Tuesday, May 25, 2010

BP - Trouble in the Gulf between fact and message?

BP is certainly experiencing what it's really like when events stack up beyond petroleum. The company's brand is at risk of drowning in the Gulf of Mexico, with any number of reports like this one sprouting up everywhere about whether the oil disaster is much worse than the company is admitting. The only thing flowing as fast as the oil are the stories and commentary across the internet.

Naturally, whenever these cataclysmic events occur, the first instinct of a company is damage limitation, but in what order of priority? This is the question many residents along the Gulf coast will be asking, as oil seeps twelve miles into wetland areas. Government agencies - from local government all the way to the White House - are starting to question whether BP is doing enough and is what it is doing effective?

For BP, damage limitation extends beyond saving the environment to brand, legal and financial. And the messages the company sends out on its efforts to stem the flow of oil shapes world perceptions about which area of damage it is most concerned about. This is regardless of what its true priorities might be.

There is no doubt that this is an enormously challenging technical problem, which extends into explaining the issues to stakeholders, from local fishermen to the US Government. In the past few days, there have been reports that BP was forewarned about problems associated with this rig. No doubt, when the litigation inevitably starts, the veracity of these claims will be appropriately tested.

Nonetheless, rig integrity or otherwise, the fundamental question is what risk assessment took place before exploration and drilling began and either:
  • Why did it not identify the potential for this problem; or
  • If it did, why did BP not have an adequate disaster management plan and facilities in place?
To some extent, BP's reputation will swing on the speed with which it can resolve the crisis it faces in the Gulf of Mexico and the appropriateness of the reparations made to communities and environment.

However, I would argue that the measure of damage to BP's brand and reputation ultimately lies in the answer to the questions I posed, because reputation is built on conducting business with integrity at every level and stage of operation.

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