BP and the Case for Multiple Stakeholders

Posted on 01. Jul, 2010 by Doug Levy in Blog, Brand Stories, Principles & Ideas

In the wake of the BP oil eruption into the Gulf of Mexico, there may be an unexpected lesson for business leaders…Broader stakeholder involvement and engagement generally delivers better results.

We now know that the agency responsible for oversight of offshore drilling, the Minerals Management Service (MMS), failed to ensure and enforce sufficient regulatory safeguards.  While a too-cozy relationship between the ‘regulator’ and ‘regulated’ was a symptom of the problem, the issue is deeper than that.  The existing system relies too heavily on just two sets of players… MMS and the regulated companies.  In fact, there are a lot of critical stakeholders, including the Federal government and the oil industry and also fishermen, environmental advocates, advocates for shoreline communities and state and local governments.

A New York Times article, charting the botched guidance on and handling of blowout prevention, suggests just how detrimental overreliance on the troubled agency was for the public and ultimately, BP. Matched with BP’s reportedly single-minded pursuit of economic efficiency at the expense of safety and sound well management, there was a critical imbalance in the system. The absence of real stakeholder alignment the company recklessly pursued a course of ill-conceived and misconstrued self-interest. Granted, public and private watchdogs were uncharacteristically quiet at a time when their historic vigilance could have helped prevent the Deepwater Horizon mess, but it is ultimately BP’s responsibility and their catastrophic failure will be yet another defining moment in this company’s disaster-riddled history.

How might regulation, preparation and the response have been different had shrimpers and fishermen been involved in crafting plans? What considerations might have been explored had other federal, state and local agencies been actively involved in creating guidelines for drilling along the outer continental shelf? How might the convention and visitors bureaus of coastal beach communities have ensured safer operating procedures or better containment and remediation plans? It may sound a bit naïve, but chambers of commerce, hotels, state governments, seafood companies, tour operators, wildlife preservationists, and others, have much more invested in offshore drilling than anyone might have suspected before the Deepwater Horizon catastrophe.

Meaningful stakeholder alignment could have been helpful in preventing the nightmare we’re currently experiencing.

Similarly, when businesses demonstrate concern for a single stakeholder, investors, the results can be damaging for investors and others.  In the Relationship Era, the most successful business leaders will look for solutions that meet the needs of various stakeholders – including employees, customers, communities, suppliers, and investors.

In regulating offshore drilling and in leading business, considering the perspectives of all key stakeholders may lead to better outcomes.

Tags: BP, disaster, Minerals Management Service, regulation, stakeholders

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