BP: How Not to Lead in a Crisis

The oil spill in the Gulf is an environmental disaster. CEO Tony Hayward's handling of the situation has been almost as bad.

If you haven’t yet seen for yourself what is happening in the Gulf of Mexico, take a look at this image, which is updated daily. The spreading stain there is not just the worst environmental disaster of our time; it’s also the biggest imaginable wake-up call about the importance of courageous leadership.

We now know quite a bit about how BP cut corners and betrayed its promises to put safety first. Its slogan “Beyond Petroleum” has been transformed into mockery, and BP now stands for “Big Problems.” The company has been forced to put up a $20 billion bond in anticipation of liabilities, and its market value has plummeted.

But the troubles of a large oil company are nothing compared to the desecration of such a massive ecosystem. The impact is being and will be felt by so many species, including of course humans, as well as in the economy. It is literally incalculable; this map gives only a preliminary idea of what is in store for the Gulf coast – and we have no idea yet how the damage will spread beyond the Gulf.

BP’s CEO, Tony Hayward, has managed to break some of the most important rules of great leadership. For example, his public appearances have shown him finger pointing and blaming others, including the vendors that BP chose to execute its work, rather than taking 100 per cent responsibility. While millions of people on the coast faced destruction of their environment and their livelihood, Hayward was complaining about the inconvenience to himself. He publicly appeared at a yacht race as the disaster continued to unfold, making it appear that it was “business as usual” for himself. Whatever happened to empathy, integrity, competence, and accountability? These are all key attributes of courageous leadership.

The BP story is far from over, and anyone who tells you they know how it will end is simply wrong. They say hindsight is 20-20. I’m sure that if Tony Hayward could turn the clock back and do things differently, he would. He may never fully recover his reputation. But what advice would he give to other leaders who may be making the same kind of quiet decisions that are fuelling the disasters of tomorrow? Here are a few obvious dos and don’ts:

1. Never forget your moral compass, even if you are under pressure to make immediate gains. Short-term thinking almost always produces long-term problems. Those Deepwater Horizon cost reductions that were aimed at BP’s next quarterly results will end up costing the shareholders and pension funds that depend on BP dividends billions of dollars. Greed always comes home to roost.
2. Have the courage to face reality, no matter how bad it is. Even after the well blew, there were weeks of avoidance and misrepresentation. This cost time, potential solutions, and public confidence. BP is not the only organization to have been in denial about risks and problems. Toyota, Enron, AIG – it’s not hard to make a list. And who knows what future blow-ups are still under the radar?
3. Never lose sight of your impact on people. The communities on the Gulf coast trusted BP to exercise its drilling rights responsibly and carefully. The company’s failure to do so will prove extremely costly. At the end of the day, leaders are judged on their impact on people, whether they are employees, vendors, shareholders, or the general public. Leaders who don’t care, or who don’t pay attention, are doomed to failure.

Isn’t it amazing how closely these principles align with what our mother and father told us when they were raising us to be good human beings? Business does not exist in some vacuum away from the rest of the economy, our society, and the planet that sustains us.

I hope that when we look back at the Deepwater Horizon oil spill, we will see it as the beginning of a new era of courageous leadership, in which the public and all stakeholders will be watching the oil industry and many others more closely than ever before, and demanding much greater accountability.

Leaders will be under pressure to be courageous and do the right thing before the worst-case scenario happens – and to move heaven and earth to make it right if it does. So far, BP has failed both of these tests. Let’s hope, at least, that the lessons learned help us avoid future catastrophes.