BP Crisis Management, PR Misfires — a Case Study

 

Updated – March 8, 2013

BP Oil can’t turn off the lawsuit spigot. A New Orleans court ruled this week that the company must pay additional oil-spill compensation. At stake for BP are uncapped billions of dollars.

Now, BP is fighting the ruling, which was made as an interpretation of the original settlement reached from the Deepwater Horizon oil rig disaster in the Gulf of Mexico. Ironically, BP agreed to the original settlement, which didn’t include a specific amount of damages.

Already, BP has agreed to pay $4.5 billion in criminal damages to the U.S. government. Earlier, for $7.8 billion, BP settled with individuals and businesses in the wake of the 2010 oil spill – the biggest offshore spill in U.S. history. You might recall 11 people died in that disaster.

BP initially set up a $20 billion trust to pay damage claims.

The disaster is a reminder — about every 20 years, there’s a major oil-spill disaster. None has been handled well, PR-wise.

On Jan. 29, 1969, an oil spill involved Union Oil off the coast of Santa Barbara, CA. On March 24, 1989, it was the Exxon Valdez oil spill in Prince William Sound, Alaska. And on April 20, 2010, it was the BP oil spill in the Gulf of Mexico.

Dr. Peter Drucker’s quote, “Arrogance is being proud of ignorance,” obviously was not intended for the most-recent public relations debacle facing BP, but it sure is applicable. The results are a case study for worst-practices in crisis management.

BP inadvertently created a PR situation synonymous with herding cats. It’s had to fight to clear up two quagmires – its oil mess and its tarnished image.

It’s important to understand the need for a comprehensive risk analysis. First impressions demonstrating empathy and competence are vital. It didn’t appear BP was prepared to successfully deal with such a catastrophe. A good old-fashioned SWOT analysis of strengths, weaknesses, opportunities and threats with worst-cases scenarios would have sufficed.

For possible insights into BP’s corporate mindset, a former CEO of Royal Dutch/Shell’s U.S. subsidiary, Shell Oil, has some illuminating realities. In the strategy+business management magazine, CEO John Hofmeister’s article, “Why We Hate the Oil Companies,” explained how some corporate oil CEOs dysfunction. He indicates they earn their reputations for arrogance and blow opportunities to create the right image.

“Retailing fuels is basically a secondary exercise from the oil company’s point of view, a way to get rid of the product it has spent so much time and money producing,” he writes. “This makes the retail side the least valuable part of the business, more often a nuisance than a value creator.”

BP’s “Beyond Petroleum” branding has not helped.

Despite BP’s best efforts, the company was not been front and center of the media. And when it has been in the media, it wasn’t a pretty picture, such as offering $5,000 to potential plaintiffs not to litigate in anticipated lawsuits. Nor has BP been seen as compassionate and aware of their social responsibility. Nor did it appear eager to roll up the proverbial sleeves to work with government to minimize the ecological damage.

In responding to a question about BP’s safety record in an interview with ABC’s George Stephanopoulos, BP CEO Tony Hayward said:

“I think we’ve made enormous strides as a company in the last three or four years with a remorseless focus on safe, reliable operations.  Ah, this wasn’t our accident. This was a drilling rig operated by another company. It was their people, their systems, their processes. We are responsible not for the accident but we are responsible for the oil, dealing with it and cleaning the situation up.”  

However, here are my recommendations:

1. Mr. Hayward should have been mindful of all his operations. In the middle of the disaster recovery efforts soon after his interview on ABC, another negative headline was published: “Washington state fines BP $69K for violations.”
2. Mr. Hayward’s initial comment should have been a strong note of empathy regarding the need for due diligence in safety.

BP’s Web site mentioned a only minimal number of advisories per day with links to Twitter and Facebook — an insufficient response. Why?

This has been a war – a war to save the environment, the livelihoods of families depending on fishing and tourism, and the company’s reputation. Where were the pictures of a hardworking CEO, in oil-stained work gear, directing crews like Gen. George Patton did in World War II? Where were images of him conferring in teamwork-style with government representatives?

Furthermore, published revelations in this typical headline, “U.S. exempted BP rig from impact study,” looks terrible for BP and a federal agency. The article indicated BP lobbied for an exemption in order to avoid an environmental impact analysis. The waiver was reportedly rubber-stamped by the Minerals Management Service of the Interior Department.

The Obama Administration also deservedly received criticism for its initial tepid handling of the accident, including this commentary:  “Government scholar Paul Light calls on Secretary Napolitano to step down.”

To minimize the damage, BP should have immediately accomplished five tasks:

1. Issue regular, frequent progress reports
2. Control the pictures (even some on the Web site appeared to be canned or generic)
3. Transparency
4. Display empathy as a concerned corporate entity comprised of authentic people diligently making a good-faith effort to solve the problem
5. Stop lobbying for environmental waivers

To be sure, BP would benefit from proven crisis management tips. Further, the oil company would also benefit by using a best-practices checklist for green branding and marketing.

From the Coach’s Corner, here are 19 Tips to Protect Your Core Assets from a Disaster.

“We made too many wrong mistakes.”
-Yogi Berra 

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.