Reflections on the BP Oil Spill Crisis

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Reflections on the BP Oil Spill Crisis
By David Grayson and David Denyer

There are many important lessons to be learnt from the BP crisis: aspects of crisis management, how you relate to different stakeholders, as well as the very fundamental issue of the crucial importance of safety, which is one of the most vital elements of a responsible and resilient organisation.

Soft Issues have become Hard Issues

Many of the issues that in the past people have thought of as soft issues for business – like the environment or working with stakeholders and with non profit organisations– have become hard issues for business. They are hard to manage, they are very hard to ignore and they are incredibly hard if you get them wrong.

Understanding Failure and Resilience

Organisational resilience is the ability to anticipate problems and make changes before the costs of not changing become too high. Businesses face two key challenges to this capability. Firstly, external pressure from multiple stakeholders can lead to competing priorities and in some situations safety goals can be sacrificed for productivity or efficiency goals. Secondly, over time, local practice tends to drift from written procedure and people often miss, downplay or ignore warning signs of impending crises.

Rapid Communication

One of the very important points for businesses, and for any organisation, is the way that they have to manage their affairs going forward, now we operate in era of 24/7 news cycles, the internet and particularly social media. If Facebook was a country, it would be the third largest country in the world in terms of population. BP came to understand that, but only some time into the crisis. It has been very noticeable that throughout the crisis the rest of the industry has kept its distance for fear of their brands being tarred by association.

Peer and Self Regulation and Standards

After Bhopal and the problems with GE in the Hudson River, you saw the establishment of responsible care in the chemical industry. Likewise, following Chernobyl the nuclear industry established the World Association of Nuclear Operators (WANO). There are now about 300 different codes and voluntary self regulatory initiatives around the world in different sectors. In addition to thorough enquiries and perhaps some further regulation, there needs to be some industry best practice standards which the industry itself develops and makes sure is being enforced around the world.

Key issues for BP and the Corporate World
Learning and change after crisis

The key issue for BP right is how it responds. Many organisations that suffer serious crisis investigate 'why did this event happen?' rather than 'why do events like this happen'? This leads to 'surface' level changes - fixing the 'widget' that broke or reprimanding individuals who made errors in judgement. Organisations rarely use events as a 'window' to critically examine deeper issues and challenge the fundamental assumptions and premises of the organisation. If you look back over BP’s history it has quite a poor safety record. This needs further understanding: what has BP learnt from previous incidents like Texas City, and events on the Deepwater Horizon itself, and why it has failed to learn some of those lessons? Another issue moving forward is how changes will be implemented.

Recommendations for the Future

Changes to prevent such events necessitate fundamental alterations and redesign across an organisation but also requires changes to culture, values and informal practices. There is a heavy pressure for the organisation to deliver to its shareholders which often requires a drive towards efficiency gain, cutting costs, waste removal and that is a core tension with the need to be safe. Until any organisation fundamentally addresses this tension and makes safety a core value and is willing to sacrifice short term efficiency and productivity goals for long term safe operations then unfortunately we will probably see accidents like this again in the future.

Danger of Over-Specification

What is evident from experience in lots of industries and organisations, is that following an event there is a tendency to over-design recommendations and over-control the organisation, putting in place more policies and yet more procedures in the hope that this will prevent future accidents. In the case of BP, there is a real danger that an outside body will produce an inquiry report following investigation, setting out 40 or 50 key things that BP needs to change and the industry needs to change. However, recommendations for future action are not implementable in the intended context and people resist change that is imposed from an outside agency. By following this approach BP and the oil industry could well fail to deal with the full complexity of the issues involved.

An innovative Case Study

A multi layered, collaborative case study is being produced by the Doughty Centre for Corporate Responsibility at Cranfield in conjunction with the Global Education and Research Network, GERN, and with colleagues from around the world an evolving case study and teaching note has been written. It presents an exciting opportunity to get involved in producing a real world case, in real time, collaboratively and taking multiple perspectives to build a deep understanding of this case. For further details, see:

David Grayson is Professor of Corporate Responsibility, Director of the Doughty Centre for Corporate Responsibility.

David Denyer is Senior Lecturer in Organization Studies, Director of MSc in Leading Learning and Change.

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