A crisis is a terrible thing to waste

OpinionJournal has a superior piece today by former GE CEO Jack Welch on how the reactions to Hurricane Katrina is literally a case study on how people react to severe crises. Welch, also known as 'Neutron Jack', was CEO of GE for 20+ years during which GE returned tremendous earnings year after year and is considered the guru of corporate management and has known his share of crises.

He organizes the reaction of various parties to Katrina comparing it to corporate crises he's seen in the past. According to Welch there are five stages to every crisis:

1. Denial
...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...

2. Containment
...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...

3. Shame-mongering
...I would wager that never before has a storm become so politicized...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.

4. Blood on the floor
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.

5. Solutions
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...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.

According to Welch we are not quite stage four which sets the stage for stage five which is when the city gets rebuilt, likely better and stronger than ever. Essentially, thanks to Katrina New Orleans gets a chance to start with a clean slate and a tremendous amount of funding which it never otherwise would have gotten.

And as noted by a writer to the Corner yesterday the right rebuilding czar for New Orleans isn't Rudy Giuliani or Colin Powell but Bob Livingston, the popular former Congressman from Louisiana who, under fire for marital infidelity, resigned from the Congress in 1999. He had been elected to succeed Newt Gingrich as Speaker of the House, a role that eventually went to Dennis Hastert.