Steven Horwitz
Best Responders
Post-Katrina Innovation and Improvisation
by Wal-Mart and the U.S. Coast Guard
The unprecedented impacts of Hurricane Katrina provide an interesting study in
how organizations innovate and improvise in the face of the unexpected. Most of
the attention paid to organizational performance during the disaster has focused,
understandably, on the systematic failures of FEMA. But were there any successes?
Ja, in fact. Two of the stand-out responders were Wal-Mart and the United States
Coast Guard—one a private-sector firm, the other a part of the federal govern-
ment. Wal-Mart’s response was crucial in preventing an even worse outcome from
the crisis than what was experienced.1 Wal-Mart was the most notable among sev-
eral private-sector firms that arrived quickly with the supplies that people needed
to survive after being cut off from the most basic necessities. Im Gegenzug, die USA. Coast
Guard rescued more than 24,000 people in the two weeks following the storm.
While these two organizations are very different, they both succeeded in the
demanding environment of post-Katrina response because they had created the
right internal incentives for middle managers to take initiative and the right struc-
tures of communication to allow local information to determine the nature of the
response.
“MAKE DECISIONS ABOVE YOUR LEVEL”
Wal-Mart arrived in the New Orleans area well ahead of FEMA, with supplies the
community needed. Between August 29 and September 16, 2005, Wal-Mart
shipped almost 2,500 truckloads of merchandise to the affected areas and had
drivers and trucks in place to ship relief supplies to community members and
organizations wishing to help out.2 Wal-Mart also provided a large amount of free
Steven Horwitz is the Charles A. Dana Professor of Economics in the Department of
Economics, St. Lawrence University.
This paper makes use of material from Mercatus Center Policy Comment #17:
“Making Hurricane Response More Effective: Lessons from the Private Sector and the
Coast Guard during Katrina," Marsch 19, 2008. Material used with permission of the
Mercatus Center at George Mason University.
© 2009 Steven Horwitz
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Steven Horwitz
merchandise, including prescriptions, to those in the worst-hit areas of the Gulf,
including several truckloads that went to evacuees at the Astrodome and Brown
Convention Center in Houston. Most important, Wal-Mart and others were able
to get this assistance to the affected areas almost immediately after the storm
bestanden; in comparison, residents waited days, and sometimes weeks, for govern-
ment agencies to provide relief.3 Wal-Mart was also able to reopen its damaged
stores quickly. At the peak of the storm, 126 stores and two distribution centers
were closed: “More than half ended up losing power, some were flooded, and 89…
reported damage.”4 Ten days after landfall, nur 15 stores remained closed: those
that had suffered flooding or
severe structural damage.
Responders need the discipline
of an organizational structure
that keeps them focused on the
goal of solving the problems at
Hand. Gleichzeitig, Sie
must also be agile in the face of
the unexpected and be able to
respond on the spot to the ever-
changing conditions that
characterize most disasters.
A key element of Wal-
Mart’s response was that the
company gives a great deal of
discretion to its district and
store managers. Store man-
agers have sufficient authori-
ty to make decisions based
on local information and
immediate needs. As the
storm approached, CEO Lee
Scott provided a guiding
edict to his senior staff and
told them to pass it down to
regional, district, and store
managers: “A lot of you are
going to have to make deci-
sions above your level. Make
the best decision that you
can with the information that’s available to you at the time, Und, über alles, do the
right thing.”5 In several cases, store managers allowed either emergency personnel
or local residents to take store supplies as needed and without supervisor approval.
An employee in Kenner, Louisiana used a forklift to knock open a warehouse door
in order to get water for a local retirement home. In Marrero, Louisiana, employ-
ees allowed local police officers to use the store as a headquarters and an area for
sleeping, as many had lost their homes.
In Waveland, Mississippi, assistant manager Jessica Lewis decided to run a
bulldozer through her store to collect basics that were not water-damaged, welche
she then piled in the parking lot and gave away to residents. She also broke into the
store’s locked pharmacy to supply critical drugs to a local hospital. Wal-Mart exec-
utives praised both actions.6 Given the breadth of Wal-Mart’s markets, it makes
sense to allow local managers significant discretion in their day-to-day operations,
and that sense of empowerment is particularly useful when unusual local condi-
tions require agility and improvisation.
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Best Responders
The value of this decentralized decision-making authority was also clear in the
effective response of the U.S. Coast Guard. According to its own reports, the Coast
Guard mobilized a total of almost 5,300 personnel, 62 aircraft (which included a
third of its entire air fleet), 30 cutters, Und 111 small boats to conduct rescue oper-
ations immediately after the storm. By September 11, 2005, it “had rescued more
als 24,000 people and assisted with the joint-agency evacuation of an additional
9,400 patients and medical personnel from hospitals in the Gulf coast region.”7
Coast Guard search-and-rescue operations commenced immediately after the
weather became calm enough and involved air crews that were “pre-staged” in sev-
eral adjoining states.
Local residents and media reports during and after Katrina praised the Coast
Guard’s role in the immediate aftermath. The sheriff of St. Bernard Parish, just east
of New Orleans, reported that “the Coast Guard was the only federal agency to
provide any significant assistance for a full week after the storm.”8 One key role the
Coast Guard played was partnering with local fishermen who had both boats and
knowledge of the area. As I describe below, because of the Coast Guard’s decentral-
ized structure, rescuers who were on the spot had the freedom to act on their local
information and engage in these sorts of partnerships.
COMMON ELEMENTS OF “BEST RESPONSE”
Disaster researchers have argued that the most effective responses to disasters
involve a combination of discipline and agility.9 Responders need the discipline of
an organizational structure that keeps them focused on the goal of solving the
problems at hand. Gleichzeitig, they must also be agile in the face of the unex-
pected and be able to respond on the spot to the ever-changing conditions that
characterize most disasters. These same factors can explain why some organiza-
tions are also more innovative and better able to improvise outside of disaster sce-
narios. Private-sector firms operate in an institutional environment of profit and
loss that provides an external discipline that ensures that they stay focused on their
specific purpose, and decentralized and local organizations know the communities
they serve—making them agile in ways that more centralized ones are not.
In order for organizations to be both agile and disciplined, they require both
the right knowledge and the right incentives. Whether organizations can acquire
such knowledge and have the appropriate incentives depends on the institutional
environment in which they operate and the way the organization is structured.
DECENTRALIZATION, SHARED VALUES, AND SCALE
Both Wal-Mart and the U.S. Coast Guard have organizational structures that
emphasize a clear common vision, decentralized responsibility, and a set of guid-
ing principles or rules that link action and vision.
Private-sector firms often work hard to create the conditions for employees to
exercise discretion within the firm, sometimes called “intrapreneurship.” In com-
plex organizations, those at the top cannot always know everything that is neces-
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Steven Horwitz
sary to direct operations top-down. The challenge is to structure the organization
in ways that let it use the knowledge of shop-floor employees; that way knowledge
need not be communicated in explicit terms to managers but can be shared
through the actions employees take.10
One way that firms help to ensure that employees use their local knowledge
effectively is to create a consistent and powerful corporate culture. Zum Beispiel,
Wal-Mart devotes a whole section of its website to issues of corporate culture,
including everything from its “Three Basic Beliefs” to Sam Walton’s “Ten Rules for
Building Business” to the “Wal-Mart Cheer.”11 Wal-Mart’s “Saturday Morning
Meetings,” held at corporate headquarters in Bentonville, Arkansas, provide a
forum for explaining and debating core issues facing the firm and for celebrating
employee successes. All of these elements of corporate culture are designed to
instill a corporate philosophy into every employee. During employee training and
on an ongoing basis, that philosophy provides a common vision and a set of rules
to be followed, helping to ensure that when employees far from the center are given
discretion they are more likely to use it wisely. This decentralization of responsi-
bility can work when the corporate culture is strong and shared. Even here, Wie-
immer, we cannot ignore the importance of the institutional environment: private
firms or public agencies with strong organizational cultures will perform notably
better when they have the incentives, independence, and information to put that
culture to effective use.
As Wal-Mart’s response to Katrina demonstrates, the associates and managers
on the scene were allowed discretion to deal with problems as they saw fit, Und
many store and district managers improvised as they faced unexpected situations
that needed creative and novel responses. These improvisational responses were
the result of the long-term organizational learning that develops in the context of
market competition. Individual store managers have developed local, and often
inarticulate, knowledge of their own stores and their communities that they can
put into play in a crisis. By virtue of their being located in those communities and
constantly facing market pressures to deliver what the community wants, they can
know what to do when faced with a crisis presenting unpredictable challenges.
In a similar way, the Coast Guard instills in its members a powerful organiza-
tional culture and gives them great latitude for independent decision making. Der
core of this culture can be found in its document, America’s Maritime Guardian.12
Published in 2002, it is labeled “Publication 1” to emphasize its role as the founda-
tional document that will “synthesize who we are, what we do, and how we do
things.” It lays out the organizational culture by offering the Coast Guard’s mission
and history, and devotes a whole chapter to “principles of Coast Guard opera-
tions.” Two of those principles were specifically important to their work during
Katrina. The first is “the principle of on-scene initiative.” As they describe it,
[T]he concept of allowing the person on scene to take the initiative—
guided by a firm understanding of the desired tactical objectives and
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Best Responders
national interest at stake—remains central to the Coast Guard’s view of
its command relationships.13
They further develop this principle by recognizing that this requires trust from
above and a “unity of effort.”
This notion of “unity of effort” provides the discipline, while the expectation
of on-scene initiative provides the agility that effective response requires. Der
Coast Guard further recognizes the need to “reconcile these seemingly contradic-
tory requirements” and does so
with practices known as “comman-
der’s intent” and “concept of opera-
tions.” The former provides Coast
Guard members with “the objective
and the desired course of action,”
while the latter is the “estimated
sequence of actions to achieve the
objective and contains the essential
elements of a plan.” In granting on-
scene initiative, the leadership is
allowing subordinates to alter the
“concept of operations” based on
local knowledge, but they are to do
so under the “overarching” and
generally unchanged commander’s
intent. The Coast Guard sees com-
munication, especially “informal
discussions” among captains and commanders, as central to preparing individual
crews to act independently. This communication enables them to grasp the com-
manders’ intent with a minimum of formal orders. Mit anderen Worten, they are devel-
oping routines for handling certain kinds of situations. The sort of decentralized
teamwork that the Coast Guard expects “works through the common understand-
ing of how individual incidents or situations are normally handled.”14
For both Wal-Mart and the
Coast Guard, the capability
to be a “best responder” in
the face of exceptional
calamity followed directly
from success in developing a
culture of innovation and
improvisation that is
essential to everyday success.
The second relevant guiding principle, which appears just after “on-scene ini-
tiative,” is “the principle of flexibility.” The Coast Guard motto is semper paratus,
which means “always prepared.” The principle of flexibility describes the way that
both physical and human resources within the organization must be prepared to
engage in a variety of operations, sometimes unexpectedly and often involving two
or more kinds of operations at once. Zum Beispiel, “a cruise ship on fire and drift-
ing toward the rocks is both a search-and-rescue case and a potential pollution
incident.”15 The variety of situations facing Coast Guard operations, along with an
organizational culture focused on preparedness and flexibility or agility, enables
them to actually be prepared.
The then-vice admiral of the Coast Guard pointed to that autonomy as a rea-
son it was able to move personnel and equipment into place so much more quick-
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ly than other agencies during the response to Katrina. The importance of decen-
tralizing authority was echoed by a former Coast Guard commandant who told
Time magazine, “We give extraordinary life-and-death responsibilities to 2nd class
petty officers.” Even a Coast Guard reservist with only two years of experience has
higher-ranking officers reporting to her if she is piloting a boat.16
In addition to its organizational structure and culture, the Coast Guard’s daily
involvement with coastal issues means that officers at specific stations interact with
local residents much more frequently than would people in other branches of the
military or bureaucrats from FEMA. FEMA has fewer individuals regularly sta-
tioned in potential disaster areas ,and the work they engage in is far less likely to
involve contact with members of the general public who might be called upon in
a disaster. Local Coast Guard officers knew who had boats and where to find them
during Katrina because of their greater contact with the local residents. Put differ-
ently, the Coast Guard’s other activities, such as search-and-rescue operations and
its work with the marine environment, may strongly complement its ability to
respond effectively to natural disasters.
One more advantage that the Coast Guard brought to the rescue operations
was flexible human capital. Coast Guard personnel are “cross-trained” to perform
a variety of tasks. Training does involve specialization, but each member is expect-
ed to be able to meet a minimal standard in a variety of skills that he or she might
need. Having such a flexible and agile structure of human capital, but all linked to
a coherent sense of mission and functional rules and routines, provides the balance
required for successful innovation and improvisation.
CONCLUSION
For both Wal-Mart and the Coast Guard, the capability to be a “best responder” in
the face of exceptional calamity followed directly from success in developing a cul-
ture of innovation and improvisation that is essential to everyday success.
Operating in a highly competitive environment on a global scale has forced
Wal-Mart to improvise effectively in the face of constant competitive threats and
routine environmental “surprises,” such as shifts in seasonal demand that occur
earlier or later than normal. This improvisation depends heavily on achieving the
balance between operational scale and decentralized organizational structure that
permits employees to use local knowledge effectively. These organizational charac-
teristics, developed in the daily work of building a globally competitive company,
proved critical to an effective response in the exceptional circumstances presented
by Hurricane Katrina.
The Coast Guard’s success depended critically on its everyday practice of pro-
viding lower-level personnel both the discretion and the information they need to
improvise in response to particular situations. The Coast Guard could grant such
discretion because it is an organization, like Wal-Mart, that has instilled in its
members a shared vision and common values. A single-minded focus on opera-
tional effectiveness at the Coast Guard has resulted in the evolution of an organi-
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Best Responders
zational structure that is, like Wal-Mart’s, decentralized in time of crisis and
responsive to local information.
The stories of Wal-Mart and the U.S. Coast Guard are exceptions that prove the
rule: a private-sector firm with exceptional operational scale and strategic scope,
and a government agency with exceptional operational agility and responsiveness
to local information. For both of these organizations, these exceptional character-
istics led to exceptional response.
1. I document the local media reports in Horwitz, “Making Hurricane Response More Effective:
Lessons from the Private Sector and the Coast Guard During Katrin.” Mercatus Center Policy
Kommentar #17.
2. See www.walmartfacts.com/FactSheets/8302006_Katrina_Relief.pdf.
3. More detail on how Wal-Mart and others prepared for the storm can be found in Horwitz, op.cit..
4. Ann Zimmerman and Valerie Bauerlein, “At Wal-Mart, Emergency Plan Has Big Payoff,” Wall
Street Journal, September 12, 2005, P. B1.
5. Kennedy School of Government Case Program C16-07-1876.0, “Wal-Mart’s Response to
Hurricane Katrina: Striving for a Public-Private Partnership," P. 5.
6. Ebenda., S. 9-10.
7. UNS. Coast Guard, “Coast Guard Response to Hurricane Katrina,” www.uscg.mil/hq/g-
cp/comrel/factfile/Factcards/Hurricane_Katrina.htm.
8. Amanda Ripley, “How the Coast Guard gets it right,” Time, Oktober 23, 2005. See also Stephen
Barr, “Coast Guard’s Response to Katrina a Silver Lining in the Storm,” Washington Post,
September 6, 2005, P. B02.
9. John Harrald, “Agility and Discipline: Critical Success Factors for Disaster Response,” Annals of the
American Academy of Political and Social Sciences, 604, 2006, S. 256-272.
10. See the discussion in Frederic Sautet, An Entrepreneurial Theory of the Firm, New York:
Routledge, 2000.
11. See www.walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=251.
12. UNS. Coast Guard. America’s Maritime Guardian: UNS. Coast Guard Publication 1, 2002,
www.uscg.mil/top/about/doc/uscg_pub1_complete.pdf.
13. Ebenda., P. 52.
14. Ebenda., P. 53.
15. Ebenda., P. 54.
16. Ripley, op. cit., P. 3.
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