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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? Yes, 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 government. 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 structures of communication to allow local information to determine the nature of the response.

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