The news that Tony Hayward has stepped down in the light of the mistakes BP made in managing the crisis of the Deepwater Horizon explosion in the Gulf of Mexico, is significant if perhaps not unexpected.
Hayward, it seems, is being painted as a poster boy for leadership failure in the media and elsewhere, but whilst Hayward should shoulder some degree of personal responsibility given his role as CEO, the focus on him as BP’s leader ignores the very real institutional responsibilities here. There are major corporate lessons (not just leadership ones) to be learnt from BP’s experience, and if these lessons are not learnt, both at BP and elsewhere, then the chances of both a similar failure and a poor response to the same remain equally high.
The sad truth is that crises are not as rare as we might think. If history has taught us anything it should be that we should expect the unexpected. Deepwater Horizon is an example of a crisis that has seen, at best, a mixed response.
Whilst the specific crises might be unexpected, crisis management should not be. If those responsible in the organization had perhaps had a better understanding of how to respond to radical change, then BP’s response might have been better handled. There are a number of lessons from BP’s approach to handling such a radical event that can help all of us in our response to such challenges in the future:
- Plan pessimistically – ask what is the worst that could happen and –plan accordingly, we tend to be optimistic and look at the upside and ignore the risks in our own plans, so involving other stakeholders and even critics is key. The plans may not match the eventuality, but the process of planning itself is likely to improve the quality of our response.
- Build contingencies – in light of our planning, have we got the resources and capabilities that allow us to respond to change and the challenges we are likely to face? BP at least had the resources to maintain several different strategies to contain the leak.
- Get information – an effective resolution and response to a crisis and its impact depends on understanding its nature and extent. Awareness of the situation is essential. The temptation may be to rush to the first response that occurs, but we have to be confident that we are acting on the basis of as full and complete knowledge as we can.
- Communicate honestly – be open and honest in communications. Provide information in a timely and approachable manner. It is almost impossible to over communicate when dealing with significant change, and remember that communication is a two-way process, so listen and…
- Show empathy – however bad it is for you remember the other guy. If may be the natural reaction in change to complain about the impact it has had on you and your personal life, but it is likely in a crisis to be much worse for someone else. We need to respond accordingly.
- Recognize mistakes – we are not perfect and to expect perfection in times of difficulty and challenge is unreasonable, but to fail to acknowledge your own mistakes and those of your organization is a lack of self-awareness and is all too often perceived as arrogance.
- Learn the lessons – review your response and the outcomes obtained, look at what went well, the process and procedures that worked effectively and how you could improve in the future. Embed the learning in the organization for next time.
The first two points should be part of ongoing management responsibilities, built into the architecture of the organization. They are no guarantee of an effective response but they improve the likelihood of your being able to respond effectively. Looking at worst case scenarios and building the dynamic capabilities needed to respond to them means that you have resources and experience to bring to the challenges you face.
Points three to five are fundamental elements of effective change. BP seems to have forgotten or downplayed the human elements of the change and has seemingly treated the Deepwater Horizon disaster as an engineering problem. Whilst an engineering solution is required, the success of the firm depends as much on how it handles and deals with the people affected.
The last two points are about institutionalizing the experiences and the knowledge and understanding they create. Just as George Santayana believed about those who can’t remember the past, so it is imperative that we learn the lessons of the challenges we face, otherwise we are doomed to repeat them. It is important that not just BP, but the wider corporate community, can and should learn from BP’s response to the disaster in the Gulf.