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Managing Crises in the Short and Long Term
A conversation with researcher Eric McNulty about how to avoid common traps.
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Eric McNulty, associate director of Harvard’s National Preparedness Leadership Initiative, studies how managers successfully lead their companies through crises such as the Deepwater Horizon oil disaster and the Boston Marathon terror attack. He identifies the common traps that leaders fall into and shares how the best ones excel by thinking longer-term and trusting their teams with operational details. He also finds that companies that put people ahead of the bottom line tend to weather these storms better. McNulty is a coauthor of the book You’re It: Crisis, Change, and How to Lead When It Matters Most and the HBR article “Are You Leading Through Crisis… Or Managing the Response?”
CURT NICKISCH: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Curt Nickisch.
Ten years ago, on April 20, 2010, the Deepwater Horizon oil rig exploded in the Gulf of Mexico. The fireball was visible 65 kilometers away; eleven workers died. The explosion launched the biggest accidental oil spill in history.
U.S. Coast Guard Rear Admiral Peter Neffenger became the deputy national incident commander. Over the coming weeks and months, he discovered that his role was not micromanaging the operational response to the spill itself. Rather, it was navigating the complex issues that were consuming stakeholders at all levels: environmental ones, legal, economic, and social. Neffenger’s efforts helped create the room for people on the ground and in the water to succeed.
Our guest on the show today was on site with Admiral Neffenger, studying the response. We’ve brought him on the show to talk about today’s crisis. The coronavirus pandemic has struck economics, paralyzed some businesses and markets, and is testing leaders and managers in ways they never imagined.
Eric McNulty is the associate director of the National Preparedness Leadership Initiative at Harvard. He’s also the coauthor, along with Leonard Marcus, of the HBR article “Are You Leading Through Crisis… Or Managing the Response?”
Eric, thanks so much for joining us.
ERIC MCNULTY: Curt, it’s a pleasure to be here.
CURT NICKISCH: We’re now a few weeks, or even a few months into this COVID-19 pandemic, depending on where you are in the world. What about this crisis feels similar to you to other ones that you’ve studied?
ERIC MCNULTY: It’s similar in that there is a major threat facing a population. There are levels of cognitive disruption, psychological disruption and emotional disruption. Which really sends people and organizations – keeps them on edge. They aren’t quite sure where to turn. It’s quite different in its scope and scale obviously, in that it’s touching virtually everyone on the planet.
CURT NICKISCH: One thing that seems particularly hard about this current situation is just the ongoing, uncertainty. I bet if you interviewed a bunch of preparedness leaders at companies and organizations before this, they would think that maybe four weeks, or two months into a crisis that they would have most of their work behind them. I bet that’s what they would have said.
ERIC MCNULTY: Exactly. In most crisis, say whether the hurricane, terror attack, a wildfire, the actual, the actual incident is relatively short from a few seconds, to a few hours, to a few days. The recovery may take quite some time. But you’re actually sort of in the fight with the actual incident for relatively a short period of time.
This as you mentioned earlier is gone on not just for weeks, but for months in parts of the world and it’s going to go on for months more. And so one of the challenges there for managers is to understand how to offboard and onboard people onto that crisis management team. Because it’s not going to be that A-team, or that first group that you can’t last forever. You physically, mentally, you can’t just do this, you know, work long hours, seven days a week forever. You’re going to wear yourself out.
So you got to be able to rotate people through the team, while maintaining an operational rhythm. And that can be a real challenge if you haven’t thought through. Do you have overlapping shifts so you can have a smooth hand off? Are roles and responsibilities clearly defined? And I do have a, for lack of better word, sort of a house style so the team dynamic isn’t changed radically when Eric steps down and Curt steps in. You want some continuity there. So it does take some practice and some having the right mindset and a common set of tools and vocabulary.
CURT NICKISCH: Yeah, I’ve heard of this team war room fatigue. Because a lot of companies have these incident response teams in so-called war rooms – that’s where people who kind of expected to get along on adrenaline for a certain amount of time, and work those late nights realize that this is a marathon and not a sprint.
ERIC MCNULTY: Absolutely. And it can be really hard to get those people to step back. I mean it does take discipline because you know, you’ve practiced for this, you trained for it, you’re ready. You feel responsible for it. The company has asked you to be on that war room team, that crisis management team. But you have to realize that the goal here is to be stronger, longer.
And one of the best emergency managers I ever had the privilege of meeting through the years, worked at the CDC. And he was very disciplined, but after an eight hour shift, he would leave and hand it off to someone else. Which both modeled the behavior you want to see; it demonstrated the faith he had of the other people who could step up in his role as he stepped back and because it was a rhythm, it wasn’t like you were worn out or somehow weak. It was, I’ve worked as hard as I can right now and the way the team functions best is for me to step back, someone else to step in and that has to happen across the roles.
CURT NICKISCH: Yeah, like it or not people are in this situation now. So maybe let’s start with some of the common mistakes that leaders get wrong in crises that, you know, whether they’re prepared for it or not, that people just tend to do wrong because they’re used to operating in a certain way. What are some of those biggest things that you think leaders get wrong in a sudden crisis?
ERIC MCNULTY: One of them I think again is that this notion that the team environment – that a crisis is a crisis because it, it’s creating some sort of existential threat to the organization, be it reputation, be it financial. But it’s not going to be solved by one person alone. You’re going to have to work as a team.
CEOs, other senior executives, their natural style is one of dominance rather than one of collaboration. So they’re natural competitors. They compete in the marketplace. They’ve competed hard against others to get to the job they’re in. And they try to outcompete the problem and a major crisis like this is what we actually have to out collaborate it.
You have to get people working together, just, not only in your senior team, but to right your organizations, what we call swarm leadership. Where people are moving in synchrony and they are able to coordinate, collaborate and communicate very smoothly. You’re not going to overpower a coronavirus. You’re not going to out think it and you’re not going to out negotiate it. Your ability to act collectively, and consistently to get you through this kind of crisis.
CURT NICKISCH: So what does that look like?
ERIC MCNULTY: Getting it right is the best example we ever, was in the Boston Marathon bombing response. 2013, a horrible day here in Boston. But when we looked back and we talk to about three dozen or so of the people in leadership positions across that response, it was the most collaborative response we had ever seen. It actually turned out that no one was in operational control, of the overall activity.
People were in charge of their chains of command, but at the leadership level they worked really well together. This is where we came up with this notion of swarm leadership based on swarm intelligence in the nonhuman, animal world. But there were behaviors that were consistent across the leaders that made that possible.
They put their egos aside. They showed high emotional intelligence and they were not trying to take credit or assign blame. Very generous and supportive of each other. Yet able to stay in their own lanes and be very credible and reliable doing the job they were supposed to do, but also able to help each other.
There was a long foundation of trust-based relationships, and overall there was unity of mission. And we’ve seen now organizations go out into the field be it Red Cross, or others, into a disaster. They have those five behaviors. They stick them up on the wall and say this is how we want to behave and this is, you know, keep your ego in check. Do your job well, but help others when you can. Make sure everybody’s clear on the overall mission and be building trust throughout it.
CURT NICKISCH: What does it look like though when people get it wrong?
ERIC MCNULTY: This notion of trying to out compete it – they over centralize it. They try to pull everything into either a single person or a very small team and say look, we’re going to make all the decisions. They want to sign off on every tweet, on every overnight express bill if they’re watching expenses. What the result is, you become a choke point because there’s only so much you can do. You squash any kind of initiative further down in the organization because everyone’s waiting for permission before they do anything. And then you become a single point of failure. If you break down and you can’t get it done, the whole organization gets paralyzed.
The classic example of this was Coca-Cola back in the ‘80s when they had a product problem and kids in Belgium and France started getting sick. And Doug Ivester the CEO pulled everything back, out of Europe, back to Atlanta. Centralized everything and I spoke to one of the then senior communications people who said we can never get ahead of, even play in the news cycle because by the time we found out what was going on we had to send it back to Atlanta for approval. By the time they got it back to us it was too late.
And so, you want agility. You want, you want to give people some clear guidelines not to go outside of – you know, don’t break the law. Take care of people. Some basic core operating principles and then give them freedom to act. Because in an event is complex and as wide scale as the coronavirus, people have got to be acting independently within the guidelines you give them, but you got to give them the freedom to, and get some fluid motion going on. Otherwise you’re going to stagnate and you’re going to get stuck behind and you become a victim.
CURT NICKISCH: I’m going to guess that when managers or leaders really try to keep close tabs and look down at what’s happening below them and try to micromanage it, that they also lose sight of the bigger picture of where the organization’s headed – not just where it is at the moment, what they’re dealing with at the moment, but also where they’re trying to get to?
ERIC MCNULTY: You’re absolutely right. Taking a narrow view is another one of those traps and the human mind is hardwired when faced with a threat to narrow its perspective. You think back to our sort of prehistoric ancestors. When they heard a rustling in the bushes they had to really quickly figure out was that going to eat them, or were they going to eat it?
And so this narrowing happens and you have to, if you’re going to lead, you have to pull back and see that bigger picture, not just the foreground, what’s happening now, but the mid-ground and the background, looking into the future. Because if you’re leading you got to be thinking about not what has to happen right this second. Hopefully you’ve got competent people around you doing that. But what are we going to need in two weeks, two months, six months?
We’re looking at coronavirus right now. You need to be thinking if there’s a lull this summer, how are you going to take best advantage of that? If cases come back with a fury in the fall and the winter, how are you going to deal with that? How does turning the things back on that you’ve already turned off, what’s that going to look like? That is always more complex than you realize. It’s not just you go ahead flip a light switch and everything’s back to normal. You’re going to have a lot of work in terms of resynchronizing your supply chain, all kinds of things are going to pop up in terms of getting back to whatever the next reality is. And as a leader you got to be looking there begin. You and half the people thinking that way to prepare you for it.
CURT NICKISCH: How do you know then as a leader when to focus on details and when to be thinking about a year or five years down the road?
ERIC MCNULTY: Well I think what I would be doing now, while I counsel senior executives to do is to just as you have a crisis response team working on things right now, have that, at least two or three people being a crisis future team. And looking out there two, three, six months down the road and be asking all those detailed questions. You can’t get obsessed with it. You might want to probe a bit to make sure they’re pushing hard enough. But say OK, we’re anticipating this is going to happen in June. This is going to happen in September. What has to be true for that to happen? What might get in the way of that happening? So you test your assumptions. But have those two or three people who are, whose only job is future, not the present, to be figuring out and watching the news, getting competitive resource, getting market research, figuring out what’s happening, looking to see what’s going on.
If they’re not absorbed by now, they have much more freedom to look forward and figure it out and to just keep reporting back to you and touching base. Because your job as a leader is to bring people into that uncertain future with confidence and hope. And if you’re going to do that you have to have some idea what you’re expecting to happen when you get there.
CURT NICKISCH: One thing about this crisis is that it’s both an economic and a health crisis. It effects people. It effects your workers. It effects how they work. How as a leader do you navigate making decisions that are right for your employees and the people who you work with and the same time trying to move an enterprise, an organization and pivot it into the future?
ERIC MCNULTY: Well Curt you’ve hit on a really important point because there is a fundamental, visceral difference in crisis that effect people personally and threaten their personal – their health, the health of their families. It’s just a whole different order of magnitude emotionally. And so I think you have to realize that until people feel some sort of emotional safety or security, they aren’t going to do well in terms of resolving the business issues.
So, it’s really important that you take care of those human factors. You remember that people are in a fear-based state, and to the extent that you can pull them out of that. And that can mean, it’s part by being a trusted transparent source of information that you are upfront about how difficult things are, the choices you may have to make, while also expressing confidence in them as a team, that you will get through this.
That you can take care of people as best you can and as best you’re financially able as well as emotionally able to do. So if you have to let people go, try to let them go with as much dignity as possible. I’ve also just in the last couple days started seeing this idea of lifeline benefits seems to be percolating up, which is that some organizations are saying, even though we have to let you go, we’re going to continue wellness benefits, or financial wellness benefits for a period of months. Maybe some healthcare coverage for a while.
Because you may want to bring those people back as you begin to recover. Who are those folks you want to be able to bring back? Because again that, it’s part of the complexity of restarting things if you have to start hiring and training that slows things down. If you can bring back good people quickly, and therefore you want to maintain that relationship with them, that’s a way to do it. Take care of your people. They will ultimately take care of you. And you have to realize this is, everyone’s operating in a place of fear right now. When you start operating from fear you tend not to do, you’re not performing optimally for sure.
CURT NICKISCH: And how do you communicate that? What is a good style and amount of communication from leaders at a time like this?
ERIC MCNULTY: I think the best thing to do is to establish a rhythm. You don’t want to over communicate. You don’t want to be in people’s faces all the time. But I think you want to have, you want to have a rhythm be it every couple of days. If it’s a major change in what’s happening with the virus for example, you may want to come out and say something, but otherwise people can expect to hear from you every couple days, twice a week.
I think it’s great now that people can take advantage of video, be it prerecorded, or live videoconferences. We have so much more capability now. Because you can communicate so much more, at a more authentic level when people can see you and not just read a memo.
Don’t be afraid to show emotion. And I think it’s also good, again this came, a practice I heard about the other day was having your senior people make the occasional random call, three, four, five levels down in the organization to people who never heard from the CFO or the CEO, just to ask how someone’s doing. Just checking in – “Curt. How’s it going? Tell me what’s going on. What’s going well?” Have a brief conversation.
You’ve got to show that you care. I mean you got to be authentic about it. It’s, it really is a matter of don’t talk about revenue. Don’t talk about sort of the usual metrics. It’s more about expressing confidence in people that we’ll get through it. We have a great team. That you have confidence in them. And that you’re going to support them as best you can going through it. And then be sure to listen. Don’t just broadcast stuff out, but have channels where you can hear back. Be that directly or through your management channels, but be able to get some feedback to how are people actually feeling? What are they concerned about?
CURT NICKISCH: You’ve worked with many companies that are good models for crisis leaders and for organizations that pivot well and navigate well through a crisis and into the future. When you look out at the companies and organizations and top leaders out there now, what have you been observing? Can you give some examples of things that you like to see and some things that you wish you hadn’t?
ERIC MCNULTY: Sure. I mean I think there are a number of people and organizations trying really hard right now, which is good. And this is now when you see the people who have built the systems and aren’t relying on individual heroes to get stuff done, but they’ve built the systems to be able to pivot in situations like this that really pay off.
I will say one of them that I was most impressed with was Lyft, the ride-sharing company that quickly tried to repurpose themselves to be able to, so their drivers could provide rides for essential workers, healthcare workers to get them to and from their shifts safely. There’s a way you can use your business strength to service social goods in the midst of crisis. It helps keep you functioning, your drivers functioning and provides an essential social service.
And that’s a way they’ve done that and that’s built from earlier capability, Airbnb is, can’t do this now, but has done this in crisis before and been a real pioneer at turning their business model into a social purpose model in disaster areas really quickly.
CURT NICKISCH: Both those companies Lyft and Airbnb, those are companies that are definitely hard hit by what’s happening now, and their revenue has to be crashing.
ERIC MCNULTY: Absolutely. But it’s looking back at what are their core business capabilities and what are their core competencies, and how do they pivot with those into something that makes sense right now? And they’re doing that and I’m sure they’re not, this is not a real moneymaking venture, but I think we see a number of businesses that are saying, how do we just generate enough revenue to stay alive? Even if we’re serving people at no profit at the moment, can we use what we know how to do and the capabilities we have to help the society get through this?
Because only if society gets through it do the businesses recover. Jet Blue for example said we’ve got pilots and aircraft. Can we move medical supplies? We’re here to do it. Other companies saying we are extending a lot of loyalty benefits and things for the next two, you know, your status is good for two years. So we are trying to think of you, the customer, we’re planning to be here. It gives a signal they plan to be here. They plan to have confidence in this going forward.
So I’ve always reacted well when I get these notifications or I talk to people and they really do demonstrate how they’re taking care of their associates, their employees. Because at the end of the day that’s the company. That’s the company you interact with are the people and if they take care of the people, it shows their head is in the right place and they’re trying to take care of business by taking care of their core asset.
CURT NICKISCH: Have you seen any CEOs or anybody saying anything that really made you scratch your head right now?
ERIC MCNULTY: I haven’t seen them so much say something that made me scratch my head, as I have some who just seem to be silent. And again, there was some initial, I think an over, over communication where everybody, whoever had your email address is sending you a note saying, we’re concerned and we’re doing something about it.
CURT NICKISCH: Right. I finally learned how many, how many companies’ mailing lists I’m on when this happened.
ERIC MCNULTY: Exactly. Right. And you ordered from us once, you ordered a pair of shoes five years ago and we’re really concerned about you.
CURT NICKISCH: I know, I know.
ERIC MCNULTY: So there is that bit of over communication you want to avoid. On the other hand, I think you need to really focus on if you’ve got inbound call centers, can people get to, can they get to people if they call in to resolve something? It’s important. And they, can they actually talk to a person and is that person empowered to take action and help? And can you sense that they feel good about what they do?
Or, is it, you know, the endless phone free and frustration and that’s, you know, that’s why the companies are getting it wrong. Not just the mass communication with their audience, but the one on one communication with them and you know, because there are things you have to call now and try to resolve and if you can’t get to a person who sounds like they care and sounds like they’re empowered to fix your problem, you wonder what else is going on.
CURT NICKISCH: So, you’ve given our listeners a lot to think about. And nobody’s going to figure it all out right away, but what are some good questions to ask yourself for some things to be thinking about what, as you start out on this journey of trying to respond to a crisis, pivot to the future and also take care of your people?
ERIC MCNULTY: You need to be asking yourself, I would do a best case, worst case question. Best case, what do we look like a year from now, two years from now? And I don’t just mean that financially, but I mean that you’re an organization where you retained the talent you want to retain. You’re attracting the talent you want to attract. Your customers are happy and growing. What does that look like and what had to be true to get you there? What are the things you got right that got you to that best case?
And then on the other side, look at the worst case and say that either you’re out of business or you’re close to it. Or, people are leaving you for competitors. Both customers and associates. What did you get wrong? And as clear eyed as you can be about that and as brutally honest as you can be with yourself and with your team, I would appoint somebody as a, one or two people as devils advocates to really make sure you’re pushing as hard as you can.
Look at those things and let, and then let them be your guide. These things will reveal themselves. There’s not a huge set of mysterious secrets here. Yes, it varies by industry and company size and geography a bit, but it is recognizing your fundamental humanity and those around you, the pain of society right now, and also the need for the economy to thrive as much as we need to solve the healthcare, the health problem right now. People are going to need jobs. We need economies to go. There’ll be casualties from that as well.
And so, recognizing those fundamental truths and then making sure you’re taking the steps to get as close to that best case as possible. And I think if you do that, the revenue and profit stuff, it almost takes care of itself.
CURT NICKISCH: In your work have you encountered a good example of that?
ERIC MCNULTY: Absolutely. I think one of the most compelling examples of that is, the company Sandler O’Neill. They were a boutique investment bank. Their headquarters were in the World Trade Center towers. And on 9/11 planes crashed and the towers came down. They lost quite a number of people. They lost two out of the three managing partners.
The surviving partner, Jimmy Dunne now found himself head of a much diminished firm and it was in danger of going out of business. And I interviewed Jimmy for our book and he talked about how he saw this as a personal crusade. That he was not going to go out of business because that would have been a victory for the terrorists.
And so his way of fighting back was to make sure they stayed in business. Rallied his team, and what he described to us was he thought of the human issues in one hand and by human issues I mean he continued salaries, paying salaries to the families of some of the deceased. He continued health benefits for those families so they weren’t left to drift. He kept on as many people as they could. And he went to every funeral personally. Every funeral he could get to, he went to.
And really concentrated on those people, those people together were the firm. Not the deals, not the file cabinets, not the contents. It was the people. And they began to battle back. And what they found was people loaned them office space. People – competitors brought them into deals to give them some business to keep them afloat. And what he said was, the more he took care of the human issues, the people issues, he had in one hand, the business issues he held in the other hand, seemed to almost take care of themselves.
Because the people he was taking care of, they were getting the business done and they were exhibiting a spirit that others wanted to help. And now they not only survived, they grew. They weathered through the 2008 financial crash when they went from being a boutique firm to actually a major firm…
CURT NICKISCH: Didn’t they, didn’t the employees take pay cuts during the financial crisis to help the company?
ERIC MCNULTY: Yes, and I’ve seen this there and other companies as well. We’re seeing it now. That in a severe economic slowdown the people at the top, take pay cuts, sometimes right down to no salary at all, for a period of time to help preserve jobs elsewhere in the organization. So those who are, had been rewarded most handsomely through the years, take the biggest cut now to keep things alive.
Because just like Jimmy after 9/11 he realized the people are the company. And so, if you have to endure some short-term pain in order to help keep other people solvent, you do that. And so, he wouldn’t take it and again, there’s been numerous examples I see at big brand name companies and lesser-known companies right now of chief executives going down to low or almost, or no pay as a way of keeping cash in the business and being able to fund more frontline employees.
When you do things like that, those stories live for years. They live for generations. They become cultural defining moments that are carried forward – that this company cares about us. That the people at the top actually are in touch and know what the experience of frontline workers is like and are willing to – they are in the fight. They’re willing to sacrifice alongside everybody else in order to get the company, get the organization through this to the other side.
CURT NICKISCH: Eric, thanks so much for talking with us today. Please stay safe and healthy.
ERIC MCNULTY: You too Curt. Thank you and thank you to all your listeners. Let’s all stay safe.
CURT NICKISCH: That’s Eric McNulty. He’s the Associate Director of the National Preparedness Leadership Initiative and he’s a co-author along with Leonard Marcus of the book, You’re It: Crisis, Change, and How to Lead When it Matters Most and they co-wrote the HBR article, “Are You Leading Through Crisis… or Managing the Response”. You can find that along with all the free coronavirus coverage at HBR.org.
This episode was produced by Mary Dooe. We get technical help from Rob Eckhardt. Adam Buchholz is our audio product manager. Thanks for listening to the HBR IdeaCast. I’m Curt Nickisch.