The Gulf Oil Spill: A Classic Failure of Systems Leadership
There are two wonderful articles on the Gulf of Mexico oil-spill disaster in the May 11 Wall Street Journal that are required reading for everyone interested in systems failures and the need for systems leadership. The first is a case study in how to abrogate responsibility when thing go badly wrong. It describes the finger-pointing among BP, Transocean, and Halliburton over who is responsible for the explosion on the Deepwater Horizon rig. No one wants to take responsibility now, which is equivalent to saying that no one was taking responsibility in the first place: a devastating failure of systems leadership.
A bit of technical detail is required to make sense of what happened to cause the spill. Early evidence suggests that the explosion that destroyed the rig and perhaps damaged the blow-out preventer on the seafloor was caused by methane gas coming up from the well. Drilling and well-capping procedures are designed to prevent this from happening because methane is highly explosive. As the well is drilled, it is filled with drilling fluid, or “mud,” which helps to prevent gases and fluids from coming up the pipe. Once the well is drilled, it is “cemented” in two stages, first around the drill casing and then the placement of a “plug” to seal the well. The latter stage is where things apparently went wrong. Early accounts suggest that an unusual procedure was used to place the final cement plug in the well, with some of the “mud” being replaced by less-dense seawater before the plug was set, resulting in the methane gas coming up the pipe and exploding.
Precisely why a different procedure was used is the subject of the finger-pointing. Halliburton says it was told to do so by Transocean. Transocean alleges that it was so instructed by BP. Regardless, it appears that a very bad decision was made for which no one is willing to take responsibility. And all the players are running for cover.
Consider, for example, the statement by Tim Probert, Halliburton’s president of global business lines, that the company was “contractually bound to comply with the well owner’s instructions on all matters relating to the performance of all work‐related activities.” Basically, he’s saying, “regardless of how dangerous we think instructions are, including the potential for our own employees to die, we are obligated to blindly follow them.” What an incredible cop-out.
Then there’s BP’s position. According to the WSJ, the chairman of BP America, Lamar McKay, was planning to testify that “we are looking at why the blowout preventer did not work because that was to be the fail-safe in case of an accident….Transocean’s blowout preventer failed to operate.” Doesn’t that completely divert attention from the main point here: a catastrophic explosion that destroys the rig has the potential to damage equipment on the sea floor?
Which brings me to the second WSJ article, on <a href="how the U.S. Federal agency charged with regulating drilling — the Minerals Management Service (MMS) — abrogated its responsibility to promote safety. The story here is one part conflict of interest — an agency with a dual mandate to ensure safety and promote exploration — and one part abrogation of responsibility with oil industry executives and former regulators arguing “offshore operations have become so complicated that regulators ultimately must rely on the oil companies and drilling contractors to proceed safely.” (The Obama administration is proposing to split the part of the agency that collects royalties from the part that oversees safety.)
The mealy-mouthed testimony of BP, Transocean, and Halliburton makes this statement seem laughable. And the article provides another great example of precisely why self-regulation is a bad idea. Because it seems that the MMS commissioned a report on the reliability of blow-out preventers and then ignored the recommendations, probably because complaints from companies about the associated costs. And this is only one of multiple regulatory failures that could have contributed to this catastrophic accident.
As systems become more complex, the likelihood of systems failures becomes ever greater. Absent a fundamental rethinking of how we define and enforce accountability, we should have absolutely no confidence that leaders in the private and public sectors will take responsibility when things hit the fan.
View original post here, by Michael Watkins @ Harvard Business Publishing