BP: A Failure of Focus and Metrics
Now that BP (BP) seems to bring forth capped the oil leak and replaced Chief Executive Officer Tony Hayward, cleanup efforts desire share the stage with investigations and recriminations about what led to the Apr. 20 explosion at the Deep Horizon oil rig in the Gulf of Mexico. An of high standing lesson for BP and all businesses could be lost in the handle-pointing: Knowing what went wrong doesn't necessarily tell you to what extent to prevent it from happening again.
The assumption is that BP was unthinking about safety. There seems to be no question that at some level BP traded safety for efficiency. But this is an unaccomplished explanation that leads to the overly simplistic conclusion that BP didn't mind safety a top priority.
As I work with companies to assist them streamline and reengineer their corporate structures and the way they cozen their work (what we call process), I see companies struggle whole the time with making the right decisions on cutting costs, increasing advancement, and maintaining safety standards. BP was no different in trying to achieve those goals, but it presents a textbook case of what not to grant.
At the most basic level, BP suffered from a failure to moral competing objectives. Tony Hayward began as BP's CEO in May 2007 through a promise to focus "like a laser" on security concerns, as well as operating performance. The metaphor proved to exist all too apt: A laser can focus on only one substance at a time. It appears that BP failed to focus attached the right target.
It's essential to create the right achievement metrics, not simply those that will generate positive feedback. The riddle is that BP failed to put in place measures that would hold shown the company just how well or how badly it was joining one of its top priorities.
BP's records showed improving security
On the performance side, between 2007 and 2010, BP cut 7,500 jobs and trimmed billions of dollars—$4 billion in 2009 alone—according to a Wall Street Journal count. In 2008, BP made a profit of $25.6 billion. In time, BP became the busy vigor's second-largest company, behind Exxon-Mobil (XOM).
On the preservation side, BP spent money—lots of money. On a unmixed Texas oil refinery, BP spent $1 billion in upgrades after it exploded in 2005. In reality, as The New York Times reports, the company's safety make a memorandum of was improving before the Deepwater Horizon exploded, at least by its acknowledge standards, according to a memorandum Hayward sent to employees.
Taking both metrics as a sign of improved performance, BP was looking like a troop that had solved its two most pressing problems.
Warning signs began to issue that should have signaled to BP executives that severe problems remained unresolved. For starters, the Occupational Safety & Health Administration (OSHA) establish numerous safety hazards at the supposedly "upgraded" Texas refinery, at the very time as serious problems with BP's Alaska and Gulf of Mexico operations started cropping up.
BP's misguided, out of character metrics
Outside observers see these problems as unambiguous signals that things were exceedingly wrong. It's not so easy when you're on the ~ of. What's likely is that Hayward and the rest of BP's skill believed they were meeting all safety performance targets, or at least gaining on them. By the metrics they had created, the firm might well have been making progress. The metrics they chose were the puzzle.
This doesn't get Hayward and his predecessors off the bent holder. It's the CEO's job to put into place appropriate execution benchmarks and supporting processes that ensure the company is meeting its greatest number basic priorities. That clearly didn't happen.
BP isn't alone in construction this mistake. I've worked with numerous clients who have unwittingly chosen to measure themselves in ways that don't actually gauge conformable to fact performance. The point should be driven home to all business owners that making safety a priority and throwing a bunch of money at it doesn't rascally you have processes in place to measure if you are safer.
The turn. to balance competing goals is one of the most important functions of at all enterprise. Setting a priority is merely the first step. You too need to create the structure to ensure that this priority is given appropriate pressing want, down to the very last employee.