It was a gigantic disaster. It's not the last time we're ever going to see something like this. Hopefully we won't see it at this level, but odds are we probably will. Let's try to learn from it. I have four points for you. Number 1, cost cutting. Cost cutting was the answer or wasn't. Tony Hayward was all about cutting costs because profitability had lagged a little bit. In fact, there were magazines lauding Tony Hayward, the CEO, for being such a great CEO because that cost-cutting effort actually led to a much better or higher profitability. But BP's emphasis really on cost cutting dominated the organization, and the net result is that even though he was charged with improving safety, actually he didn't. I mean, it's one thing to say we care about safety and we want to focus on it. It's quite another thing to be constantly cutting costs and then also say, well, we want to ensure that we're going to be as safe as we possibly can. These things go across purposes. You have to invest in safety. You have invest in having the infrastructure, and the support, and the learning, and the teaching, and the training, and lots and lots of other things as well. That just didn't happen. It's an example of the expertise trap in action. Because where are the fresh ideas? Who's questioning or challenging this expertise around cost cutting? What's the question that you want to ask given the situation that you're trying to face? You can see this expertise trap, not just as an individual for Tony Hayward, but for the whole company as a whole. This became this dominant thing. I also have to mention, it's rare for one dominant theme to be the only theme for a company to successfully navigate in a complex world. Back in course 1, we talked about Motorola and how they had a central dominant theme of trying to be continuous improvement, Six Sigma, quality improvement. I mean, really good things obviously. But that so dominated their thinking that they miss some of the technological changes and the significance of those technological changes that led to analog to digital, which is why Motorola went from being a major play into cell phone business to being really an also ran, barely registering at all. The same thing holds here. When you let one theme dominate, in this case cost cutting, you better hope that that solves all your problems. In a complex world and in a complicated company, it usually doesn't. Expertise can be dangerous when there is no learning going on, and that's what happened here. Point 2, learning from experience may be a two-edged sword as we've talked about, but that doesn't mean that your past history is devoid of lessons for you to pay attention to. Remember from module 1, we are our history. We can't ignore that. We just need to avoid assuming that what worked in the past will automatically work today. It would be foolhardy to ignore the lessons of the past, but that's what BP did in this situation. I mean, consider what came out of the commission to investigate BP's Texas City Refinery Explosion. This was like a giant explosion. People died. It was in 2005, and there was a commission that was created to investigate what went wrong and then capture the learning. This is what the Safety Board ended up concluding. The disaster was caused by organizational and safety deficiencies at all levels of BP. Warning signs of a possible disaster were present for several years, but company officials did not intervene effectively to prevent it. I mean, this comes from a report in 2007 several years before the Gulf oil spill, but exactly the same thing, exactly the same conclusion actually could have been taken, could have been made based on the BP oil spill in the Gulf of Mexico as well. They just didn't learn from that history at all. I mean, four years after that Texas City Refinery Explosion, the US government identified 700 safety violations, many the same as those included in the settlement. As the US Assistant Secretary of Labor said, "BP has difficulty applying the lessons learned from past disasters." I would say so. Point 3, experts have a tendency to become overconfident. I mentioned this earlier in an earlier video as well. They become overconfident. As one little example in an interview with with BP CEO, Tony Hayward, one year before the Deepwater Horizon disaster, one year before. He was asked, what keeps you awake at night? He said, "As long as you are thinking far enough ahead, you can make the necessary adjustments." Sounds like he's pretty confident that he and his company could think far enough ahead and that they would make the necessary adjustments. But as I had just described earlier, they didn't. The same things that happened with the Texas City Refinery, the same underlying cultural and safety issues, they existed again for the Deepwater disaster. Point 4, the perfect storm revisited. If you've already taken my first course in the series, lessons learned from the Why Smart Executives Fail project, you may recall in module 2 that I talked about the perfect storm fallacy. That's where leaders argue after the fact that the bad thing that happened to them and their company could not possibly have been predicted because it was a perfect storm. What I didn't say then that we can definitely add now is that the perfect storm excuse is tailor-made for people with deep expertise who cannot fathom how they went so wrong. I mean, that's what it is. You think it's perfect. You cannot imagine that you would fall into this trap because your expertise is so deep and deep, but you're not learning from it. It wasn't that was a black swine event. It wasn't a fluke, but that's how they thought about it. That comes from yet another commission that looked into the BP Deepwater Horizon oil spill. Another quote, this comes from one of the senior executives at BP, "A sub-sea blow out of the kind that happened was seen by us, was seen by the entire industry as a very low probability event." We thought we had the appropriate mitigations in place. That's Bob Dudley who was quoted in the Wall Street Journal in 2010. That sounds like a perfect storm to me. It couldn't possibly have happened to us, but it did. We have to look at situations like this to learn from them, and I think this module with its focus, this jewel focus on experience and expertise, is really important. To wrap up the module, yes, expertise, experience are so valuable for each of us. They make us feel good. They enhance our confidence. They can help us be more successful in many ways, but there's no such thing as a free lunch as valuable as expertise and experience are. There are downsides, and this module has spelled them out for you. The good news is that with some humility and an idea of what to work on as I shared in this module, we can rely on that expertise, we can rely on our experience because we never let it get stale. We never let it run out of gas. We're always updating, we're always adjusting, and we're open-minded and humble enough to recognize that our experience won't always work. It should be seen as like a living thing, almost organic, something to be nurtured, to be exercised, to be pushed. After this module, I think you're going to know exactly how to do that.
