Crisis Management Case Study: Deepwater Horizon

The Deepwater Horizon oil spill was truly a crisis. Unfortunately, it was also handled in one of the worse ways possible. When a crisis occurs, management and communication become some of the largest and most significant issues. In this particular case, BP failed in both of those areas. It’s important to look at how this occurred and why in order to have a better understanding of the event and its aftermath. Additionally, determining ways to avoid the issue in the future and better manage the next crisis is a valuable part of learning lessons from the Deepwater Horizon spill, so the risk of another spill and its resulting damage can be reduced. Here is everything you need to know about this event and the lack of proper crisis management from BP at the time it occurred.

A Summary of the Situation

On April 20, 2010, the Deepwater Horizon oil platform exploded in the Gulf of Mexico. The resulting spill was deemed to be among history’s worst environmental disasters. In addition to the damage inflicted on the planet, eleven workers died in the explosion. Nearly five million barrels of crude oil entered the Gulf before the leak created by the explosion was stopped, and there have been suggestions that the local environment was irreparably harmed by the oil. While some of the oil was cleaned up or contained, much of it made its way into areas where cleaning wasn’t easy or where containment was not really an option. Due to the way oil spreads and the amount of it being released in the spill, collecting all of it and restoring the environment was not really possible.

Additionally, the oil-coated fish, birds, and other animals, and made it more difficult for businesses in communities along the Gulf Coast to survive due to the dip in tourism the spill created. But the problem wasn’t just in what actually happened. It was also in how BP handled the explosion, the leak in the Gulf that went on for far too long, and what the public was being told about the event and the efforts to clean it up. Through a series of missteps and poor choices, BP not only made the situation more complicated but also added to the damage that was being done. Before it was over, BP would be chastised by environmental groups and many others for the decisions made immediately after the explosion took place and in the days and weeks following it, while the leak continued.

BP Failed at Crisis Management

While the explosion, loss of life, and immediate impact of the spill were all devastating, it was what BP did after that which became the subject of discussion and frustration for a lot of people. There was a distinct lack of leadership right from the beginning, and gas stations around the country that carried the BP branding changed their names. They did not want the association with the company and were seeing their sales drop based on the way people felt about BP and the choices the company had made. The lacking leadership was not the only problem the company had, though. It also showed a strong lack of compassion during a time when compassion could have been its greatest asset. The company missed an amazing opportunity to make things right.

Instead of making it right, BP allowed oil to pour into the Gulf of Mexico without really doing anything about it for weeks. There were some failed “attempts” to cap the spill, but it seemed that these were half-hearted, at best. They really failed to get to the heart of what would have helped improve the situation, and what would have addressed the concerns of the public, as well. Among the most obvious gaffes was the realization that BP had not planned for crisis management in any way. It was as though the company assumed a serious problem like the Deepwater Horizon explosion and resulting oil spill could not, or would not, happen to them, so there was no point in “wasting” any time or money being ready for it. When it happened, they clearly were not ready.

There were two facets to BP’s lack of readiness. The first had to do with the health and safety of their workers and the environment, while the second was related to their public image. The company had slashed PR budgets and also cut costs where government relations were concerned, in order to reduce overhead. But that only worked as long as nothing went wrong. When a catastrophe like Deepwater Horizon occurred, there was no plan in place to save the company’s reputation. At the same time, the company had not put any money into crisis management, either, so the ways to handle environmental and worker impacts were not funded or even considered. Both areas were in serious need of correction, which would have been far easier before the oil spill occurred.

It is generally not good practice for a company to have a major disaster and then choose to hire a crisis management firm to address the fallout. Most large companies have these firms already available to them and plans in place for potential problems. Since BP did not have any of that at the time, they had to start from scratch on what they were going to do and say. That delay cost the company significantly, because of the heavy environmental damage and perceived lack of compassion the company displayed in the days and weeks after the Deepwater Horizon explosion. As millions of gallons of oil poured into the Gulf of Mexico, the company seemed to take its time doing anything at all about the issue. That did not sit well with the majority of people in the country.

Communications — Where BP Really Went Wrong

It was not just in the way the company handled the Deepwater Horizon event that was a real problem, though. It was also in the way the company talked about the event. The CEO of BP, Tony Hayward, was quoted as saying, “There’s no one who wants this thing over more than I do. You know, I’d like my life back.” His insensitivity to the people who had lost their lives and the others who had their lives damaged or disrupted due to the oil spill was talked about for some time. Even if the CEO felt that way, which would be understandable due to the stress of everything taking place, he should have focused his public statements on the tragedy of the people who died, and all the serious environmental impacts of the Deepwater Horizon incident caused, instead of himself.

Hayward received significant backlash for his comments and the ways he seemed to ignore or misunderstand the gravity of the issue around him. He was also quoted as saying there would be minimal impact on the Gulf, and talked about his sympathy for the “small people” who lived along the coast. Naturally, people who lived and worked in the area did not take kindly to Hayward, who appeared to think of himself as being far above most “normal” people. The lack of planning for crisis communications really affected BP the longer the situation went on without public information being provided to those who were worried about their health, their jobs, and their local environment. Even when crisis planning help was offered, BP was slow to take the offerers up on that option.

While BP did eventually launch an ad campaign in an effort to communicate with the public about how they would clean up the spill and restore the environment, that was met with a lot of skepticism given the company’s tone-deaf response to concerns up to that point. Additionally, the ad campaign cost the company $50 million, which could have been used for clean-up efforts. A far less expensive campaign would have been enough, and the biggest focus should have been on getting the work done, instead of telling people that the work would get done. It was six weeks after the Deepwater Horizon exploded before these ads even began to air, showing that BP did not seem to see that time was of the essence, or take the future of the Gulf Coast seriously.

US Government Actions Led to Big Company Changes

The fines BP received for their damage to the environment and careless response to it were unprecedented. There was a fine of $5.5 billion for violations of the Clean Water Act and another $8.8 billion penalty for the damages to natural resources. Those were only the fines and penalties levied by the EPA and did not take into account all the other lawsuits that came about from environmental damage, business harm, and loss of life. Between 2012 and 2015, there were a lot of different settlements between the US government and BP or BP’s partners, based on lawsuits and assessed penalties. Most of those settlements were in the millions of dollars. But the biggest impact was not to BP’s bottom line. Instead, it was really to their reputation and branding.

In 2018, BP re-emerged from all the trauma it had been dealing with as a stronger and leaner company. Robert Dudley had taken over from Hayward and was committed to re-inventing the company so it could remain viable. Now, BP is not the big-name it once was. But it is a strong company that is smaller and more compact than before. It was forced to sell off millions in assets to pay the fines and lawsuits resulting from the explosion of the Deepwater Horizon and the resulting 87 days that un-capped well pumped oil into the Gulf of Mexico. There were times when it was questionable as to whether the company would survive at all. But it did, and it seems as though lessons have been learned from the way it failed to handle one of the biggest environmental disasters of all time.

Lessons Learned From the Oil Spill

There are several takeaways to be considered from the Deepwater Horizon incident. While these are likely lessons that BP has learned the hard way, they are also lessons that any company can use to have a better understanding of crisis management and how it should be handled. The most important thing to remember about crisis management is that it needs to be fully and completely in place before a crisis occurs. Waiting until it happens and then hoping to get quick, quality help with it is just not realistic for the majority of companies. Instead, every company should have a fully planned and functional crisis management plan in place that is periodically reviewed and updated. That plan should include PR, which is one of the areas where BP had the most trouble.

Planning for a crisis should never be considered optional. Many companies try to avoid it — or at least avoid doing it fully — because of the cost. But the cost of not having this kind of plan in place when it is needed is so much higher. Not only is there the cleanup and damage control, but the fines and penalties that can come from failing to take quick action, as well. Any company that wants to be taken seriously when it is involved in a crisis should be ready with a plan. That plan should also include how to interact with the people who were harmed by the crisis, as that is another area where BP struggled. The comments made by Hayward did not win the company any favor with the public and left people feeling as though they were marginalized and did not matter.

When a company has a good crisis management plan in place and takes it seriously, that company has a better chance of surviving a crisis if and when it occurs. It will also perform better in the court of public opinion, because it shows concern about people who have been harmed and the local environment where those people live, as well. As difficult and taxing as the BP Deepwater Horizon oil spill was, a number of critical crisis management lessons learned were captured from this disaster.

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