BP and Degrees of Stewardship
Almost two years ago, on the day that the Dow experienced its single greatest drop in history, I blogged about Ice Cube's heartfelt "It Was A Good Day." I may have stretched the analogy, but tried to maintain a specific point: optimism. Challenges, managerial or otherwise, test our abilities to navigate murky waters and unclear paths forward. We must have confidence that proper leadership, intrinsic values, and the maintenance of our internal compasses will assure our success in the darkest of days. And that we, as SOM students, were better prepared than any for such moments. Today I find myself mulling over that idealism as oil continues to spill into the sea and wash upon the shores of my beloved Louisiana and Mississippi Gulf Coasts. While I am not as well equipped to speak to the environmental impacts of this disaster as, per se, some of my FES dual-degree peers, I can in the least provide an opinion: This is awful. In the wake of the Deepwater Horizon catastrophe, I’ve been pondering the decisions that companies make concerning quality management and cost reductions. These happen every day. It doesn’t take an MBA to understand that in 99% of situations there is a more expensive way to do something safer. The question is where to draw the line. What p-value do you maintain when you run your scenario analysis on the chances of absolute disaster? Here’s another one. It’s one thing to be required by law to compliance and monitoring standards and measuring. It’s a completely different thing to do something with the information when it’s not what you wished it was. According to some of the things I’ve read, Deepwater Horizon had issues for months before this disaster. There was even evidence that pieces of the emergency stopping mechanism in the well had disintegrated (analogous, I think, to not changing the transmission fluid in your car, and your gears flaking metal and disintegrating.) The truth is that in large capital projects, “better safe than sorry” equals losing money. For any company in the business of drilling for oil, retrieving oil, and selling oil, the quicker the better. I’m not writing to play the blame game, and I knew BP was Beyond Petroleum before this whole thing. I am saying this though— for the love of the world, when you take a risk, you better be really, really sure you have mapped out the worst case scenario, and not just to one or even two degrees of separation. Unfortunately, through my career I have found that one of the most difficult things to institute in a populace is large-scale behavioral change. A culture of preparedness is never the rule, and all too often the function of a prolonged “recency effect” dependent on how long ago a disaster occurred. People don't generally like staring risk probabilities in the face. It’s almost as if what can go wrong “hopefully won’t go wrong,” and we operate like so. I do not believe that can be the standard for our generation of leadership. Our world demands more so than ever before that we approach our future endeavors with not only consideration, but with an onus of responsibility. It’s pretty obvious what side of Milton Friedman’s social responsibility quandry I fall. Yes, take care of your shareholders, but also mind the integrated economic and social system within which you and your shareholders exist. When it comes to environmental disaster, everyone is a shareholder and a stakeholder. So, I suppose it is trying, but what else can we do but try to make it better going forward? The full effects of this disaster have yet to be identified, and honestly they are a bit terrifying. But however the world changes from this or from anything else, I say stay optimistic. Do not forget for a moment the implicit responsibilities of stewardship that come with any leadership role. And furthermore, depending on your line of work, do not forget that such stewardship may extend many degrees beyond the business beneath your nose.
And finally, on a lighter note, let's hope that things can be plugged before the Gulf of Mexico ends up looking like the scary Oil Ocean level from Sonic the Hedgehog. All rights reserved for Sega. -Guillermo