By David Nichols— Senior Financial Services Executive,
with David Dachinger— Career Fire Lieutenant & Co-founder Mind Health, LLC
Following Part 1 “High-Performance Crisis Leadership” and Part 2 “The 3 Ways to Size-up a Crisis Situation”, we bring you real-life instances of crisis leadership in action in Part 3, where we share actual examples of how to incorporate lessons learned from the fire service into business.
In this article, former firefighter David Nichols shares his experiences as a COO of a major investment firm, where he utilized fire service leadership skills throughout Japan’s 2011 historic earthquake, tsunami, and resulting nuclear accident.
Despite the fact it had been six years since he actively attended fire training drills, David credits “mental muscle memory” and the “logical and straightforward nature” of his training for his capability to activate key leadership strategies during such catastrophic events.
David Nichol’s story (in his own words):
I was the Chief Operating Officer of a US asset manager’s Tokyo subsidiary on March 11, 2011, when our building began violently shaking due to the 9.1 magnitude Tohoku earthquake. None of us had ever experienced such violent shaking, uncertainty, and chaos arising from an earthquake in our lifetimes – and Japan is no stranger to major earthquakes.
Our management team’s ability to negotiate through the immediate crisis and subsequent nuclear disaster was greatly enhanced by my previous training and experience as a firefighter and Lieutenant with Scarsdale NY Fire Company #1.
David Nichols as a Scarsdale, NY Firefighter in 2004
Firefighter training and standard operating procedures provide a framework that is likewise extremely useful in crisis situations off of the fire ground.
- Fire Training – Don’t run on the fireground.
- Rational – Bystanders and other participants take their lead from players who represent positions of authority. A firefighter running in full turnout gear will almost certainly cause general panic. Leaders have a responsibility to set the tone that teams will follow.
- Business Application – During the earthquake and aftershocks that immediately followed, many of our staff were on the tipping point of panic. We knew that it was critical to stop the panic contagion and the best way was to demonstrate a concerned calm. We first focussed on making sure our managers understood this priority. At one point, I was looking into the eyes of my Head of Legal telling her over and over that she was OK, until she was able to control her fear.
The aftershocks that continued after the initial earthquake felt equally as strong as the initial quake, and conventional wisdom dictated that we all should take shelter under the nearest desk. I determined that having our senior management remain visible would serve the office better than me hiding under a desk.
Accordingly, I stood in the doorway of my office, a relatively stable structure (I’m not crazy), so that I was visible to staff.
- Fire Training – Initial situation size up. Position the “first due” (first arriving) engine on the side of the fireground furthest from the fire station.
- Rational – Successful management of the fireground requires the best quality information about:
- The scope of the problem,
- The people and property at risk,
- The resources available on-site, and
- Additional resources that can be activated by HQ.
The initial “size-up” is rarely 100% complete, but it needs to provide as much information as possible. If the first due drives past the fireground rather than stopping short, it gives the incident commander an opportunity to see three out of four sides of a typical fire ground.
- Business Application – In the asset management industry we look at our operations in terms of people, process, and technology, which became a good way to prioritize our initial size up.
As soon as things calmed down enough, we did an assessment to identify if any of our staff were injured. Once we ascertained that we were all OK, we made a determination of where we would be safest. Should we evacuate the building or shelter in place?
Since the building did not collapse and we were worried about materials falling off of buildings, we concluded that the safest place to be was in our office.
Once I knew we were all safe, I called our Hong Kong office to alert them to stand by with all “hands on deck” to support our processes.
My next responsibility was to determine how the earthquake had impacted our process. The earthquake occurred at 2:46 PM and the Tokyo Stock exchange closes at 3:30, so I checked with my Japanese equity traders to make sure all of their trades for the day had been executed and matched with brokers and trust banks.
Our next processing priority was to calculate and publish our mutual funds’ net asset value. If we were not able to publish before 7:00 PM we would need to report to regulators that we had a regulatory breach. Our ability to calculate the NAV was dependent on receiving external pricing feeds and it was not clear that we would receive those on time.
We quickly reached out to our pricing vendors for status reports and alerted our Compliance department so they could issue an early warning to our regulators.
Finally, we focussed on technology. Our systems seemed to be working fine for the moment, so my Technology manager assessed our back-up facilities. While there were legitimate issues, addressing them early put us in a good position to maintain our resilience profile.
And then it was back to people. We figured out ways to either get our employees home or find a safe place for them to stay. We also established an understanding of the likelihood of employees being able to return to the office when we opened after the weekend.
- Fire Training – Continual situation re-assessment. Size-up needs to be an ongoing evaluation of problems while considering the effectiveness of the initial plan.
- Rational – As the situation evolves, more information becomes available and current information gets out of date or inaccurate. Basing action decisions on old data will lead to poor outcomes and missed opportunities.
- Business Application – We arrived back at the office Monday after the earthquake, still in shock from witnessing the destruction of the seismic event and accompanying tsunami, and immediately had to face the unfolding nuclear crisis. We faced a dearth of information and an abundance of misinformation to confuse things. We started and ended each day with a situation assessment. We adopted a mantra of “fact-based decision making”, meaning we would not make decisions based on rumors, but only using information that we judged to be true and accurate. If we changed our decision we made sure to track it back to information that had changed or emerged to impact our decisions.
A critical part of the situation assessments was to communicate to all stakeholders in a clear and transparent fashion. We would articulate the facts as we understood them and the decisions that we made based on that information. But more importantly, we communicated what we didn’t know. The continued re-assessment allowed us to start to proactively plan for coming out of the crisis.
- Fire Training – Incident Command is a standardized approach to the command, control, and coordination of emergency response to enable effective and efficient incident management.
- Rational – Clear incident command on the fireground is essential so that all resources and effort are coordinated towards effective fire suppression. Without that leadership, teams may end up working at cross purposes and put lives at risk.
- Business Application – Early in the nuclear crisis, we established an incident command and made it clear to the organization where decisions would be made and where we would give latitude to our mid-level managers. We also had to make sure that our US headquarters understood that we were in control of the local situation and we would let them know when we needed assistance. We did this by giving them a direct line into the incident command and a clear picture of our decision-making process.
During the crisis, it was unclear if Tokyo would continue to be habitable. Some embassies were arranging charter flights to fly their citizens out of Japan, and the US embassy was dispensing potassium iodide to US citizens as a prophylactic measure against radiation. Our US team arranged for a charter flight, but we retained the decision whether or not to bring the plane to Japan. Our non-Japan locations were able to source potassium iodide for our staff. So, through effective incident command we were able to use both local and remote resources effectively.
- Fire Training – Looking ahead using predictive analytics and modeling.
- Rational – The situation on the fireground is always changing and evolving, hopefully improving, but always dynamically changing. There is no such thing as holding the line. One way or another, the fire will go out, but hopefully not because it runs out of fuel. Part of effective incident command is anticipating how the situation will evolve and developing contingencies for all scenarios.
- Business Application – During the nuclear crisis we had to consider a number of different scenarios and different concerns.
- Would radiation make remaining in Tokyo untenable?
- Would the financial markets remain open?
- If the markets shut down how would they reopen?
- What would our regulatory responsibilities be in each scenario?
- How could we keep our people safe and productive in each scenario?
We did not try to guess the answers to these questions, rather we looked at realistic possibilities and formed action plans that would give us flexibility to address possible scenarios. We thought that the markets closing and social disruption in Tokyo was a realistic possibility, which could impact our ability to reopen when the markets were ready.
So, as a precaution, we sent a group of our key operations people to Hong Kong to work remotely, so that regardless of what happened in Tokyo we would have staff ready to support the business.
Many firms made a decision to ask staff to work from home and we considered that approach, but ultimately decided to keep our offices open while giving individuals the flexibility to work from home depending on their personal situations. We made this decision for two reasons.
First, we felt it was better for our staff’s mental health to spend time together and not suffer from isolation.
Second, we could not foresee clear criteria for ending the work from home arrangement.
- Fire Training – Overhaul is the process of searching for hidden fire extension by opening walls, ceilings, voids, and partitions on a fire scene, and is one of the last steps in the firefighting process.
- Rational – A fire is a traumatic and destructive event. Overhaul is key to minimizing damage and starting the recovery process.
- Business Application – A few weeks after the tsunami, I had the opportunity to travel to the impacted area and help with the cleanup. A major portion of the work was directing water out of houses and dealing with waterlogged walls and ceilings. The overhaul experience from the fireground helped me to effectively start the recovery process for the people most impacted by the tsunami.
David Nichols doing overhaul work in Minamisanriku Japan, May 2011
In conclusion, even though Japan has a history of significant seismic events, the lessons people have learned from past disasters became perishable over time.
The ability to walk-don’t run, do an initial and continuing size-up, establish command, and use predictive modeling completely supported our management team’s ability to negotiate through multiple crises.
While earthquakes and tsunamis had struck Japan before, the Fukushima Daiichi nuclear disaster, like the coronavirus pandemic, represented the landscape of the unknown. The logical and straightforward training I received from my firefighting service helped me to maximize my effectiveness in addressing the disasters we lived through in the spring of 2011.
Today, those same fire service leadership skills continue to serve me well during the current COVID-19 pandemic.