Friday, 24 April 2015

Lessons from an oil spill: how BP gained - then lost - our trust


Oil slick in the Gulf of Mexico - photo via iStock

by Tony Jaques, RMIT University

The Deepwater Horizon oil spill disaster in the Gulf of Mexico in 2010 is one of the most exhaustively analysed environmental and management crises in recent history. And BP‘s response will probably be remembered for a generation as the perfect example of how not to manage a crisis.

But it wasn’t always that way. This year marks the 25th anniversary of another BP oil spill which is now virtually forgotten, but was regarded at the time as a gold standard in how to respond effectively and protect reputation.

Although it is eclipsed by a litany of subsequent high profile oil spill disasters – such as the Erika breaking up off Brittany in 1999 and the Montara oil rig fire off northwest Australia in 2009 – there is much to be learned from what happened 25 years ago on the coast of Southern California.

In February 1990, less than a year after the debacle of the Exxon Valdez running aground in Alaska, the BP-chartered tanker American Trader accidentally ran over its own anchor off Huntington Beach in Orange County, spilling 400,000 gallons of crude oil, which came ashore on the prestigious surfing strip.

BP’s response was prompt and unequivocal. In just over two hours, oil skimming vessels were on the scene and the company’s crisis team was in the air. And within 24 hours there were 36 BP specialists on-site.

Even more impressive was the leadership of BP America Chairman James Ross, who flew straight to the scene. In a memorable press conference on the polluted breach Ross told reporters: “Our lawyers tell us it’s not our fault. But we feel like it’s our fault and we are going to act like it’s our own fault.”

Contrast this statesmanlike approach with the denial and blame-shifting which blighted BP’s response in 2010 when fire destroyed the oil rig Deepwater Horizon in the Gulf of Mexico, killing 11 workers and starting a torrent of oil onto a massive swathe of coastline. Then-BP CEO Tony Hayward commented that the amount of oil was “relatively tiny in a very big ocean.” His now infamous comment to the media that he would “like his life back”, was dubbed by the New York Times as “the sound bite from hell”.

The clean-up at Huntington Beach was swift and efficient. More than 100 people from other big oil companies took part on the spill response, and BP trained and equipped volunteer bird rescuers, who became some of the company’s strongest supporters in the community. And they worked very closely with government agencies, and the parade of political figures who wanted to be photographed on the beach. Ross later commented: “We are convinced that by working with them, we avoided jurisdictional disputes and a ton of controversy.”

The outcome is strikingly evident. The Los Angeles Times ran a story praising the company’s efforts under the headline “After spill, BP soaks up oil and good press.” It later ran a front-page photograph of the company’s crisis manager fulfilling his pledge to be the first to swim at the cleaned-up beach.

When BP America President James Ross was summoned to Washington he found himself praised by lawmakers. Compare that with the concerted attack by American politicians on BP after the Deepwater Horizon spill. President Barack Obama himself called for Hayward to be sacked.

Of course the volume of the Deepwater Horizon spill was much greater. But the lesson for today is not about the challenges of clean-up. It’s about the response at a management level, and what it teaches us about crisis leadership. Just like the Huntington Beach spill, James Ross too was quickly forgotten by the media and he went on to a successful career as CEO of Cable and Wireless and company Director.

By contrast British-born Hayward was famously pilloried by a headline in the New York Times - “BP’s CEO Tony Hayward: The most hated – and most clueless – man in America.” And when he was appointed to a role in a small oil company two years later the New York Times observed that for bewildered Americans who saw oil plumes rising, livelihoods crumbling and seabirds dying in the viscous crude, Hayward came to personify the catastrophe.

The starkly different outcomes of the two incidents could be put down to failure of corporate memory. To a rigidly hierarchical executive style which was acknowledged to exist at BP Headquarters. Or to over-dependence on a single spokesperson who was ill-suited to the task of conveying compassion and conviction. Whatever the cause, BP’s Gulf of Mexico oil spill has well and truly earned its place in the pantheon of bona fide PR disasters. And it’s a brutal warning that the impact of bad management can persist for decades.

But perhaps most importantly, it’s a reminder that individual managers set the tone in a crisis. Even after 25 years, there is much more to be learned from the little-known success of James Ross of BP in 1990 than can ever be gained from raking over the much studied disaster of BP and Tony Hayward in 2010.

This is part of an ongoing series on ‘bad’ management. Read more in the series here.

The Conversation
This article was originally published on The Conversation. Read the original article.

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