BP doesn't need an engineer at the helm. It needs a leader.
Of course engineers matter, when the task is stemming damage from the largest oil spill in U.S. history. BP needs all the talent it can get. Scientists, engineers, and technicians, including the 2500 BOP employees sent to the Gulf from all over the world, have a critical role to play in cleaning up the environmental mess.
But BP must also clean up an organizational and cultural mess. The company needs a leader who engenders confidence. CEO Tony Hayward has had over six weeks in the spotlight to demonstrate his leadership capabilities. Yet the situation keeps getting worse: escalating damage in the Gulf and a whopping 35% drop in BP's stock price.
A true leader faces facts, presents a situation fully to all stakeholders, and models accountability. A leader does not attempt to minimize the extent of a problem or promise action faster than can be delivered. A true leader sets appropriate expectations and delivers. He or she does not duck responsibility by shifting the bulk of the blame to someone else.
About a week after the April 20 explosion, Hayward was quoted in the New York Times
as asking his executive team, "What the hell did we do to deserve this?" Recently, he declared that "I want my life back."
Mr. Hayward, it's not about you. The only consideration should be what's best for the institution and its stakeholders. Eleven workers are dead, and damage to the ecosystem and coastal livelihoods are incalculable. Tony Hayward's actions have not been responsive, and when that happens, a manager is dispensable. He can't be the only person who can run the company during this crisis — which means that BP has even more BP (big problems) ahead.
Though Hayward has received public support from the chairman and top managers, we can guess that they've already privately conferred about a successor — unless the board is asleep at the switch. How could there not be gossip, speculation, and jockeying for his job? Behind-the-scenes maneuvering like this is common at other major companies facing less financially and environmentally disastrous situations.
Hayward became CEO three years ago to help stem the loss of reputation from a 2005 refinery explosion in Texas, when the company was fined a record $87 million by OSHA for failing to correct safety violations, and a 2006 pipeline leak in Alaska, which resulted in $20 million in criminal penalties for neglecting to repair corrosion. Hayward came in on a promise to change the culture and emphasize safety. So much for the safety platform.
Pointing fingers at Transocean because it was their rig and a failure of their equipment further hurt Hayward, even though others, such as Halliburton, the company in charge of cementing the well, are also playing the blame-shifting game.
A company can outsource the work but not the responsibility for it. One failure surely was the failure to apply high standards to suppliers and partners. Companies are now expected to take end-to-end responsibility for what they produce and sell. The SODDI defense ("some other dude did it") doesn't get CEOs of major companies off the hook.
Lapses seem to have been everywhere; e.g., in preparedness, alert systems, communication, and worst case scenario plans. BP has hired a new U.S. media relations head who had once worked for former Vice President Dick Cheney. (Pause to ponder the irony of invoking the Cheney-Halliburton-Iraq connection, which surely was not positive PR.) How can the CEO hold anyone else accountable if he or she doesn't model accountability?
The public doesn't expect miracles. Stuff happens. But it's reasonable for stakeholders to expect that every possible step will be taken to prevent the stuff from happening in the first place and then to keep it from get out of control if it does. When stuff happens, a true leader should apologize quickly and take responsibility. The focus of a true leader's attention is on the victims.
Why is Hayward still running BP? He should be smart enough to resign before being fired. It's well-known that CEOs of organizations on a losing streak are notoriously hard to dislodge — look at how much General Motors bled before Rick Wagoner was out the door. But this circumstance is not minor, unlike Hayward's initial protestations. It is not a slow accumulation of losses — BP's finances were in good shape before the explosion. This is an acute, explosive situation with short-term urgency and long-term consequences. The problem is not PR.
Before other executives shed crocodile tears for Hayward, with secret snickers of schadenfreude, they should heed the leadership lessons. Confidence (as I say in my book by that title) requires accountability first and foremost. Like Hayward, leaders must learn to say out loud three important little words: "I was wrong."