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Leadership in a Crisis: How One Firm Survived

The HBS case study curriculum stresses that it challenges its students with real world situations every day. On December 5, the HBS community had the opportunity to hear from an individual who has just faced one of the most extraordinary situations ever to befall world business. The events of September 11.

Bob Scott, the President of Morgan Stanley, was giving a speech to 400 people at the Marriott Hotel in 3 World Trade Center on the morning of the attack. After hearing what they thought was a bomb, everyone began to evacuate the building.

As he came out, Scott saw debris everywhere, paper “fluttering down from the sky” in silence, and many wounded people. He was getting away from the scene when he saw the second plane crash into 2 World Trade Center. His immediate reaction was: “That plane hit right where my people are.”
Morgan Stanley was the single largest tenant in the World Trade Center complex, with over 3,700 employees working in 1 million square feet of office space, including 25 floors of 2 WTC and space in 5 WTC, a smaller building in the complex. Rules were in place from the 1993 WTC bombing requiring a full evacuation of all employees if there was an incident anywhere in the complex. These rules, as well as frequent evacuation drills, meant that many lives were saved.

But just because people got out of the building didn’t mean they were accounted for. Once Scott made it back to midtown Manhattan, where Morgan Stanley had established a crisis management center, his work truly began.

After a quick, reassuring call to his wife, who was in hysterics, he and his colleagues divided into teams to manage different parts of the recovery process. Their most important task was to find all of their employees and ensure they were safe. The next was to determine how their business would continue to operate, communicating with the Federal Reserve, the stock exchanges and the Treasury Department, to be certain that the Fed would be making sufficient liquidity available for financial firms to survive the initial shock. But according to Scott, the biggest difficulty was finding time to personally absorb the enormity of the tragedy.

By 11:30, Scott and his team had commandeered a Discover Card call center to serve as a clearinghouse for people to check in and provide information. The Discover team wrote scripts for the operators immediately, and Morgan Stanley was able to announc a toll-free number to all broadcasters. This was the first toll-free number publicized-they actually beat the U.S. government.

The call center was flooded with calls, from families of their missing employees and the employees themselves. But, one student in attendance at the event said people also “used it to call and ask questions, even if they didn’t have any family or friends who worked for Morgan Stanley,” said Becky Silver (NI). “They would take your number and call you back when they had more information.”

In the end, it took four days and a door-to-door search for some employees before almost everyone had been accounted for. The search shows the immense benefit of contingency plans: out of 3,700 employees, 6 died in the attack.

The team focused on the company’s business had to get inventive. Because the New York phone lines were down, they had to route their phone calls via Morgan Stanley offices in London and Chicago to get in contact with the government and other financial institutions, but Scott said they just kept trying until they found a way to make it work.

Away from the details of the tragedy, Scott reflected on his experiences over the past three months. First, he feels an even stronger trust has developed among his coworkers. “We were making decisions every five minutes in a climate of complete uncertainty,” he said, and in retrospect, he was surprised at the quality of the decisions that were made.

“There is no way to over-communicate in a crisis,” he continued. The crisis management team comprised at least 100 people, and they met 3 times each day. They formulated firm-wide communications and tried to ensure the world knew that when the markets reopened, Morgan Stanley would be ready for business again.

Now, Scott and his firm are facing longer-term decisions such as how to deal compassionately with traumatized workers who may not be able to return to work, how to restructure and decentralize their operations, and how to increase security in their offices around the world.

Students found Scott’s personal account extremely powerful. “It was a great chance to see how a true leader deals with a crisis,” Stacy Sonnenberg (NI) said. That day, the LEAD students had completed a newly written case on the challenges that have faced New York Mayor Rudolph Giuliani and will soon face Mayor-Elect Michael Bloomberg. Most seemed happy that it had been added to the curriculum.

“Even though we’re far enough away from the tragedy, not that many people have thought analytically about the situation,” Brian Wheelan (ND) said. But, Wheelan said, Scott’s key points were ones their section had already discussed.

Scott closed with the lessons that he had learned. First, he mentioned that trust, both a leader’s trust in subordinates and their trust in a leader, is most important. “You work for the people that you work with,” Scott said. And more significantly, he continued, leadership is not just required in extreme circumstances. “If you wait for a crisis to lead, it will be too late.”

December 10, 2001
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