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BP Barred by U.S. Government from New Leases: Trust and Accountability

Fri, November 30, 2012 2:38 PM | Deleted user

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There was an odd narrative going on in the past six months concerning BP that has just been resolved. After the environmental, reputational, and economic disaster of the Deep Water Gulf oil spill, BP replaced their CEO Tony Hayward, spent billions on fines, penalties, and advertising to try to make things right. Recently, BP executives were charged criminally for their roles in the disaster. As all this was happening, there were stories surfacing that BP was expanding their oil exploration activities in the Gulf. It seemed for a time rather incongruous.


This week, that changed. The EPA blocked BP from new leases in the Gulf because it judged that they had not sufficiently resolved “integrity” issues. This recent development reminds me of a question that I often get asked when I speak on trust: Is it possible to have a high trust organization where there is not accountability? Interestingly, this question is often asked when people feel like they are working in a dysfunctional or low performing organization.


My answer, which is relevant to the EPA action in the BP case, is that it is not possible to have a high trust firm where there is not accountability. This relates to an aspect of trustworthiness that some call “competence,” “ability” or in my work I call it “capability.” We should not trust agents who are not capable of delivering on their promises. High trust firms have their act together. They are experts and reliable in the methods of delivering on their commitments, and this can only happen in firms that are great at execution. Larry Bossidy and Ram Charam have written about this. At firms that are great at execution, there is clarity and accountability that you will not find at low performing firms, many of whom can talk a good game but have not demonstrated that they can deliver.

BP in 2005, after the Texas oil refinery explosion, talked about reforming its safety culture. This week, the EPA said, prove it! Demonstrate that you are reliable and competent in the areas that are critical to earning our trust and then we will let you drill again. This was an important message. Too often fines and slaps on the wrist by regulators are seen as just a cost of doing business, which are easily paid when firms are extremely profitable. It is true that trust repair cannot be done with words or smoke and mirrors. It requires substantial changes, monitoring and then more changes to see what works, what has taken, and what else is needed. This takes time and follow up which is why the most successful trust repair efforts appoint external monitors to review progress (Siemens, Mattel, and BAE Systems). It seems that BP is making good strides so far. Let them keep at it and prove they deserve the public trust. Thank you EPA for making a stand for integrity and trust!

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