, according to American Federation of Teachers president Randi Weingarten (Gaudiano and Tauré 2020). “I don’t care if you hate each other,” Weingarten stated. “You have to talk to each other if you are being real about caring for children” (Gaudiano and Tauré 2020). Weingarten contrasted the situation in the Chicago Public Schools with that of New York, where the teachers’ union and administration “talk to each other all the time,” and Boston, with reopening committees that have “people talking to each other, sharing the data and solving problems” (Gaudiano and Tauré 2020). In the emotionally heightened context of the pandemic—as in a nascent venture—the absence of an early, direct, problem‐solving approach in the Chicago schools likely contributed to the deterioration of the substantive task conflict into a bitter relationship conflict.

As a counterexample, Alphabet, the parent company of Google, recently announced that employees would work remotely and not return to the office until July 2021 at the earliest. CEO Sundar Pichai said that in addressing this issue, he consulted with Google employees and heard their concerns about health, childcare, and the general uncertainty regarding the pandemic (Copeland and Grant 2020). By consulting with stakeholders and taking their concerns into account, Pichai likely mitigated the risk of a task conflict (the decision about how long to permit remote work) morphing into a morale‐sapping relationship conflict within the organization.

Entrepreneurs tend to favor “creative” decision‐making logic, which focuses on experimentation and action as a guide to decisions and conduct (Sarasvathy 2001). This differs from more established organizations, where “predictive” logic is the norm. Predictive logic involves researching and learning from existing data, making a plan based on that data, and then acting in accordance with the plan. Negotiators following predictive logic would predict (or at least extrapolate) what is likely to work in a negotiation—in terms of process and deal design—based on precedent and other existing information. They might, for instance, use objective criteria to justify or evaluate offers and to negotiate expectations regarding future performance. They might also expect negotiated agreements to be implemented as planned—perhaps within certain parameters or with specific contingencies. Predictive logic generally works fine when the future is, well, predictable.

The dynamic, volatile nature of the pandemic has raised issues that cannot be adequately negotiated using predictive logic. For example, how does a retail business resolve an internal dispute about whether and how to reopen its physical stores with so many shifting variables? How does a factory negotiate a supply contract when the demand for its products has become wildly unpredictable? How does a pharmaceutical company renegotiate funding when its scientists no longer have access to their experimental subject pools, thus delaying or rendering moot their research?

In the volatile environments of nascent ventures, the traditional logic of “learn → plan → act” is insufficient. If the venture is introducing entirely new technology, for instance, or entering a completely new market with extant technology, there may be no reliable way to predict the likelihood of, or conditions for, success. In situations where relevant past data is limited or nonexistent, entrepreneurs create and collect their own data through iterative experimentation (Sarasvathy 2001; Keifer, Schlesinger, and Brown 2010). In other words, entrepreneurs flip the traditional logic about how to make business decisions: instead of the predictive “learn → plan → act” approach, they use the creative approach of “act → learn (by generating new data) → plan (for the next step)” (Schlesinger, Kiefer, and Brown 2012).

This creative logic approach to intra‐organizational negotiation was illustrated recently by Eataly, an international chain of Italian food halls. Prior to the pandemic, Eataly offered a popular series of wine and cheese tasting nights at its Boston location. For about $85, customers could spend an evening eating and drinking while learning about the history, production, and flavor profiles of the products. When the pandemic forced Eataly to cancel its tasting events, they had no way of knowing whether customers would respond to an online alternative. They had never tried virtual events, and there was essentially no market data about customer interest in virtual wine tasting during a pandemic. Rather than trying to research and predict the response, Eataly’s management team adopted the creative logic of “act → learn → plan” and launched an experiment. They piloted a virtual class (the “act” phase) in which they would deliver the wine and cheese to participants’ homes by 5pm the day of the event, and conduct the tasting class online. Eataly found almost a 100% conversion rate from customers who had registered for in‐person tastings, as well as repeat customer interest (the “learn” phase). Based on this response, the Eataly team expanded its virtual class offerings, now offering several per month (the “plan” phase) (Simon 2020). From an intra‐organizational negotiation perspective, the Eataly team first negotiated the experimental process; then agreed on the substantive business decision after generating relevant data about customer interest in virtual events.

Like Eataly, other organizational negotiators may benefit from shifting to the “act → learn → plan” process suggested by the creative logic of entrepreneurial negotiators. Rather than trying to commit to a final long‐term decision or major contract under unpredictable pandemic conditions, they might consider negotiating the iterative experimentation process by which they can generate the data they need. For instance, a retail management team might resolve an internal dispute about reopening their physical site by agreeing to a limited reopening followed by regular reviews of the health and financial impact. Depending on whether the employees and customers remain healthy and the extent to which the reopening seems financially viable, the team could then expand the reopening or close down. Similarly, a factory renegotiating a supply contract amid uncertain demand might request a shorter, renewable contract length—perhaps in exchange for some concession such as slightly higher fees—that would allow it to reassess demand on an ongoing basis and determine whether to renew, expand, or discontinue the contract. This creative logic approach favored by entrepreneurs requires an ongoing willingness to pivot from one decision or strategy to another, in response to the results of each “test” or experiment.

The uncertainty, unpredictability, and high stakes of the COVID‐19 pandemic have created an unfamiliar negotiating context for most. However, such conditions are typical of entrepreneurial ventures, particularly those in the nascent stage. Research from the entrepreneurial venture context may therefore provide useful guidance for managing conflict and negotiating during the pandemic.

Moreover, a more entrepreneurial approach to negotiation need not be limited to pandemic conditions. Given the trajectory of increasing economic, political, environmental, and social uncertainty (see e.g., Ahir, Bloom, and Furceri 2018), lessons developed from effective entrepreneurial negotiators may prove useful to all organizational negotiators even in a post‐pandemic world. In sum: (1) recognize and tap into available resources; (2) address conflicts directly and early, while seeking stakeholder input; and (3) employ the creative logic process of “act → learn → plan” to conduct iterative experiments in the face of uncertainty.