Tuesday, June 29, 2010

BP Stands for no "Backup Plan"

By now, the only people in the world who don’t know about the BP oil spill in the Gulf of Mexico are those without access to mass media. It has caused devastation in the whole region, killing wildlife and ruining many Americans’ livelihoods.

BP’s response to this disaster brought to light several examples of failure in strategic business planning. In fact, they had a previous history of safety violations and had been fined several times before the Gulf oil spill occurred. They were notorious for not having plans in place to deal with disasters, and had put off much needed safety testing on many of their rigs. BP had no crisis management in place.

Not only that but their response to the press has been poor at best, a shocking thing for a company that has been around as long as BP has. You would think they would be able to better reply to accusations and be more involved in giving helpful answers. Instead, they plan on pouring their money into an advertising campaign meant to improve their image, which I believe is causing their reputation to slide further rather than achieve the desired result. Current CEO Tony Hayward has been denying that he knew anything about safety concerns, which shows his lack of responsibility and reflects poorly on the company as a whole.

BP’s corporate culture has also been faulty, causing many of their top level employees to quit as they didn’t like the way the company was handling budget issues. Some of their “cost cutting” solutions included giving engineers less of a safety budget but expecting their products to continue to remain just as safe, and seemingly targeting the more seasoned workers for layoffs and firings (presumably because they made more than less seasoned workers). Also, when BP decided to change from “British Petroleum” to “Beyond Petroleum” because they wanted to join the “green movement,” it felt like an oxymoron to many of the employees because they knew that their company was still always going to mostly be a petroleum company.
In fact, one person that they fired was Ken Abbott, a former Project Control Supervisor, who had explicitly warned his managers of the safety concerns he was facing. I’m sure in hindsight they wished they had listened to him!

One of the mistakes is that BP set increasingly more ambitious production and exploration goals, while cutting out their focus on safety. They put quantity of oil wells and rigs compared to the quality of the oil wells and rigs, and in doing so played a more active role in the accident rather than a passive one. They also prioritized their PR and ad campaign over safety. This was, without a doubt, a very preventable disaster.

With all that has happened, BP no longer stands for just an oil company or “Beyond Petroleum,” but rather many other not-as-kind definitions: “Beyond Parody”, “Beyond Propaganda”, “Broken Promise, “Beyond Pathetic”. I prefer to think of them as having no “Backup Plan.”

What can we learn from BP? First, that while a company cannot focus on every area of business, they should never focus so narrowly that they ignore safety. Second, that plans should ALWAYS be in place for worst-case scenarios. Even if they had formed a plan slightly pertaining to this oil disaster, they would have had a much more effective response. Third, remember that your response to press about your business can be a positive or a negative, so you also want to plan how quickly and how knowledgeably you can respond to any press regarding your company. Fourth, if you want to cut costs, it is much better to retain your more knowledgeable employees and find a different area to save money. Finally, when your employees bring something to your attention, it is better to address it than to ignore it (and then subsequently fire that employee).








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