Already a Bloomberg.com user?
Sign in with the same account.
Had the oil company's leaders followed Peter Drucker's philosophy on empowering lower-ranked employees, they might have prevented the catastrophic spill
Peter Drucker, who took to calling himself "a very old environmentalist" as far back as the early 1970s, would surely have felt saddened by the devastation resulting from the explosion of the Deepwater Horizon oil rig in the Gulf of Mexico. But I believe he would have been distressed, as well, by the damage done to one of his guiding management principles: the need for employers to hand workers a healthy mix of independence and responsibility. During his infamous appearance on Capitol Hill last month, BP's Tony Hayward assured lawmakers that the British oil company's own workers and those from rig owner Transocean have "stop-order authority," meaning they can instantly shut down a drilling operation if something appears unsound. Once such an order is given, the chief executive explained, "it requires everyone to agree to continue. And if there is one person who does not agree, then they do not continue." Exactly what triggered the massive spill is still being determined. But in the months since oil first gushed into the Gulf, a steady flow of media reports and congressional findings has made clear that there was no shortage of concern leading up to the tragedy. Less than a week before the explosion, for instance, a BP (BP) engineer called Deepwater Horizon a "nightmare well." Subcontractor Halliburton (HAL) warned that a "SEVERE gas flow problem" could occur. Another worker has said he raised a red flag about leaks in a crucial device called a blowout preventer. All this begs the question: Why didn't anybody on that rig step up and issue a stop order? Line Workers Know Best
In a sense, a stop order is the utmost expression of something that Drucker advocated for many decades: pushing authority down through the organization to the lowest level possible. He thought this was particularly vital for knowledge work (and running an oil rig, with its myriad technical demands, certainly qualifies as that). In highly specialized fields, Drucker asserted, "each worker should know more about his or her specific area than anyone else in the organization." In turn, he or she "should be expected to work out his or her own course and to take responsibility for it. … Knowledge work requires both autonomy and accountability." For years, Toyota (TM) has touted its own version of the stop order, in which every factory worker at the automaker has the ability to signal for help and ultimately halt the assembly line by pulling a rope known as an andon cord. John Shook, who in the early 1980s helped Toyota launch a joint venture with General Motors, knows firsthand that this concept invites great skepticism. "Some of our GM colleagues questioned the wisdom of trying to install andon" in the enterprise, Shook recalled in a piece he wrote earlier this year for MIT Sloan Management Review. "'You intend to give these workers the right to stop the line?' they asked. Toyota's answer: 'No, we intend to give them the obligation to stop it—whenever they find a problem.'" Too Much Control at the Top
Of course, a stop-the-line system is no cure-all, as Toyota has painfully discovered. But it is equally true that any organization with too much control concentrated at the top is likely to fail. As Drucker noted, "In the old days the 'boss' issued a proclamation or order 'to my workers.' After 1900, he increasingly addressed himself 'to our fellow employees.'" He added, "No one yet addresses workers as 'fellow managers.' … Yet this is the goal." So if they really had stop-order authority, why didn't anyone on the Deepwater Horizon rig intervene before it was too late? Based on the evidence that has emerged so far, it appears that some may have tried to sound the alarm, but higher-ups disregarded them. In other cases, it seems that BP and Transocean workers felt themselves under tremendous pressure to save time and money, despite claims by the companies that safety always comes first. Some have even suggested they were afraid they could lose their jobs for making a stink—a situation Drucker would have regarded as especially perilous. Any business in which the flow of information is "circular from the bottom up and then down again" is capable of "fast decisions and quick response," Drucker wrote in his 1986 book, The Frontiers of Management. But "these advantages will be obtained only if there are understanding, shared values and, above all, mutual respect. … There has to be a common language, a common core of unity" throughout the organization. What's more, Drucker cautioned, any company in which "financial control is the only language is bound to collapse in the confusion of the Tower of Babel." Robert Dudley, who is set to take over Hayward's job as CEO of BP, has a full agenda: soothing regulators, restoring investor confidence, and most important, cleaning up the Gulf. But if he's smart, he'll put another task at the head of the list: ensuring his workers have the power—and the responsibility—to stop a disaster before it happens, and not just on paper.