Monday, June 14, 2010
Lessons to Learn I've been asked a dozen times since the BP oil spill developed in the Gulf of Mexico what I would have advised the company's executives as they face what may prove to be - or already is - a truly catastrophic environmental disaster. Alas, BP hasn't called, but of course I have some ideas about what they might have done differently. The general consensus has now developed that BP has irreversibly lost the PR battle, with some now comparing the lackluster response to Exxon's handling of the Alaska spill years ago, and has yet to win the battle to stop the oil flow. Could it have been different? Hard to tell, but maybe. Rule number one of a real crisis, I think, is simply that it is almost impossible for any entity - corporate, governmental, etc. - to move fast enough. The first hours in responding to a disaster, particularly such a public disaster, almost always establish the public perception of how well the crisis is being handled. The first hours and days of the Gulf spill now seem like a blur. What was happening, who was in charge, was this really bad, could it be quickly contained? Instinctively, I think, most people watched the television pictures of the burning oil rig and concluded that this would be a real mess. Meanwhile, BP and the government seemed slow out of the blocks. So, BP - and the government - failed the first test of crisis. They couldn't or wouldn't move fast enough. In the early hours of a major crisis, action is always better than talk. What might BP have done differently? I have five suggestions for what could have been done and one guess about why none of it happened. First, how might it have changed public perception had BP's CEO, the much-beleaguered Tony Hayward, immediately gone on television - from the Gulf - and announced that he was asking the state of Louisiana to establish an account, that the state would control, in which BP would immediately deposit - pick the number - $250 million as a down payment on the clean up? Real cash, not a promise to pay all "legitmate claims" might have made a powerful statement that the big oil company was really serious. Additionally, BP might have announced that it was immediately suspending al offshore drilling every where in the world while it conducted, with the help of outside experts, its own assessment of safety and emergency response. Hayward could also have humbly asked for an immediate meeting - in the Gulf - with President Obama, the Secretary of the Interior, the top Coast Guard officials, the heads of Exxon-Mobil, Royal Dutch Shell and the governors of the Gulf states. The purpose of the meeting: establish an immediate crisis response team, seek the best possible industry help to determine the best way to stop the leak and contain the oil and, most importantly, get all the responsible folks in the same room and on the same page. It might have also helped BP's credibility from the first moment had Hayward admitted what almost all the rest of us suspected - the company did not know the extent of the leak, did not fully understand the cause, didn't have a sure fire solution to contain the oil and fully expected the worst with regard to the environmental consequences. It is remarkable what a humble admission of "we don't know and we need help" will do to retain credibility and, frankly, buy time to get organized and really figure out what to do. Hayward should also have become the sole face of the company's response. He should have camped out in the Gulf, constantly meeting with local officials, business people, environmentalists and fishermen, and working the media. He should have aggressively engaged the President and his administration rather than appear to be a reluctant participant in the whole process by suggesting he wanted "his life back." Here is a bet as to why BP seemed to do nothing in the first days except to say it took responsibility while seeming to downplay what was really happening. I'm betting the company's lawyers took charge of the response and the overriding objective became to contain the financial and legal liability for BP and its shareholders. I can almost hear a smart, articulate attorney telling the CEO that he must do nothing that would eventually be used to shape the inevitable legal cases that will drive BP's liability. Don't get me wrong, the lawyers must be in the room when a crisis is unfolding, but in a career of helping manage various kinds of crisis - nothing admittedly this big - I have concluded that the "right thing to do" is almost immediately in conflict with what constitutes the best legal strategy for the entity responsible for the crisis. It's hard for any CEO - even the most well intentioned - to ignore the legal advice he will receive, but doing the right thing - and fast - is almost always the better long-term option than to craft a response that is driven largely by legal considerations. Now, as the President heads back to the Gulf today, the New York Times reports that he will demand a BP escrow account, summon the company's executives to the White House and generally ramp up the public pressure on the company. Some might argue it's a little late. It is easy to second guess while looking in the rear view mirror, but I think, had BP acted faster and more decisively by putting real money on the table and seeking help and buy in from the industry and government, it could have taken charge of the unfolding narrative in the first hours and saved itself some major and long-lasting PR heartburn. Tomorrow, some thoughts on lessons for the President in the government's response to the spill.