I reprint Welsh's article from the WSJ today without permission.
When Welsh has something to say, it is a good idea to listen:
The Five Stages of Crisis-Management
By JACK WELCH
September 14, 2005; Page A20
Our last day in Nantucket this summer, we bumped into a crusty old islander we know, a sea-hand who has seen his share of hurricanes. We asked him about the storm bearing down on New Orleans. "Probably just another overhyped Weather Channel event," he mused. We saw him again the next day, a few hours after the storm's landfall, and he repeated his take, this time with relief. We agreed -- the pictures on TV weren't that bad.
Then, of course, the levees broke and all hell broke loose with them.
* * *
In the terrible days since then, there has been a hurricane of debate about what went wrong in New Orleans and who is to blame. Mother Nature, perhaps for the first time in the case of a bona fide natural disaster, has been given a pass. Instead, the shouting has been about crisis-management -- or the lack thereof. Everyone from President Bush to the police chief in a small parish on the outskirts of the city has been accused of making shockingly bad mistakes and misjudgments. The Katrina crisis, you would think, is unlike any before it.
Unfortunately, that's not completely true.
Yes, there has never been a natural disaster of Katrina's magnitude in our history. An entire city has been devastated, hundreds of lives lost, and hundreds of thousands of people displaced. In terms of impact, only an extended catastrophe like the Great Depression can compare in scope.
And yet, Hurricane Katrina is practically a case study of the five stages people seem to have to go through during severe crises. Over the past 40 years, I've seen these stages unfold in companies large and small, of every type, in every part of the world, and I went through them myself at my own company more than a few times.
New Orleans, of course, is not a company, but like any city, it is an organization. And there can be no denying that New Orleans' crisis is tragic in a way that company crises are not. But contrary to the sound and fury out there right now, the Katrina crisis follows a well-worn pattern.
The first stage of that pattern is denial. The problem isn't that bad, the thinking usually goes, it can't be, because bad things don't happen here, to us. The second is containment. This is the stage where people, including perfectly capable leaders, try to make the problem disappear by giving it to someone else to solve. The third stage is shame-mongering, in which all parties with a stake in the problem enter into a frantic dance of self-defense, assigning blame and claiming credit. Fourth comes blood on the floor. In just about every crisis, a high profile person pays with his job, and sometimes he takes a crowd with him. In the fifth and final stage, the crisis gets fixed and, despite prophesies of permanent doom, life goes on, usually for the better.
We are a way off from the fifth stage in New Orleans, but the first four played out like an old movie.
* * *
Denial: In the days and even hours before the hurricane struck, officials at every level of the government demonstrated a lack of urgency about the storm that seems crazy now. No one operated out of malice -- that can be said for certain. But the facts reveal the kind of paralysis so often brought on by panic and its ironically common side-effect, inertia. The federal government received hourly updates on the storm, but the head of FEMA, the ill-fated Michael Brown, waited 24 hours, by the most generous estimations, before ordering personnel into the area. The state's governor, in her early communications with the president, mainly asked for financial aid for the city's clean-up efforts. On the local level, the mayor let a critical 12 hours elapse before ordering an evacuation of the city.
Denial in the face of disaster is human. It is the main and immediate emotion people feel at the receiving end of any really bad news. That doesn't excuse what happened in New Orleans. In fact, one of the marks of good leadership is the ability to dispense with denial quickly and face into hard stuff with eyes open and fists raised. With particularly bad crises facing them, good leaders also define reality, set direction and inspire people to move forward. Just think of Giuliani after 9/11 or Churchill during World War II. Denial doesn't exactly come to mind -- a forthright, calm, fierce boldness does.
All that was in short supply during the disaster in New Orleans. But it might be argued that denial in and about New Orleans started long ago. New Orleans was a city with more than 20% living below the poverty line, a homicide rate almost 10 times higher than New York, and an intractable tradition of political corruption.
Why did it take a hurricane to reveal these unacceptable conditions?
New Orleans was also well aware that its levee system was inadequate for a major storm and that the economic plight of its citizenry, with their lack of cars and cash, rendered evacuation plans meaningless.
Why did it take a hurricane to prove those points?
In both cases, the only answer is denial, that predictable first phase of crisis, which in Katrina's case, happened before, during, and after the actual storm.
Containment: For this second predictable phase in crises, Katrina was no exception. In companies, containment usually plays out with leaders trying to keep the "matter" quiet -- a total waste of energy, as all problems, and especially messy ones, eventually get out and explode. In Katrina's case, containment came in a related form, buck-passing -- pushing responsibility for the disaster from one part of government to another in hopes of making it go away. The city and state screamed for federal help, the feds said they couldn't send in the troops (literally) until the state asked for them, the state said it wouldn't approve the federal relief plan, and round and round went the baton.
No layer is a good layer. Bureaucracy, with its pettiness and formalities, slows action and initiative in any situation, business or otherwise. In a crisis like Katrina, it can be deadly. The terrible part is that Katrina might have avoided some of its bureaucratic bumbling if FEMA had not been buried in the Department of Homeland Security. As an independent entity for decades prior, FEMA fared better. But inside Homeland Security, FEMA was a layer down, twisted in and hobbled by government hierarchy. And to make matters worse, its head, Michael Brown, appears to have been an inexperienced political operative -- making his appointment an example of bureaucratic inefficiency at its worst.
Shame-mongering: This is a period in which all stakeholders fight to get their side of the story told, with themselves as the heroes at the center. Katrina's shame-mongering had blasted into overdrive by Tuesday, about 48 hours after landfall. I would wager that never before has a storm become so politicized. Very quickly, Katrina wasn't a hurricane -- it was a test of George Bush's leadership, it was a reflection of race and poverty in America, it was a metaphor for Iraq. The Democrats used the event to define George Bush for their own purposes; the Republicans -- after a delay and with markedly less gusto -- used it to define them back. The key word here is delay. Because in any crisis, effective leaders get their message out strongly, clearly -- and early. George Bush and his team in Washington didn't do that, and they are paying for it.
Blood on the floor: From the moment it became obvious that Katrina was a crisis-management disaster, you knew someone's head was going to roll. That's what usually happens in the fourth stage of crises. People need to feel that someone has paid, and paid dearly, for what went wrong. Michael Brown was the obvious choice -- a guy who had few hard credentials in his bag of defenses. And if Katrina is like most crises, his blood won't be the last spilled. In a few weeks, more personnel changes in FEMA and Homeland Security are sure to come, and politicians in New Orleans and Louisiana will be both made and ruined by what they did during the storm.
* * *
Eventually, all crises go away, and New Orleans' will too. The waters will recede; people will return and rebuild. In a year, the media will report that progress toward normalcy has been made. In three years, the best levees ever constructed will be completed with great fanfare; the Superdome or its replacement will have been outfitted to keep thousands of people housed and fed for a month. In five years, the before-and-after photos of New Orleans will boggle the mind.
History shows us that crises almost always seem to give way to something better. Maybe that's because crises reveal how and where the system is broken in ways that make denial no longer feasible. They have a way of forcing real solutions to happen.
Hurricane Katrina has the potential to do that in New Orleans -- to compel leaders in government and business to find ways to break the city's cycle of poverty and corruption. The opportunities are huge because the losses were. There is a blank slate for change to begin, and it most likely will. Just watch the entrepreneurs rush in with ideas and energy, revitalizing old and creating new businesses with the help of the money politicians will be outbidding one another to throw at the problem. Just watch the residents of New Orleans flock to the jobs that are created with a new spirit of optimism. Crises like Katrina have a way of galvanizing people toward a better future. That's the fifth and final part of the pattern -- the best part.
Now, you may be wondering that if most every crisis follows a pattern, why can't we manage them better, or even prevent them?
In business, we very often do. Over time, organizations may go through several crises, but very rarely do they go through the same type twice. The reason? Companies typically go to extremes after a crisis. They throw up fortresses of rules, controls and procedures to fix what went wrong in the first place. In that way, they build a kind of immunity to the sickness that felled them. It is very unlikely, for instance, that Johnson & Johnson will ever have another product-tampering disaster like Tylenol.
Immunity to crises comes from learning. Crises teach us where the system is broken and how to repair it so it won't break again. Ultimately, learning is why disasters, in business and in nature, have the potential to make the organizations that survive them so much stronger in the long run. And learning will reveal the crisis management of Katrina for what it was -- an age-old pattern meant to be broken.
When Welsh has something to say, it is a good idea to listen:
The Five Stages of Crisis-Management
By JACK WELCH
September 14, 2005; Page A20
Our last day in Nantucket this summer, we bumped into a crusty old islander we know, a sea-hand who has seen his share of hurricanes. We asked him about the storm bearing down on New Orleans. "Probably just another overhyped Weather Channel event," he mused. We saw him again the next day, a few hours after the storm's landfall, and he repeated his take, this time with relief. We agreed -- the pictures on TV weren't that bad.
Then, of course, the levees broke and all hell broke loose with them.
* * *
In the terrible days since then, there has been a hurricane of debate about what went wrong in New Orleans and who is to blame. Mother Nature, perhaps for the first time in the case of a bona fide natural disaster, has been given a pass. Instead, the shouting has been about crisis-management -- or the lack thereof. Everyone from President Bush to the police chief in a small parish on the outskirts of the city has been accused of making shockingly bad mistakes and misjudgments. The Katrina crisis, you would think, is unlike any before it.
Unfortunately, that's not completely true.
Yes, there has never been a natural disaster of Katrina's magnitude in our history. An entire city has been devastated, hundreds of lives lost, and hundreds of thousands of people displaced. In terms of impact, only an extended catastrophe like the Great Depression can compare in scope.
And yet, Hurricane Katrina is practically a case study of the five stages people seem to have to go through during severe crises. Over the past 40 years, I've seen these stages unfold in companies large and small, of every type, in every part of the world, and I went through them myself at my own company more than a few times.
New Orleans, of course, is not a company, but like any city, it is an organization. And there can be no denying that New Orleans' crisis is tragic in a way that company crises are not. But contrary to the sound and fury out there right now, the Katrina crisis follows a well-worn pattern.
The first stage of that pattern is denial. The problem isn't that bad, the thinking usually goes, it can't be, because bad things don't happen here, to us. The second is containment. This is the stage where people, including perfectly capable leaders, try to make the problem disappear by giving it to someone else to solve. The third stage is shame-mongering, in which all parties with a stake in the problem enter into a frantic dance of self-defense, assigning blame and claiming credit. Fourth comes blood on the floor. In just about every crisis, a high profile person pays with his job, and sometimes he takes a crowd with him. In the fifth and final stage, the crisis gets fixed and, despite prophesies of permanent doom, life goes on, usually for the better.
We are a way off from the fifth stage in New Orleans, but the first four played out like an old movie.
* * *
Denial: In the days and even hours before the hurricane struck, officials at every level of the government demonstrated a lack of urgency about the storm that seems crazy now. No one operated out of malice -- that can be said for certain. But the facts reveal the kind of paralysis so often brought on by panic and its ironically common side-effect, inertia. The federal government received hourly updates on the storm, but the head of FEMA, the ill-fated Michael Brown, waited 24 hours, by the most generous estimations, before ordering personnel into the area. The state's governor, in her early communications with the president, mainly asked for financial aid for the city's clean-up efforts. On the local level, the mayor let a critical 12 hours elapse before ordering an evacuation of the city.
Denial in the face of disaster is human. It is the main and immediate emotion people feel at the receiving end of any really bad news. That doesn't excuse what happened in New Orleans. In fact, one of the marks of good leadership is the ability to dispense with denial quickly and face into hard stuff with eyes open and fists raised. With particularly bad crises facing them, good leaders also define reality, set direction and inspire people to move forward. Just think of Giuliani after 9/11 or Churchill during World War II. Denial doesn't exactly come to mind -- a forthright, calm, fierce boldness does.
All that was in short supply during the disaster in New Orleans. But it might be argued that denial in and about New Orleans started long ago. New Orleans was a city with more than 20% living below the poverty line, a homicide rate almost 10 times higher than New York, and an intractable tradition of political corruption.
Why did it take a hurricane to reveal these unacceptable conditions?
New Orleans was also well aware that its levee system was inadequate for a major storm and that the economic plight of its citizenry, with their lack of cars and cash, rendered evacuation plans meaningless.
Why did it take a hurricane to prove those points?
In both cases, the only answer is denial, that predictable first phase of crisis, which in Katrina's case, happened before, during, and after the actual storm.
Containment: For this second predictable phase in crises, Katrina was no exception. In companies, containment usually plays out with leaders trying to keep the "matter" quiet -- a total waste of energy, as all problems, and especially messy ones, eventually get out and explode. In Katrina's case, containment came in a related form, buck-passing -- pushing responsibility for the disaster from one part of government to another in hopes of making it go away. The city and state screamed for federal help, the feds said they couldn't send in the troops (literally) until the state asked for them, the state said it wouldn't approve the federal relief plan, and round and round went the baton.
No layer is a good layer. Bureaucracy, with its pettiness and formalities, slows action and initiative in any situation, business or otherwise. In a crisis like Katrina, it can be deadly. The terrible part is that Katrina might have avoided some of its bureaucratic bumbling if FEMA had not been buried in the Department of Homeland Security. As an independent entity for decades prior, FEMA fared better. But inside Homeland Security, FEMA was a layer down, twisted in and hobbled by government hierarchy. And to make matters worse, its head, Michael Brown, appears to have been an inexperienced political operative -- making his appointment an example of bureaucratic inefficiency at its worst.
Shame-mongering: This is a period in which all stakeholders fight to get their side of the story told, with themselves as the heroes at the center. Katrina's shame-mongering had blasted into overdrive by Tuesday, about 48 hours after landfall. I would wager that never before has a storm become so politicized. Very quickly, Katrina wasn't a hurricane -- it was a test of George Bush's leadership, it was a reflection of race and poverty in America, it was a metaphor for Iraq. The Democrats used the event to define George Bush for their own purposes; the Republicans -- after a delay and with markedly less gusto -- used it to define them back. The key word here is delay. Because in any crisis, effective leaders get their message out strongly, clearly -- and early. George Bush and his team in Washington didn't do that, and they are paying for it.
Blood on the floor: From the moment it became obvious that Katrina was a crisis-management disaster, you knew someone's head was going to roll. That's what usually happens in the fourth stage of crises. People need to feel that someone has paid, and paid dearly, for what went wrong. Michael Brown was the obvious choice -- a guy who had few hard credentials in his bag of defenses. And if Katrina is like most crises, his blood won't be the last spilled. In a few weeks, more personnel changes in FEMA and Homeland Security are sure to come, and politicians in New Orleans and Louisiana will be both made and ruined by what they did during the storm.
* * *
Eventually, all crises go away, and New Orleans' will too. The waters will recede; people will return and rebuild. In a year, the media will report that progress toward normalcy has been made. In three years, the best levees ever constructed will be completed with great fanfare; the Superdome or its replacement will have been outfitted to keep thousands of people housed and fed for a month. In five years, the before-and-after photos of New Orleans will boggle the mind.
History shows us that crises almost always seem to give way to something better. Maybe that's because crises reveal how and where the system is broken in ways that make denial no longer feasible. They have a way of forcing real solutions to happen.
Hurricane Katrina has the potential to do that in New Orleans -- to compel leaders in government and business to find ways to break the city's cycle of poverty and corruption. The opportunities are huge because the losses were. There is a blank slate for change to begin, and it most likely will. Just watch the entrepreneurs rush in with ideas and energy, revitalizing old and creating new businesses with the help of the money politicians will be outbidding one another to throw at the problem. Just watch the residents of New Orleans flock to the jobs that are created with a new spirit of optimism. Crises like Katrina have a way of galvanizing people toward a better future. That's the fifth and final part of the pattern -- the best part.
Now, you may be wondering that if most every crisis follows a pattern, why can't we manage them better, or even prevent them?
In business, we very often do. Over time, organizations may go through several crises, but very rarely do they go through the same type twice. The reason? Companies typically go to extremes after a crisis. They throw up fortresses of rules, controls and procedures to fix what went wrong in the first place. In that way, they build a kind of immunity to the sickness that felled them. It is very unlikely, for instance, that Johnson & Johnson will ever have another product-tampering disaster like Tylenol.
Immunity to crises comes from learning. Crises teach us where the system is broken and how to repair it so it won't break again. Ultimately, learning is why disasters, in business and in nature, have the potential to make the organizations that survive them so much stronger in the long run. And learning will reveal the crisis management of Katrina for what it was -- an age-old pattern meant to be broken.