From: Issue 1
A drop in the ocean
Why the BP Gulf Spill could usher in a more responsible age
One of the worst environmental disasters in US history – the Gulf of Mexico oil spill – is just over a year old. At the time, it had blanket media coverage and dominated the domestic political agenda, but today it has vanished in the periphery. However, questions remain: What have we learned, and how accurate is our diagnosis of what went wrong?
Many attribute it to an event that we couldn’t predict, let alone prevent. While a few politicians, including Texas Governor Rick Perry, used the phrase “an act of God,” most commentators prefer secular equivalents – “bad apple” or a “bolt from the blue.” Whatever the phrase, the implication remains the same: We have little to learn from the disaster; accidents happen and we shouldn’t be pointing fingers.
Our investigation of this case convinces us that a different world view would be more accurate and useful: We are all co-creators of this crisis. Although this might be less palatable, it makes explicit that everyone shares responsibility for this disaster. It can also be empowering in that, if we so choose, we can learn from this failure and decrease the frequency and severity of such “normal accidents.”
Of course, trying to predict which rig will explode on what day is simply not feasible. As philosopher Nassim Nicholas Taleb explains, while you cannot predict which particular truck will make a faulty bridge finally collapse, you can investigate the bridge to see if it is susceptible to crumbling into the ground and determine what steps to take to enhance its resilience.
“It’s very dangerous to join up dots that may not be appropriate to join.”
– Tony Hayward
The reality is the “bridge” BP and its subcontractors constructed – and the regulators allowed and its investors enabled – was indeed faulty. As significant as this case is, it is also emblematic of the wider malaise of “shareholder value maximization” capitalism.
It is a simple statement of fact that BP has a recent history of serious risk management failures. These include the Grangemouth refinery explosion (2000), an explosion at Texas City that killed 15 and injured more than 170 (2005), a burst pipeline in the Alaskan North Slope (2006), the Azerbaijan gas leak (2008), illegal energy trading activity (2008) and a period of major air pollution (2007–2009).
With multiple accidents occurring in such different locations and operations, this is prima facie evidence of a weak safety/risk culture. Indeed, this is what independent investigations have generally concluded, and this lengthy track record exposes an organizational learning disability. The good news is that this has been partly acknowledged, implicitly at least, by the decision of BP’s new CEO to significantly empower safety specialists.
This poor safety record also demonstrates a narrow conception of risk that was driven by technical arrogance (if BP engineers were so good at operating on the technological frontier, why wouldn’t they also be good at safety?), and an increased focus on narrow metrics (in this case, lagging safety indicators such as mortality). The focus on easily measured, recurring accidents, rather than process safety issues, led to an increased exposure to high-impact, low-probability events.
While safety was said to be the priority, there is little doubt that cost-cutting was an even more important guiding principle. This is a function of an obsessive commitment to shareholder value maximization, which we call shareholder value fundamentalism.
This misbalanced leadership focus – enabled by overly dominant CEOs, combined with a board who failed to ensure accountability – created a culture where the obsessive focus on cost-cutting led to strong incentives to save time and money. Without an equally obsessive focus on safety culture, consequences were inevitable.