Tina Stowell Associates

The lessons from BP are quite simple

November 4th, 2010 | Posted in Uncategorized

Yesterday (Tuesday 2nd November) I read an article by Michael Skapinker on FT.com about how companies can learn from this year’s BP disaster.  I felt Mr Skapinker had missed some important points, so I posted a reply.  I’ve pasted a copy of what I said below.  However, it made me realise I really should have a blog of my own – so this is why I’ve set this up.

Comment on Michael Skapinker’s 2 Nov article: ‘Memo to board: we need to talk about BP

“Tina Stowell | November 2 5:15pm | Permalink

Interesting article, but in learning lessons from the BP disaster, I think companies need to reflect more deeply than just on their reactive processes.

I have not studied the examples you cite in any detail, but in my view what distinguishes successful crisis management – in this case J&J’s Tylenol from Lehman, BP, Toyota etc – is whether an organisation is clear about the fundamental point of its business and understands how that is essential to its reputation.

J&J clearly understood that any suggestion (indeed, evidence) that Tylenol kills rather than cures would be ruinous and withdrawal of the product was a no-brainer. Toyota, however, which has built its reputation on building safe cars, didn’t understand it was irrelevant whether the faulty brake lay with the manufacturer or the driver – the impact of the failure was to undermine what it exists to do: provide safe cars. Enron, Arthur Andersen and Lehmans seem to have lost the plot entirely in terms of what they were about. As for BP, its website (I’ve just looked at it) is very clear about what it does: extracting oil from hard to reach places and using it to make products to sell to people like me as safely as possible. If it had properly understood that the impact of what went wrong off the Florida coast totally undermined what it tells us it’s here to do, it would – in my view – have not doubted for a moment the scale of the disaster and the need for it to accept full responsibility for gripping the situation.

I agree with Messrs Hayward and Dudley that an organisation should be judged on what it does. But, the reason Mr Hayward’s words were so damaging was not because they were an “attention lapse”, because he was unrehearsed (though evidently he was), or even because they were heartless (as they were). They were damaging because they illustrated what was wrong: BP was out of touch in recognising the impact of the disaster on its own reputation and therefore lacked the will for accepting responsibility and sorting it out.

I agree that company executives need to communicate quickly and clearly in the event of a disaster and getting the content and tone right is essential. But the audience doesn’t want ill-informed guesses just because we live in a world of 24 hours news. They expect – quite rightly – those in charge to be able to tell them: what kind of problem it is; why it’s essential to the organisation and its customers that they fix it; and an outline plan for fixing it.

But delivering those messages needs confidence. And the confidence comes from those in charge knowing exactly what their organisation is there to do and recognising that its reputation is built on providing the evidence of it delivering that purpose.

It is of course right – as you advise – that all organisations carry out risk analysis, have registers and rehearse their processes and procedures for when something bad happens (as it always does). But they also need to know how policy decisions to introduce new products or to embark on new ventures relate to delivery of the organisation’s purpose. This is essential because it’s that which will allow executives to determine whether the fault if it goes wrong lies in the execution or in the policy. The understanding is what gives executives the confidence to explain themselves on the media.

If you’re about safe cars, drugs to relieve pain, auditing to protect against fraud, or an oil company extracting the stuff safely: the next time something happens that jeopardises your ability to deliver that (and therefore people’s belief in you being able to do so) make sure you can do this: acknowledge the problem immediately as something which goes to the heart of why you exist because that will give your stakeholders, shareholders and customers confidence that you are taking it seriously and will take responsibility for fixing it swiftly. Once everything has been properly analysed, then come back and explain the root of the problem and the steps taken to prevent a recurrence.”