Organizational culture and leadership style:
The missing combination for selecting the right leader for effective crisis management
Melissa R. Bowers
a,*, J. Reggie Hall
b,1, Mandyam M. Srinivasan
aaCollege of Business Administration, The University of Tennessee Knoxville, 242 Stokely Management Center, Knoxville,TN37996-0562, U.S.A.
bPrincipalOwnerandConsultant,BaldEagleAssociatesStrategicConsultingServices,Ogden,UT,U.S.A.
1. The Taiwan-4 incident: A high-risk, high-magnitude crisis
InAugust2006,theUnitedStatesAirForce(USAF) mistakenlysentfournuclearfusesthathelptrigger nuclear warheads in Minuteman ICBMs to Taiwan instead of four replacement battery packs Availableonlineatwww.sciencedirect.com
ScienceDirect
www.elsevier.com/locate/bushor
* Correspondingauthor
E-mailaddresses:[email protected](M.R.Bowers), [email protected](J.R.Hall),[email protected](M.M.Sri- nivasan)
1Colonel,UnitedStateAirForce(Retired)
KEYWORDS Crisismanagement;
Leadershipstyles;
Organizationalculture;
Crisismanagement leadership;
Organizational leadership
Abstract Mostorganizationsfacedwithacrisiswillrelyontheleaderinplaceat thattimetoleadthemoutofthecrisis,oftenwithdisastrousresults.Whenthecrisis getsoutofhand,theseorganizationsrealizebelatedlythatthecurrentleaderdoes notnecessarilypossesstheleadershipstylerequiredtomanagethecrisiseffectively.
Wepresentthreecrisisresponseleadershipprinciples(CRLP)tohelporganizations successfullyprepareforandmanageacrisis.ToaccompanytheCRLP,weprovidethe crisisresponseleadershipmatrix(CRLM),aprescriptiveguidetohelpanorganization improveitsinitialresponseandenhancetheeffectivenessofitscrisismanagement efforts.Combiningtheelementoforganizationalculturewithindividualleadership styles,theCRLMoffersastandardmethodologythatallowsorganizationstomatcha givencrisiswiththebestpossiblecrisisresponseleader.Wepresentareal-worldcase studythatdescribesasuccessfulimplementationoftheapproach:theU.S.AirForce Taiwan-4crisis.Organizationsadoptingthismethodologycanconfidentlychoosethe rightpersontoleadaswift,effectiveresponsetoacrisis.
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http://dx.doi.org/10.1016/j.bushor.2017.04.001
requested for use in Taiwan’s fleet of UH-1 Huey helicopters. Themisshipment wasamatter ofna- tional security that threatened to undermine the credibility oftheUSAF.Morethan18monthstran- spiredbeforeofficialsintheDepartmentofDefense (DoD) realized the wrongpartshad beenshipped, and thenews hitthemediain March2008(White, 2008).U.S.SecretaryofDefenseRobertGatesfound the incidentdisconcertingand launchedanimme- diateinvestigation.InamoveunprecedentedinU.
S. militaryhistory, two high-rankingofficials, Sec- retaryoftheAirForceMichaelWynneandChiefof Staff GeneralMichael Moseley,wereforced to re- sign in June2008.This incidentpresentedacrisis because it threatenedtounderminethe ability of the USAF to secure and account for its nuclear weaponsarsenal.Thisarticlefocusesoncriseslike the Taiwan-4 incident–—namely, high-risk, high- magnitude criseswithpotential impactsso severe thattheycanthreatenthecredibility,perhapseven the survival,oftheaffectedorganizations.
Crises often drive organizations to predictable mitigationstrategiesfocusedonmanagingdistrac- tions rather than prioritized actions targeted at crisis response. Moreover, many organizations op- erate in areactive mode, waiting for publiccriti- cism, emergencies, or negative publicity before they act(Girboveanu&Pavel, 2010).A more pro- activeapproach,basedonthethreekeyprinciples wepresentinthisarticle,canhelporganizationsto prepareforandsuccessfullymanageacrisis.These principles,thecrisisresponseleadershipprinciples (CRLP),provideapracticalframeworkforanorga- nization to improve its initial crisis response and enhance crisis management effectiveness. These principles offer a prescriptive methodology to be usedinconjunctionwithacrisismanagementtool, thecrisisresponseleadershipmatrix(CRLM),which servestomatchagivencrisiswiththebestpossible crisisresponseleaderbasedon organizationalcul- ture and individual leadership style. We describe how theseprincipleswereappliedtotheTaiwan-4 crisis supply chain managementrecovery, demon- strating theimpactofleadershipstyleandorgani- zationalculturalonoptimal crisisrecovery.
2. Managing crises
Organizations are keenly aware of the potentially devastatingimpactofacrisis.Typically,whenacrisis occurs,theresponsefromtheorganizationfacingthe crisiscanrangefrompandemoniumtoacontrolled, purposeful,andwell-orchestratedcrisisresolution, depending onthe characteristicsofthe leadership team in place at the time and the prevailing
organizationalculture.Theresponsetothecrisiswill determine the trajectory of recovery and future organizationalperformance.Inpreparation,vigilant organizationsshouldscanthehorizonforsignsofan impending crisis. Since the jobof leadership is to addressthecrisisasquicklyandeffectivelyaspossi- ble,anenhancedenvironmentalscanisprescribedby theCRLPthat,unlikethetraditionalenvironmental scan,assesseshoworganizationalcultureandchoice ofleadershipteambothdirectlyimpacttheproba- bilityofsuccessfullymanagingacrisis.
Organizations, however, rarely allocate resour- cestocrisismanagementpreparednesssincecrisis managementisnotapartoftheirday-to-dayoper- ational activities.AsstatedbyHickman and Cran- dall(1997, p.75):“Despitepastdisasters and the millions of dollars of damage they have rung up, many organizations are not prepared for a catas- trophe tooccur.”Crisismanagementreadinessre- ceiveslittletonoattentionundernormaloperating conditionsforavarietyofreasons,oneofwhichis the belief that the organization is unlikely to be affectedbyacrisis.Inanarticleoncrisismanage- ment, Lockwood(2005) cited a2005 Disaster Pre- paredness Survey which indicatedthat even after the9/11attacks,45%oftheorganizationssurveyed did not create or revise disaster preparedness plans.
Organizationsrarelyallocateadequateresources toprepareforcrisismanagement.Thisstemsfroma notionthatitisverydifficulttoanticipateacrisis.
Lockwood(2005) presentedfive reasonswhyman- agersand organizationsfailinthis regard:
1. Denialof animpendingthreat tothe organiza- tion;
2. Areluctancetomakecrisispreparednessapri- ority;
3. Alackofawarenessoftherisksinherenttothe business;
4. Ignorance of warning signs accompanied by a failure to critically analyze the organization’s ownhistoryorthedisasterexperiencesofothers inthe industryorlocale;and
5. Relianceon weak, untestedplansthat will not effectivelyprotectorganizationsinarealcrisis.
TheCRLMconsiderstheorganizationalcultureand the leadershiptraitsneeded forsuccessful resolu- tionofthecrisis,andtheCRLPprovideclearguide- lines on how organizations can adopt a proactive processtoprepareforseriouscrisesandmanagea
crisis as soon as it occurs, thereby prompting a positiverecoverytrajectory.Beforedescribingthis approach, we present some realities that under- score the needto develop and apply the CRLP to improve crisisresponseand organizational perfor- mance.
2.1. Therealities of crisismanagement
2.1.1. Firstcrisismanagementreality:Timeis afactor
Crisisdynamicscreateacompressedtimeandspace continuum.Atthemomentofacrisis,organizations donothaveenoughtimetodothethingsnecessary foroptimal response.
AccordingtoWeiner(2006,p.1)and consistent with Lockwood’sfindings,research showsthat the vast majority of crises develop because organiza- tionsfailtoidentifyapotentiallycontentiousissue at an early stage, which leaves them unable to develop a plan of action to “manage the issue before the issue manages them.” When a crisis occurs, organizations quickly tryto fit themselves andtheircrisisresponsetothesituation.Thepace ofsituationaldevelopmentsforcerapidchangesto organizational policies, procedures, and cultural identityaswell.AsWeiner(2006, p.3) noted:
The first casualty of a crisis is perspective.
Characteristically,the pattern is one ofesca- lation,withtheinitialresponsebeingsurprise. .. Aseventsescalate,managementsensesa lossofcontrolovertheissue.Intensescrutiny by the media, regulators, stakeholders and competitorsbreedsasiegementality,tempting acompanytobatten downthehatches.
2.1.2. Secondcrisismanagementreality:
Framingshouldnotbethe priority
Whenacrisisoccurs,thereisaperceivedimmedi- ateneedfortheleadertodemonstratepubliclythat everythingisundercontrol.This responseisoften shaped by the perceived need to cope with the media by framing perceptions, which often takes the form of attempting to contain the crisis or attempting to make it go away (Zald, 1996). As based on Druckman (2001) and stated by Coombs (2007a,p.167),“theframingeffectoccurswhena communicatorselectscertainfactorstoemphasize [e.g.,‘everythingis undercontrol’],” hoping that the “people who receive the message will focus theirattentionsonthosefactorswhenformingtheir opinionsandmakingjudgments.”Theobjectiveof this approach is to convince the public that the situation is well in hand, thereby reducing media attention.Rarelyisthisapproacheffective.Onthe
contrary, it distracts the leader’s attention away from taking actions to actually resolve the crisis, leaving the leader relatively little time to ade- quately assess the situation and ensure he/she is doing the right thing. Coombs (2007b) noted that theprimaryfocusshouldbeonwhatisbeingdoneto addressthe crisis, not on how best to handle the media.
2.1.3. Thirdcrisismanagementreality:
Everyoneneedsaplan
Crisesdonotdevelopovernight.Theyarerootedin systemicissuesthatsendout signalsmostleaders ignore because of the prevailing organizational culture. Since all organizations will experience a crisisatsomepointintime,theyneedtoknowhow theywillrespond toacrisiswellbefore itsonset.
As articulated by David Weiner (2006, p. 1): “An issue can fester for months, maybe years, until eventsandcircumstancesintersectandpropelitto centerstageofthepublicagenda.”Boththe9/11 terroristattacksandtheHurricaneKatrinadisaster were preceded by many unheeded warnings of potential risks–—for instance, notice of Al Qaeda activitiesin thefirstcaseand weakleveeprotec- tioninthe second.Yetadequate preventivemea- sures–—which,inhindsight,wereglaringlyneeded–
—were not taken before these deadly events oc- curred.
Indeed,asestablishedbyLockwood(2005),most organizations take a this-will-never-happen-to-us attitudetowardthepotentialofacrisisoccurring.
However,crisescannolongerbethoughtofasrare orunlikely.Infact,asnotedbyLalonde(2007),the occurrence and diversity of types of crises in our societies have increased. Thus, it is critical that organizations prepare for crisis response well in advance.
2.2. Crisis responseleadership principles So how can an organization ensure that it is pre- paredandposturedforasuccessfulresponsewhena crisis occurs? Having identified three realities of crisismanagement,weofferasetofcorresponding principles that counterbalance the impact of the crisisrealitiesand,whenappliedtocrisisrecovery, enableorganizationstomitigatethoseeffectsand takeactionsthatleadtoapositivecrisisrecovery.
Sinceallorganizationsareverylikelytoexperience a crisis at some point in time, they can position themselvestomaneuverthroughanycrisissuccess- fullybyapplying theCRLPbeforethe crisisoccurs andchoosingtheappropriateleaderattheonsetof thecrisisviatheCRLM.
2.2.1. Firstcrisisleadershipprinciple
Crisismanagementrequiresmoretimeandresour- cesthaninitially perceived.Afirmshouldmanage expectationsearlytofacilitatestakeholderowner- ship and acquire additional resourcesand timeto expand therequiredoperatingspace.
2.2.2. Secondcrisisleadershipprinciple
FocusingonPRdistractionsismisguided.Instead,a firmshouldfocuseffortsonresolvingthecrisis.Itis critical tocommunicatethataclearactionplanis being developed to deliver a successful crisis re- sponse. Do not be tempted to declarevictory too earlybecauseiterodescredibilityandprolongsthe actualcrisis.
2.2.3. Thirdcrisisleadershipprinciple
Culture playsa hugerole in the development and management of a crisis. Furthermore, leadership style matters–—not all leaders are best suited for handling a crisis. Therefore, organizations must perceive, prepare,andpositionfor crisisresponse byknowingtheorganization’scultureandleaders, andapplyingtheCRLMbasedoncrisisenvironment, organizational culture, and leadership styleto se- lectthe rightleaderforthecrisis.
3. How leadership traits affect crisis response
Allleadershaveasignaturestylethatcharacterizes theirapproachtoleadinganorganization.Leader- shipstyleshavebeenclassifiedandcategorizedina variety of ways and different styles have been shown tobemoreeffectiveindifferentsituations.
Choosingtherightleadertomanageagivencrisisis clearly not a one-size-fits-all proposition. Placing thewrongleaderatthehelminacrisissituationcan virtually guaranteeacatastrophicresult.
Inthisstudy,weconsiderfourleadershipstyles.
Three of these–—directive, transformational, and transactional–—are as presented in Pearce et al.
(2003), while the fourth–—cognitive–—aligns with Fiedler,McGuire,andRichardson’s(1989)cognitive resource theory.
The directive leader is characterized as strong and decisive, adopts atake-charge approach, has well-defined expectations, communicates clearly, and typically expects people tofollow the dictum without questioningit too deeply.This do-what-I- say approachcan be very effective in an internal crisis or when working with problem employees.
However,suchaleadershipstylemayinhibitinitia-
tivesincrisissituationsthatrequireorganizational flexibilityorinnovative action.
Thetransformationalleaderisdescribedasself- assured, adaptive, and logical. He/she consults withsubordinatesandseeksinputtomakeconsen- susdecisions.Thistypeofleaderthinksstrategical- ly,isdetail-orientedyetabletoseethebigpicture, andiscapableofdrawingfromdiverseexperiences to connect the dots using cause-and-effect logic.
Thistypeofleadermaynotbethemostappropriate in the case of an extreme time crunch, if only becauseittakes timetobuildconsensus.
Thetransactionalleadercanbethoughtofasa dot-the-I’s-and-cross-the-T’s kind of leader. This leaderfocusesonasmallsetofindividualdetails, is intelligent, follows the rules, and gets the job done.Thetransactionalleaderisboundbyrulesand regulations, making him/her ill-suited to manage thedynamicsofmostemergingcrisissituations.
Thecognitiveleaderisperceptiveandimagina- tive.Characteristicsofthecognitiveleaderinclude knowledgeleadership,expertiseinaspecificarea, big-picturethinking,strategicthinking,andpartic- ipativedecisionmaking.Whilethecognitiveleader isoftenperceivedaslackingsufficientempathyand theinterpersonalskillstomanageaseriousexternal crisissuccessfully,he/shemaybequiteeffectivein leadinganinternalcrisisincooperationwithhis/her experienced,seasonedstafftocoordinatecommu- nicationandprovidemanagerialinsight,infrastruc- ture,andsupport.
Simply defaulting to the incumbent in place to leadacrisisresponseeffort–—assuggestedbyTsang (2000)–—can have disastrous results. A leaderwell suited to manage a particular crisis in a given organizational culturemaynot befitto managea differentcrisisinadifferentorganizationalculture.
Organizations can recover from a disastrous crisis undertheleadershipoftheindividualwhosestyleis the best fit for the specific dynamics ofthe orga- nization’scultureandthegivencrisis.Thus,attrib- utes of the organizational culture and the crisis itself mustbe consideredbest to matchthe crisis managementleaderwith thecrisisevent.
4. Knowing the organizational culture and why it matters
Cultureisasetofbasic,tacitassumptionssharedby agroupofpeopleabouthowtheworldisandought to be. These tacit assumptions determine the group’s perceptions, thoughts, feelings, and to somedegree,theirovertbehaviorthatdrivestheir actionsandresponses.Naturally,theseassumptions
shapeorganizationalculture(Schein,1996).Inthis article we consider three distinct organizational cultures: the hierarchy culture, clan/adhocracy culture (Kinicki & Fulgate, 2012), and the elitist culture(Wiener,1988).
A hierarchy culture can be characterized by a rigid,tieredstructurewithastrictlydefinedsetof core values that demand detailed processes and systemstodrivecompliance.Thehierarchyculture is generally risk averse.It is a cultureladen with policyandregulations thatmaytendtolimitindi- vidualcreativity.
Organizationswithaclan/adhocracyculturetyp- icallyhavefewformal,rigidprocesses;theyhavean entrepreneurial spirit and an empowered work- force.Organizationswithaclan/adhocracyculture arenotriskaverse. Theyarewilling totake risks, butsuchriskscanbeadetrimentinacrisissituation ifrisktakingplaysaroleintheleadershipstrategies formed tocopewith thecrisis. Taking unduerisks while efforts are underway to manage any crisis leaves little room to maneuver if something goes wrong.
The elitist culture tends to be dictatorial in nature with intrinsic qualities or perceptions of worth. The pervading belief is “we are smarter and better.” Power is concentrated in the hands of a few. These organizations believe that they possessspecialprivilegesandhavespecial respon- sibilities. They believethat the same set ofrules thatapplytoorganizationsingeneraldonotapply tothem.
5. The crisis response leadership matrix
The crisis response leadership matrix provides a rubric for identifying the type of leader most equippedtoleadanorganizationthroughaserious crisisgiventhecrisisenvironmentandorganization- alculture.Thecrisisitselfcanbeeitherinternal(e.
g., moral or ethical failures, an unanticipated changein leadership,pooroversight,productfail- ures)orexternal(e.g.,environmentaldisastersdue toactsofnature,pandemicthreats,targetedpublic acts,stockmarketcrashes)totheorganization.The three organizational cultures–—hierarchy,clan/ad- hocracy, and elitist–—arecombined with the crisis
environment to form the CRLM. Each cell is then populated with the leadership style–—directive, transformational,cognitive,ortransactional–—best suitedtomanagetheparticularcrisis.TheCRLMis presentedasTable1.
We applied the CLRM to widely known crises involvingTylenol,NewCoke,Netflix,BritishPetro- leum,Hurricane Katrina,and PennState. Wevali- date the CRLM by walking the reader through a categorization of the organization’s culture, the crisis,theleadershipstyleofthecrisismanagement leader,andthesuccessofthechosenleaderineach case.
5.1. Tylenol
In 1982, Johnson and Johnson (J&J) CEO James Burkefaceda crisisbothinternally and externally when seven people died from ingesting cyanide- laced Tylenol capsules. Confident as a decisive, take-charge, yet transformational leader of one oftheworld’smosttrusted,well-respectedcompa- nieswithahierarchyculture,Burkesuccessfullyled J&J through the crisis by immediately recalling 31 million bottles of Tylenol and replacing them withtamper-resistantpackaging(Foster,2000;Pro- kesch,1986;Thomas,2012).In 1986,facedwith a similarcrisis–—thistimethedeathofoneindividual againfrom cyanide-laced Tylenol capsules–—Burke guidedJ&Jsuccessfullythroughthecrisisbyquickly recallingmorethan$100millionofTylenolcapsules and replacingallcapsule productswith caplets, a decision from which emerged an even stronger Johnson& Johnson. Burke’s handling ofthe crisis is now cited as a gold standard in crisis control (Yang,2007).
5.2. New Coke
Asaresponsetoconsumertastetestsandalossof salestoitsleadingcompetitorPepsi,theCoca-Cola Company replaced its primary soft drink product, Coke, with a newly formulated product it called New Coke in April 1985. An American icon, the elitist Coca-Cola Company was shockedwhen the switchwasfollowedimmediatelybyapublicoutcry to bring back the old Coke (Choueke, 2011). A switchviewedpreviouslyaskeytoregainingmarket dominanceleftthecompanyfacingitsowninternal Table1. Thecrisisresponseleadershipmatrix(CRLM)
ElitistCulture HierarchyCulture Clan/Adhocracy
InternalCrisis Cognitive,directive,ortransformational Directive,ortransformational Transformational
ExternalCrisis Transformational Transformational Transformational
crisisastheenragedpublicdemandedthereturnof theirbelovedproduct(Keough,2008).ByJuly1985, Roberto Goizueta,thecognitiveand somewhatdi- rectivechairmanofCoca-Cola,successfullyguided the company out of the crisis with his announce- ment of the return of the original Coke product renamedCokeClassic(Fink, 2010).
5.3. Netflix
Known for its entrepreneurial clan/adhocracy cul- ture, Netflix caused an internal crisis when it an- nounced asignificant changein itsproduct-pricing scheme in June 2011 (Copeland, 2010). Netflixin- creased the price of a package combining video streaming andmailorderDVDrentalsfromroughly
$10 permonth to$16 permonth.Outragedbythe change, customers cancelled their subscriptions, which led to a significant decline in thepriceof Netflix stock(Gilbert,2011).Then,inSeptember2011,CEO ReedHastingsannouncedthecreationofQwikster,a separate business that would handle all DVD sub- scriptions, leaving Netflix to focus on the video streamingbusiness.Overwhelmingcustomerdisdain led to an exodus of 800,000 customers and stock pricesdeclinedfurther(Wingfield&Stelter,2011).
Afewweeksafterthedisappointingmove,Hastings, knownforhisadaptive,transformationalleadership style, attemptedtorightthewrongbyannouncing thedissolutionofQwiksterandthereturnoftheDVD business to Netflix (Ryan, 2013). The adaptation allowedNetflixtorecoverandbythethirdquarter of2014,itsstockpricewasupto$480pershare.
5.4. Hurricane Katrina
InAugust2005,HurricaneKatrinahittheU.S.Gulf Coast,leavingnearly2000peopledeadinherwake, destroyinghomes,businesses,property,andinfra- structure along the coast from Florida to Texas.
Hurricane Katrina, a Category 3 storm, was one ofthemostdeadlyandcostlyhurricanesonrecord and resultedin billionsofdollarsin damage(Moy- nihan, 2012). MichaelBrown, then-directorofthe Federal Emergency Management Agency (FEMA), was placed at the forefront of leading the crisis management effort. The publicquickly lost confi- dence inBrown’sabilitytoleadtherecovery.Asa transactionalleader,hebecameconsumedwiththe need to adhere to FEMA’s administrative standard processesand proceduresandwasunabletomove beyondthebureaucraticfacadeofredtapegener- ally associated with the hierarchy culture (CNN, 2005;FEMA,2005).U.S.CoastGuardAdmiralThad Allen replaced Brown in September 2005 (Baker, 2005).Allen, known as anunflappableman ofac-
tion, took the leadership reigns and didwhatever wasnecessarytobreakthroughredtapeandgetthe jobdone(White,2005).Thetransformational ele- mentpresentinhisleadershipstyleallowedAllento seethebigpictureandtocreateactionplansbuilt on shared values and common goals, all of which contributedtohissuccessfulfacilitationofrecovery effortsinthe GulfofMexico.
5.5. BritishPetroleum
BritishPetroleum(BP),consideredanelitistleaderin thepetroleumindustry,founditselfatthecenterof thebiggestoilspillinU.S.historyinApril2010.The failureofablowoutpreventerledtotheexplosionof oneofBP’soilrigsintheGulfofMexicoandthedeaths of11people(Elkind,Whitford,&Burke,2011).The company’s CEO,TonyHayward–—characterizedasa results-oriented, practical, operational, directive scientist-leader–—did not immediately grasp the enormityofthesituation (Bednarz,2012; Conway, 2008).BPcalleduponRobertDudley,adecisiveyet compassionate transformationalleader,tomanage thecrisis(James,2011).WithDudleyatthehelm,BP successfully capped the well, initiated a massive cleanup effortin the Gulf, andmanagedto regain publicconfidence.
5.6. PennState
InNovember2011,thePennsylvaniaattorney gen- eral brought formal sexual abuse charges against Jerry Sandusky, the defensive coordinator for the PennStateNittanyLionsfootballteam(Wertheim&
Epstein, 2011). Suddenly Penn State, a university withanelitistcultureevidencedbyitsWeArePenn State motto, found itself atthe centerofa crisis internal to its revered football program–—perhaps thebiggestscandalincollegesports.Followingthe dismissal and resignations of numerous university officials, Jerry Sandusky was found guilty on 45 countsofsexual abuse in June2012 (Simpson, 2012). Shortly thereafter, the NCAA levied a sen- tenceonthePennStatefootballprogramthatsome speculatedmightbeworsethanthedeathpenalty.
Thecrisismanagementeffort,whichwasledbythe institution itself, suffered because of the en- trenchedinstitution’sdirectivestyleofself-gover- nance.TheresolutionofthePennStatecrisisandits long-termeffectonthereputationoftheinstitution remaintobeseen (Wolff,2012).
5.7. Findings
Table2summarizestheapplicationoftheCRLMto these classic crisis management cases. Based on
these cases, we believe that the strictly transac- tionalleadershipstyleisnoteffectiveinmanaging crises.Transactionalleadersaretypicallyunableto adapt and maneuver organizations effectively through a crisis situation because their strengths lieinfollowingawell-established,structuredsetof existingrulesand regulations.
A second generalization is evident: The leader best suited to guide an organization through an externalcrisisisatransformationalleader.Because externalcrisesimpactindividualsbeyondthewalls oftheorganization, itiscriticalthattheleaderin such a crisis situation sees the bigger picture to understandthe scopeofthecrisisand execute an
optimal response. It is equally important for the leaderwillinglytoseektheadviceofthoseclosest tothesituationathandandleveragethatexpertise to form a logical yet flexible and adaptive crisis response plan, hallmarks of a transformational leadershipstyle.
Asnotedearlier,knowingtheorganizationalcul- ture and traits of the leadership team can help senior leaders set the vision for optimal crisis re- sponseandpreparetheorganizationforactionwell beforeacrisisoccurs. Suchwasthe casewith the approachundertaken bythe USAF to reinvigorate the nuclear supply chain and, in particular, the 748th Supply Chain Management Group (SCMG),
Table2. ValidatingtheCRLMwithclassiccrisismanagementcases
ElitistCulture HierarchyCulture Clan/Adhocracy
InternalCrisis NewCoke
Goizueta:Cognitive,directive leader SuccessTylenol(J&J)
Burke:Directive, Transformationalleader SuccessNetflix
Hastings:Transformational leader SuccessPennState
Institution:Directiveleadership style TBDTaiwan-4
Director:Directive,Transactionalleader
(Unsuccessful) Replacedby Hall:Transforma- tionalleader SuccessExternalCrisis BP
Hayward:Cognitive,Directive leader (Unsuccessful) Replacedby Dudley:Transformational leader SuccessTylenol(J&J)
Burke:Directive, Transformational leader SuccessTransformational
Katrina
Brown:Transactionalleader
(Unsuccessful) Replacedby Allen:Directive, Transformational leader SuccessTaiwan-4
Director:Directive, Transactionalleader
(Unsuccessful) Replacedby Hall:Transformationalleader
SuccessanorganizationwithintheAirForceMaterielCom- mand (AFMC) tasked with managing the Air Force SupplyChainfortheOgdenAirLogisticsCenter,at HillAirForceBaseinUtah,thesiteoftheTaiwan-4 crisis. The748thSCMGappliedCRLPin theircrisis recoveryeffortstosuccessfullyrestoreICBMsupply chain management compliance following the Taiwan-4 crisis that was briefly presented at the beginningofthisarticle.Wetakeadeeperlookinto this crisisinthefollowing section.
6. Taiwan-4: The U.S. Air Force faces a serious crisis
TheUSAFfacedsignificantICBMsupplychainman- agement and asset handling challenges in recent years. A series of unfortunate incidents in ICBM asset management, indicative of larger systemic problems, servedas aburning platform tochange how theUSAF managedtheICBMsupplychain.
6.1. The Taiwan-4crisis and thefirst crisis management reality
Crisisdynamicscreateacompressedtimeandspace continuum.Atthemomentofacrisis,organizations do nothave enoughtimeoroperatingspacetodo the thingsnecessaryforoptimalresponse.
The Taiwan-4 incident placed USAF leadership underimmensemediascrutinywhileoutcriesfrom across the nation questioned the security of the USAF nuclear arsenal. Oneofthe ramifications of thisincidentwasanerosionofpublicconfidencein the USAF’s ability to positively control its NWRM inventory.Duringthe10-weekperiodimmediately following theTaiwan-4 incident,SecretaryWynne andChiefofStaffMoseleynotonlytestifiedbefore Congress, but also engaged the USAF in taking significant corrective actions. Unfortunately, the complexity, depth, breadth, and scope of such crisis dynamics do not allow for short-termfixes.
Even if organizations are given time to devise a plan and set corrective actions in motion,as was the case with the USAF following the Taiwan-4 incident,sucheffortstypicallyprovetobeinade- quate.Unlessorganizationsarepreparedandpos- turedforthecrisisbeforehand,theywillnothave time to formulate an optimal recovery response strategyquicklyandexecuteitrapidlyinthecon- finedandconstrainedcrisisresponse environment inwhichtheyareforcedtooperate.Theresimplyis notenoughtimeavailablewhenthecrisisoccursto figure out and execute the appropriate response strategy.
6.2. TheTaiwan-4 crisis andthesecond crisis managementreality
Assoonasnewsofacrisisbecomespublic,thereisa perceivedimmediate needforthe leadertodem- onstratepubliclythateverythingis undercontrol.
Giventhevolumeandintensityofthismediamael- strom,the USAF moved quickly intoaction byim- mediatelyinventorying allofitsnuclear weapons, associated parts, and equipment and launching a full investigation. Despite these efforts, both the Secretary of the Air Force and the Chief of Staff were forced to resign. In addition, the USAF re- lievedfromdutyseveralofficersin commandposi- tions. These drastic measures were aimed to identify what was perceived as the root cause of the incident–—poor leadership–—and demonstrate corporate resolvein fixing theproblem. Thehope wasthat takingthese extraordinaryactionswould instillconfidenceinthepublicthateverythingwas undercontroland movethecrisisoff thenational centerstage. Unfortunately, thatstrategydid not play outand over the ensuing weeks and months, the USAF endured intense pressure and repeated inquiriesastohowthiscouldhavehappened.Deal- ingwith theever-increasing negativemediaexpo- suresubsumedtherealcrisisandineffectbecame thecrisisitself.
Crises are not events occurring on a standard cyclethatcanbetrackedandmonitoredwithexact precision.Seniorleadersdedicatelittleifanyeffort topreparationforanorganizationalcrisis.Resisting this natural tendency is one of the biggest chal- lenges for senior leaders, and the CRLPprovide a meanstocounterbalancethis effect.
6.3. TheTaiwan-4 crisis andthethird crisis managementreality
Crisesdonotdevelopovernight.Theyarerootedin systemic issues that send out signals that most leadersignorebecause oftheprevailing organiza- tional culture. Since all organizations will experi- ence a crisisat some pointin time, theyneed to knowhowtheywillrespondtoacrisiswellbeforeits onset.TheeventthatultimatelyledtotheTaiwan-4 crisisoccurred in August2006, but the underlying rootcausesdidnotreceiveanyattentionuntilwell afterJune2008,whenthemediadrewattentionto theproblems.Asimilarincidenthadtakenplacein August 2007 when a B-52 bomber was mistakenly loaded with six nuclear warheads and then flown fromMinotAirForceBaseinNorthDakotatoBarks- dale Air Force Base in Louisiana. The B-52 was loaded with advancedcruise missiles(ACMs),part ofaDoD efforttodecommission 400 ofthe ACMs.
TheACMs should have beenremovedatMinot be- fore being flown across the country to Barksdale.
ThemistakewasdiscovereduponlandingatBarks- dale and a full inventory ofnuclear weapons was quicklyadministeredtoensureallnuclearweapons wereaccountedfor(Hoffman,2007).Thesystemic illsleadinguptotheseeventshadbeenchronicled innumerousreportsandinvestigationsdatingback totheClintonadministrationatthepresidentialand DoDlevels (Spence,1994).
AreportbytheDefense ScienceBoard (DSB)on theunauthorizedmovementofnuclearweaponsto Taiwanprovidedfurtherinsightintotherootcause of the crisis. In the aftermath of the Cold War, America'snuclearweaponsweresoneglectedthat theywerebeingstoredalongsideconventionalmis- siles,withnothingbutan810inchsheetofpaper todifferentiatebetweenthetwo(DefenseScience Board,2008).Despitethe urgencyunderscored by such extreme circumstances, as our third reality suggests, other distractions inhibited immediate responsetotheburningplatform.
It appears that during the Cold War era, the nuclear community cultivated somewhat of a uniqueculturebasedonthespecialresponsibilities andattributesoftheirweaponssysteminventory.In theaftermathoftheColdWarandtheDoD’sshiftin focusingonasymmetric/non-conventionalthreats, toalargedegreethenuclearcommunity’sprimary focuswas onreadinessand weaponssystem avail- ability, an emphasis amplified by the reality of diminishing resources. This shift in priorities led to “deficient supplychain processes and noncom- pliance with related procedures which degraded controlofsensitivemissilecomponents”(U.S.De- partmentofDefense,2008).Whatthenuclearcom- munity failed to recognize was that their lack of supply chain compliance jeopardized both readi- nessand weaponssystemsavailability.
On August12,2008, SecretaryGatesappointed GeneralNortonSchwartzasChiefofStaffoftheAir Force. Byappointing GeneralSchwartz, Secretary Gatesinstantlyimpactedthefabricandcultureof the USAF, abandoninga tradition of choosingonly bomber or fighter pilots to lead the nation’s Air Force. General Schwartz brought a broader per- spectivetothevision/utilityofairpoweralongwith a collaborative and inclusive working relationship withtheotherservices.Heletitbeknownthatthe Air Force should no longer consider buying new multibillion-dollar tankers, fighters and cargo planes as the service's top priority. Instead, he announced that reinvigorating the nuclear enter- prisewouldbe top priority.In hisfirstmessage to the nation and to airmen stationed worldwide,
GeneralSchwartz referencedthenuclear mission, saying(Randolph, 2008):
The bottom line is we lost focus, and we’re bringingthatfocusback.Wehavealotofwork to do, but we have a lot to be proud of as well.. .In those areas where others have foundfault,we aregoingtowork withaven- geance,and wewill remaintheworld’sfinest AirForce.
6.4. Offand running:Applying CRLPto theICBMsupply chain recovery
In 2008, shortly after news of the Taiwan crisis broke,the748thSCMGdispatchedfourUSAFsupply chain subject matter experts (SMEs) to the ICBM System Program Office (SPO) to provide full-time support in the recovery efforts. At that time the ICBMSPOheldprimaryresponsibilityforICBMsup- plychain management. Steepedin the unique at- tributesofthenuclearenterpriseandwithdecades ofICBM experience, thiscrack teamofSMEswere ready, willing, and able to tackle the deficient supply chain processes/procedures and provide a roadmaptorecovery.
Thedirectiveandtransactionalleadershipstyles and hierarchical cultural barriers that confronted thisrescueteamwerereal,active,andentrenched.
Although several recommendations for improve- ment and plans for recovery were offered, they weremetwithdisbelief,dismissal,anddisapproval.
Theteamwasultimatelyrelegatedtothesidelines.
Fortunately,thisattempttoassistdidnotgowith- out merit. In May 2010, the 748th SCMG, 414th Supply Chain Management Squadron (414 SCMS), wasassigned responsibility formanaging theICBM weaponssystemsupplychainandNWRMassets.The knowledge and insight gained by the team in 2008 provided invaluablepreparation for applying theCRLMandCRLPtothe748thSCMG’sassumption ofresponsibilityin2010.Additionally,amandateby AFMC Commander General Hoffman to improve supply chain management performance postured the 748th for optimal response. All that was left for executionwasfinding the rightperson to lead thisrecoveryeffort.
Asthecrisismovedforward,MajorGeneralMc- Coy was reassigned as the commander of the Air ForceGlobal LogisticsSupport Center(AFGLSC) in November2008.Recognizing thatleadership style matters,in 2009GeneralMcCoyidentifiedColonel ReggieHalltotakecommandofthe748thSCMG,a person he had worked with in the crisis response centerduring the Pentagon 9/11 crisis whenboth
were assigned totheUSAFAirStaff Headquarters.
Although Colonel Hallwas unfamiliarwith thenu- clear enterprise and lacked supply chain experi- ence, the transformational leadership style he displayed in the 9/11 crisisresponsecenter made himfitforthetaskofleadingthe748thSCMGICBM supplychaincrisisrecoveryeffort.
In June2010,11monthsafterColonelHall took commandofthe748thandonlyafewweeksafter the 414 SCMS was assigned to his group, AFMC conductedaLogisticsComplianceAssessmentPro- gram (LCAP)inspectionatHillAFB. TheICBM SPO and 414 SCMS were rated MARGINAL with over 203 non-compliancefindingsnoted,manyofwhich were repeats ofprevious issues. This was not the firsttimetheSPOareaswereratedsub-standard,as the2010resultswerethemostrecentinaseriesof lessthan stellarperformancesdatingbackseveral years,indicativeofaculturewithlesserconcernfor rulesandadherence toprocedures.
6.5. The Taiwan-4crisis and thefirst crisis leadership principle
Our firstcrisisresponseprinciplestatesthatcrisis management requires more time and resources than initially perceived. Immediately after the 2010 inspectionteamdeparted,ColonelHallgath- ered theSMEteam assignedtothe 2008ICBM SPO recoveryeffortalongwithothernuclearenterprise andsupplychainexpertswithin748thSCMGtocraft the initial response to the inspection results for General McCoy’s situational awareness. The first crisis leadership principle was put into action. In additiontoinformingGeneralMcCoyofthespecific details of the situation at hand, the team also crafted a notification to General Hoffman. Both piecesofcorrespondenceweredesignedtoachieve specific results to facilitate the crisis action plan and optimize crisis responsebyinforming General Hoffman of the facts without soft pedaling the magnitudeofthecrisis.Bydoingso,theteammade sure Hoffman’s expectations were aligned with reality.
Inessence,the748thSCMGinitialresponsecre- ated the time and space needed to execute an optimal crisis response, cultivating internal and externalstakeholderownershipasthecornerstone foundation of the crisis response upon which all recovery efforts were aligned. By gaining senior leadershipbuy-infromthestart,theteamsecured supportatthehighestlevels,creatinga“weareall in thistogetherandwill doallwecan tohelpyou succeed” ethos to facilitate full execution of the near-termcrisisresponseplanaswellasthe long- term recoverycampaign.
6.6. TheTaiwan-4 crisis andthesecond crisis leadership principle
The second crisis leadership principle states that focusing on PR distractions is misguided. Instead, thepriorityshouldbesolelyonresolvingthecrisis.
The second task Colonel Hall initiated after the team crafted the situational awareness updates to GeneralsMcCoy and Hoffmanwas the develop- mentofcrisisactionand crisisrecoverycampaign plans.Bydoingso,the748thSCMGrecoveryteam usedthetimeand operatingspacecreatedbythe inspectioncorrespondencetodeveloparobustand comprehensivecrisisresponsestrategyandawell- documentedrecoveryplanbeforemakinganypro- clamations ofsuccess. These actionsaffirmed the team’scapabilityandcapacitytoexecuteanopti- mal crisis response and shaped the stakeholders’ expectations, reassuringthemthat allenergyand efforts were being focused on the crisis and con- firming that the right things were being donefor successfulcrisisrecoveryandthatpositiveprogress wouldresult.
The team developed the vision,mission, goals, objectives,performancemeasures,andmetricsfor thecrisisrecovery.The748thSCMG’svisionwasto bethebestsupplychainmanagementgroupinthe DoD.Thecrisisresponsestrategyandrecoveryplan mission,goals,and objectiveswerealignedtothe vision, codified, and communicated in the 748th SCMG campaignplan. The strategicobjective was toensure thateveryone inthe748thSCMGunder- stoodthegroup’smission,vision,andgoalsaswell as how their daily work contributions fit into the overallachievementofgroupsuccess.Allofthese strategy-to-actionelementswerereplicatedinthe 748thSCMGcrisisrecoveryimplementation/action plans and were central to the successful crisis response, providing a detailed roadmap for how andwhencrisisrecoverywouldbeachieved.
Asthe sequenceofeventsunfolded overthe 2- yeartimeframe,extendingfromtheinitialdiscov- ery of the Taiwan-4 misshipment until the 748th SCMG’s assumption of responsibility, much of the external national/international media attention subsided. Other DoD, national, and international crisestook centerstage.Although there were oc- casionalreferencestotheeventsinthepress,the focus ofthe media’s attention turned elsewhere.
WhilethemagnitudeandvolumeofthePRdistrac- tion was diminished, these distractions were not absent.The 748thSCMGrecoveryteam continued tobeinundatedonanalmostdailybasiswithmul- tipledistractionsintheformofnumerousOfficeof theSecretaryofDefenseReviewpanelsandspecial investigations, USAF Air Staff inquiries and data
requests, follow-up interviews,andother internal DoDPRdisruptions.
Despite these distractions, the 748thSCMG re- covery team focused exclusively on the crisis re- sponse effort as its number one priority. The cumulativeeffectsofCRLPalsocoalescedtoassist withtheresidualelementsofstrategiccommunica- tion andcontinuedprimacyoftherecoveryfocus.
The additionalresources obtainedfromthe appli- cationoffirstCRLPwereswiftlyputtouseandthe team addressed a spectrum of issues, including training and workforce development and changes topolicyandguidance,aswellasimprovingtactics, techniques,andprocedures.Therecoveryandcam- paign plangoals, objectives, andmilestones were followed to the letter and progress tracked and measured on a weekly basis. PR distracters were providedproactivelywithimmediateevidencethat confirmedthingswereprogressingaccordingtoplan and senior leaders receivedperiodicupdates that kept them informed and engaged throughout the recoveryprocess.Thisboostedtheteam’scredibil- ity by garnering endorsements from stakeholder advocates.
So meticulous was the recovery team’s adher- encetothecrisisrecoveryactionplanthatduring the365-dayprojectschedulewithover500hundred tasks,onlyonedeliverablewasmissedandthatwas onlylatebyoneday.Thedoggeddeterminationand persistenceinexecutingtheplanpaiddividendsin furtheringtheteam’sabilitytoleveragetheinter- nalmediascrutiny.The748thSCMGsuccessfullyco- opted the distracters into relaying observations withpositivemessagesandstrategicallycommuni- catingtheir crisisrecovery actionplanprogressso as to restore stakeholder confidence and support alongtheway.
6.7. TheTaiwan-4 crisis andthethird crisis leadership principle
Cultureplays ahuge role in the developmentand managementofacrisis;thisisourthirdleadership principle. Furthermore, leadership style matters–
—notallleadersarebestsuitedforhandlingacrisis.
Organizationsmustperceive,prepare,andposition for crisis response by knowing the organization’s culture and leaders and applying CRLM based on crisis environment, organizational culture, and leadership style to select the right leaderfor the crisis.
The results of the August 2012 AFMC LCAP evaluation at Hill Air Force Base affirmed effec- tive CRLP execution and successful crisis recov- ery. The 414th SCMS earned a ratingof excellent in theinspection.The inspectionteamalso noted
theremarkable culturalchangewithin the 414th:
“A culture of excellence permeated the squad- ron, and their pride in ownership was evident in every aspect of the organization.”The prevalent culture of excellence in the 748th SCMG infused every aspect of the 414th SCMS crisis recovery from planning through execution. The success of the 414th crisis response and the ICBM supply chaincrisisrecoveryeffort forthe Taiwan-4crisis confirms the link between knowing the organiza- tion’s culture and selecting the right leader to guide the organization through the crisis, affirm- ing the validity of the CRLM and the application of the CRLP.
7. The heart of the matter: Crisis management is all about culture and leadership
A crisis is not an event that happens overnight.
Organizations’ leadership and cultural dynamics set the conditions leading up to the event and these complexand deep-rootedprecursors mani- fest themselves in predictable patterns. Given the tools to recognize and respond to these signals, organizations canprepare for the advent of crises before they occur and posture them- selvesforsuccess byunderstandingthe prevalent organizational culture and identifying the right person to lead the organization through a crisis.
The Crisis Response Leadership Principles (CRLP) offer a framework and tools via the Crisis Response Leadership Matrix (CRLM) to aid orga- nizations in selectingthe rightleader for optimal response and recovery based on the most effec- tive leadership style for the given organizational culture and crisis dynamics.
The USAF’s response to the Taiwan-4 crisis, along with the additional cited cases, supports the notion that the events associated withcrises aresequential,havecumulativeeffects,andcon- ventional organizational response practices that will lead organizations down the inevitable path toward suboptimal crisis response and delayed recovery.
Understanding the crisis management realities and applying the CRLP enables organizations to implement an optimal crisis responsesuccessfully inthefaceofacrisis.Torespondeffectivelytosuch a crisis, organizations can prepare in advance by takingthefollowingactions:
1. Recognizing and understanding the organiza- tion’scurrent culture;
2. Continuously assessing the leadership styles of the membersofthe leadershipteam;and 3. UsingtheCRLMtooltoselectthebestleaderto
respondtoaspecificcrisistosuccessfullyguide the organization through crisis recovery by applyingthe CRLP.
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