BP has become the latest mega-corporation to join the pantheon of most despised companies ever. By wreaking havoc on the Gulf of Mexico by dint of the worst man-made ecological disaster in the history of the world, it has easily supplanted Enron and Goldman Sachs as the poster child for avarice at any cost. Now come the revelations about the root cause of the disaster- bad cost cutting decisions. As Gomer Pyle would say, “surprise, surprise, surprise!”
Except that we should not be surprised at all. BP has ample company in the cost-cutting department. We call it by many names, including margin improvement, productivity enhancement, cost-out, or something similar. Every public company pursues it in the drive for increased profitability and stock appreciation, which is, after all, the raison d’etre of the corporation in the first place. And most of the time the decisions are the right thing to do. But left unchecked, the endless quest for increased profitability can lead to some very bad decisions.
Which brings us back to BP. It is becoming apparent that scads of bad decisions were made, which when stacked upon one-another led to the blow-out of the Deepwater Horizon and the tragic loss of life that followed.
BP CEO Tony Hayward has become the face of this now reviled company. His tone-deafness to the tragedy, especially early on was stupefying. But one thing is for sure, he was not in the loop on any of the bad decisions that led to the disaster. He is, however, squarely responsible for the culture that would allow such decisions to be made in the first place, even if he did so unknowingly.
Leaders need to understand the power of the underlying culture of their organizations. Further, they need to stay in touch with the culture through regular feedback from regular people, not just their direct reports who have millions in potential stock wealth at stake.
I can not help but wonder what might have been different if Tony Hayward would have had some connection with the people on the Deepwater Horizon who knew that the decisions being made were potentially catastrophic. Had he known and yet BP persisted on the course that led to the disaster, he would have rightly deserved the vilification he is currently receiving.