The firefighter approach to business crisis

by Florian Gegier

Contents:

I.                What firefighting and business crisis management have in common

II.              Command and leadership

III.            Rules of engagement

IV.            The aftermath

I.                What firefighting and business crisis management have in common

In my “normal life”, I am a business development manager, spending my days analyzing markets, networking, establishing partnerships, writing quotations, training representatives, visiting customers, managing sales. But since 2013, I have been also a voluntary firefighter. In Switzerland, a lot of public services are organized and carried out by volunteers. So are the firefighters, the civil protection agencies, and believe it or not, even the military as well as politics are mainly done by civilians volunteering their free time to contribute to their communities and society. I recall moving to a new town, when I received that letter from the local fire chief calling on new residents to go to an information evening on firefighting. At the time, I had been looking to do something more. A team sport, joining an association, learning something, meet local people, make some friends. So I went. They presented the job, the responsibilities, showed off their fancy tools, machines and vehicles, and I was hooked. I signed up and started training a few weeks later.

We are divided in divisions such as traffic, first aid, SCBA (self-contained breathing apparatus), technicians, electricians, etc. The SCBA division are the guys (and girls, of course) that “go in”. E.g. the ones that enter the danger zone and work equipped with the SCBA. That’s were the main action takes place. I was thrilled and felt honored when I was invited to join the SCBA division. It has been seven years of exercises, training, social gatherings, and of course the occasional real life mission, and one thought just stuck in my head: To this date, I have rarely seen the same level of quality leadership, organization and crisis management in companies around the world, as I do in my local firefighting corps.

Of course, the leadership culture in our corps is strongly determined by the commander and his values of transformational leadership, that transcend down the hierarchy pyramid through like-minded officials, division leaders, all the way to us, the foot soldiers. However, organization and field tactics are defined by a public legal framework of guidelines in regard to how to tackle specific crises. And just the same way how I continue to be impressed by the firefighters’ leadership culture and the example it could and should set for business operations, I feel that the underlying logic to firefighting tactics can be translated into a business administration context, especially in times of crisis.      

In principle, managers of companies in crisis face similar challenges as firefighter commanders when the alarm goes off: Multiple and existential problems, scarce resources, time pressure, the responsibility for the well-being of their subordinates and re-gaining control the situation. In the following, I will interpret how the tactical recommendations of firefighting can be used to establish leadership principles and guidance for managing crisis in the business world.

II.              Command and leadership

The commander is the individual to take ownership, responsibility and control of the mission, define the means and overall strategy, and the soldiers execute. This is not to say, however, that individual leadership is discouraged. On the contrary: command and leadership are two very distinct and different dimensions in cooperation. Commanding is the responsibility for the overall situation, the responsibility to guide, and manage resources. To show the way, if you will. But leadership is required and expected as well from the individuals on the front lines, to assess the situation of their respective and direct surrounding, take action accordingly, and communicate up the chain of command so decisions can be taken and tactics adapted as the situation develops. The glue that holds it all together is concise, direct and effective communication, trust and loyalty. The teams on the inside are the commander’s eyes and ears on the ground, and as their leader, the commander must make sure a communication culture is in place to continuously receive the relevant information on which decision making takes place.

In the business setting, these are the first lessons to learn from first responder organizations in general, and the firefighters in particular. In a way and unfortunately, the classic and outdated transactional command and control leadership culture continues to exist in organizations and companies around the world, and dare I say this is because of a pathological distrust in employees, leading to companies’ lack of agility in times of crisis. Effective firefighting would not be possible without the commander’s trust in his subordinates and their assessment of the situation on the frontlines, their loyalty towards him, their individual leadership within the teams of soldiers, to empower and support each other, and take action within their respective realm of responsibility. The same goes for companies navigating troubled economic waters.

Secondly, effective communication is key for the manager to be able to take informed decisions. The right channels of communication need to be in place, whether these be in the form of bilateral conversations with a respective subject matter expert, or group brainstorming meetings and discussions within a given department. The manager needs to be able to trust and listen to his subordinates, which just as in the case of the firefighter commander, are his eyes and ears in the field. They need to know how, when and where to find him to be able to convey their information, and that the information be heard and considered. Keep in mind, in times of crisis, the scarcest resource is time to act, and there is no organization that can afford to ascertain the same set of data multiple times when the clock is ticking. 

III.              Rules of engagement

Fortunately, man power, experience and physical resources such as fire trucks and heavy machinery are not the commander’s only means to dominate a given crisis. At his disposal he has a comprehensive set of rules of engagement, which are a powerful toolbox and provide orientation and guidance. They also represent the legal framework within he is expected to act. In firefighting, these are:

1.    Organize and provide sufficient means and resources in a timely manner

Consider delay for activation of means. Preventive action is a source of time gain. Better have too many resources ready for action than not enough. Deploy adequate and necessary means and heavy and special machinery. Identify, organize and deploy special machinery appropriate to deal with crisis. Objective: Establish advantages to control the crisis. 

The most common type of crisis that businesses around the world face these days is the financial one, typically resulting from a decline in demand and subsequently a declining backlog of customer orders whose projected revenue will not sustain the company in its current structure. Depending on the company’s financial asset structure and the seriousness of the crisis, its consequences can be devastating in a very short time period. Since most companies these days are trimmed to financial efficiency in order to remain competitive and maximize shareholder value, for managers facing challenges of this type, reactive crisis management will be typically their only way forward, at least during the acute phase.

For business managers, this typically means a good and painful look at liabilities. Calling up the bank and re-negotiating credit lines and conditions to stretch liquidity should probably be the first course of action. Also, in this day and age of the current coronavirus crisis, many governments have instituted uncomplicated access to interest-free or even -negative emergency credits. Secondly, get in touch with your high-volume suppliers. If you have a healthy relation in place, a possible amicable extension of payment terms should be possible to be discussed. Furthermore, which cost can be reduced short term without compromising the company’s agility on the long run? For most companies, salaries will be one of their highest, if not the main liability. Lucky the managers in some countries that can resort to short-time working, effectively dropping their salary cost by up to 50%, but to my best knowledge, that system does not exist outside the German speaking realm. Lay-offs are tempting and effective, but should be a means of last resort, not the first, as they come with significant opportunity cost in the form of internal leadership credibility and reliability, trustworthiness, and of course loss of knowledge. It takes more courage to look at what assets can be efficiently liquidated, as it might present a lower cost of opportunity. Maybe there is an expensive ongoing development project in R&D that ties up significant resources that could be used otherwise. Or a product line that has barely made any money lately and does not have a very positive future outlook, that requires costly production capacity that could be used more effectively otherwise, or underused machinery that could be liquidated. Just as in firefighting, the sooner measures are taken and resources secured, the better. 

2.    Strive for offensive tactics

Tactics are determined by the relation between danger and state of damage, as well as the available resources. Inferiority of resources: defensive tactics. (Secure, save, maintain, protect, isolate, prevent, stop.) Superiority of resources: offensive tactics. (Secure, save, advance, attack, clear.)

The same principles hold true for business crisis management. While offensive tactics to tackle a crisis will yield positive results quicker, they are, of course, more resource intensive, and these resources need to be afforded and allocated first. In other words, especially in the beginning of a crisis, most managers will find themselves forced into defensive tactics to avoid a deepening of the crisis, until the organizational strength is gathered to re-gain control.

A good example for how to do this right and bring sustainable change and growth to a company in crisis was when Indra Nooyi became CEO of PepsiCo in 2007, at a time when Pepsi’s product portfolio primarily consisted of soft drinks and snacks that had seen a strong decline in consumer demand for years due to people’s increased demand for healthier options. On top of that, she took over the role at the beginning of one of the biggest financial and economic crises the US had seen since the great depression. But instead of caving up into an existing company culture and structure and wait it out, she took control, shook things up, brought a true cultural change to the organization, and re-shaped the company’s offering. Not by moving away from the admittedly delicious but unhealthy options, but by re-shaping the product portfolio into the categories “fun for you” (Mountain Dew, Pepsi, Lays...), “better for you” (lower-calory sodas, baked potatoe chips, ...), and “good for you” (fruits, vegetables, whole grains and nuts, ...), all of which complemented each other into an apparently fair, transparent, and open product portfolio policy that was aggressively marketed. PepsiCo’s stock has more than doubled in value during her presidency, from their lowest point of around 50 USD in the aftermath of the financial crisis to about 110 USD when she left the company in October 2018.

3.    Key locations are key to successfully controlling the crisis

Taking control of the crisis in key locations will generate considerable advantage for a successful mission. 

In firefighting, key locations are mission critical spots in regard to the development of the crisis. These represent for example elements within a building that are crucial to its structural integrity, stairwells and the like. By pushing fire and smoke back from or avoiding that it spreads into these locations, firefighters gain time by securing the structure itself and avoiding imminent collapse, as well as guarantee access routes into the building for evacuation and combating the fire.

In a business crisis context, it is the manager’s responsibility to identify securing which areas of their respective enterprise are key to resolving the crisis. If the problem is an empty order book, the focus should be on supporting the sales department in a multidimensional approach. Questions that should be asked include whether the product portfolio is state-of-the-art and corresponds to actual, current, and ideally, future projected customer demand, whether services offered are effectively complementary to the product offering, if products are competitive in price, delivery time, as well as provide unique selling points and advantages when proposed to customers. Many companies struggle because they are “just one more candidate” offering more of the same, lacking innovation and true added value. Supply chain should allocate additional resources to optimize cost and lead times, re-negotiate possibly existing framework contracts with suppliers, marketing to provide the sales people with adequate advertising and materials. In a nutshell, the company should make sure their sales department has all tools available and optimized which they need to increase projected and actual sales in a foreseeable and tangible future.  

4.    Interior attack firefighting

For the attack to be effective, attack from close proximity, on same height, from below up and from the inside out. Make use of all channels of attack and secure retreat. 

In firefighting, the interior attack is certainly the most resource intensive, potentially dangerous, but also the most exciting part of the job. While the clock is ticking, lives and property may be at risk, and as informed as decisions can get, it still can be a gamble on how long the structure will hold until it is too dangerous to work inside.

In advanced business crises, it is no coincidence that managers often speak of having to constantly putting out fires as they emerge all around them. In these organizational life or death situations, sometimes induced by external events, it is all about controlling the in-house drama before proceeding to re-direct the company’s strategic course. In 2004, Oil & Gas giant Shell found itself amid an oil reserves crisis that slashed its share price and put the very survival of a company at risk that some might have considered too big to fail. Newly appointed Chairman Jeroen Van Der Veer initiated an internal change programme known as Downstream-One. Primarily an IT initiative, the programme sought to simplify and unify processes across 80 business units worldwide. The central logic, that what would be best for Shell globally would have to take precedence over local and individual needs, was not an easy message to promote as it implied a lot of important stakeholders’ toes to be stepped on. The change process was lead by a team of experts, both internal as well as external, and eventually proved to be a success. Shell employees now benefit of globally unified and consistent systems and processes, that helped the company re-gain competitiveness and financial health.    

5.    Uniform mission direction

Define uniform direction of attack, and promote reciprocal support between teams.

This rule of engagement in firefighting is all about leadership and promoting collaboration. The commander’s coordination of resources can be particularly challenging in the beginning of a mission, the so-called “chaos phase”, when the building is on fire, resources are still just arriving on site, and everybody is looking up for guidance and leadership. The principle of uniform mission direction essentially recommends that all efforts to resolve the crisis be pro-actively directed in the same direction, and to make sure teams support each other collaboratively.

When crisis strikes business, instability and uncertainty, whether objectively real or subjectively felt, can be major factors of tying up valuable resources within the company that could better be used otherwise. People might feel overwhelmed in regard what to do and how to set priorities. Or worse even, a “save yourself first” mentality kicks in where employees prioritise actions to safeguard their respective departments or personal importance to the company over solving the “bigger picture”, and actively or passively sabotage internal competitors for survival. Some managers might be tempted to fall into temptation of “divide et impera”, hoping to solidify their own power basis, however strong leaders understand the importance of unifying and promoting collaboration to see the organization come out stronger at the end of the crisis.

Years ago, I found myself managing a major crisis myself. Having won a large international tender, our company was sitting for months on end on millions worth of product ready to be delivered to an important customer. That particular client was just undergoing a restructuring process when the company was privatized, and different sections of their quality assurance departments were battling internally for superiority and survival, complicating supplier evaluation and delivery clearances to levels of unprecedented absurdity. When I hit the dead end with my possibilities, I requested support from the management to create a multidisciplinary task force. Together with colleagues from QA and engineering, we invested resources to be prepared for a multitude of eventualities before yet another supplier evaluation team from the customer visited for audits and factory acceptance testing. During these visits, they typically seemed to internally compete for how many unconformities at suppliers they were able to construct. However, our well-prepared team was able to satisfy the most demanding and curious requests and to demonstrate a rock-solid QA management system until the customer’s QA teams ran out of points to object to. Additionally, several visits to the client’s HQ with senior managers eventually broke the deadlock and released the shipments.

In a nutshell, we were able to solve the crisis by getting a multitude of internal players within our company to collaboratively move towards a single and specific objective, and eventually succeeded, what no one on their own would have been able to do.   

6.    Avoid secondary and collateral damage

Extinguish the fire, but do not drown it. Make use of most effective means and resources of lowest secondary and collateral effects. 

Contrary to how firefighting is often portrayed in TV and movies, the selection of appropriate types, qualities and quantities of means to combat the fire is actually based on an incredibly delicate and difficult set of decisions. Of course, the safety of residents in danger and the very firefighters is always the first priority. However, once there is the slightest margin of manoeuvre, firefighters have to weigh the potential collateral damage versus the benefits of selecting a specific means without compromising the mission’s primary objectives. This applies for example to the amount of water or foam used, and there are regularly cases where the damage to a building inflicted by excessive amounts of water outweighs that of the fire.   

Similarly in business, managers must not only identify the most effective means and resources they have at hand to tackle a crisis, but also their collateral and secondary effects, and strike the right balance of selecting sufficient of the right measures. When looking at the last years’ business crises, we mainly find stories of companies reacting too late and too little to crisis. Think about Boeing in the aftermath of the two deadly 737M crashes, Facebook’s handling of the data scandal or Papa John’s PR nightmare, the firefighting equivalent of wait and see if the fire won’t disappear on its own. On the other end of the spectrum there is a long list of disastrous mergers and acquisitions, born out of a need for growth to avoid losing ground to competitors. Examples include Microsoft’s takeover of Nokia, later written down at 7.6 billion USD, Ebay’s acquisition of Skype for 2.6 billion USD, or the failed Daimler-Chrysler merger that ended up costing the Germans a staggering 36 billion USD. Clearly, all that money would have been better invested in R&D and marketing, possibly leading to more profitable outcomes.

On the smaller scale of day-to-day business in crisis, corporate politics of restructuring and lay-offs, while unavoidable at times, should be very carefully planned and executed as well, as what can boost the bottom line on the short term can end up coming at far superior opportunity cost in the form of lost talent, relations, and organizational agility. Unilateral “re-interpretation” of contractual payment terms, so to speak, e.g. delaying invoice payments to stretch liquidity, can badly damage supplier relations to the point of running out of reliable high-quality suppliers altogether, forcing a company to resort to lower-quality components that can cause internal quality problems down the line, or see supplier prices and payment conditions deteriorate on the mid-term.   

IV.              The aftermath

In firefighting, whether it is after real-life missions or training exercises, extensive analysis and evaluation takes place during which the commander explains his understanding of the situation and its development, justifies decisions taken, and reviews mission-critical moments. The different divisions’ roles and effectiveness of their work comes under scrutiny, positive points are reiterated and need for improvement and training recorded.

In the business world this is often seen as a luxury or inconvenience once a crisis is overcome. After all, everybody wants to get back to work as normal, and the routines of daily business absorb us ever too fast. Furthermore, and more often than not, the very fact that the crisis is over is seen as a confirmation that decisions and measures taken have been effective and correct, and this is not entirely wrong. However, failing to post-evaluate these processes would be a valuable opportunity wasted to learn from the past and prepare for future crises. Because after the fire is before the fire.  

Notes and thanks:

This article is based on the rules of engagement of the firefighters of the canton of Argovia in Switzerland, as defined by the Argovia Building Insurance Agency and issued by the FKS, Bern, Switzerland. Their guidance, training, support, and provision of resources is essential for the safe and effective firefighting in our communities. Thank you.

Pictures Copyright Feuerwehr Koordination Schweiz FKS, Bern, Switzerland. Source: Kantonsbeilage Einsatzführung, AGV Aargauische Geb?udeversicherung, Feuerwehrwesen.

For the sake of simplicity and reading fluency, the author has chosen to use the male versions of commander, officer, manager etc. All my female colleagues, both in business as well as in our corps of firefighters, are highly respected, regarded, and play an equally valuable role in what we all do, whether it is to extinguish a fire, or run a business.

Special thanks to our commander Thomas for his exemplary leadership and selfless and uncompromising dedication to the safety of our corps and community.