Topics:   Leadership,Risk Management,Strategy

Topics:   Leadership,Risk Management,Strategy

June 21, 2019

From the Skies, to a River, to a Supply Chain in China: Surviving and Thriving Through Crisis

June 21, 2019

Ten years ago, US Airways Flight 1549 departed from La Guardia airport with Captain Chesley B. Sullenberger III (“Sully”) in command. Shortly after takeoff, the engines ingested a number of large geese, the aircraft faltered, and the Captain was forced to make the life or death decision between trying to make the runway at Teterboro, New Jersey, or landing the plane in the Hudson River. His choice was the water, and he made a rare successful water landing, coined the “Miracle on the Hudson” and made famous a second time in 2016 by the movie Sully.

Sully’s leadership during that crisis formed the backdrop of a recent panel discussion at NACD’s Strategic Asset General Counsel event in New York. The panel focused on the personal and professional ramifications of a crisis and featured Miracle on the Hudson passenger and experienced public company director, Maryann Bruce; senior vice president, general counsel, and secretary of Spirit Airlines, Thomas Canfield; and Andrew Cole, co-president and board member at Sard Verbinnen & Co (SVC), a global strategic communications firm. Key takeaways from the discussion follow.

The right person at the helm is critical. Sully was the right person at the right time during the crisis. For companies, having the right CEO is likewise critical, as is being ready for a change at the top. “Companies must be prepared for unplanned CEO departures, whether they are due to the #MeToo movement, health problems, or something else,” Cole said. “Someone has to be the quarterback during such a crisis, and if it’s a CEO departure, it won’t be the CEO.” One of his clients even did tabletop exercises for a scenario in which the CEO never returned from an overseas vacation.

According to Bruce, who joined a board just as that company’s CEO was asked to leave, suggested that the best approach is to get the right leader in the position in the first place—a critical role of the board. For that company’s new CEO hire, Bruce believed more structure was needed. “I suggested that the board create qualitative and quantitative internal and external metrics to define success for both the CEO and the company, as we needed to ensure board alignment as well as a methodology to hold the new CEO accountable.” She recommends that companies have both an emergency CEO transition plan as well as a succession plan.

Canfield agreed on the importance of succession planning. “Spirit Airlines recently completed a smooth, year-long transition of our CFO into the CEO role.”

Having courage in a crisis is a must, and preparation can help. Sully had the courage to make a difficult call quickly on the day he landed the plane in the Hudson River. Some of that courage came from years of experience and preparation.

According to Canfield, Spirit Airlines constantly prepares for a variety of scenarios, including customer and cyber incidents, as well as airline-specific emergency preparedness. “We have a dedicated emergency response department that includes people highly experienced in airline operations and disaster recovery,” he said. “Between 80 and 100 people participate in tabletops, including the general counsel and outside counsel, representatives of the pilots’ union, insurance carriers, and government representatives. These rehearsals use fictitious but real-world simulations, which are not revealed to participants prior to the session. While the board is not part of a physical disaster exercise, the board is briefed regularly on the company’s safety systems and procedures, including emergency preparedness.”

In a non-aviation context, unexpected courage also can be required. Cole mentioned a retail client that learned one of its suppliers was using detention camp labor in China. Despite the potential blow to the bottom line, “the company had the courage to cut off that particular supplier, acting in line with their values, even though they recognized there would be near-term impact to their business.”

Put the corporation ahead of yourself. Sully was the last person off the plane in 2009. For directors and general counsel, the circumstances may be less dire, but the duty to put the corporation first remains. This duty could lead to stepping off a board when doing so is best for the company, according to Bruce. Cole stressed that taking personal feelings out of a situation can be tough, “especially for founders during a crisis.” Shareholder activism can often feel personal as well, but the best approach is to rise above personal attacks. For all boards, he added, “preparation and level-headed advice from the general counsel can be helpful to get people to separate personal and professional interests.”

“The GC must be able to tell it like it is, with a firm and unsparing analysis,” added Canfield.

Stick to the script in a crisis. Sully faced heavy governmental and media scrutiny, but stuck to his “script” about the events on the day of the water landing. In any crisis, sticking to the script is important; however, crafting the script can be tricky. For the general counsel, there must be a balance between liability concerns and providing a swift response. “Very few lawsuits threaten the long-term success of the company,” said Canfield, so tipping the balance toward a swift response is appropriate. Cole agreed, emphasizing the need for transparency and authenticity in crisis communication and the need to tailor the response to the appropriate channel.

The panel agreed that a crisis can be an opportunity as well as a challenge, sometimes both professionally and personally. Bruce summed up the point. “Prior to the Miracle on the Hudson, I had always managed my career and led my life guided by what I refer to as my two ‘P’ philosophy: have purpose and passion. Yet it wasn’t until 2009 when I was looking at the city skyline from a raft in the middle of the Hudson River that I realized I was missing a third and the most important ‘P’: perspective. I will always have passion and purpose . . . but without the benefit of perspective, the context is missing. I now realize that . . . we make a living by what we get, but we make a life by what we give . . . . And, quite frankly, that’s the only perspective that matters.”

More on the Miracle on the Hudson can be found in NACD Directorship magazine.

Kimberly Simpson was the panel moderator. She is an NACD regional director, providing strategic support to NACD chapters. Simpson, a former general counsel, was a U.S. Marshall Memorial Fellow to Europe in 2005.