06.09.10

Why BP Didn't Plan for This Crisis

The company is spending $50 million to advertise its Gulf cleanup. Eric Dezenhall on their PR mistakes so far—and the valuable lessons to take from Exxon’s handling of the Valdez disaster.

I taught a business school class on crisis management recently, and, against the backdrop of the BP oil spill, a sharp MBA student asked me if companies hired me to get ready for crises, or if they waited until “it” hit the fan.

My answer concerned the class, and it should have: A vast majority of corporations wait until the drama turns nasty to the point where, to paraphrase what has been said about Shakespearean tragedies, the objective is to leave enough of the players alive to drag the dead ones off the stage.

The very same companies that spend hundreds of millions, and even billions, on advertising throw a fit when they receive a $50,000 bill for crisis communications services.

In the wake of the Gulf of Mexico catastrophe, the question of why companies aren’t better prepared for crises merits a brutally frank discussion. Here is what I told the B-school students:

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A corporation is not a singular entity with one heart and brain; it is a collection of individuals motivated by short-term personal self-interest, the first and foremost of which is job advancement and preservation. When it comes to crisis management, these individuals fall prey to what psychologists call “the apathy of crowds,” the passive assumption that someone else, somewhere, has things covered.

This lethal misassumption is exacerbated by a free-floating sense that a crisis is an abstraction, a vague, external and remote possibility that befalls Others, in the same way that tornadoes appear to make beelines for communities that are alien to many of us.

The aversion to making plans is not altogether illogical. Plans often do crumble when confronted by force majeure, but it doesn’t excuse the insidious short-term mindset that pervades in corporations.

Almost no one in a corporation views it as being in his personal self-interest to invest his time, energy and finite budget in crisis management planning beyond a perfunctory gesture. After all, no one ever became CEO by being perceived to have been responsible for averting a scenario that never actually happened—and wasn’t supposed to.

What about the value of the stock in the employees' retirement funds? Shouldn't that be incentive enough? This is a perfectly good rational long-term argument, but one that consistently collapses in the battle between mundane everyday pressures and theoretical storm clouds on invisible horizons.

My experience has been that the very same companies that spend hundreds of millions, and even billions, on advertising throw a fit when they receive a $50,000 bill for crisis communications services. The reason for this is that the executives from whose budget these funds are drawn don't feel they have anything tangible to show for it and, in a sense, they are right. A client once asked me what she got for her money after we did scenario planning, and I answered, “Nothing. And that’s what you want—for nothing to happen.” Tough sell.

Advertising, on the other hand, is always popular with companies either afraid of controversy, or responding to one. Advertising provides instant gratification, and it makes management, employees, and shareholders feel good about themselves.

Nowhere is advertising a more popular crisis management default than in the environmental arena. In recent years, BP spent hundreds of millions of dollars on a massive PR campaign stressing its credentials as an alternative energy company, its utopian slogan being "Beyond Petroleum." Heh—the cruel irony of the slogan merits no further analysis given current events. Nevertheless, the BP crisis forces us to ask if these funds would have been better spent on safer drilling and transportation technologies. To its credit, the company began moving away from its cynical campaign in recent years.

There are, of course, exceptions to corporate groupthink in the face of crisis and, irony of ironies, one of them occurred in a company that is routinely pilloried as the quintessential corporate villain. Having created and endured its own hell in the wake of the 1989 Valdez disaster, Exxon knew that for an oil company, the best PR is to receive no attention at all. Rather than engaging in a self-congratulatory PR campaign after its cleanup of Prince William Sound, Exxon emphasized safety over marketing, and invested in crisis-avoidance in the form of safer shipping hulls and more advanced drilling methods. But it took a catastrophe to make them realize the limits of spin control. And, honestly, is anyone shouting "Three cheers for Exxon!"?

Indeed, our culture would be well served to stop diagnosing oil spills as public relations problems—they are environmental and economic catastrophes. Saying an oil spill is a PR problem is like saying someone that has been hit by a train has a headache. They probably do, but there are bigger challenges at work, which, if met, take care of things like corporate reputation.

As much as I would like to conclude with a starry-eyed call for placing incentives on averted crises, I cannot do so in good faith. I have been fighting this battle for the better part of 30 years and am underwhelmed by the evidence that human beings as a species are learning or changing. The only individuals and entities that do learn are those that have personally experienced—and endured—the crucible of crisis.

Whether it's BP, 9/11, or the 2008 financial meltdown, the same syndrome has been at work: The strong personal disincentives for individuals to think beyond their immediate agendas and the cognitive impossibility of imagining the unimaginable.

Perhaps the new generation of business and political leaders in the classes I teach will usher in an age of respect for long-term thinking. Or maybe we'll just be in for some really awesome advertising.

Eric Dezenhall co-founded the communications firm Dezenhall Resources, Ltd., and serves as its CEO. His first book, Nail 'em!: Confronting High-Profile Attacks on Celebrities and Business, pioneered techniques for understanding and defusing crises.