- By Morris Bocian

Wikipedia defines Leadership as the process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task…..

Alan Keith stated that ‘Leadership is ultimately about creating a way for people to continue making something extraordinary happen.’” In this article I would like to discuss some of the leadership “don’ts” that should have been learned over the past five years.

A recent Harvard Business Review article about BP, opened with “BP doesn’t need an engineer at the helm, it needs a leader.” A company’s leader establishes an organization’s values and sets the tone of that organization, for example:

• Excessive risk taking
• Overlooking warning signs
• Hiding facts
• Ignoring experts

In BP’s case (as in the case of the financial service sector) I contend that leaders were measuring the wrong matrix. They are awarding bonuses based upon excessive risks taking and behaviors that are unsustainable. If this continues we will have corporate and meltdowns, such as Enron, Washington Mutual, Citibank, Lehman Brothers etc.

One of the lessons one should learn from this crisis is that “Crisis exposes dysfunction of organizational cultures.” Unfortunately, many CEO’s (and politicians) did not learn as much as you might expect from the likes of Enron and the financial service sector meltdown.

BP’s CEO Tony Hayward, was quoted in the New York Times as saying, “What the hell did we do to deserve this?” And about a week or two later he said “I want my life back.”

With all due respect, Mr. CEO, you are living with “cause and effect” except you are blaming others for problems you created. Oh, and by the way, don’t you think the people living in the Gulf States, not to mention the citizens of other countries that affected by the spill, want their life back? They should be asking “What the hell did we do to deserve this?” not you! BP’s actions spoke louder than rhetoric.

Whether it is BP, Merrill Lynch, Citibank etc., risk management took a back seat to profitability. Although some of the side benefits might have been increased employment, increased percentage of people becoming home owners or cheaper energy, these benefits came with significant costs, costs not included in any pricing models. In certain respects this behavior is analogous to a politician voting based on their party and ignoring the bigger picture. As a leader, “you are there to serve your companies, its people and communities, NOT YOUR SELF INTERESTS.”

A true leader faces facts. The leader does not try to minimize the extent of a problem. On the contrary, they articulate the problem along with a positive vision for the future. For example, after 9/11, various leaders offered inspiring, reflective and constructive responses to the disaster. They established expectations and (as it pertained to the cleanup) implemented them. A leader presents the situation fully to all stakeholders, and creates accountability.

After 9/11, those impacted by the disaster felt that we were fortunate to have Mayor Giuliani at the helm. I am confident that victims of Katrina did not feel confident in how the disaster was handled and the subsequent rebuilding. Mayor Giuliani had a grip on the situation, whereas the CEO of BP (as well as the head of FEMA and the then President George Bush) appeared weak and lacked a grip on the situation in New Orleans.

Unlike Mayor Giuliani, CEO Hayward was not highly visible and armed with critical information. When Hayward spoke, he appeared to be well briefed by the lawyers and seemed to know very little about the decisions that were made that caused the disaster.

There are companies that when a disaster hits, has boots on the ground to provide various type of support to those effected by the disaster. They recognized by doing so, they retained customers and reduced the risk of litigation or alternative settled for less money. As a leader your top priority must be to get a grip on the situation, understand its ramification, be truthful (especially if you do not have the answers today) and deliver a message that makes people feel confident that the right person is in charge. Keep reminding people of the opportunity to rebuild; after all there is opportunity in chaos. Also, recognize when a crisis can’t be spun.

An effective leader does not attempt to shift the blame – “it was the fault of one of our subcontractors.” Probably more companies outsource components of a production process then operate a fully integrated manufacturing process. Imagine if you purchased a car and the braking system failed resulting in an automobile accident, you complained and the car manufacture said “Sorry, that’s a software issue, we had nothing to do with that failure.” How would you and millions of potential customers react? What do you think would (should) happen to the value of the automakers stock?

A company can outsource the work, not the responsibility. If BP failed to apply high standards to their suppliers and partners, it is BP’s problem that can’t be outsourced. What if the costs would have increased by 10-20 percent or additional inspections would have resulted in 30 to 60 days of delays? Would you be more sympathetic or more furious when a company tries to outsource responsibility?

Now assume the company has a poor track record of safety, accounting for more than 80 percent of the violations issued by the regulators and you need a license from that regulatory government agency to drill, and you were able to get those licenses; how would you feel about that leader and the company?

How a leader responds can make the difference between a lose/lose outcome or a win/win outcome. If you or a member of your family was impacted by the April 20, 2010 rig explosion, the resultant oil spill and the environmental damage; your blood pressure would jump not only from Tony Hayward’s leadership, but also the leadership of the federal government. As a leader “if you expect to be effective it’s important for your team needs to work together. Avoid scoring points and pointing fingers.”

Hayward focused on himself, not the families of the 11 workers who died on the rig, not the families who lost their livelihood since as a result of the spill, the families that might lose their businesses and homes – as consequential damages of the explosion. As a leader “you become a moral compass. You help people stay focused on the ‘greater good.’ It’s not about you!”

As to my comment about the federal government’s reaction, a leader establishes priority! If this were a priority, why did it take 50 days for the President of the United States to meet with the President of BP? Is the slow response a signal being that our environment is not important? Is the President’s failure to address the regulatory agency (that oversees offshore drilling) dual mandate as a signal that after the crisis it will be business as usual. The regulatory agency:

• Sells oil leases while trying to maximize value
• Regulate the safety of the drilling (potentially allowing risky behavior to maximize value)

Our President did not change the leadership on of numerous agencies, including Treasury (Timothy Geithner and Ben Bernanke) as well as the regulatory agency overseeing offshore drilling, to mention a few. The agency issued licenses to BP to drill offshore even though BP account for over 80 percent of the violation issued by the agency. A lesson that can be from this policy is “if you want to change the direction of a company, agency government, change its leadership.”

People do not expect miracles; they expect honesty, sincerity and follow-through. They expect you to do what’s right. People want accountability from their leaders, not just rhetoric. You lose credibility when you testify that BP had a laser like focus on safety and the facts do not corroborate the testimony. As the leader you become a moral compass. If you are not creditable you will do more harm than good. If you are creditable, you help people stay focused on the ‘greater good.”

In conclusion, BP has faced a significant diminution of its market value as a result of the explosion and how it handled matters. In all likelihood the value of the company would not have been as high without taking on the risks, but when the truth comes out people tend to overreact the other way. In other words, “true leadership exists beyond the title and office. Its about doing the right things for the stakeholders.”

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