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Tripp Babbitt

Quality Insider

Command-and-Control Disasters

BP’s high-profile culpability should be a lesson to all of us.

Published: Thursday, June 17, 2010 - 13:35

The worst man-made environmental disaster in history is a tough pill to swallow for everyone, but especially for those responsible for it. Overnight, BP’s name and reputation has turned from a respected energy company with a predictable dividend to the company that should not be named.

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So what makes BP better or worse than other companies? The Gulf of Mexico disaster could serve as a reminder that it’s often useful to put down the magnifying glass and pick up the mirror. BP stands guilty—quite visibly so—but don’t we all, even without the world’s attention focused on us?

In his book, Chasing the Rabbit (McGraw-Hill, 2008), Steven Spear outlines the differences between high- and low-velocity organizations. One trait of low-velocity organizations is an inability to see small problems as something to be addressed; high-velocity organizations, by contrast, address problems as they occur. He cites the Three-Mile Island nuclear disaster as an example of how one small problem may not end in disaster, but when many large or small issues come together, the result can be catastrophic.

Pressures in the earth and board room

Such was the case on the $350 million “Deep Horizon” drilling rig. Ironically, just before the explosion on April 20, the Transocean-owned rig had nearly completed the drilling project, and up till then had an admirable safety record of seven years without a serious accident.

Mike Williams, the chief electronics technician aboard the Deep Horizon, gave an eyewitness account of the disaster in a May 16 segment of 60 Minutes. His story seems to support Spear’s description of low-velocity organizations. Simply put, the rig’s safety equipment was damaged, but work continued regardless. Williams explained that a back-up control pod, part of the blowout-prevention system at the base of the 3.5 mile-long drill, had stopped functioning, and that the annular—a rubber gasket used to seal the drilling hole—had been seriously compromised in a mishap during a safety test a month earlier. Both these elements are critical to safety.

Williams also reported that everyone was under constant pressure to drill faster because the project had doubled its three-week time frame. The BP officials, wanting to speed up the process, came up with a faster drilling method that reduced the amount of “mud” used. A man-made drilling fluid that is pumped through the drilling pipe, mud is critical in keeping pressure under control. This decision may have compromised safety, because the mud kept methane gas from reaching the surface.

In addition to these issues, it’s important to understand the role “system conditions” played in this catastrophe. These are issues such as structure, measures, work design, procedures, information technology, and management roles that help define why a system behaves the way that it does. Ultimately, they determine how work is carried out.

In Freedom from Command and Control (Vanguard Consulting Ltd., 2003), author John Seddon identifies the “command and control thinking” that often governs how systems operate. Almost all organizations subscribe to command-and-control thinking, and it is evident that this was at play at BP. Let’s take a look at four of the elements that make up command-and-control along with the evidence that BP subscribes to this management thinking.

Top-down hierarchy

The evidence indicates that control was in the hands of BP management, and the prevailing attitude was that workers work and managers manage. Two events took place to support this. One was, as Williams recounted, a worker’s report to his supervisor that “double handfuls” of rubber pieces from the annular were showing up during drilling. The supervisor overruled the evidence and drilling continued. Another is the fact that a BP official made the decision to reduce the amount of mud to speed up the drilling process.

Decision making separated from work

As reported by the Associated Press, worker Chris Pleasant stood on the burning rig awaiting approval from an off-shore installation manager to activate the emergency disconnect system. Decisions were not being made where the work was being done.

Outputs, targets, and budgets

As in most command-and-control organizations, Williams felt the pressure of the schedule. He reported that the schedule overrun—six weeks instead of three—created constant pressure to make up the time as well as the $500,000 to $1 million in daily operational costs. This led to tools breaking and the original well having to be abandoned. In the haste to drill, the process ultimately took longer and proved more expensive.

Contractual attitude toward suppliers

The finger-pointing that went on between the three “partners” (Transocean, BP, and Halliburton) during ongoing congressional hearings was revealing. No one wanted to take responsibility, and everyone was anxious to blame the other. During a May 11 session, Senator Robert Menendez, D-NJ, described the exchange as a “liability chase.” The question of liability is a contractual one, but those left as victims need help and cooperation from all three companies.

What about regulation?

A cozy relationship purportedly exists between the U.S. Minerals Management Service (MMS), the government agency that oversees the oil companies, and the oil industry. Many pundits point to this as part of the problem. However, regulation is often misguided and can’t replace the corporate responsibility that is needed.

As was the case for the recent banking crisis, passing laws and regulations is no guarantee that the next problem will look like the present one. Legislators will always be one step behind the crisis. Inspection and monitoring are no guarantee that a future crisis will be avoided or less expensive. W. Edwards Deming famously noted that quality can’t be inspected in; it has to be there. All the regulations and inspections that can be legislated can’t override poorly designed systems and management thinking in command-and-control organizations.

How different (really) is your company?

Most organizations in the public and private sectors are run in command-and-control fashion just like BP. The difference is that BP is in a high-risk and high-profile environment, and a series of events led to a major disaster.

Even in lower-risk and lower-profile companies, evidence abounds of poorly designed work and outdated management thinking. Such organizations facing the inevitably negative PR are saved more by the shadow of bigger disasters than by efficient and effective systems. The true liability from command-and-control thinking is felt from delivering products and services that fail to meet customer expectations, as well as by added costs from the waste produced.

Organizations must improve system conditions and management thinking with the same ferocity that they presently go after concerning the most favorable accounting and financial methods to boost their dividends. Financial games are composed more of sleight of hand and tricks than real improvement. When organizations focus on reducing costs, costs increase—always.

The command-and-control thinking that governs system conditions in any business should spur us to rethink how organizations design and manage work. If we design out bad elements in favor of better ones, we can improve with less regulation, more corporate responsibility, better culture, and greater profits.

Discuss

About The Author

Tripp Babbitt’s picture

Tripp Babbitt

Tripp Babbitt the managing partner for The 95 Method - Executive Education and Advisors. The 95 Method is about giving organizations a method to use new theories to grow business.  Babbitt can be reached at tripp@the95method.com. Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt

Tripp also does two podcasts: The Deming Institute Podcast and The Effective Executive podcast. 

Comments

Response to Greg

Hi Greg-

You are exactly right, most organizations have this mindset. Let me whet your appetite about the phrase.

Some organizations skip on maintenance to reduce costs and wind up paying more later.

Also, organizations outsource contact centers to reduce transaction costs, but wind up paying more because the design of the work is poor creating what is called failure demand (Seddon). Failure demand is demand caused by a failure to do something or do something right for a customer. Contact centers may have as much as 70-90% failure demand and we wind up outsourcing our waste. The focus to reduce costs does not address the systemic issues.

Come back next month and I'll address this issue more thoroughly.

Tripp

Command and Control Disasters

Thanks for interesting article. I am particularly interested in your comment in second last paragraph, "When companies focus on reducing costs, costs increase - always."
I was wondering if you wouldn't mind providing a little more detail on this statement , perhaps with some examples showing why this is the case. Cost reduction seems to be a common strategy among companies especially when times are tough. If this is flawed thinking how can this be changed - what should companies do?
Thanks,
Greg