Learning from Leadership Failures!

Looking at how BP has handled the catastrophic failure of its Deepwater Horizon and the subsequent blow up of the oil well nearly one mile below the ocean’s surface one wonders if this was a failure of technology or of something else. What makes this failure particularly egregious is how its top management has handled the entire episode from the get-go. It appears that BP has failed on both fronts: preventing the disaster in the first place and then properly managing the fallout from the explosion and the ensuing oil spill.

Reflecting on the events of the past few years, BP is not alone in this failure, which stems more from the failure of its management to provide proper leadership to both its ongoing operations and during a major crisis. When taken into perspective BP’s plight is not isolated; it is merely amplified by the sensitive nature of the disaster and the long-term effect it is going to have on our lives for years to come. In my opinion the failure is not of technology but is of poor leadership. BP’s failed leadership can be paralleled to the recent failures of the Wall-Street giants and that of the mortgage, housing, and auto industries.

What are the commonalities?

In each case the failure appears to be that of the basic understanding of the management process. A manager’s job is to deal with everyday technical problems by dealing with them and from getting them from becoming worse on the one hand and to show leadership in identifying the lurking problems and preventing tomorrow’s disasters. Because the technical problems are visible (they are the ones that scream the loudest: unhappy customers, broken products, delayed shipments, etc.) they get management’s immediate attention. But, management problems quietly pile up with no visible signs of trouble. A manager’s job is to create a management process where both problems are handled with appropriate urgency and to prevent a meltdown, as it is now happening with BP and has happened with yesterday’s Wall-Street firms and with our automobile industry.

My prescription for avoiding such problems is outlined here:

1. Understand the difference between management and technical problems
2. Create a clear escalation process for technical problems that do not go away and solve them with an appropriate management intervention
3. Create accountabilities throughout the organization and set clear examples of leadership.
4. Reward people by not what is measurable, but also by what is not and what cannot be measured. Many solutions to management problems do not show their effects in a visible way. They manifest as lack of crises on an ongoing basis.
5. When a crisis does occur quickly own the responsibility and take swift actions to remedy the situation in a proactive way.

Dating back to Enron’s meltdown nearly 10 years ago there has been a steady drumbeat of failed companies that have not adopted sound management practices. The auto, housing, and mortgage industries are the more recent casualties. BP is now leading that pack because of the suddenness of the crisis, its severity, and the pervasiveness of its bad management decisions.