The longer you're in business it's only a matter of time before you are faced with a crisis. The question is: Are you prepared? Your ability to effectively handle a crisis deeply impacts your company's long-term viability. Every business has a series of worst-case scenarios, and business as usual cannot prevail in these instances. Instead, your company's leadership must quickly shift its methods and modes of operation when disaster strikes.

In terms of leadership, the handling by BP ( BP) of the oil spill in the Gulf of Mexico has been a colossal failure. Offshore drilling is nothing new, and neither is the crisis associated with a spill. The first offshore well was drilled in 1887 from a wharf off the coast of California. Platform drilling began in the 1940s. The first recorded spill was in 1942 when German U-boats attacked tankers off the East Coast of the United States, and in the past 30 years alone, the U.S. has experienced over 20 spills. Given the extensive history with offshore drilling and spill management, the U.S. and oil companies should be experts at responding, containing and cleaning an oil crisis. So what's gone wrong in the Gulf?

First, solid, clear-thinking leadership is required during a crisis. With the BP oil spill, it's impossible to determine who is even in charge! There is no clear leadership or coordinated plan. Everyone, and no one, seems to be handling the situation -- BP, the White House, the Coast Guard, governors. In a crisis, there shouldn't be any doubt who is in charge.

Second, this is not the time for finger-pointing, litigation or the "rolling of heads." That time will come. Immediately following the initial crisis, speed, precision, effectiveness and safety become top priority for resolving and curbing all collateral damage. The leader must have answers, courage and a plan for the future.

Third, crises, particularly of this magnitude, demand overreaction and attention, not excuses, blame-shifting, protracted analysis, abdication and delayed response. BP should have overwhelmed the problem by commissioning more boats and cleanup workers, providing multiple backup technology and equipment required to drill relief wells, doubling tankers on standby to transport reclaimed oil and requesting emergency production and delivery from boom manufactures. Additionally, BP could have assembled a team of cross-discipline experts to triage and recommend alternative, entrepreneurial solutions.

Exxon ( XOM) also got off to a bad start when the Exxon Valdez ran aground in Alaska's Prince William Sound in 1989. Instead of acting quickly to contain the damage and begin cleanup, Exxon opted for denial and showed lack of leadership, discipline and focus. Some estimates claim only 3% to 4% of the oil was recovered. The delayed and chaotic cleanup continues to cost the company exorbitant sums of money and wreak havoc on the ecologic and economic prosperity of the Prince William Sound area.

Leading effectively during a crisis requires two important qualities, and both have been noticeably absent in the Deepwater Horizon disaster.

Judgment and Decisiveness
  • Leaders should seek out and accept offers of help. Within days of the spill, 13 countries from around the world volunteered varying forms of assistance. All were told "No, thanks!" by our country's administration based on rules of the Jones Act, an antiquated law routinely waived by former presidents in times of crisis. This is no time for pride or bureaucracy. Seek assistance to get the quickest resolution using all available resources needed to fix the problem and protect the environment. The logic behind rejecting Norway's oil skimmers, Britain's chemical dispersants, and Dutch spill response vessels with skimmers defies common sense and is a dereliction of duty.
  • Leaders should never allow bureaucracy to impede emergency progress. The Jones Act and overly stringent Environmental Protection Agency regulations should not impede solving catastrophic problems.
  • Leaders must maintain the ability to think clearly amidst chaos. Southwest Airlines (LUV) provides an excellent example of a company effectively adapting to crises. It has weathered interest rate changes, industry deregulation, chaotic fuel costs and the 9/11 terror attack and still managed to remain lucrative. To think strategically, leaders must stay engaged, but emotionally separated.

Communication

In a crisis, your "golden hour" response holds critical importance. A leader's action, or lack thereof, determines his ability to respond and recover effectively. Time and information are critical, and constant communication is key. In 1996, Odwalla, a subsidiary of Coca-Cola ( KO), faced a crisis when an E-coli outbreak was linked to its juice. By acting immediately, providing vital internal and external communication and addressing the contamination problem, Odwalla recovered from the initial devastation of plummeting sales and stock prices and pending litigation.

To effectively communicate during a crisis, a leader must:
  • Get the right information to the right people.
  • Establish and follow chain of command.
  • Determine frequency and methods for status updates
  • Define success criteria; measure and report progress against this criteria.
  • Determine your "go/no-go" process for stopping ineffective solutions and starting the next.
  • Minimize delays, confusion and inaction.
  • Continually promote the leader's vision and goals and ensure progress in meeting those goals.

Here is what leaders should have done from day one of the Gulf oil disaster:
  • Immediately assign emergency leadership from the private sector (BP's CEO) and government (the Federal Emergency Management Agency), with both reporting to the president. Enlist international expertise from Exxon Valdez Oil Spill Trustee Council and other large oil spill experts from around the world to provide counsel and solutions.
  • Define the chain of command and decide communication and decision making procedures at state, federal, local levels.
  • Within the first three days, assemble a team of top engineers and CEOs of all major oil and pipeline companies, and top technical minds from institutions such as MIT, NASA and the U.S. Navy to brief them on the situation and provide all known facts.
  • Task the team of experts to develop their top three short-term solutions to stop the leak and report their solutions within three days.
  • Assemble the most qualified parties to review and prioritize proposed solutions and offers of help from abroad.
  • Direct the expert team to start implementing the top 10 solutions simultaneously. If one solution fails, deploy the next without delay.
  • Continue identifying and deploying additional solutions until the problem is solved.
  • Follow the same process for containment and cleanup.
  • Have government establish emergency relief fund for states to use in protecting and cleaning shorelines. Allow governors with, support from federal EPA experts, responsibility for coordinating and prioritizing their respective state's response, including use of National Guard, local companies and private citizens.
  • Assign full-time teams to capture best practices to more effectively combat future disasters

Leaders also could have used lessons learned to guide response:
  • Cyanide-laced Tylenol -- Johnson & Johnson's (JNJ) effective communications, decision making, actions and response enabled the company to completely recover from lost market share and reestablish brand name prominence.
  • Desert Storm -- Government's speed and accuracy of response quickly drove Iraq from Kuwait.
  • Apollo 13 space mission -- NASA pooled a team of talent to respond and correct catastrophic in-space problem.
  • Exxon Valdez -- What was learned about containment and clean up? What would Exxon have done differently post spill?
  • MASH unit and hospital triage -- Enabled military to deliver emergency surgery and care to maximize lifesaving. Proven process for handling what's most important first.
  • Ford (F) -- - Effective forethought, decisions and actions allowed the company to avoid a government bailout and prosper.
  • Airport security post 9/11 -- Private sector response with technology solutions.

Smart corporate leaders are those who learn from past mistakes, both their own and others. While the Deepwater Horizon spill presents difficult challenges, the problems are not unique. We've been in similar situations before, yet the government and BP's response has been so ineffectual, sluggish and irresponsible it begs the question: Have we not learned from the past? We know better, and we should do better to assuage the long-term effects to our coastal economies, wildlife and human populations.

To learn more about how top leaders get results go to Bob Prosen's Web site and read excerpts from Kiss Theory Good Bye - Five Proven Ways to Get Extraordinary Results in Any Company.

At the beginning of the day, it's all about possibilities. At the end of the day, it's all about results. -- Bob Prosen

Written by Bob Prosen in Dallas.

Prosen is president and CEO of The Prosen Center for Business Advancement, where he shows current and future leaders how to rapidly increase performance, productivity and profit. The Prosen Center delivers the nation's only leadership and mangement training focused exclusively on business execution. that enable them to convert plans into results. Along with being a frequent guest on MSNBC and FOX News, Prosen is the bestselling author of Kiss Theory Good Bye, which gives leaders the tools and step-by-step directions to achieve extraordinary operating and financial results. Prosen earned his B.S. from Texas Tech University, an M.B.A. from Georgia State University and holds postgraduate certifications from MIT, Duke University and The Wharton School.

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