1 [Weekly BIZ] Leaders must be the first in and last out as with the pilot of the Hudson River accident Chosun Biz April 26, 2014 Hoh Kim, Head Coach at THE LAB h, Minyeong Yu, Head Consultant at Acase Reflecting upon the Sewol ferry disaster through lessons from Harvard Universitys Leadership In Crises (LIC) program Launch a designated Red Team to investigate the accident immediately and minimize mistakes Appoint a commander based on arrival on site and level of expertise not by seniority Sit and listen to the victims side-by-side not face-to-face Deliver positive messages to cope with chaos and trauma Kennedy School of Government at Harvard Universitys Leadership In Crises program is a world- renowned course on national crisis management, which was first founded in 2001 and attended by over 700 leaders from nearly 50 countries. Ten lessons learned from participating in the program for a week is introduced here in connection with the recent Sewol ferry tragedy.1 Passengers await to be rescued atop the wings of US Airway Flight 1549 that crash-landed into the Hudson River in April 2009. Sullenbergers wise and prompt judgment saved the lives of 155 passengers and crew members. / AP 1 This is the translation of the article printed in Weekly Biz section of Chosun Ilbo (April 26, 2014) in Korea. About 30-40% of the original article submitted by authors to Chosun Ilbo has been edited due to the space limitation. For example, the first paragraph of the original article was as follows: We (two employees from THE LAB h and ACase) participated in the Leadership in Crises (LIC) program held from April 6th till 11th at Harvard Kennedy School. Launched in 2001, the program has been attended by over 700 leaders from nearly 50 countries over the past decade. In this article, we have analyzed the case of the Sewol ferry crisis by applying the case studies and crisis management principles taught at LIC, interview results with Professor Arnold Howitt of Harvard Kennedy School along with insights from various consulting projects to finally identify 10 key factors companies need to pay attention to for crisis management. For any inquiry about this article, please contact Hoh Kim at hoh.kim@thelabh.com or Minyeong Yu at navy@acase.co.kr.

2 Leadership 1. Wear the commanders hat wisely In the US, the commander-in-chief is appointed either based on who arrived at the site first or has the deepest level of expertise. A fire broke out when the Pentagon was attacked on September 11, 2001. At the time, James Schwartz who was number two in command at the Arlington County Fire Department (ACFD) was the first to show up at the scene. As a result, Scwhartz was appointed to take command instead of Rumsfeld, then Secretary of Defense. Even his senior from ACFD supported him saying, You have a better understanding of what happened here so you should take the helm. On the contrary, people who had no idea of the accident or expertise wore the commander hat for the Sewol ferry accident turning it into a shambles. 2. First In, Last Out Now retired Captain Chesley Sullenberg saved the lives of all 155 passengers and crew members by boldly ditching the plane in the Hudson River when its engines broke down midair in New York. Sullenberg double-checked the aircraft to make sure there was no one left behind before he finally evacuated. New York firefighter John Salka gave the title First In, Last Out on his book about leadership lessons from the New York Fire Department. Taking full responsibility commensurate to ones name and title is what true leadership should be about. Judgment 3. Demonstrate instantaneous resilience Realizing the engines were in trouble, Sullenberg drew a three dimensional map in his head peering down at New York City. While air traffic control advised him to attempt landing at a nearby airport, he quickly recognized that flying so close to New Yorks skyline could result in a more devastating disaster and landed the plan into Hudson River instead. This was a wise and prompt decision. We call this experience and training based instantaneous resilience. Sullenberg had piloted nearly 19,500 hours and received regular crisis training. Moreover, while the trainings took place in a classroom he also did exercises on emergency landing into water. Many multinational companies offer routine crisis management simulation courses for its CEO and executives and these types of trainings are more often found in industries prone to higher risks such as chemicals, pharmaceutical as well as food and beverage. 4. Avoid Head First responses Credit card companies were helpless in the wake of massive private information leaks. They had never braced themselves with crisis management training, were incapable of putting together a response strategy and did not have any experts on standby. Consequently all they appeared to do was keep their heads low and deny their wrongdoings or make up excuses upon official briefings and news coverage. This kind of behavior is known as the head first (rash and unconscious reaction) response. Always make a War Room in case of a crisis outbreak. And no matter how hard a blow you are dealt with, get to the bottom of the case and develop a strategy and goal for it accordingly. System Management 5. Manage expectations On the day Sewol ferry capsized, the government initially announced that 368 passengers were rescued

3 only to later continuously correct their statement to 164174175176 and finally 179 people. The Korean government taking back its original statement from mostly rescued to mostly missing will go down in history as the worst ever mistake. By nature, human feel a relatively higher degree of devastation and anger when expectations are set high and suddenly lowered dramatically because of the significant rift between positive expectations and tragic reality. This is the very reason the UK government kept on delaying the official disclosure on the number of victims after the terrorist attacks on the London Underground. With no exception, the very first step in crisis management at global companies is always fact checking. 6. Build a Red Team In the TV drama Newsroom, the news bureau chief asks the main anchor to oversee the Red Team. In simple terms, the Red Team pokes holes in the facts covered by the White Team to ensure that it is fact-based and error-proof. This kind of practice is exercised in order to avoid editing facts in a way people want to believe in. Likewise, global companies play a so-called terrorist game to arm themselves from potential crises. In this game, the CEO and executives serve as consumers, government officials, civil activists and members of the press so that they can identify any loopholes that may become targets by these stakeholders. 7. Dont create a crisis out of crisis management' In general, a risk triggers two crises simultaneously. One is the risk itself and the other is the crisis caused by handling the risk at hand. Earlier this year, two oil tanker accidents occurred off the coasts of Yeosu and Busan. While the Busan accident suffered a larger oil spill and hence more critical, it had less of a negative public reaction thanks to swift initial responses. However, the Yeosu oil spill still looms large because of poor response by the coast guard in the wake of the accident. In fact, people mostly talked about the touching story of two coast guards who sacrificed themselves on the tankers while covered in oil after the Busan accident. A downpour in the name of a crisis can turn either into a storm or can go away depending on how you handle the situation. Communication Relationships 8. Do not exchange business cards at the scene of a disaster Be on a first name basis This is a quote by Richard Serino, former senior executive at the Federal Emergency Management Agency (FEMA). An emergency situation requires close cooperation of government organizations, armed forces, police and corporates however, if people meet for the first time and exchange names only after the accident occurs, teamwork can never really come into effect. Last year, Park So Ryoung of Harvard University highlighted the first name basis relationship by observing what happened before and after the Boston Marathon bombings. The responders to the devastating crisis were already close as they had attended the emergency trainings hosted by the Massachusetts Emergency Management Agency together following the 9/11 attacks, which resulted in a meaningful synergy effect. 9. Engage in quick and frequent communication for cooperation Professor Arnold Howitt of the Kennedy School of Government at Harvard University taught four communication elements governments must engage in under an emergency situation as follows: Only speak of known facts. While only facts that have been verified as true must be disclosed to the public, this is where the Korean government first made its mistake.

4 Disclose the measures that are being taken. Frequently communicating what measures are being made is equally important as acting upon it. Explain what citizens should do. It is critical to deliver a clear message on what the people at the site of the accident, families of the victims, government, politicians as well as citizens need to do. The fact that stakeholders from dozens of emergency offices as well as the marine company released separate statements of their own was a catastrophic mistake. A joint statement as in the case of the Boston Marathon bombing is what is needed. Offer an executive interpretation of the crisis. When a national disaster occurs, leaders must be able to build their opinion to help their people cope with chaos and trauma. After the September 11 attacks, then President George Bush delivered a message on strong America and six days after asked Americans to return to their lives and routines. Meanwhile, while there is no shortage of messages filled with condemnation and punishment for those involved in the Sewol ferry sinking, it is hard to find any determination on overcoming (the crisis) as a single team. 10. Keep an internal listener Taking care of victims is the most important part of crisis management and yet often gets overlooked. Along with nimbly preparing rescue measures, there also needs to be appropriate plans for the victims and their families as well. This plan must include a person to act as an internal listener. The role is to offer emergency medical support for both their physical and psychological wellbeing by empathizing with their feelings of loss and panic. In the US, doctors and/or hospital officials are required to sit with the patient and their families when a medical accident occurs so that they can look at the situation in their shoes. ###