The progressive worsening in BP’s share price might in part reflect a continuing failure to address the finer points of strategic crisis management. Following on from the recent Toyota crisis, it leaves a worrying impression that many big international enterprises are not well equipped to manage large-scale incidents.
This is not a new problem of course. We’ve experienced many disasters before, and there are well established principles on how to go about crisis management. The snag is that they’re not widely appreciated. Neither are they easy to execute. In fact very few senior executives, no matter how bright or well trained, seem to be able to translate expert advice into reality.
Good crisis management is a rare skill. There are a few reasons for this. Partly it’s because most executives are immersed in an organisation culture that is often itself a major contributing factor to the crisis, preventing them from seeing the wood for the trees. Partly it’s because few executives are comfortable playing a dynamic, decision-making role that’s completely different from their day job and prior experience. And partly it’s because it’s hard in practice to think clearly, objectively and strategically when you’re under enormous pressure.
You can certainly spot some questionable decisions in BP’s response: attempting to play down the size of the disaster; presenting a British image to an outraged US community; and offering up the CEO as a potential whipping boy. Lack of preparation or rehearsal for such events might also be a contributory factor, as there are press reports of factual errors in the published oil spill response plan.
As Dr Peter Sandman, a risk communications expert, once put it “The engine of risk response is outrage”. An engineering response, not matter how elegant, will never suffice. Citizen rage needs to be directed to an appropriate target. President Obama clearly recognises this and is channelling it, along with his own rage, towards BP’s British management.
There are numerous learning points from this and other crises. My book “Managing the Human Factor in Information Security” contains a whole chapter on the subject of incidents and crisis management, setting out many of these points. It’s a difficult art but one that needs to be studied and practised by a lot more senior executives.