Deepwater Horizon

Integrity & Wickedness

Wout Gijsbers

I399175

The e-Documentary is available online at:

deepwaterhorizonebc4045.blogspot.com

Maastricht University School of Business and Economics

Department of Organization & Strategy
May 31, 2010
Managers @ Work EBC4045
Jia Li MPhil
Deepwater Horizon: Integrity & Wickedness
Storyboard

1. Introduction: 2. Question slide:

The introduction consists of a short photo This section consists of a slide with
presentation of the Gulf oil spill disaster, questions that the documentary intends
showing the consequences as well as on answering. These questions form the
some of the causes of the disaster. individual sections of the e-documentary.

4. Question 2: Who or what caused it? 3. Question 1: What happened?

From a micro and macro perspective, the A short account of the disaster and its
disaster will be analyzed; the analysis will direct effects; videos will be used to clarify
among other items include the blame game, the early days of the disaster and its
the dangers of deep-sea drilling and the US current state.
energy policy. Specific emphasis will be laid
on the idea that the Gulf spill disaster is in
fact the direct result of a wicked problem.

5. Question 3: What are the effects? 6. Conclusion

From a micro and macro perspective, the The concluding section will shortly
effects of the disaster will be discussed, summarize the preceding sections and
including items such as the Louisiana once again link them to the literature
marshes, the polluting effect of the studied for this e-documentary.
dispersants and the in situ burns, the impact
on the economy of the Southern states, as
well as the effect on BP’s track record and
reputation and the impact on the oil industry
as a whole.

Special focus will be put on the reputation of

BP and its relation to integrity and wicked
problems.

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Deepwater Horizon: Integrity & Wickedness
Script

Please note that any severe inconsistencies between the script and the monologue in the
documentary are the result of encoding problems residing in the video-editing software employed
for the making of the e-documentary. This unfortunate fact, coupled with the use of low quality
audio recording equipment make it highly visible to use this script as a backup and means of
clarification while watching the e-documentary.

2. Question Slide
The main topic of this e-documentary is the ongoing oil spill disaster in the Gulf of Mexico.
This e-documentary sets out to answer three main questions related to this disaster.
The first question is "What Happened?". In trying to answer this question, we will not only look at the
direct causes of the event such as the faulty Blowout Preventer (BOP) and the dangers of deep sea
drilling but also at the US energy policy as well as the policy of British Petroleum (BP). Please note
that we will focus on the situation as it was on May 22. Developments after this point in time are not
taken into account. Because the event is currently still in full motion, the decision to stop data
collection on May 22 was made so as to provide ample time for the making of the documentary
itself.
The second question is "Who or what caused it?". In answering this question, I will employ Camillus's
five characteristics of wicked problems (Camillus, 2008). Through these five characteristics I will try
to clarify the direct and indirect causes of the event, as well as the effect each of these causes had
and has on the current situation.
The third question is "What are the effects?", not only referring to the direct ecological
consequences of the spill but also its effects on the economy of the Gulf Coast area, its effects on
politics and its effect on BP itself, as it is claimed to be the party mainly responsible for the disaster
(as well as the fact that it is still not adequately dealt with). The main focus will lie on the latter, as
this gives insight into the role of BP in this wicked problem as well as the impact of the event on BP's
perceived integrity and reputation.

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3. Question 1: What Happened?
So, in sum:
- The catalyst and main cause of this disaster was an explosion on April 20; one which caused BP's
Deepwater Horizon rig to catch fire and eventually sink on April 22. As an effect of the explosion and
the sinking of the rig, three leaks were formed in the pipeline that was to distributed oil to the
surface.
- Up until this point in time multiple containment measures have been tried. BP tried to engage the
BOP by using sub-sea robots, which didn't work. It tried to put a dome-like structure over one of the
leaks and suck the oil out via this dome; this approach also didn't work. Other measures included in
situ burns of the oil floating on the surface, the placement of plastic booms to stop the oil from
spreading and the use of chemical dispersants which react with the oil and prevent it from surfacing
this way. However, these dispersants are said to have a tremendous negative impact on marine
ecology. According to some (among others Greenpeace), these dispersants are mainly used to avoid
photogenic pictures of dead fish on the Louisiana shores, as the fish would sink to the bottom of the
ocean.
- Currently, the oil spill is still expanding and is now dwarfing the Exxon Valdez disaster of 1989. The
worst-case scenario (in case all containment measures all) is that 378 million gallons will be spilled
(34x times the size of the Exxon Valdez spill and almost 3x times the size of the Ixtoc 1 spill in 1979,
the biggest known oil spill). The latter, the Ixtoc 1 disaster, was roughly equivalent to the current
disaster in the sense that it was also caused by a faulty Blowout Preventer, which lead to weeks of
uncontrolled spilling and which could not be stopped by booms, dispersants or in situ burns.
- Fragile marshlands of Louisiana are currently constantly flooded by more and more oil, heavily
impacting local ecology as well as local fisheries, which account for a major part of Louisiana's
economy, which was already heavily devastated by Hurricane Katrina.

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4. Question 2: Who Or What Caused It?
The deeper causes of the disaster point to a wicked problem, or a number of interrelated wicked
problems.
According to Camillus (2008), wicked problems generally have 5 characteristics, not all of which have
to be perfectly fulfilled for a problem to be considered wicked.
Each of these characteristics will now be explained and placed into the perspective of the topic of
this e-documentary.

1. Stakeholders
The stakeholders in the current disaster can be divided into micro and macro stakeholders.
In the micro stakeholder category, we find the companies directly involved in the disaster: BP, the
owner of Deepwater Horizon; Halliburton, the company responsible for cementing the wellhead and
Transocean, the operator of Deepwater Horizon and the developer of the faulty Blowout Preventer.
A second (relatively micro) stakeholder is the Gulf coast economy, representing all parties (such as
fishers, but also tourism industry and restaurants) directly affected by the spill. It also includes the
shipping industry, as ships are not allowed to dock in U.S. ports once they have travelled through oil
tainted waters. This also impacts the transportation of oil from the rigs to refineries in the Gulf Coast
Region (the 141 counties in the five Gulf States, Louisiana being currently the most directly affected
one). As a result, many of 3,858 oil rigs will have to temporarily shutdown. Furthermore, a third
stakeholder is the gulf coast ecology, not only including the ecology in the gulf itself but also the flora
and fauna of the fragile coastal areas which are currently hit by the spill.
In the macro stakeholder category we find consumers, who need oil to run their lives (not only their
cars, but also for the manufacturing of products that they highly value). Despite the fact that many of
these are not directly affected by the current spill, the long-term consequences of the spill (related to
the macro stakeholders) may impact them. Furthermore, consumers' ensuing demand for oil-based
product can be said to be an indirect contributor to the current disaster through the other macro
stakeholders. The second macro stakeholder is US politics, referring to the politicians responsible for
the current energy policy, particularly their approval of domestic deep sea drilling, as well as the
Mineral Management Service, the organization responsible for monitoring the oil industry. This
organization has been claimed to have overly cozy ties with the oil industry. Thirdly, the oil industry
itself, companies in which are struggling to stay ahead of each other and remain competitive is
another stakeholder. A fourth stakeholder is the global economy, which is still heavily reliant on oil to
run. With oil industries desperately trying to retain this status quo until oil is simply too scarce to
sustain the world economy (due to scarcity pricing), the global economy has a direct effect of the

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strategies and policies of companies in this industry. Lastly, the global environment is also a
stakeholder. Firstly, the global environment is of course affected by the consequences of our energy
and oil consumption. Moreover, the fact that conventional oil resources are running out, has led oil
industries to pursue less-conventional (and, in this case, more risky) means of getting oil.
With regards to the current topic, the fact that BP has had to move to deeper waters to delve for oil,
with greater pressures, higher temperatures, differently structured oil and a different marine
geology, while still working with techniques that have not been sufficiently tested under novel
circumstances.

Technical Complexity
According to Conklin, technical complexity, referring to the amount of technologies and the
interactions among them present in a given situation, coupled with an industry-based need for
technical change play an important role in the wickedness of problems. This certainly plays out in the
blame game between the companies involved in the Gulf oil spill disaster. It is unclear (judging by the
official role of the companies) whether one is more responsible than another for the disaster.
Nevertheless, BP is seen as the main culprit because it is the owner of Deepwater Horizon, whereas
the other two involved companies (Cameron is a subsidiary of Transocean) were merely responsible
for parts of the drilling process.

2. No Precedent
At the moment, on May 22, it seems to be the case that the current disaster is highly likely to
become one of the biggest environmental disaster the US has ever seen, already eclipsing the Exxon
Valdez disaster and might even trump the Ixtoc 1 disaster.
Of course, it is not the first oil well disaster. However, it is the first oil-well disaster in such deep
waters. Furthermore, the current global environment, which puts increasing value on environmental
sustainability, zero pollution and decreasing energy consumption, draws in factors that have not
been present during other non-ship-involved oil disasters. It can therefore be said that the current
spill is simply the outcome of a much bigger, and much more complex, wicked problem.

3. No Right Answer
Obviously, the direct solution is quite clear: the spill has to be stopped as soon as possible, thereby
making sure that the economy and ecology of the area is harmed as little as possible.
However, the solutions to the underlying problem (or problems) are much more complex... let alone
imaginable.

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4. Complex and Tangled Roots
The blame game that went on during the last couple of days draws attention to who is in fact mostly
responsible for the disaster. Is it merely BP? Or one of the other companies? Is it the Mineral
Management Service, responsible for monitoring the oil industry, or the US Federal Government,
with its approval of domestic offshore drilling?

5. 'Fluid' Problem
Again, the direct problem is fairly obvious. However, clarifying all of its facets (as well as interactions
between them) is much more difficult. Not only do the parties have limited information, they (BP in
particular) have also been claimed to be unwilling to share all (or accurate) information. For example,
whereas BP claimed that 5000 barrels per day were spilling from the (now two) leaks, others have
claimed that the actual amount might actually be as much as 100.000 barrels per day.
Furthermore, the mapping process, referring to the clarification of the causes and effects of the spill
might take months. Even with the causes and effects of the spill laid out, the actual deeper (more
macro) causes might be much more complex

5. Question 3: What Are the Effects?

Environment
Firstly, the oil spill has a large impact on marine ecology the Gulf. Not only does the oil itself have a
devastating impact, the chemical dispersants also heavily impact fish and plankton in the ocean.
Moreover, the oil that is currently seeping into the Louisiana marshlands couldn't have been timed
worse, as it currently the breeding season of many shrimp species as well as birds and fish, all of
which use these marshes as their main breeding area.

Local Economy
The effect on the local economy of the Gulf States, most importantly Louisiana, is devastating. Not
only is this state the one hit worst by this disaster, it is also still in the process of recovering from the
effects of Hurricane Katrina. The effects of the spill are present in multiple facets of the state's
economy; from shrimp fishers to dock workers (as ships are not allowed to enter the Louisianan
ports) and from the local tourism industry to restaurants and their distributors.

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Politics
As previously stated, the oil spill might have a great effect on both state and federal politics. For
example, Governor Schwarzenegger of California has already announced that he plans to ban
offshore drilling in his state. Also, the spill has a direct effect on president Obama, whose crisis
management skills are put to the test. Thirdly, the MMS, responsible for monitoring the oil industry
has been under growing criticism for its inability to control the safety of rigs and drilling processes.
Lastly, the current disaster may have an effect on the energy policy of the United States, which,
under growing societal pressure might refrain from constructing new offshore (as well as possibly on-
shore) wells in the near (and maybe even far) future.

Corporate Reputation (BP)

Ever since the first days of the disaster, BP was seen as the major culprit (despite the fact that many
other parties seem to have been involved in the process causing the disaster). Not only did the
company fail to prevent the disaster from occurring in the first place (due to insufficient safety
criteria and measures), its response has been far from ideal. At this point in time, the company has
lost close to a quarter of its market value and has seen its stock declining quite abruptly. Secondly,
the company has had to report its failures to the US Congress, together with representatives of the
other companies involved.
Despite the fact that BP has promised to "pay for all legitimate financial claims" and to do all it could
to stop the leakage as soon as possible, its inability to do the latter despite having worked on it for
close to a month has led many to claim that the company is not fully aware of what it is doing, as the
senator in the clip stated.
A second source of criticism revolves around the oil's flow rate, as we just saw.
A concept that best summarizes the effect of the current crisis on BP's reputation is "integrity" (or
the increasing lack of it). For example, the apparent fact that the flow rate of the oil is much higher
than the 5000 barrels per day claimed by BP is in stark contrast with the company's claim to provide
as much accurate information as timely as possible. This, corporate transparency, according to others
such as Kayes et al. (2007), is one of the cornerstones of corporate integrity. According to these (and
other) authors, it is paramount for companies to not only stimulate integrity in key organizational
practices (e.g., boundary-spanning and external relations roles) but to have a culture of ethics, one
that values integrity in every vain of the company. In other words, integrity on TMT (Top
Management Team) level has to be equal to integrity "on the work floor", pointing to what Palanski
& Yamarinho (2009) refer to as "isomorphism" and integrity.

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If we define integrity simply as a congruence between words and deeds (Simons, 2002), which is a
sufficiently narrow definition for now, we can easily see that BP is struggling to maintain this
congruence. For example, despite claiming to go "beyond Petroleum" and putting high emphasis on a
sustainable future (as its green starburst logo signifies) BP's words and actions seem to be out of
sync; the current crisis being yet another stain on BP's track record.
Another factor that might play an important role in the negative effect of the oil spill on BP's
reputation is that people tend to see cases such as these, where they are openly presented with a
lack of corporate integrity and honesty, as the tip of the iceberg (Bovens, 1996); the cases that
"surface" make up only a small percentage of the actual lack of integrity within BP (as well as the oil
industry as a whole). Thirdly, as stated earlier, BP finds itself in an industry which is not exactly
known for walking the talk when it comes to CSR; their words and actions are misaligned.
According to Thomas Maak (2008), the oil industry is an example of an industry in which CSR has
changed into SCR, "Strategic Corporate Responsibility", valuing merely the economic benefits of CSR
and thus being morally hypocritical. Despite the fact that quite a number of its top managers have
provided several press releases, provided their perspectives on the situation on Capitol Hill and have
made a significant amount of media appearances, the fact remains that BP has lost a major portion
of its credibility and integrity. So, even though its top managers seemingly it, there still seems to be a
vast gap between their words and actions.
As a means of overcoming this and truly becoming integer and just, Maak (2008) suggests a seven-
partite description of corporate integrity, which, according to him should become "the new CSR".
This description may help in delineating and overcoming the deeply embedded problems currently
present in the oil industry and the Gulf oil spill disaster in particular.

The 7 C's of Corporate Integrity (Maak, 2008, pp.362)

1. Commitment to a worthwhile purpose, moral principles and human rights
2. Moral Conduct in line with an individual's integrity requirements
3. Acting responsibly in terms of the content of its actions
4. Being integer with regards to one's context, taking the perspectives all stakeholders into account
5. Being consistent in aligning the walk and the talk
6. Being coherent with regards to the links between words and actions
7. Continuously showing organizational members and external stakeholders that the company is
integer; not only in bad or good times but throughout the organization's lifecycle.

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6. In Conclusion...
So, what we can conclude from the preceding sections? What lessons are to be learned?
In the first section, I outlined the event and its direct consequences.
Following that section, I set out to analyze what or who caused the event (or its underlying catalysts)
by seeing the event as a wicked problem. I deconstructed elements of the event by focusing on
Camillus' 5 characteristics of wicked problems. In doing so, I showed the interconnections between
the stakeholders and the consequences of their actions. In addition, I hope to have communicated
that the oil spill has a wide array of effects, as well as a wide array of causes, making it much more
complex than it may seem at first sight.
In the third section, I discussed the effects of the Gulf oil spill disaster. I discussed the effects on the
environment, on the economy of the Gulf region states, on local and federal politics as well as, and
most importantly for this documentary, its effects on the perceived corporate integrity of BP.
In conclusion, it can be stated that the current crisis is in fact the consequences of a number of
events and processes that have already been going on for years, not only in politics but also in the
way oil companies such as BP do their business. For BP, it was simply a crude butterfly effect, a
waterfall of relatively small errors that together formed one of the biggest, if not the biggest
environmental crises in the history of the United States.
I argue that, as much of the problem lies with an insufficient focus on true integrity, as opposed to
merely using CSR as a buzzword (and a cover-up), putting more focus on integrity and implementing
it in every corner of an organization may play help avoid disasters like these from happening in the
future.

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Deepwater Horizon: Integrity & Wickedness
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Pictures
Opening: Courtesy of Reuters

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Clips
Retrieved from YouTube

ABC News. (May 2010). BP America President Lamar McKay

http://www.youtube.com/watch?v=UpgdRXYmORQ

Associated Press. (May 2010). Oil Spill Testimony The Blame Game
http://www.youtube.com/watch?v=zkhKkMO4msc

CNN International. (May 2010). BP director BP is 'devastated'

http://www.youtube.com/watch?v=yC3hBc5ToXc

CNN International. (May 2010). 'BP will pay necessary clean up costs'
http://www.youtube.com/watch?v=busfDHBnBG4

MercatorInfogr. (May 2010). 06.05.2010 Containment measures in the Gulf of Mexico

http://www.youtube.com/watch?v=hj_r8vs2vmU

ND TV. (May 2010). Gulf oil spill hits Louisiana coastline

http://www.youtube.com/watch?v=Jh1Gcbfkobo

Olemann77. (April 2008). World Oil Consumption

http://www.youtube.com/watch?v=Zc1alHvEbXs

Russia Today. (May 2010). Obama's Katrina One Month On Still Spilling
http://www.youtube.com/watch?v=q0hx4NG_7bM

Russia Today. (May 2010). Oil on their Hands BP in blame game over worst US eco disaster ever
http://www.youtube.com/watch?v=jB0IzffKOTs

Uptake Video. (May 2010). Obama's Oil Spill Commission, BP & DC Too Cozy
http://www.youtube.com/watch?v=Q_dLz4LI7gc

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