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Allies by Adversity

Executives have aided government during times of crisis-and likely will again.

As CEOs cast around for a corollary to the September attacks to derive guidance, they realize no analogs in American history quite prepare them for what happened or what lies ahead. Pearl Harbor was a shock, but involved a known enemy and was a traditional style of warfare. The Gulf War took place in a far-away land, and, for many business leaders, was closer to reality TV than a real war.

The Civil War perhaps comes closest because the violence was on American soil. And just as the war that divided the nation had a profound impact on Americans’ sense of self, so too will September’s crimes and their aftermath dramatically affect the nation and its corporate leaders, believes Harvard University business historian Nancy Koehn.

Nearly a century and a half after Confederates began firing on Fort Sumter, our national identity still embraces the principles of freedom that survived that bloody war. But now it is also tightly spiraled within our capitalistic system. And while corporations may not always side with government on business debates, they are implicit allies in this 21st century conflict.

The private sector has long played a prominent role in wartime, most notably in World Wars I and II, when many chief executives mobilized employees and shifted resources to help the war effort. During the first World War, Bell Telephone, for example, sent battalions of employees to France to build and operate a phone system for the American military. With the onset of WW II, with a much more developed and pervasive communications network, long distance call volume skyrocketed. Between 1939 and 1945, calls increased by 350 percent, according to Sheldon Hochheiser, corporate historian at AT&T in Warren, NJ. With constraints on new construction for non-military use, the phone system was stretched to its limit. Bell ran ads urging people not to call long distance in an attempt to free lines for soldiers to call home.

In addition, Bell research was directed toward military objectives, resulting in key developments such as the first secure transatlantic communications line over which Winston Churchill and Franklin Delano Roosevelt talked.

Meanwhile, IBM’s longtime leader, Thomas J. Watson, placed the company’s facilities at U.S. government disposal in January 1941, 11 months before Pearl Harbor. By December of that year, half of IBM’s manufacturing capacity was devoted to munitions and other defense-related production.

CEOs also have cooperated with government in wartime by lending technical expertise. One example, says K. Austin Kerr, Ohio State University history professor, is John Collier, a top executive at BF Goodrich. The U.S. was dependent on natural sources of rubber in Asia that had fallen under Japanese control. Collier helped to persuade Washington to create an alternative. The resulting development of synthetic rubber is one of the success stories of WW II, points out Kerr.

America’s war against terrorism will not require the same business sacrifices. But it will impact decisions that arise from operating in a global economy, from ensuring the safety of employees worldwide to limiting transactions with nations suspected of harboring terrorists.

As Americans seek leadership from President Bush and his administration, they also seek reassurance from business and financial leaders such as Federal Reserve Chairman Alan Greenspan and, closer to home, their employers.

Indeed, many CEOs responded admirably. Hundreds of companies in the New York area and nationwide mobilized to account for employees, offered aid to the rescue effort, penned e-mail missives to soothe grieving employees, and held gatherings where employees could air their concerns. Companies stepped up security and took out full-page ads extending their condolences to survivors of the victims. Ford Motor Co. Chairman William Clay Ford immediately reached out to Arab and Muslim leaders in the community to express his support and denounce discrimination.

Now the hard part begins. An already-strained economy is in danger of crumbling along with the twin towers. Not even professional prognosticators are able to accurately predict a recovery. In addition to managing in prolonged economic downturn, CEOs must convince traumatized employees that their work still matters. Robert Joss, dean of Stanford University’s Graduate School of Business, says, “There’s a huge premium on being decisive and flexible and rethinking priorities.”

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