BP 2010 Deepwater Horizon Oil Spill Crisis: What The Specialists Say (Part 1)

This post reveals the results of the second primary research method I used in my BP 2010 crisis case study- specialist interviews. Interviews are a qualitative method of research and the most appropriate one for the purposes of this study as they provide an expertise and add value gained from a source of information, different from the ones already used. For this research, four interviews with four different specialists were conducted – Crisis Communication Specialist, Maritime Law Specialist, Reputation Repair Specialist and Oil Industry Specialist. As this section is quite a long one I will separate it in two parts. The first part will reveal the results from the Crisis Communication Specialist (CCS) and the Reputation Repair Specialist (RRS) interviews. The second part which will be posted next week will reveal what findings have been made out of the Maritime Law Specialist (MLS) and the Oil Industry Specialist (OIS) interviews.

The crisis communication specialist interview revealed major issues related to BP’s strategy in theoretical terms applying some of the main Situational Crisis Communication (SCCT) principles. It also shed light on BP’s relations with its shareholders and investors and explained the sudden shift of strategy in the beginning of 2013. Similar to the content analysis, the interviews were also separated in three main periods during the BP crisis – Early Period (Victims Cluster) – April-October 2010, Shareholders/ Investors Period – April-December 2012 and Strategic Shift Period – February-August 2013.

Crisis Communication Specialist Interview (CCS)

In the early period of the crisis, BP chose to use two main strategies proposed by SCCT – compensation and apology. However, the question is whether these were the most appropriate strategies and could the company have used some additional ones in order to strengthen its crisis response campaign. According to the CC specialist, BP made the right choice by using compensation and apology in the early stages of its campaign as it had no other alternative. As a worldwide company which spilled a massive amount of oil it could not have done anything else but to apologise and try to compensate those who were affected; any other strategy apart from these two would have made the situation even worse. However, even though these were the best options for BP, they did not have the positive effect it was aiming at because as a wealthy company it was the main target and the whole responsibility was attributed to it. Moreover, BP was probably prepared for some sort of a crisis, but it definitely lacked an adequate preparation for a crisis of this scale.

In the early phase of the crisis, BP hit the bottom on June 25, 2010 with $27.02 per share. However, it managed to recover quickly and six months later the share price rose by 40%. According to the CC specialist, one reason for that was the company’s decision to replace its British chief executive Tony Hayward with the American Robert Dudley. As the interviewee said, the ex-chief executive “was a dead man walking, saying the wrong things at the wrong time and his reputation was unrecoverable” so there was no way the company could continue with him. Moreover, the fact that the new chief executive was American was a courtesy to the USA and had its positive effects.

The CC specialist was not aware that BP was fined by SEC in the autumn of 2012 but agreed that the fact BP lied to its investors and shareholders broke their trust. Moreover the interviewee expressed an opinion that this event has pushed the company into signing the settlement with the Department of Justice in November 2012. And the fact the settlement resulted in absurd claims and compensation payments was a breaking point in BP’s strategy when the company switched from defence to attack and started targeting its investors and shareholders as definitive stakeholders, putting them at “the heart of its strategy”.

Reputation Repair Specialist Interview (RRS)

The RRS interview gave a new perspective to the research in terms of BP’s reputation repair strategy throughout the overall period of the crisis.

Similar to the the opinion of the CC specialist, the reputation repair specialist also said that BP is perceived as a British company on the American market rather than as a global one. The interviewee also added that BP was attributed the overall responsibility because this is how it was portrayed in the media and also because it tried to distance itself from the other companies, which remained invisible straight after the explosion. Another important thing that was pointed out by the reputation repair specialist was that most of the other companies involved in the incident are American. Moreover, Halliburton is aligned to the previous presidential team (George Bush’s team), so they were perceived as a patriotic firm and nobody attacked them. One reason why the rest of the companies have not been harmed by the crisis and their shares even rose after it, according to the RRS was that BP lost its government contracts while the other companies did not. For instance Halliburton did US Federal Government contracts, Federal Defence contracts and so on. BP, on the other hand, did not have the Government support.

Similar to the other interviewees, the RRS was not aware about the SEC fine. The reputation specialist expressed an opinion that some investors like the pension funds choose the companies they invest in because they are big not because they are ethical so BP lying about the true amount of oil spilled into the ocean should not have been such a big problem. In terms of the settlement BP probably did not look at the wording adequately.

The next post which will be the second part of the interviews results, will give a legal perspective to the research and will look into the compensation agreement and the fraudulent claims that followed in more detail.

Lidiya Kirilova

What Is a Social Media Crisis and How to Avoid It

Most businesses nowadays are using social media. It is an amazing and free tool and it is understandable that the number of companies which are recognising its qualities increases every single day. However, social media could be quite tricky as well, because one of the major problems related to it is the fact it is uncontrollable.

In this post, I will be discussing what a social media crisis is and how it can be foreseen and avoided or in case it hits, how to effectively respond to it.

thAs discussed in my previous blogs, the most important thing for companies is to be prepared for a crisis. If you don’t have a crisis response plan in hand, you’d better go back to work and create one. Of course, as mentioned earlier, social media is uncontrollable and therefore you cannot know where exactly the crisis will come from, but when you have a few possible crisis response scenarios, this should make things easier. The first thing we need to clarify is what a social media crisis is and how to distinguish it from a social media issue. An issue is not an existing problem but the chance there might be one, if not handled well. This could be a negative comment, a rogue tweet, a wrong hashtag etc. On the other hand, a crisis is a much more serious thing. It is an existing problem which is affecting a company’s reputation in a long-term. However, an issue can easily develop into a crisis, so be careful!

An interesting example of a social media crisis that turned out to have positive consequences for the company is the case with Burger King. Some time ago someone hacked Burger King’s Twitter account and changed the name to McDonald’s, tweeting on its behalf. During the time Burger King/McDonald’s account gained 30,000 new followers before they restored the control over it. However, not all social media crises end in such positive way. That’s why companies need to learn how to recognise a crisis and how to avoid it. Here are some useful tips that save lives:

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1) Have a crisis plan in hand- This is the thing I’ve been talking about in all my posts and research papers- “be prepared”- because most crises that affect companies in an extremely negative way are those, companies themselves have not been prepared for. You cannot stop a crisis once it happens, but you can minimise the consequences of it.

2) Train your people- Having social media crisis simulations from time to time doesn’t hurt anyone, it could only help. Knowing what to expect and how to react to is always a good way to start. And remember, even if the crisis happens, don’t panic!

3) Identify potential risk areas- Do your research! Get to know your weaknesses! Work on crisis response messages that could be standardised and applied to most crisis cases. Not so complicated, is it?

If you work on these three simple tips and develop them, come up with your own etc. you will have made the first step in a crisis response cycle. And even if a crisis hits despite your efforts to avoid it, you will be now prepared to handle it. In my next post I will be talking about the next step in the crisis response cycle- how to handle a social media crisis. In the meantime, please feel free to share your opinion on this topic and give any suggestions on how to avoid a social media crisis.

Lidiya Kirilova