Looking Beyond Government for Help

"AMERICA seems to have dodged a bullet with the swine flu epidemic" writes Stephen T. Ganyard, a former deputy assistant secretary of state, in an op-ed in The New York Times titled All Disasters Are Local. He notes that a big challenge is coordination:

"In responding to crises, the most persistent problem is that of collaboration — people with information and equipment who are unable to share it with those who need it most. The means to effective collaboration is social networking and exploiting the natural mutual attractions of communities with common interests."

An approach to enhance coordination that Ganyard established is an open and voluntary annual disaster simulation in Los Angeles titled Golden Phoenix that builds relationships and trust:

"The degree of personal trust at the tactical level, not money or machines, is the single most important determinant of how well communities will deal with threats and disasters. But these relationships must be established in training so that first responders are not handing out business cards to one another on the way to the disaster."

In the end, says Ganyard, Americans must look beyond government for help:

"Most of the critical infrastructure of the country is in private hands, and much of humanitarian relief is provided by local churches and relief charities. We need "whole of society" not just "whole of government" responses."

Ganyard's perspective on building community relationships and capacity echoes what was learned at the Crisis Leadership Forum, where nearly two dozen leaders came together to share lessons from hurricane Katrina:

• Forge relationships: Build relationships with a broad base of stakeholders before the crisis.
• Develop flexibility: Develop a culture of flexibility, adaptation, and discretion while staying action oriented.
• Encourage courage: Lead your organization in a way such that people aren't afraid to “bet their bars” and take personal risks.
• Empower people at the grassroots: Organizations should empower local leaders to make decisions based on the situations they face and then support those decisions.
• Engender inclusive leadership: Develop the capacity in individuals, groups, and communities to participate as peers in creating leadership.

Maintaining Competitive Advantage Requires High-Reliability Organizing

A healthy dose of paranoia and an obsession with failure: That’s not typical leadership advice. But that’s part of what management guru Jim Collins discusses as a crucial ingredient for leaders hoping to maintain competitive advantage through crisis and adversity.

What he didn’t say, at least in the teaser to his new book featured in the May 25 issue of BusinessWeek, is how much we can learn about business resilience and leadership from “high-reliability organizations.”

High-reliability organizations (HROs) are those that face so much danger, complexity, and ambiguity on a daily basis that we’d expect them to fail very frequently—but they don’t. Typical examples of HROs include nuclear power plants, naval aircraft carriers, and emergency response agencies. For a variety of reasons, these organizations are able to continually cope with small errors and negotiate the ambiguity around them such that they avoid disaster.

Two of the most prominent thought leaders regarding what makes HROs special, Karl Weick and Kathleen Sutcliffe, described five specific principles that HROs embrace:

1. Preoccupation with failure
2. Reluctance to simplify
3. Sensitivity to operations
4. Commitment to resilience
5. Deference to expertise

As I’ve previously written, leadership along these principles is about creating a culture that seeks errors, questions assumptions, and makes sense of circumstances through respectful interpersonal communication. It’s not about always being positive, and it’s certainly not about always saying what other people want to hear.

This notion of leadership differs from much of leadership thought—both in academic and managerial circles—that focuses on leaders as heroic men and women who gallop around organizations on white horses, dream about possibilities, and inspire followers to march along toward greatness. I’m exaggerating for illustrative purposes, of course, but my point is that we can learn from the tough, questioning, interactive model of leadership suggested by HROs.

A common critique of using HROs as a model for leading business organizations through crisis and adversity is that HROs are simply too different from the private, for-profit sector to offer any worthwhile lessons. The research that Collins described, however, suggests otherwise. For example, he suggested that organizations encounter five stages of decline: (a) hubris born of success, (b) undisciplined pursuit of more, (c) denial of risk and peril, (d) grasping for salvation and (e) capitulation to irrelevance or death.

Discussing the dangerous nature of success, Collins wrote, “The best leaders we’ve studied never presume they’ve reached ultimate understanding of all the factors that brought them success. For one thing, they retain a somewhat irrational fear that perhaps their success stems in large part from fortuitous circumstance.” Therefore, it seems that leaders who preoccupy themselves with failure are also those best poised to maintain success.

Additionally, Collins suggests that teams “on the way up” have specific patterns of interaction that allow them to maintain their organizations’ resilience and competitive advantage. These dynamics include:

1. Rewarding those who highlight “grim facts"
2. Leading by asking questions
3. Crediting others for success
4. Arguing and debating to help the organization overall
5. Learning from past mistakes

Therefore, it seems as though Collins is suggesting a way for organizations and their leaders to succeed that has much in common from what we’ve learned from HROs. Or, as I’ve suggested, what we can infer is that maintaining competitive advantage requires high-reliability organizing.

Collins’ new book, How the Mighty Fall and Why Some Companies Never Give in, probably offers numerous other ways in which business organizations can become more resilient and ways in which leaders can effectively lead during crises. All I’m saying is that those principles have much in common with what we’ve already learned from HROs. Namely, Collins’ research strongly suggests that we can apply lessons learned in HROs—be they combat teams, nuclear power plants, or flight-deck operators—to the realm of business, providing distinct ways for leaders in organizations to avoid the disastrous consequences of failure.

The article also appears at Foster Excellence.

Helpful Tool or Rumor Mill 2.0: The Role of Social Media in Crisis Communication

It’s commonly assumed that when it comes to communication that more is better. But if we look closely at what that assumption means regarding how people behave within organizations and how leaders function during crises, it’s relatively easy to find evidence suggesting that more isn’t better. In fact, too much information can greatly exacerbate ambiguity within organizations and, during a crisis, incite panic among external stakeholders.

Consider the current buzz surrounding the H1N1 influenza virus, the so-called “swine flu.” It’s getting a great deal of attention—as it should—from major news outlets around the world. For example, a Google News search of the keyword H1N1 at 1:10 p.m. EST on April 30 yielded 77,337 results within the last hour alone. Combine that coverage with millions of people sharing it and discussing it on social-media sites like Twitter and Facebook, and you have an incredible amount of information bouncing around cyberspace. Yet the question remains: During crises, are social media and Internet-based technologies helpful tools? Or do they make the problem worse by functioning like a high-tech rumor mill?

Certainly, arguments exist for both sides. The Internet and social media make information dissemination extraordinarily fast. Tech-savvy leaders during crises could potentially use sites like Twitter to provide stakeholders with useful updates that ensure wide dissemination of information.

It’s also plausible that people may become overloaded with contradictory or erroneous information, and that specific pieces of information may unduly influence people’s perceptions. Additionally, the Internet and social media may encourage users to gauge a crisis’ severity incorrectly and take inappropriate action. For example, it’s a distinct possibility that people may hoard personal stashes of the influenza medication Tamiflu, greatly hindering public-health efforts.

So how should leaders use the Internet and social media during crises? Or should they even use these tools at all? The answers to those questions are complex, but perhaps leaders could start by recognizing the Internet and social media outlets for what they are—tools. And like any tool, they are only as good as the way in which they are used. Maybe leaders should start with understanding the important messages they need to communicate, the audiences that they need to reach, and then wisely employ the most appropriate technologies accordingly.

At the very least, it behooves leaders to understand what tools are available and strategize how best they might use them before crisis strikes—remembering, of course, that (a) more information isn’t always better and (b) anything disseminated via the Web has the propensity to spread like wildfire.

Pirates, Hostages, and Ambiguity on the High Seas: Countering Complex Threats with Complex Solutions

Despite what the office-supply store Staples says in its latest advertising campaign, most of the time there is no “easy button.” This is especially true in crises, which typically involve numerous actors, interdependent action, and high levels of ambiguity and uncertainty. Add to those complications malicious intent by certain actors within the crisis, and you’ve got a real problem. Such is the crisis currently in progress about 300 miles off the coast of Somalia, where a band of pirates are holding hostage Richard Phillips, captain of the U.S.-flagged cargo ship Maersk Alabama.

In the still-developing story, pirates attempted to take control of the cargo ship—an attempt that ran afoul when crewmembers resisted. Now, four pirates are holding the ship’s captain hostage in a lifeboat, spawning a confluence of numerous different actors from the United States bent on resolving the crisis. And the reason why so many different actors are getting involved has something to do with (a) the complexity of the event itself, and (b) something scholars have called “requisite variety.”

First, consider the complexity of dangerous pirates operating in international waters off the coast of the Horn of Africa, holding an American ship captain hostage, and communicating no clear paths toward resolution. National reputations, corporate interests, and general notions about international-shipping safety are at stake. Thus, a number of powerful parties—Maersk Line, (owners of the Maersk Alabama), U.S. President Barack Obama and his White House, the U.S. State Department, and others—have a vested interest in the event and its outcomes.

Second, an event of this level of complexity necessarily requires a complex response. This is the notion of “requisite variety,” which essentially means that successfully dealing with multifaceted circumstances requires a similar amount of diversity within the response. There is simply so much ambiguity and so many interests involved that many different group representatives with different areas of expertise must interact and come to a collective solution. For example, the U.S. Navy’s response includes aerial surveillance and on-site monitoring by the guided missile destroyer USS Bainbridge. Furthermore, the FBI is now involved, and its hostage negotiators have been attempting to establish communications with the hostage takers via a satellite link aboard Bainbridge.

The collaboration between the Navy and the FBI is a good example of escalating requisite variety because Navy leaders recognized that the situation was more complex than their capabilities, and that they needed to collaborate with people who have more extensive hostage-negotiation expertise. For almost three years, I served as an officer aboard a ship identical to the USS Bainbridge. The ship itself is an extraordinary machine. It’s highly maneuverable, technologically advanced, and has a wide range of defensive, offensive, and surveillance capabilities. Its crew of about 300 comprises a highly diversified and well-trained cadre of subject-matter experts and naval-warfare generalists, so the Bainbridge and its crew are an example of a highly complex system designed to counter complex challenges.

But within this current crisis off the coast of Somalia, the decision by Navy leaders to reach out to the FBI for more expertise in the hostage-negotiation realm demonstrates a key competency of crisis leadership. Leaders must be able to recognize that when a situation requires more diversity in expertise, more requisite variety. And if they are successful in matching the complexity of the environment with a complex and well-coordinated response, positive outcomes become more likely.

So it’s an unfortunate fact that there’s no “easy button.” What leaders can do within crises, however, is pay close attention to their environments and ensure a finely grained division of labor among diverse experts in their response. They must counter complex threats with complex, collaborative solutions. It’s not easy, but it’s one key part of good crisis leadership.

Core Values and Human Capital: Keys to Success in an Era of Turbulence

Welcome to the “new normal.” That’s part of what management guru Jim Collins recently said in an interview with Fortune magazine senior writer Jennifer Reingold. And by the “new normal,” Collins, author of business classics “Built to Last” and “Good to Great,” suggested that the current volatility and instability in the marketplace is not an aberration. In fact, he opined that the stability we enjoyed from 1952 to 2000 was an anomaly. Simply put, economic turbulence is here to stay. So get used to it.

If that’s the case, though, what should business organizations do about it? To answer that question, Collins cited practices of some of the past century’s most-enduring companies, specifically, Procter & Gamble, General Electric, Johnson & Johnson, and IBM. For Collins, two particular aspects of those companies’ strategic approach have made them successful in the face of crisis.

1. Strong core values: Because crises naturally challenge an organization’s capabilities, it’s crucial for managers to maintain a consistent focus on the organization’s central ideals. This entails continually reinforcing how you do business, in addition to what your business does. For example, Collins cited Procter & Gamble’s persistent focus on product quality as an enduring feature that has helped it succeed despite adversity.
   
2. A continual focus on human capital: Quite simply, people matter. If managers choose to sacrifice attention to their human capital, their organizations will fail. Retaining—and yes, even hiring—good people during economic downturns should continue to be a top priority. Why? According to Collins, it’s high-performing employees that pull organizations toward success during crises. Additionally, in a labor market flush with talent, the time is ripe for organizations to bolster their human-capital advantage.

Finally, Collins proposed that executives should remember that “turbulence is your friend.” Despite current economic uncertainty, organizations with leaders who seek and exploit new opportunities will emerge from this crisis with a renewed strategic focus enabling them to succeed.

The worst action for executives, Collins contended, is inaction. Referencing his hobby of rock climbing, he said, “You don't just sit on the mountain. You either go up or go down, but don't just sit and wait to get clobbered. If you go down and survive, you can come back another day. You have to ask the question, ‘What can we do not just to survive but to turn this into a defining point in history?’” The place to start, as Collins suggested, just might be (a) reinforcing your core values and (b) focusing on your human capital. Because, after all, values and people do make a difference.

Crisis Leadership Lessons from the "Miracle on the Hudson"

Captain Chesley “Sully” Sullenberger, who brought his planeload of 150 passengers down safely in the Hudson river after losing both engines, has been celebrated for his performance and his character.

A blog post, How to Pilot Through a Financial Crisis Like Captain Chesley “Sully” Sullenberger, distills some of the characteristics Captain Sully displayed:

Stay Calm: Sully didn’t panic. Think about that. He was the Captain of a large commercial airliner with more than 150 lives depending on his every move. If there was ever a time to panic, it was when both engines lost thrust over New York City.

Be prepared: January 15, 2009 was not Captain Sullenberger’s first day on the job. He had spent a lifetime preparing for that very moment. In addition to his experience as an Air Force pilot and hang-glider (some say sailplane) enthusiast, he undoubtedly spent countless hours in flight simulator training.

Get help: Captain Sullenberger didn’t save that plane and its passengers all by himself. He had a co-pilot and crew there to help. (We might add that many passengers also rose to the occassion to help others to safety.)

Stay focused:The tapes of Captain Sullenberger’s communications with ground control are quite telling. Sully was focused, as you might imagine, on what was important. His communications with ground control were very brief and to the point. He communicated what he needed to, and then stayed focused on the problem at hand.

Be hopeful: Emergency landings, like life, do not always have a happy ending. That’s just reality, and no matter how much we may wish it weren’t so, sometimes bad things happen to good people. But hope, above all else, gives us the desire and drive to keep trying.

The Captain's exemplary performance has undoubtedly gained much greater attention as we seek role models in a time of crisis. In an essay in Newsweek, Sully reflects on this:

It's been a month since the airplane I piloted, US Airways Flight 1549, made an emergency landing in the Hudson River.

Since then, the attention given to me and my crew—I'm trying to resist, somewhat unsuccessfully, everyone's attempt to make this about fewer than five people—has obviously been immense. But I still don't think of myself as a celebrity. It's been a difficult adjustment, initially because of the "hero" mantle that was pushed in my direction. I felt for a long time that that wasn't an appropriate word. As my wife, Lorrie, pointed out on "60 Minutes," a hero is someone who decides to run into a burning building. This was different—this was a situation that was thrust upon us. I didn't choose to do what I did. That was why initially I decided that if someone offered me the gift of their thankfulness, I should accept it gratefully—but then not take it on as my own.

As time went by, though, I was better able to put everything in perspective and realize how this event had touched people's lives, how ready they were for good news, how much they wanted to feel hopeful again. Partly it's because this occurred as the U.S. presidency was changing hands. We've had a worldwide economic downturn, and people were confused, fearful and just so ready for good news. They wanted to feel reassured, I think, that all the things we value, all our ideals, still exist—that they're still there, even if they're not always evident.

The Captain offers his own lessons on crisis:

We valued every life on that airplane and knew it was our responsibility to try to save each one, in spite of the sudden and complete failure of our aircraft. We never gave up. Having a plan enabled us to keep our hope alive. Perhaps in a similar fashion, people who are in their own personal crises—a pink slip, a foreclosure—can be reminded that no matter how dire the circumstance, or how little time you have to deal with it, further action is always possible. There's always a way out of even the tightest spot. You can survive.

Managing Expectations to Manage the Unexpected

Crises inherently involve people dealing with unanticipated events. And one way that leaders often shape how people around them think about crises is by talking about expectations. For example, much of the recent talk initiated and perpetuated by leaders within the U.S. government incorporates aspects of expectation management.

Take, for instance, President Barack Obama’s Feb. 24 address before a joint session of Congress. In his speech, which dealt largely with his plans to bolster the economy, Mr. Obama incorporated several elements of expectation management. Specifically, after discussing his immediate plans for economic recovery, Mr. Obama’s rhetoric shifted to describe plans with a decidedly futuristic orientation. To illustrate with a simple example, let’s consider the president’s use of two phrases: “short term” and “long term.”

For starters, Mr. Obama used the phrase “short term” twice while mentioning “long term” six times. But what is compelling from an expectation-management perspective is that both times that he said “short term,” he immediately juxtaposed “short term” with “long term.” Early in the speech, Mr. Obama compared the two, saying, “Short-term gains were prized over long-term prosperity.” Later, he said, “The recovery plan and the financial stability plan are the immediate steps we’re taking to revive our economy in the short-term. But the only way to fully restore America’s economic strength is to make the long-term investments that will lead to new jobs, new industries, and a renewed ability to compete with the rest of the world.”

In his recent column on Forbes.com, Shaun Rein describes Mr. Obama’s expectation-management strategy as one that business leaders should adopt in difficult times. Rein wrote, “President Obama has continually lowered expectations about his ability to right the economy quickly. This has given him time to maneuver and allowed for more upside potential … Managing the expectations of investors and employees is critical now. One of the biggest mistakes senior executives make is trying to put too positive a spin on a situation.” Indeed, business bloggers are also picking up on the importance of expectation management in the face of crises.

Bloomberg News columnist Caroline Baum focused instead on Mr. Obama’s optimism. In her Feb. 26 column, she wrote, “Chicago is home to, among other things, rational expectations theory, the idea that outcomes depend to some extent on what people expect to happen. It would have been hard to spend that much time in Hyde Park without some of Chicago rubbing off on Obama … If we expect the future to be better, rational expectations dictate that it will be.”

Taking a scholarly perspective, organizational theorists argue that people’s expectations regarding what constitutes the ordinary shape how they make sense of and ascribe meaning to the world around them. So in terms of leadership, it behooves leaders to manage expectations carefully, keeping in mind the power of suggestion and using talk to frame how others regard their environments. At the same time, however, it’s crucial to manage expectations in such a way that people are more likely—not less—to notice and publicize the weak signals and small deviations from normality that are all too often beacons warning of impending disaster.

One of three ‘inevitables’. Crisis leadership in practice

By Kinga A Komorowska
MBA Student at the University of Strathclyde

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Common wisdom and many research studies have proved there are three inevitable things in life: death, taxes and crises. Having no capacity to deliberate death & tax issues, I would like to share a few reflections on leading under storms. These are based on the survey (N=141) I have conducted for my MBA project (Strathclyde Business School) in January 2009.

To the point: on the basis of the extensive literature review, I identified six hypotheses to be tested by the survey:

Hypothesis 1. Transformational leadership is the highly correlated with company performance during the crisis. I expected the transformational leaders to be the kind of leaders described by Klann (2003): being ready for anything, being keen on crisis to test their effectiveness and, finally, being able to ‘turn the chaos of a crisis into the promise of opportunity’. The finding that transformational leaders are able to influence only their performance and, practically, have no impact on company performance under crisis was highly disappointing.

As ‘charismatic attributes are at the heart of the transformational leader’ (Merolla et al. 2007), I expected by charismatic leaders to have even stronger impact on company performance than transformational leaders. Therefore, my Hypothesis 4 was that the charismatic leaders can increase company performance during a crisis. I found the only charisma that is important in crisis is the one presented during through time. If the leader was charismatic on a day-to-day basis but for some reasons, for example due to high stress level and inability to cope with it, changed his leadership style, the benefit of his charm would disperse.

Hypothesis 2. Leadership style does not change during crisis – it just become more expressive. I would say this was confirmed by my research although the results of validity tests were mixed. The direction of the shift was the biggest astonishment for me. I expected the number of transformational leaders to increase. Yet, the move towards more firm and less partnering style of leadership is visible during crisis.

Hypothesis 3. Leaders who perceived themselves charismatic would prefer ‘mental toughness’ as a major stress copying mechanism. I classified the following behaviours as the mental toughness: self-confidence, being optimistic, never-give-up approach, ‘take one day at time’, you-can-do-it approach, determination to succeed and ‘I always win’ strategy. This hypothesis was confirmed in my survey but work-related solutions (working even harder than during non-crisis time, crisis plan preparation, motivation from previous crisis-experience) were just slightly less popular among respondents.

Hypothesis 5. Performance depends on the stress level: the higher crisis level, the lower assessment of participants’ performance, as well as their company performance. My research proved the usefulness of the Yerkes Dodson model of arousal tension (Halverson et al. 2004): low levels of arousal stress can be beneficial for personal performance. As far as company performance is concerned, the relation is more linear: the stronger the stress, the lesser the performance.

Hypothesis 6. Stress coping mechanisms are not related to the leadership style expressed by leaders in crisis. Overall, there are no correlations with the mental toughness being the only exception. On the more detail (stress-mitigating behaviour) level, seeking external (but not professional) support was by far the most popular activity if under stress.

To sum up, the most general observation I have is the literature is so diverse and the opinions are so wide-ranging and at variance with each other that anyone can find both supporting and contradicting citations for any single issues related to crisis leadership. Any new research can bring evidences to defend some earlier findings but also to oppose them.

On the other hand, my MBA project has clarified my point of view on the debate on leaders being born or made: the crisis leaders are made! No doubts you have to have certain traits but this research proved the more experience in crisis, the better performance. You have to go through this hell to become a crisis leader!

Wisdom of the Ages for Timless Challenges

Jack Covert and Todd Sattersten in Learning from the Heroes in Harvard Business Review observe that the core challenges we struggle with are the perennial ones echoed in Joseph Campbell's "hero's journey:"

"Like Hercules, Luke Skywalker, and Jack Welch, we all struggle with five recurring challenges as we journey through work and life: We wander without knowing where we’re going. Data and circumstances confuse us. Fear blocks us from acting. Change paralyzes us. And despite our best intentions, we talk more than we listen."

They find that these challenges surface repeatedly in the business literature:

"An examination of business writing from the past 30 years shows that these challenges emerge again and again—and the best books offer simple yet profound lessons for overcoming them: Find a clear purpose. Be aware that past experience and a mass of information can interfere with wise decisions. Maintain a bias toward action. Be open to change. Seek feedback."

These nuggets of wisdom -- to take swift action but be open to feedback and frequent course corrections -- make much sense in crisis situations where desired outcomes are clear ... but the path there may be anything but obvious.

Creativity or Destruction: Choices in the Storm of 2009

The economic downturn ripping through the business world is tearing down some organizations and gutting others. David Hurst, in a column in The Globe and Mail, draws on lessons learned from the 1982 recession to offer some sage counsel on what's at stake and what can be gained:

"The sudden change in economic fortunes has given organizations an unexpected opportunity to show their true colours. And their people are watching. It is a challenge that will test the boilerplate on corporate values in countless annual reports and set every organization's tone for years to come. Will the stories to be told of the Crash of '08 and the ensuing recession reaffirm your organization's values or will they tell of cold actions that contradicted the warm words crafted in happier times?"

He indicates that there is need to balance managing costs with managing the toll on people. Leaders must engage at human level:

"Don't underestimate the power of face-to-face communication: Trust is at a premium and nothing reaffirms and creates it like sitting down with people, especially over a meal. Get in front of your clients, suppliers and resource providers. Talk to your people in town halls and other venues."

He also states that it is a time to be flexible and open to change:

"Address the key issues with cross-functional, cross-organizational teams comprising people from all over the organization and who are capable of handling a variety of challenges. De-emphasize the formal organization. Line managers are often best left off the teams to run their operations. Include “young Turks” and perennial malcontents from the fringes of the organization to send a powerful message of change."

This advice – to open up the lines of communication and create open space for new growth – runs counter to the path that many organizations opt for in a crisis. David's perspective – expressed in books such as Crisis & Renewal – is that a crisis is an opportunity for organizations to get back to their innovative roots and reconnect with the processes of creativity, learning, and experimentation that brought them to life.

The Financial Crisis: A Corporate Leadership Game-Changer?

Crises necessarily challenge assumptions. And certainly the recent turmoil on Wall Street has shaken many assumptions about economic and financial stability. Looking back on 2008, however, what can we learn about corporate leadership and management? In the Jan. 19 BusinessWeek cover story, titled “Managing Through a Crisis: The New Rules,” senior writer Emily Thornton suggests that current economic conditions have fundamentally changed how business leaders should make decisions, and that within economic turbulence resides new opportunities.

In the article, Thornton mentions several ways in which the decision-making milieu for managers has shifted, including reduced consumer confidence, tighter credit, the prospect of stricter regulations, and general ambiguity about both current conditions and future prospects. Furthermore, she discusses five specific sets of productive actions taken by chief executives in 2008, specifically:

• Change your mindset. Recognize that market conditions have changed, and that those changes should call into question many aspects of how you’ve traditionally done business.


• Get your financial house in order. Make tough choices, possibly including eliminating lines of business and issuing more stock, to strengthen your balance sheet and to secure your firm’s fundamental financial health.


• Make a move for market share. Focus on your core business and be on the lookout for newly available resources, both human and asset-related.


• Rethink your reward system. Avoid cutting compensation across the board; instead, find non-monetary ways to reward employees and improve morale.


• Dare to innovate. Taking the time and effort to innovate during the downturn could open new doors in the future. It’s risky, but may result in high returns.

The past year has forced us to think differently about what it means to undertake risk. Additionally, it seems that obtaining actionable information about potential risks is becoming increasingly difficult. It may not be a lack of information that fuels this difficulty; rather, it may be that managers today have such an abundance of information to process—via numerous financial reporting services, for example—that they cannot reasonably evaluate competing courses of action. Much of 2009 will be about figuring out what exactly happened to markets during 2008, but whether managers can use that information to guide their firms successfully remains to be seen.

This entry also appears at Organizing for High Reliability.

Leadership Failures During Hurricane Katrina

As the author James Joyce once said, “Mistakes are the portals of discovery.” And although the leadership failures during and after hurricanes Katrina and Rita pummeled the United States’ Gulf Coast resulted in widespread tragedy, it’s useful to examine what went wrong and to learn what those events can tell us about leadership. In fact, failing to glean lessons from disasters may result in future tragedies that we could have otherwise mitigated. As another author, George Santayana, once wrote, “Those who cannot remember the past are condemned to repeat it.”

In their recent research article titled “Making Matters Worse: An Anatomy of Leadership Failures in Managing Catastrophic Events,” scholars Naim Kapucu and Montgomery Van Wart analyzed the catastrophic events in the city of New Orleans during and after hurricanes Katrina and Rita made landfall in 2005. Kapucu, an associate professor in the Department of Public Administration at the University of Central Florida, and Van Wart, a professor and chair of the Department of Public Administration at California State University, San Bernardino, propose that 12 specific leadership competencies are particularly important in the management of catastrophic disasters and provide evidence of how those competencies were lacking during the Katrina emergency response.

Specifically, the authors argue that leadership during catastrophes especially requires leaders to demonstrate the competencies of decisiveness, flexibility, informing, problem solving, managing change and creativity, planning and organizing personnel, motivating, managing and building teams, scanning the environment, strategic planning, networking and partnering, and decision making. Using these competencies as a conceptual framework, Kapucu and Van Wart then discuss how their analysis of government reports and national media coverage demonstrates that in many ways the emergency-management efforts related to hurricane Katrina in New Orleans is a “case study of what not to do” (p. 719, emphasis added).

Kapucu and Van Wart suggest that the leadership failures regarding hurricane Katrina in New Orleans fall into five categories:

1. Failures in prevention and planning. Relevant leadership competencies that were lacking include environmental scanning (defined as “gathering and critically evaluating data related to external trends, opportunities, and threats on an on-going and relatively informal basis” p. 718), strategic planning, networking, and personnel planning. Leaders failed to appropriately demonstrate these capabilities both prior to the hurricane reaching land and during the immediate aftermath of the disaster.
   


2. Failure to adapt and expand capacity. Relevant leadership competencies that were lacking include environmental scanning, strategic planning, team building, flexibility, and decision making. In particular, leaders failed to shift their plans as dictated by the unfolding disaster and took a more reactive than proactive approach toward requesting assistance.
   


3. Failure to restore communications rapidly. Relevant leadership competencies that were lacking include strategic planning, problem solving, creativity, and providing motivation. With these competencies, the authors suggest that community and government leaders could have restored communications more rapidly.
   


4. Inflexible decision making. Relevant leadership competences that were lacking, as implied by the category title, include flexibility and decision making. For example, the authors discuss how the decision to use the New Orleans Superdome as an emergency shelter was flawed because it “encouraged nonevacuation, was unprepared for the 20,000 who were housed there, and was unequipped with the supplies necessary” (p.732). Thus, this decision failed in terms of both preparation and implementation.
   


5. Weak coordination and lack of goodwill. Relevant leadership competencies that were lacking include networking and partnering, team building, and decision making. Specifically, the authors mention a number of organizations that failed to adequately coordinate their emergency-response efforts. Furthermore, although some local communities responded admirably during the disaster, others did not, and in so doing stymied evacuation and appropriate disaster relief.

Therefore, Kapucu and Van Wart’s research suggests that leaders during disasters must enact specific competencies in addition to those required by leaders in stable operating conditions. Proactive contingency planning is vital, but leaders must be prepared to adjust their plans as necessary when unfolding events challenge the assumptions upon which the plans were built. Finally, the massive level of inter-organizational coordination that facilitates effective emergency response necessitates direct attention to networking and partnering before disaster strikes.

Kapucu and Van Wart’s article appeared in the journal Administration & Society. The full reference is as follows:

Kapucu, N., & Van Wart, M. (2008). Making matters worse: An anatomy of leadership failures in managing catastrophic events. Administration & Society, 40, 711-740.

The Bottom-Up Response in the Mumbai Attacks

I’ve just returned from India. The country is still grappling with the terrorist attacks in Mumbai that claimed nearly 200 lives. In India, where mass casualties are not unusual – in train accidents, stampedes, or floods – the shock revolves around the inability of India’s institutions to protect even its most elite populations at an iconic hotel in its central commercial center.

There were many failures that enabled the scale of the attacks. Quite telling was that the elite commando force took 10 hours to arrive at the scene of the attacks, ferried the last miles to the scene of the attacks on borrowed public buses. Clearly the Indian government was completely unprepared for this kind of attack.

Also telling was the role that ordinary people played in rescues. The heroes were hotel waitstaff and cooks who put their lives at risk to hide hundreds of guests instead of bailing out through the back door with their own lives – many staff perished (watch a segment on Charlie Rose). A tea vendor at the train station that was attacked saved dozens of lives by repeatedly rushing in to get paralyzed commuters out. The one AK-47 toting terrorist who was captured alive was taken down by constables wielding bamboo sticks.

In the national soul searching that has followed the attacks there is much blame being levied against the government for the lack of intelligence, the lack of preparation, and the tardy response. Nevertheless there is appreciation too that guarding this vast country from terrorism is going to take the vigilance of all people. It is a lesson India can learn from Israel where ordinary citizens foil the majority of attacks by taking swift action. In the Mumbai attacks the 10 terrorists came ashore at a fishing village and walked past the dock official who passively watched them go despite all the signals that something was amiss.

Can you plan for uncertainty?

These are uncertain times – recession, terrorism, war, climate change.... All this uncertainty upsets the planners among us (people who like to know what’s going to happen and when). When I was reflecting on my childbirth experience and preparation for it, I compiled this advice for “planning the un-plannable”. I'd love to see your comments if any of this resonates with you.

1. Know all the possibilities and parameters.
2. Learn how others have dealt with the challenges.
3. Know yourself.
4. Know your support system.
5. Fill in gaps in your support system.
6. Prepare for stress (for example, by being healthy).
7. Think through scenarios and decisions ahead of time; postpone actual decision 'til the necessary time.
8. Find small ways to feel confident and in control.
9. Be kind to yourself.
10. Sleep.

Sarah L. Glover

The Highest Order of Crisis Preparedness

CCL President John Ryan's October 28, 2008 column on BusinessWeek.com offers insights for leaders in dealing with a crisis. The column draws on the Crisis Leadership Forum and makes an important point about the counterproductive tendency to centralize control in a crisis:

"When leaders feel suddenly overwhelmed in crisis, they often try to do everything themselves. Strong individual leadership is of course imperative during a crisis. But it is not sufficient. A collective response is essential. Leaders trying to fix a crisis with a top-down approach many times find they're not close enough to the ground to know what's really happening. And even if they are, there's still no way for them to absorb and make sense of the massive volumes of information flying at them. "

In considering how to effectively marshall collective leadership capacity, there is much to be learned from the US Coast Guard. The USCG's dual strategy of encouraging "on-the-scene initiative" from frontline responders coupled with "commander's intent" from above enables an effective blend of top and bottom leadership. The USCG's ability to align across levels and commands is a product of its continual investment in building individual skills and organizational culture. This focus on building leadership capacity may well be the highest order of crisis preparedness.

Coming to Grips with the Panic of ’08

David Hurst, author of Crisis & Renewal and management speaker, consultant and writer, wrote this essay on the financial crisis and the cycle of creative destruction.

Creative Destruction:
Coming to Grips with the Panic of ’08
By David Hurst

Sir Isaac Newton knew a thing or two about up and down, but not even he could understand the gyrations of stock markets. “I can calculate the motion of heavenly bodies, but not the madness of people,” remarked the famous English physicist, after he reportedly lost twenty thousand pounds (over $5 million in present day value) in the collapse of the South Sea Bubble in 1720. His puzzlement must be shared by many contemporary experts, especially the “rocket scientists” who developed the arcane financial instruments and valuation techniques that have contributed so heavily to the collapse of Wall Street in 2008. Indeed, one of the more complex such instruments, Credit Default Swaps, have been described as the “dark matter of the financial universe.”

After the March meltdown of Bear, Stearns, one of America’s most admired companies, the markets seemed to stabilize for a bit and the scientists might have retained their equanimity. But then, after 158 years of successful operation, Lehman Brothers evaporated over a weekend and that icon of American business, Merrill Lynch, a.k.a. the thundering herd, nearly went off the precipice, disappearing instead into the arms of the Bank of America. AIG, the world’s largest insurance company, needed an $85 Billion bailout. Staunch Republicans have supported government intervention to which they were unalterably opposed and markets around the world have swooned. While stunned economists and mathematicians wrangle about what went wrong, perhaps it would be helpful to reframe our understanding of what is happening. In addition to science, it’s useful to use some history; it also helps to enhance economics with some ecology.

History

While many talk of a global recession, some are even using the “D” word as they recall events from 1929. Historians have suggested, however, that analogies to 1929 are misguided and that the current financial turmoil is more similar to that of the Bankers’ Panic of 1907. In that year the stock market fell nearly 50% as the economy went into recession and there were numerous runs on banks and trust companies. By strange coincidence, that crisis had also begun in March of that year, with the collapse of Union Pacific stock, which was widely used as collateral for raising finance. The stock market survived that, more or less, but it was done in by the collapse of The Knickerbocker Trust, the third largest in America, in October 1907. It turned out that the trust had been funding speculation in the copper market, which had slumped a few months earlier. A fierce contraction in liquidity followed, with depositors trying to withdraw their holdings from banks across the country. The United States did not have a central bank at that time, so there was no lender of the last resort to throw out a lifeline. The economy was saved by the efforts of J.P. Morgan and his banking associates, who acted together as a financial backstop. Charles Barney, the President of Knickerbocker, shot himself on November 14, 1907. However the trust company opened again after a few weeks of closure and paid out all its depositors plus interest. The panic was over.

References to economic crises in history remind us that, although they are infrequent, financial panics are by no means rare. Professor Charles Kindleberger in his classic, Manias, Panics, and Crises, has identified nearly forty of them since the beginning of the 17th Century i.e. about one every ten years, although eighteen of them were in the 19th Century. So we have been here before. What makes the Panic of 2008 so frightening is its global scope and the suddenness with which it came upon us, contrary to all expert opinion. Former Chairman of the Federal Reserve, Alan Greenspan observed in 2005 that “increasingly complex financial instruments have contributed to the development of a far more flexible, efficient, and hence resilient financial system than the one that existed just a quarter-century ago.” These remarks now seem destined to go down with economist Irving Fisher’s observation on the eve of the market crash of 1929 that "Stock prices have reached what looks like a permanently high plateau.” Famous, last words indeed.

Ecologics

None of the dynamics of the Panic of ’08 are surprising to anyone who looks at the world through an ecological rather than an economic lens. For this is the way nature works. Long slow processes of growth are followed by swift bouts of destruction that prepare the environment for renewal. Take a lodge-pole pine forest for example, like those that flourish in the Rockies. Lodge-pole pines are self-pruners. As they grow, they drop their lower branches on the ground, building up highly flammable debris. After forty years or so they get attacked by bugs like the mountain pine beetle and the weaker trees die, creating standing firewood. When lightning then strikes, fires devour the dead trees and tinder-dry underbrush in brief but violent infernos. Efforts to put them out are in vain – the best that fire-fighters can do is to try to control the boundaries and hope for assistance from nature in the form of rain. In the aftermath of fire, however, the scorched ground is ready for renewal. The fire removes the large trees that had hogged resources and prevented any variety from growing in their shade. It recycles their resources, supplying nutrients in their ashes that can nourish small scale organisms. The fallen trees supply innumerable refuges for armies of insects to assist with the recycling. The lodge-pole pines themselves have special heat-resistant cones that burst only when the temperature rises above 140º F and release their seeds into the warm ash. Within a year the ecology is bursting with renewal, as the weeds and seedlings and migrant animals and birds, the entrepreneurs of the natural world, flourish in the open patches.

Such natural systems work well, provided they are left alone. But we know that human intervention often makes the cycles more violent. Until recently forest managers made forest fires much more destructive by mistakenly suppressing natural fire in national parks like Yellowstone. The strategy works for a while, often confirming the wisdom of the strategists. But after a while so much fuel builds up that nothing can stop it from burning. Indeed, the effective exploitation of nature to make it more “efficient” mandates that we turn systems with variety into mono-cultures. The forests that supply the paper on which we blow our noses and clean our counters are such mono-cultures: all the trees are evenly spaced and are of the same age and same type. Without variety or fire-breaks, they are vulnerable to being wiped out by sudden catastrophes, ranging from wind and fire to disease and insect attack. The pan-caking floors of the Twin Towers after the attacks of 9/11 and the toxic NINA (no income, no assets) mortgages have this dynamic in common. Once one went, they all went. In crises economists call the process “financial contagion”. From an ecological perspective Alan Greenspan was quite wrong. Resilience does not follow from efficiency: it requires variety, which is the opposite of efficiency. And the restoration of resilience to a complex system often demands destruction first.

After the Panic of 1907 the Federal Reserve System was formed to act as lender of last resort. I am glad we have them this time around, as they try to avoid the mistakes they made in 1929. More generally, meaningful social, political and institutional change happens only in the aftermath of crisis. To a considerable and unacknowledged extent society and its component organizations advance strategically by accident, economically by windfall and politically by disaster. Armies are reformed only after defeats. Safety regulations are usually introduced after accidents. Certainly a comprehensive overhaul of the financial system is needed to ensure that the unregulated growth of mono-cultures is checked and monitored. We will have to avoid, however, the excesses of regulatory zeal such as the Sarbanes-Oxley legislation, enacted in the aftermath of the Enron collapse. In his prescient book, A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation, investment expert Richard Bookstaber describes how, at times like these, markets can suddenly change their character. They flip from a well-understood game like probability-based roulette to a high-stakes one like psychology-based poker, offering huge rewards for those brave enough to seize the opportunities and disaster for others. He suggests that, among other things, we need to reduce the complexity of financial instruments, even if this means slowing down the rate of financial innovation. If the risks of complex derivatives are not understood, he argues, their risk cannot be mitigated.

Socially and intellectually these are humbling times, when many who thought they understood the system have found that they did not. The world’s politicians have not been helpful. President George W. Bush, to quote The New York Times, “had nothing to offer but fear itself.” Apart from dealing with the economy to restore confidence, our leaders need to get back to our ideas about values and community: the soil in which economies are nurtured. In our proclamation of the triumphs of markets we have forgotten their origins in and continued dependence upon human relationships and mutual trust. Trust, like the lubricant in an engine, is noticed only when it is gone and the motor has seized. Many of us live such fragmented lives and some say our values of hard work, thrift and support for each other have been eroded by decades of easy money, consumerism and a cult of selfish individualism. Changing that will not be easy. Rulers throughout the ages have known that nothing is more destructive of social order than a fall in the standard of living from a higher level, real or imagined, to a lower one. It will help immensely if we know that everyone is in it together and that the pain is being shared. Disasters, whether physical of financial, often have the effect of bringing the human community back together again in a common fate and a shared survival.

In the meantime it couldn’t hurt to pray for rain.

David Hurst is the author of Crisis & Renewal: Meeting the Challenge of Organizational Change (Harvard Business School Press, 1995/2002). He is a speaker, consultant and writer on management. He is a also Contributing Editor to Strategy+Business and his writing has appeared in the Harvard Business Review, The Financial Times and other leading business publications.

From Hurricane Winds to Vanishing Credit: The Many Faces of Crisis

Fear and pain. Ad hoc rescue. Panicked days. Collapse. Turmoil. Meltdown. We typically reserve these types of phrases for natural disasters and other emergencies that pose an immediate threat to life, limb, and property. Recently, however, news outlets such as the Financial Times, the New York Times, the Seattle Post Intelligencer, and Reuters have used these words and other similar language to describe what pundits around the world are simply calling the “financial crisis.” Indeed, during the past few weeks, the world has turned its attention to the United States’ financial markets, which are in the midst of a rapidly changing landscape of tightening credit, bankruptcy, and volatile share prices.

So what do we really mean by the word “crisis?” Given the diversity of circumstances that we may call crises, it appears that some definition of crisis is necessary if we are to understand crisis leadership. Scholars differ on some of the nuances of what a crisis is and what it is not, but most agree that crises are unexpected, high-impact events characterized by high levels of uncertainty and ambiguity. They are situations in which we question the stability of what we previously thought stable and the assumptions upon which we previously acted with confidence.

Given this rough definition of a crisis, one way we may think of crisis leadership is as a process of positive influence toward safety, security, and stability. Metaphorically, crisis leadership encompasses the means through which we emerge from the fog of chaos into the clarity of familiar surroundings.

With these concepts in mind, the status of the United States’ financial system is certainly one of crisis. Most experts didn’t expect the sub-prime mortgage market to collapse, leading to a worldwide tightening of credit and failure of stalwart organizations such as Bear Stearns and Lehman Brothers. And it’s even more unlikely that anyone could have predicted that today the federal government would enact a $700-billion plan intended to bolster the nation’s financial system. In terms of crisis leadership, who are some of the key players? Treasury Secretary Henry Paulson? Federal Reserve Chairman Ben Bernanke? Thousands of American constituents voicing their opinions?

If anything, the financial crisis is an example of how crisis leadership affects many vital aspects of life we often take for granted, be it the ability of a levee to hold, the rapid arrival of first responders, or the stability of business, labor, and our financial future. Further inquiry into successful crisis leadership, then, is not just an interesting matter of scholarly pursuit—it’s a crucial matter of survival.

Crisis Leadership Podcasts from CCL on iTunes

Four podcasts based on learning from the Crisis Leadership Forum are now available on iTunes:

These are part of a Center for Creative Leadership series on iTunes that includes dozens of downloads on topics such as ethics, strategic leadership, and conflict management.

iTunes also features some 150 documentaries, podcasts, audiobooks, radio shows, and songs related to Hurricane Katrina.

Jindal’s Emergency Response

As previously discussed, leaders’ communication during crises may make a significant difference in how they enable or hinder emergency response. According to a Sept. 7 article in the New Orleans Times-Picayune, Louisiana Governor Bobby Jindal responded effectively to the threat of Hurricane Gustav by focusing on continually measuring preparation progress while reducing barriers to response efforts. He did this, at least in part, through communication with the public and other constituents.

The true test of emergency readiness in Louisiana and the rest of the Gulf Coast, however, may come in the weeks and months ahead. The official Atlantic hurricane season lasts until Nov. 30, leaving the potential for future evacuations and many other demands upon leaders. Furthermore, what impact does the fact that Gustav was less severe than anticipated have on future evacuation efforts and responses?

One possibility may be that people will be less likely to act with as much of a sense of urgency during future crises. Many heeded leaders’ warnings regarding Gustav, but will that followership continue? Interestingly, the Times-Picayune reported today that Gov. Jindal does not foresee an evacuation order regarding incoming Hurricane Ike.

This highlights an important dilemma for leaders considering to order evacuations and carry out other disaster preparations. Leaders want to prepare their communities, but they also need to maintain their followers’ trust that they will only sound the alarm when it is really needed. Only then will people follow and respond when disaster strikes. This, too, emphasizes the delicate yet vital nature of communication in crisis leadership.

Retired General Russel Honoré Talks about Gustav and Katrina

CNN’s Anderson Cooper interviewed Retired General Honoré as he headed from his Georgia home to New Orleans. General Honoré, who was responsible for heading military relief effort during Hurricane Katrina, is also an alumnus of CCL’s Leadership at the Peak program.

General Honoré spoke to Cooper about cites (Miami, Houston, and Biloxi) that are at risk of becoming the next “New Orleans”; shared three rules for family preparedness before hurricane; and talked of the work that still needs to be done in NOLA. Click here to read full interview.

Leaders, Communities Brace for Gustav’s Landfall

To many along the United States’ Gulf Coast, it must seem like déjà vu. Almost three years ago to the day, Hurricane Katrina slammed into the coastlines of Louisiana and Mississippi, resulting in the loss of more than 1,800 lives and $80 billion in property damage. Now, Hurricane Gustav is set to make landfall near New Orleans tomorrow afternoon. And thousands of that city’s residents are evacuating, heeding a mandatory order to do so.

We all hope, of course, that Gustav’s impact will be less severe than expected and that preparedness efforts will reflect lessons learned painfully during and after Katrina. That remains to be seen, but it’s certain that people will critically compare crisis leadership efforts during the next few days with actions taken three years ago.

One theory of leadership, complexity leadership theory, seems particularly appropriate for discussing leadership during crises. The theory builds upon the idea that organizations are complex adaptive systems in which change is continual and organizational members continuously affect structures within the system through interaction and the process of sensemaking. This is an overly simplistic explanation, but the most relevant point here is that leaders within this theoretical framework act as enablers rather than controllers, and they manage words more so than they manage people.

With that in mind, it will be interesting to see how leaders respond to Hurricane Gustav—how they enable or hinder preparation and response efforts, and how they communicate with their many constituents. In the meantime, we hope for the best while bracing for the worst.

Leading Toward Preparedness

According to a recent report by New York University’s Center for Catastrophe Preparedness and Response and The Public Entity Risk Institute, crisis preparedness remains low within many organizations throughout the United States.

As the report mentions, future crises will most likely only increase in frequency and complexity. Technological advances, globalization, and continually greater inter-organizational dependence result in a society where what affects one organization will most likely affect others. So when disaster strikes, leaders will need to become ever cognizant of how rapidly changing environments may affect them. For example, hurricanes could disrupt a corporation’s supply chain, which in turn could adversely affect its workers and customers.

It is surprising—and alarming—that organizations continue to operate without enough attention to how their leaders should address crises. Perhaps the problem lies in the fact that some organizations may treat crisis leadership as a segmented organizational function, for example, making it the sole responsibility of the business continuity planning department. But history and research are beginning to show that crisis preparation may be most effective when addressed in a holistic, systemic, and ongoing fashion—not when it is relegated to another set of checklists and conference-room meetings.

Access the full report here.

Resilient Organizations Know How to Improvise

Why do some organizations bounce back after hard times and others don’t? According to a recent Harvard Business Review article written by Diane Coutu, there are three important characteristics that underpin resiliency in an individual or organization. Resilient people and organizations have a clear view of reality, find meaning in hardship, and they know how to improvise.

“Inventive tinkerers, resilient organizations use whatever’s handy to overcome hardship. They improvise solutions without obvious tools and imagine possibilities where others are confounded,” writes Diane Coutu.

Coutu uses the example of how USP was able to deliver packages to residents just one day after Hurricane Andrew devastated southeastern Florida in 1992. UPS’s ability to effectively respond under extraordinary circumstance can be attributed to their commitment to empower employees to improvise and do whatever it takes to deliver packages on time.

The ability to improvise was one of the resounding themes during the discussion at the Crisis Leadership Forum in 2007.

"The day after the storm, we realized that 98 percent of our plans weren't any good," said Joe Spraggins, director of emergency management for Harrison County, Mississippi, whose first official day on the job was the day Katrina hit. It was as if "an atomic bomb hit the Gulf of Mexico," said Spraggins. "This was something that had to be dealt with in a different manner."

Leaders and experts at the forum agreed that crisis response, regardless of size or scope, requires both planning and improvising. Planning and preparation helps enable rapid coordinated action; at the same time plans are always insufficient. A plan is a starting point, but every situation will involve something unexpected. Logic and imagination cannot factor in every contingency. People need the capacity to read and understand a situation and improvise their approach as the reality unfolds. To learn more about improvising when plans fail, click here.

The Megacommunity: Harnessing the Tri-Sector to Prepare and Respond

As the saying goes, “It takes a village to raise a child.” Likewise, it just might take a “megacommunity” to effectively manage crises in today’s ever-evolving, increasingly complex and uncertain world. In their book, Megacommunities: How Leaders of Government, Business and Non-Profits Can Tackle Today’s Global Challenges Together, four executives from the consulting firm Booz Allen Hamilton—Mark Gerencser, Reginald Van Lee, Fernando Napolitano, and Christopher Kelly—propose that the best way to address macro threats is through engaging organizations and leaders in three sectors: government, business, and the public/non-profit realm.

A megacommunity, as the authors describe it, is a community of organizations, not of individuals. Specifically, a megacommunity is “a public sphere in which organizations from three sectors—business, government, and civil society—deliberately join together around compelling issues of mutual importance, following a set of practices and principles that make it easier for them to achieve results without sacrificing their individual goals” (p.53). The book’s main theme is that continually advancing globalization and technology have created a world in which communities are highly interdependent. When disaster strikes, therefore, the most successful responses draw upon numerous organizations for resources and leadership. A working relationship among these otherwise disparate entities is imperative. Hence, the megacommunity is the vehicle through which organizations can unite toward common goals without forcing them to abandon their own identities and goals.

For example, the authors discuss how leaders in Florida, after suffering Hurricane Andrew’s devastating impact, recognized that no single organization could effectively meet the demands of hurricane preparedness and subsequent response. Afterward, officials in Florida engaged a wide range of non-profit groups and businesses in its contingency planning and response preparedness. This new approach was largely successful in responding to subsequent hurricanes, and the authors contrast it sharply with the widely criticized response to Hurricane Katrina in southern Louisiana and Mississippi.

Megacommunities goes on to describe how the megacommunity idea requires a shift in thinking to include building relationships across organizational boundaries while engaging vital stakeholders, sensing common goals among organizations, and initiating a megacommunity after analyzing conditions internal and external to one’s organization. The megacommunity concept has numerous implications for leaders who want to successfully prepare for crises. Leadership in this sense includes a wide range of abilities and actions such as recognizing common values among organizations in other sectors, building the requisite relationships and reputation capital to engage leaders in other organizations, and continually assessing who might be important stakeholders.

As a whole, Megacommunities is more about steps organizations can take to better address large problems facing themselves and their communities than it is about what organizations should actually do during crises. That being said, however, the notion of the megacommunity is compelling because it stresses the importance of leaders looking beyond their own organizations for mutually beneficial support in addressing large-scale challenges. Each of the three sectors that megacommunities should engage—business, government, and civil society—have unique abilities and perspectives necessary to find the best solutions. And as technology continues to advance, so will global interdependence. What affects one organization, may very well affect many others—making the megacommunity approach viable and necessary.

Megacommunities proposes that we think about our organizations in a more holistic manner, considering them within the broader context of a society with common threats. What types of risks face your organization and organizations in other sectors? A few possibilities come to mind: expansion into new markets, financial crises, natural disasters, pandemic outbreaks, terrorist attacks, cultural conflicts, and information-technology advancement, to name a few.

No longer are our villages, regions, organizations, and countries sustainable without a mindful approach toward mitigating the risks we all face. Building inter-organizational ties within a megacommunity, or simply recognizing and strengthening latent megacommunities around us, appears to be an important step. And at the very least, leaders seeking to successfully manage crises should take heed of the megacommunity concept and consider its implications.

Reference: Gerencser, M., Van Lee, R., Napolitano, F., & Kelly, C. 2008. Megacommunities: How leaders of government, business and non-profits can tackle today’s global challenges together. New York: Palgrave Macmillan.

Lessons Learned from the Fire

Just over a month after a massive lightening storm ignited more than 2,000 fires throughout northern California fire officials recently announced that 98% of the fires have been contained. Still fire officials warned that fire danger remains high throughout the state.

David Balwin, an adjunct at the San Diego campus of the Center for Creative Leadership, knows first hand what some of the residents of northern California have been facing this past month as fires threatened their homes. He and his wife were among the residents endangered by the 2007 Southern California wild fires that destroyed 1,500 homes and over 500,000 acres.

“As my wife and I hunkered down in our home with windows shut tight, we tuned in to the television for ongoing live footage of houses being burned to the ground. But, every few hours the mayor of San Diego would have a communication press conference and facilitated key leaders from the police, fire, national forest service, helicopter pilots, etc. This communication proved essential especially for my wife who has only been in the San Diego area for a couple years,” said Baldwin.

Fortunately their home survived the fires and one of the key lessons David and his wife learned from their experience was the importance of relying on others is times of crisis.

The Baldwin’s insights echoes much of what the General Honoré who was lauded for shaking New Orleans out of a daze after hurricane Katrina struck observed during the height of the Katrina crisis--- the need to have a “culture of preparedness” where people have a natural civic response to helping others in times of crisis.

According to Honoré, the greatest and largely unlearned lesson of Katrina, Honoré was that despite investments and improvements in federal and state disaster response, civic response remained weak.

"I'm sure you and your wife have a plan to meet at Uncle Joe's house, but does your plan include asking Mrs. Smith next door if she needs a ride?" he says. "We saw a lot of Mrs. Smiths in New Orleans," said Honoré.

Another lesson the Baldwins learned from their experience was to have a plan in place in the event of future disasters. “The crisis made us reflect on what are the key personal items we need to have prepared and ready to evacuate with in our hands. Additionally, we purchased a fire safe as our perspective changed from living in a sense of stability to having an evacuation plan in place,” stated Baldwin.

The need to think ahead is articulated in the book “The Unthinkable: Who Survives When Disaster Strikes — and Why” and reviewed in The New York Times. The Time's piece states:

"There are ways to prepare for more common threats like fires, floods and other emergencies. Take part in evacuation drills at work and at home. Make a habit of changing batteries in your smoke detector on a schedule, like the first of the month or every time you change the nearest light bulb. And get to know your neighbors, who can be a valuable resource in emergencies."

The Times and the author offer a "disaster IQ" quiz online:

How Prepared Are You if Disaster Strikes?