New FBI means business

Times Staff Writer

At a class on leadership, a professor at Northwestern University's business school here asks his students to ponder a landmark on the Chicago skyline 10 miles south.

"Walk along the lake, and look downtown. You see the Sears Tower," Ranjay Gulati says. "Sears Roebuck & Co. owned retailing. They defined retailing."

That they no longer do, he says, shows "what happens when the world changes around you ... and you don't."

Thirty senior FBI managers and executives stir at their desks.

They're here because their employer is looking for ways to manage what is still a wrenching transition: In the wake of the Sept. 11 attacks, a newly urgent mission -- disrupting terrorism before it hits the United States -- was thrust upon the bureau.

In an effort to change the famously insular and hidebound organization, the FBI has sent more than 2,000 of its top agents and supervisors -- including this group of spy-catchers, cyber-sleuths and terrorist-hunters -- to management school at Northwestern.

This is new training for a new FBI, or at least that is the hope.

Traditionally, FBI agents and supervisors are schooled in the nuts and bolts of law enforcement. Agents learn how to become expert marksmen or cultivate informants. Supervisors learn how to mentor new agents or follow proper procedures.

Here, they explore how large corporations have shifted their missions. If Toyota can adapt its car lines to the baby-boom generation, then why can't the FBI adapt its role to the changing security needs of the country?

They practice role-playing exercises aimed at instilling teamwork, although about half fail to get the point of one exercise because they missed a subtlety in the instructions. "The competitive mentality is hard to break," Professor Leigh Thompson said.

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Puzzled reactions

And they study business experiences that might help them present the FBI in the best light. They learn how Starbucks developed a strong identity and how Exxon botched its handling of the 1989 oil spill in Alaska.

The program was started three years ago by FBI Director Robert S. Mueller III. Most of the senior headquarters staffers and top agents from the 56 field offices have taken the weeklong courses, which cost the bureau about $3 million a year.

Mueller is an ardent student of management science. He has sought the views of successful chief executives, including former IBM Corp. chief executive Louis V. Gerstner Jr., and has looked to outsiders to fill high positions.

The training has been one of Mueller's main efforts to bring fresh thinking into the bureau, though some FBI officials at first found the idea puzzling.

"The initial response was, 'We are going to go where?' " recalls Kevin Brock, a counter-terrorism official who attended the program. "A lot of us did not know what we were getting into. So we were wondering, 'How does this connect with putting bad guys in jail, hunting terrorists and all that stuff?' "

Management experts say there are limits to what a government agency can learn from studying the ups and downs of companies. And there are questions about how much the FBI has really embraced the lessons.

But in being asked to fight terrorism while solving more traditional crimes, the bureau faces a quandary that is fairly common in the business world.

"How can one organization arrange itself to do two things well? This is hardly a challenge that is unique to the FBI," said Michael Roberto, a professor of management at Bryant University in Smithfield, R.I., who is co-writing a case study of the FBI that Harvard Business School plans to use.

"We have no monopoly on good ideas," Mueller said in an interview, adding that he and others found the training "tremendously educating."

Mueller took a version a week or so before he testified before the Sept. 11 commission in 2004. The training focused in part on how to respond to a crisis. It highlighted traits of executives who successfully handle such situations: transparency, expertise, commitment and empathy.

At the time, the bureau was under siege and there was speculation the commission would order it dismantled because of intelligence failures that preceded the attacks.

Mueller followed the advice to a T, and gave a performance that drew praise from the commission, which recommended the bureau be preserved.

The classes take place in a modern conference center that caters to business. Lunch is served in the Johnson Wax Dining Room, breaks are in the Oscar Mayer Lounge.

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Experienced group

The FBI allowed a Times reporter to sit in on several days of classes. The Times agreed to withhold certain details of some exercises and discussions, which in a few instances are based on actual cases.

The latest class is a seasoned one; its participants average about 20 years' experience. They include administrative officers and heads of some of the most sensitive investigations in recent bureau history, including the Sept. 11 attacks and the 2001 anthrax episode.

The students are self-effacing, and seem to have no illusions about the difficult task they face. The mission is akin to "building an airplane while trying to fly it," said Thomas Mahlik, a senior counter-espionage official.

A major theme is creating an atmosphere in which people are open to change, no small feat for an organization that has done things the same way for generations.

Gulati used as an example urinals introduced at Amsterdam's airport that used the image of a black fly inside the basin to try to get men to hit their mark. What seemed a good idea never caught on. "Just because you have a great idea ... does not mean everybody will line up behind it," he said.

The class watches a video as part of an exercise in "Inattentional Blindness," which is when people do not see what is clearly in their visual field because they are focused on a different task.

In keeping track of how often people throw a basketball, most of the agents fail to see a mysterious figure who walks through the scene. Richard Lambert, head of the FBI's Knoxville, Tenn., office, was so certain that figure was not in the video, he said, "I would have bet you a paycheck."

Such conceptual learning -- the classes have such names as "Strategic Leadership" and "Beyond Win-Win: Managing Interdependencies" -- is an adjustment for an agency that has long been run by G-men.

"The bureau is full of people who are very good at crisis situations. We know how to do that. We got it," said Brock, the counter-terrorism specialist. "So far as large cultural changes, we are like everyone else."

Innovation is rare in organizations such as the FBI that are highly regimented. But the professors tell the class that quality is essential for large organizations to become successful.

"Every organization that operates efficiently and effectively has people who are exploring better ways to do things," said Joseph Hannigan, a Mueller confidant who heads the FBI program at Northwestern's Kellogg School of Management. "In the bureau, that has been kind of random."

So the agents are taught the value of dissent. Included in the assigned reading is an article called "How Management Teams Can Have a Good Fight."

The instructors teach that people are naturally drawn to obeying the rules, even where the consequences can be bizarre or lethal. They cite the case of a jet that landed in the wrong country even though 250 passengers and flight attendants could tell from an electronic map that the pilots were off course.

"People are afraid to break ranks," said another professor, Michelle Buck. "The role of a leader is to create an environment in which people feel free to speak up."

Steve Gomez, a former terrorism squad leader for the FBI in Los Angeles who is now a bureau supervisor in St. Louis, said the classes reinforced for him the importance of seeking out dissenting views among his team.

"When I have these meetings, and we are brainstorming, I have to find somebody to be my naysayer and challenge us," Gomez said. "I know who those people are. They are going to speak their mind. They really don't care what I think, and that helps."

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PR crisis lesson

The class also gets a lesson in brand management by studying how Mercedes-Benz handled a public relations crisis.

As it prepared to roll out a new subcompact in the mid-1990s, the model flipped while making a sharp turn during a routine test of whether it could avoid a sudden obstacle, such as a moose.

At first, the automaker reacted defensively. But as ridicule of the car's failure of the "moose test," Mercedes executives took action to protect their reputation and made a costly safety improvement in the car.

Mercedes then launched a public-relations blitz and tried to defuse the furor by putting plush moose toys in the new vehicles. The lesson, said Daniel Diermeier, one of the Kellogg professors, is that agents should not let "tactical excellence" get in the way of "strategic thinking" that may help the agency in the long run.

"Think of yourself as a steward of the FBI brand," he said.

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rick.schmitt@latimes.com

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