What BP Did Wrong

Published: June 4, 2010

By Jim Lichtman
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“I don’t know how else to say it. All the things that they told us could never happen happened.”

That’s what Mike Williams, the chief electronics technician on-board British Petroleum’s Deepwater Horizon told reporter Scott Pelley last month on 60 Minutes.

“The tension in every drilling operation,” Pelley reports “is between doing things safely and doing them fast; time is money…”

“We were informed of this during one of the safety meetings,” Williams said, “that somewhere in the neighborhood of $25 million was lost… And you always kind of knew that in the back of your mind when they start throwing these big numbers around that there was gonna be a push coming… a push to pick up production and pick up the pace.”

Four weeks before the deadly explosion that killed 11 workers and began spewing millions of barrels of crude into the Gulf of Mexico, Williams told Pelley that a vital piece of safety equipment – a rubber gasket – was accidentally destroyed during a safety test.

“He discovered chunks of rubber in the drilling fluid,” Williams said. “I recall asking the supervisor if this was out of the ordinary. And he says, ‘Oh, it’s no big deal.’ And I thought, ‘How can it be not a big deal? There’s chunks of our seal is now missing.’”

There are so many ethical failures surrounding, what has now become, the largest crude oil disaster in U.S. history that a comprehensive account probably won’t be available for some time, but here’s a short list:

Constant pressure – as Williams points out, on-site managers pushed to pick-up the pace of production, regardless of problems.

Ignored safety concerns – as soon as it was discovered that a critical rubber gasket had been damaged, immediate steps should have been taken to stop drilling and fix this vital piece of safety equipment.

Minimized the problem – BP initially estimated that the well was leaking 1,000 barrels a day. Associate research scientist Timothy Crone estimated at least 50 times that estimate based on video footage. Former Environmental Protection Agency Administrator Carol Browner and Congressman Ed Markey both accused BP of having a vested financial interest in downplaying the size of the leak.

Communication problems – BP CEO Tony Hayward was initially slow to respond and any information that came fromBP was intermittent and eventually determined by local and federal officials as being untrustworthy.

Poor follow-up plans – in the early stages of the leak, rather than work with local officials, BP officials only acted on those things necessary in an effort to contain the damage to their reputation rather than address the immediate needs of the Louisiana coastline.

During this initial series of events, the first thing BP lost was trust – from local and federal officials and finally the public.

So, what can executives learn from the BP incident to prevent similar ethical failures?

1/ When you make mistakes, admit to them, apologize, and implement the necessary corrective actions.

2/ Don’t put yourself in positions where anyone could eventhink that you are doing something wrong. Perceptions are as powerful as reality.

3/ Goals should never come at the expense of safety or company integrity.

Ethicist Michael Josephson offers these five points to build trust:

Be Credible – in their book, Credibility, authors James Kouzes and Barry Posner reveal thru their research that the most important quality in a corporate leader is credibility – honesty in both communications and conduct.

Be Consistent – the quickest way to build integrity is by elevating principle over expediency or self-interest. This requires consistency between words and actions.

Keep Promises – Promise-keeping imposes the responsibility of making all reasonable efforts to fulfill our commitments to the best of our ability and to avoid “bad-faith” excuses, as well as unwise and unclear commitments.

Stimulate Loyalty – Loyalty creates an expectation of allegiance, fidelity and devotion to take extra steps to protect and cooperate with one another.  It means practicing confidentiality and working to avoid personal, conflicting interests.

Be Responsible – A trustworthy person is accountable and does not blame or excuse their actions.  They constantly seek the best solutions to problems for all stakeholders.

Last Sunday (May 30), BP took out a full page ad in the New York Times whose central message was: “We Will Make This Right.”

My message to BP:  Ethics is not about what you say or what you intend, it’s what you do. At the end of the day, credibility rests on humility, honest communication and responsible action.

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