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Response from BP better than perceived

BP is coming in for plenty of abuse these days, and certainly much of it is deserved. Mistakes made by BP officials, or contractors and suppliers they engaged and supervised, led to a preventable explosion that killed 11 people and unleashed an environmental disaster of immense but still unknown proportion. Compounding those initial mistakes has been a failure to anticipate such a disaster and have an adequate response plan in place.

So extensive is the damage, and so great are its potential liabilities, that BP's very existence is now at stake — a company that until a few weeks ago had a market valuation in excess of $180 billion. As corporate screw-ups go, it doesn't get any bigger than this.

My purpose today, however, is not to bury BP, but to praise it.

When confronted with such crises, corporate executives instinctively head for the bunker, withhold information, deny responsibility and drag their feet on efforts to clean up their messes. But to their credit, rather than respond in ways you would expect them to, BP and its executives have generally responded in ways you'd want them to.

From the start, BP has declared that it is ultimately responsible for what happened and responsible for making things right, waiving any liability limits it might be entitled to under federal law.

The company's CEO, Tony Hayward, moved from London to the gulf, personally overseeing operations, visiting with government officials and conducting regular news interviews, in which his contrition seemed genuine.

At its own expense, the company mustered a private army, navy and air force to disperse the oil, contain the spill and clean up the damage on shore. It flew in experts to devise and execute strategies for capturing the leaking oil and plugging the leak, sparing no expense. It opened multiple centers where fishermen and business owners can file claims for lost income and walk out an hour later with a check.

It initiated an internal investigation into the causes of the explosion, waived any attorney-client privilege and shared with congressional committees its preliminary findings that BP officials made mistakes that probably contributed to the explosion.

It committed $500 million for research into preventing and mitigating oil spills. It sent checks for $25 million to each of five states along the Gulf Coast to jump-start their cleanup efforts, and $70 million in grants to tourist businesses, with promises of more to come. It promptly provided hundreds of thousands of internal documents to nine congressional committees investigating the disaster. Its executives provided almost daily press briefings that, for the most part, lacked spin and defensiveness.

BP's response has not been perfect. Almost from the beginning, the company has either underestimated or understated the amount of oil leaking from the underground well and the environmental damage it was likely to cause. It didn't take long for Hayward to regret his comment that the damage would be "very, very modest," or that the oil slick was small compared with the vastness of the oceans.

Despite these missteps, BP's handling of the gulf spill is looking far better than Exxon's handling of the Valdez, Massey Energy's handling of its deadly mine explosion or even Wall Street's response to the recent financial crisis.

And while this crisis is far from over, it is possible that BP's Deepwater disaster will one day replace Johnson and Johnson's Tylenol scare as the classic business school case study on crisis management.

Response from BP better than perceived 05/30/10 [Last modified: Friday, May 28, 2010 10:08pm]
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