Posts Tagged ‘Gulf of Mexico’

Save a penny, lose a dollar

April 23, 2011

It has been a year since the explosion of the Deepwater Horizon oil rig on the Gulf of Mexico. Eleven people lost their lives and five million barrels of oil spilled in the ocean, the worst such accident in US history.

From a public relations point of view, it is surprising that corporations as important as BP reacted in such an inadequate way to the disaster. In fact, BP’s behavior is now the point of reference for what NOT to do during a crisis.

Prior to the accident, BP’s then CEO, Tony Hayward, had reduced the company’s PR budget, following the advice of consultants who obviously were not qualified to make such a recommendation. And much less in light of the coming crisis. The result was enormous damage to BP’s reputation and, therefore, also to its bottom line. By the way, Hayward lost his job as CEO as a consequence of his handling of the crisis.

A corporation which in 2009 earned 14 billion dollars started to save money in an area as vital to them as public affairs and in the end the paid for their mistake. As the saying goes, save a penny, lose a dollar.

A decision that was not only irresponsible but also lacked intelligence; because an oil company definitely knows that, sooner or later, an accident such as this can happen. And when it does, it must have a first-rate public relations team that is always ready to deal immediately and efficiently with such a crisis. Even though any corporation or government can face any type of crisis, this is true for companies that deal with especially risky fields such as airlines and chemical companies. It’s only a matter of time before an accident happens, never mind a terrorist attack. And if the crisis is not dealt with satisfactorily, it could lead to the end of the business.

That is why it’s so surprising that a corporation as prestigious as BP could be so shortsighted.

The other incident that, unfortunately, reminds us about the total lack of preparation when facing catastrophes is what happened in Japan.

I have visited Japan several times. I have dealt professionally with the Japanese and Japanese businessmen and women. The last thing that you’d imagine is that a country as organized and professional as Japan would not be ready for something that is totally predictable.

Japan is one of the world’s most earthquake prone countries. In that area, obviously, the earthquakes cause tsunamis, which is also to be expected. And is anyone surprised about the potential danger that a nuclear accident could bring about? The Japanese government and the company that owns the nuclear plant should have been ready for all these situations, but it’s obvious they were not. Something that is truly unforgivable because we’re talking about events during which the lives of hundreds of thousands of people are at risk.

It is true that the catastrophe was beyond what anyone could have imagined and that when something like that happens it’s hard to react. There is a collective psychological shock. However, I must state again, we are talking about situations that are truly predictable.

In addition to the structural and human disasters, there was an information one. There was a total void of reliable and precise information. The Japanese government completely failed when the population most needed this information to be able to make potentially life or death decisions.

No one knew how to deal with the media, what information to share, which recommendations to make. The information the public was getting was incomplete, half-truths or totally wrong. The Japanese media would say something and the international media would report something totally different. The nuclear plant owners would state something and independent experts would immediately deny it. The Japanese government would put out a press release and the US government would contradict it. And to this we must add the traditional skepticism that
many Japanese have regarding what many national companies say, because they’re well known for their lack of transparency. The result was a total information chaos which was aggravated by an environment of extreme physical and emotional tension. A perfect storm.

I know people who have family in the affected area in Japan. They tell me that no one knew the real security perimeter surrounding the nuclear plant, what they needed to do, where to find shelter or where to find uncontaminated water or food. This is not precisely the image that most have of a country such as Japan.

What happened? Didn’t the Japanese government have a crisis management plan in place for situations such as this, which are, once again, completely predictable? And if they had it, why wasn’t it put in place? Didn’t the Japanese government train its key personnel so they would know how to handle the media, known as media training, especially during a crisis? And if they did get the training, why did they act in a way that put the population in such danger?

How is it possible that multimillion dollar corporations such as BP or first-world governments such as Japan’s could be so poorly prepared for these types of situations? How is it possible that they could have made a strategic mistake of such magnitude?

Without a doubt, in disasters such as these the first priority for a government or corporation should be the physical security of people and the environment. However, during these events, the flow of reliable and correct information is
not secondary but also a priority because it directly impacts the security of the population and the environment. During a catastrophe, knowing how to communicate effectively saves lives.

Unfortunately, more accidents or natural disasters are in our future. We will see if BP and the Japanese government, as well as other institutions and businesses have learned from these mistakes or history will repeat itself.

The White House Bubble

May 30, 2010

Every president is a victim of it.  Each one, sometime during their Administration, hears that he has locked himself in “the White House bubble.”  This means that, immersed in his daily work, spending most of his time isolated in the Executive Mansion, he has distanced himself from the country’s realities.  That he doesn’t understand what’s happening on Main Street.  That he doesn’t understand any longer the daily concerns of the common citizens. These criticisms are now aimed at President Obama.  The reason?  The oil spill in the Gulf of Mexico.

The White House is on the defensive regarding this issue.  During the first weeks of the crisis, the polls stated that the public had decided on a clear responsible party for the disaster, British Petroleum (BP), and approved of the way the government was handling the situation.  However, opinions have been changing substantially since then and the confidence on the Administration has fallen significantly.

Many pundits criticized President Obama for, apparently, not giving the crisis the importance it merits from the very beginning.  The April 20 incident has already become the largest oil spill in the history of the United States. 

The President responded by holding a press conference on May 27 and said that his Administration has always led the response to the crisis and that those who doubted this, simply “don’t know the facts.”

However, even well-known Democratic activists such as James Carville, who lives in the affected area, have directly confronted the White House, accusing it of responding to the crisis too slowly.  Carville even added that if the crisis had taken place on the coasts of California or on the beaches near the Washington, DC area, the response would have been completely different:  quick, efficient, forceful, well-coordinated.  Carville, a key advisor during the Clinton Administration, has grown more aggressive in his critique of the way the White House is managing the situation.  And he is doing this publicly, completely aware of the resentment that he is creating in the Administration.  Still, Carville isn’t the only one.  Louisiana’s Democratic Senator, Mary Landrieu, also stated “the President has not been as visible as he should have been on this and he is going to pay a political price for it, unfortunately.”

The Republicans state that if this had happened to former President George W. Bush, rather than to President Obama, the Democrats would be criticizing him mercilessly 24-hours a day.  They would accuse him of incompetence and of not being actively involved in the crisis because of his ties to the oil industry.

During the press conference President Obama insisted that this is a clear priority for his Administration and that from the onset they have devoted the necessary experts and resources to solve the oil spill as fast as possible.  According to him, this situation is first on his mind when he wakes and last when falling asleep.

We won’t put in question the President’s statements regarding his efforts, but the truth is that many people think that the government has not done enough and that they have let BP take the lead in dealing with such an important issue.  These people qualify the spill as a national crisis and add that, therefore, the government should clearly have a leadership role and attitude.  According to them, this leadership has either not been in place or has not been properly communicated to the American people.  And as we all know, in politics perception is 90 percent of reality.

I think that the President’s press conference took place too late.  It was not proactive but reactive.  I believe that if President Obama immediately named US Coast Guard Admiral Thad Allen to be in charge of the Federal response to the disaster, from the beginning Allen should have stood shoulder-to-shoulder with BP’s representatives during the daily press conferences.  This also applies to the local and state authorities.  But the US public only saw one person:  the BP spokesperson.  I think that the President cannot hold a press conference without being informed that a key player in the situation had been fired or had resigned.  This person is Elizabeth Birnbaum, the former director of the Minerals Management Service, an executive who answered to Interior Secretary Ken Salazar. This is the very government agency that President Obama criticized for its responsibility in allowing the oil industry to have improper influence in the environmental control area and security regarding oil rig accidents.

On Friday, May 28, the President once again to the affected zone to witness the effects of the disaster.  The government now asserts that instead of the five thousand barrels of oil it had previously stated were being spilled, the real number is 19 thousand.

President Obama went to one of the beaches suffering the effects of the crisis and later met with the leaders in charge of fighting the spill.  After the meeting, he left Louisiana.  He left without even speaking with the fishermen and citizens of the area.  Those clearly most directly affected by the disaster.  It was a flyover type of trip.  Taking into account the criticism, right or wrong, regarding his behavior up to then, why not take advantage of the long Memorial Day weekend to stay a couple of days in the area and become more deeply familiarized with the situation where it is happening?  Why not stay to listen to first-hand accounts from the victims?  Why not stay and convey the clear message that he doesn’t have a priority more important than this one?  I think that it was a great lost opportunity for the President and that this has highlighted even more Louisiana’s belief that Washington truly doesn’t understand what this situation means to the state.  A state already very resentful with the federal government for its response to Katrina.

President Obama was universally praised for being a master in his relations with the media during the presidential campaign.  He is undoubtedly a great communicator.  He’s also has left his mark in history by being the first who knew how to mobilize massive popular support for his campaign through social media networks.  Something that enabled him to raise more money than any other presidential campaign in history with an average contribution of $100 or less.  He also has shown that he is not afraid to “grab the bull by the horns.”  In just a year he has led the fight for health care reform, financial reform, and significant economic stimulus packages.

President Obama said in Louisiana that he has tripled the aid to deal with the oil spill.  He has even given his White House phone number to the local community authorities so that they can call him directly if something that has been promised is not taken care of.  His advisors confirm that he is constantly briefed about everything that is happening and that stopping the oil spill is one of his main priorities.  That this issue takes up many hours of his day.

Nevertheless, the truth is that the ongoing perception is that there hasn’t been enough presidential leadership on this matter.  To this day, many people still don’t know who is really in charge of this crisis.  Yes, the President stated that he is ultimately responsible, but, who is responsible on a day-to-day basis?  BP? The Coast Guard admiral?  The governor of Louisiana? The local authorities?  Secretary of Interior Ken Salazar?  Someone in Washington? Who?  I, who have been following this situation closely since it began, must admit that I have no idea.  The Administration has yet to put forth a face that we can all identify as the person responsible for the daily management of the crisis.  Something fundamental in terms of public perception is that someone specific is designated as being in charge.

And that it’s not enough to do things, but that you must know how to efficiently communicate what is being done.  It is difficult to understand how an Administration such as this one, so aware of the importance of public opinion, has allowed for this perception to spread regarding an issue as important as this one.  Now, in addition to solving the problem, they will have to communicate extremely well everything being done to prevent that this ecological disaster also becomes a political one for the White House.

BP: PR disaster

May 22, 2010

I was waiting in line to get my daily coffee at my neighborhood Giant Food’s Starbucks.  The barista told the customer in line ahead of me that Giant has a new agreement with Shell Oil – for every so many dollars you spend at Giant, you can get free gas at Shell.  The man laughed and said that in a very short while it won’t be necessary to go to the gas station to buy gas – the only thing that we’ll have to do is go to the Virginia shore (the state where I live) with a pail to get the oil from the British Petroleum (BP) spill.  He then added, rather upset, “I will never buy gas from BP.”  The Gulf of Mexico and Louisiana, where the spill happened, are more than a thousand miles away from Virginia.

It’s not a joke.  BP has had a real public relations disaster with the Gulf of Mexico oil spill.  They’re already paying for it, but the final tab could be even higher.  The reaction of my fellow shopper at Giant is a perfect example.

BP earns two billion dollars a month.  During the first three months of 2010, its profits were six billion dollars.  It begs the question, then:  how is it possible that a corporation as powerful and with so many resources could manage so poorly the escalating public relations situation brought about by this ecologic disaster.

This catastrophe will be studied in years to come as what not to do during a crisis.

The US is not North Korea.  In the US it is impossible to cover up the information regarding the accident as well as BP’s response to it.  Sooner or later, the truth will come out.  The Congress is already on the hunt.  And if the truth will ultimately come out, why not be open from the beginning and demonstrate an image of total transparency?  As those of us who live in Washington well know, the story that the press is pursuing is not the spill itself but the possible cover-up by BP.  Something that not only has brought about a public relations nightmare, but possibly criminal charges.

The first lesson learned when dealing with this type of crisis is the paramount importance of transparency and of letting people know what is going on.  Trying to cover things up is the worst thing that can be done.  As I said before, in the end, no matter what, everything will come out in the open and if the company has not been completely transparent and has covered up important information, the public will be left with the worst opinion possible about it.

It took BP 23 days to give the press a 30 second-long video clip of the spewing oil well deep in the Gulf of Mexico.  This, despite the fact that BP had underwater cameras that recorded everything that was going on round-the-clock.  The media criticized them harshly.  BP then demanded that volunteers that would be helping to clean-up the spill sign a document absolving BP of any responsibility from any health-related damages brought about their clean-up work. Let’s see:  first, oil spills on US waters and then the volunteers helping to clean this mess up are prohibited from suing BP for any damages?  The press was up in arms and this led to BP retroactively cancelling the document.   BP’s president vowed to remain in the US until the situation was resolved.  However, according to the British press, and in spite of the seriousness of the matter, he returned to London to attend a business meeting and celebrate his birthday.  His message is clear:  I have other more important things to do than being in the US to personally supervise the clean-up and closing of the oil well.  The press, as was expected, pounded on him.  He also had stated during an interview that the ecological damage from the oil spill would be “modest.”  Nowadays we can see the oil slicked waters off Louisiana’s coast.  The damage can’t be determined yet, but at least for those living and suffering its effects on a daily basis do not deem it to be “modest.”  As I write this article, experts estimate that six million gallons of oil have already been spilled in the Gulf.  Initially, BP stated that five thousand barrels of oil were being spilled every day, but did not allow any verification of this number by independent scientists.  Now, many scientists state that the amount of oil spilled is much larger than BP’s estimates.  Some reporters have stated that BP did not give them access to the video of oil spilling from the well so that independent experts couldn’t refute BP’s statements regarding the five thousand daily barrels.

The US government hasn’t done a very good job either.  This isn’t just BP’s problem; it’s a national problem.  Many can’t understand why the government hasn’t been more proactive in the process to stop the flow of oil, instead of letting BP take the lead.  This crisis could also prove to be very costly for the Obama Administration.

We all know that accidents are inevitable.  The airline industry, for example, trains constantly about how to deal with the crisis that will be brought about when one of its airplanes, unfortunately, is involved in an accident.  This might never happen, but an airline has to assume that, sooner or later, some type of accident will take place.  These companies are ready for these crises because it is a given to do so.  One of the basic principles of these crises, among many others, is the vital need for transparency about what has happened.  There are human lives at stake, as was the case with BP.  Eleven workers died during the explosion on the oil platform.  Nothing can be hidden.  This situation is even worse because of the ecological damage brought about by the oil spill.  It is important to be proactive and say what is happening before the press does it for you.

Oil companies also know that accidents are inevitable in their line of work.  What happened to BP?  Did they not remember what happened after the Exxon Valdez accident?  Didn’t they get trained to deal with a crisis?  Did they not get trained to deal with the media in case of a crisis?  And if they did, how is it possible that their behavior has been so terrible?  For many companies, whether or not they have received crisis communication training, the first and natural reaction is to not share information.  However, the only thing that this causes is even more damages.  This is precisely why crisis communication training is so important.

This accident has caused a lot of damage to BP, but the effects to its public image are going to be even worse.  I am afraid that my fellow coffee drinker at Starbucks is not the only one who will stop buying gas at BP.  I am sure that the other oil companies have paid close attention to what has happened.  After all, there are another four thousand oil wells just in the Gulf of Mexico – 30% of US oil comes from them.  It’s only a matter of time before another accident takes place.  Will the next oil company make the same mistakes as BP?