Resilient corporations -- those that have survived and flourished despite disruption and disaster -- have much to teach government agencies about how to prepare for crises like Hurricane Katrina, according to Yossi Sheffi, director of the MIT Center for Transportation and Logistics and professor of engineering.
Sheffi, who has a new book out, "The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage" (MIT Press), outlined the lessons business could teach government in an op-ed article published by The Boston Globe on Monday, Sept. 19.
In the Globe article, titled "Fixing Government After Katrina," Sheffi contrasted organizational breakdown during the "largely avoidable tragedy" of the hurricane's aftermath with corporate successes following similar disasters.
"Instead of taking decisive actions, city, state and federal officials argued with one another, communications broke down, and too many civil servants, from New Orleans police officers to Louisiana state officials to FEMA directors, did not have the urgency or passion required," he wrote.
By contrast, some companies that took decisive action have enjoyed business victories in the face of crisis and supply disruption, he noted. Dell Computers increased its market share while Apple "stumbled" after the 1999 Taiwan earthquake, and Chiquita recovered much faster than Dole after Hurricane Mitch, which devastated Latin America in 1998.
Both Dell and Chiquita were prepared with flexible supply chains, Sheffi wrote. But resilience is more than that. An MIT team studying resilient companies found "something in their DNA … a certain corporate culture that helped them survive and even thrive."
According to Sheffi, the three major aspects of crisis-ready corporate culture are empowerment of front-line employees, constant communications and a company-wide sense of the "big picture."
Front-line employees in business and in government should be empowered, just as sailors on the deck of any U.S. aircraft carrier are empowered to stop flight operations when they detect a problem.
"Front-line employees are close to the action and can assess what is needed; as a disruption develops there is usually not enough time to go through the usual chain of command," Sheffi wrote.
And that chain must be both fluid and transparent. "Resilient enterprises communicate obsessively and ensure that they can communicate in a disaster. Thus, Intel keeps an emergency center in each region of the world where it is doing business," he wrote.
Sheffi's essay ends on a note of limited hope that the lessons of Katrina will lead to changes. "What has to be done is strikingly obvious -- instill a radical change in organizational culture," Sheffi declared.
A version of this article appeared in MIT Tech Talk on September 21, 2005 (download PDF).
