BP is our tragedian of moment. Our anxieties are priced in the cost of its shares, off 50% since April. As investors, we anticipate significant punitive and reputational damages, eyeballing  the $30bn gap between worst-case scenarios and its $20bn escrow fund, puzzling on internal bets between our personal fantasies of corporate resurrection and bankruptcy.

What do we really know? Only what we pay attention to. Selective attention determines what we think of as risk factors. When corporate units meet their targets, we are well pleased. We do not consider that the decisions and acts eventuating either in success or failure are compromises, compounds of actions that, at best, are sufficient enough to satisfy goals.

Meeting targets allow us to believe that there are no gaps in what we do. BP’s board, for example, has transformed the top levels of corporate culture in elevating safety to a major concern. Then Macondo: and our scrupulous attention to those inefficiencies, those warnings— discernible in retrospect— that the seemingly sufficient would never be good enough.

And no, it wasn’t. The outcome was disastrous.

But the business lesson is about how we dig down suddenly, after the disaster and not before: not as investors, not as boards, not as business stakeholders. Only when the inefficiency becomes clear, when it emerges on the radar screen, do we all become seers.

Unfortunately, disjunctions in corporate communications, in differences of message at different levels of the corporate hierarchy, of judgment calls made incorrectly by experts and teams, are the stuff of daily business as usual.

What is remarkable today, with BP front and center, is that we think BP’s situation so unusual rather than common. In so doing, we betray our ignorance of organizational risk assessment: and choose to credit only what we see rather than what is knowable, but currently meeting its unobjectionable targets. Its not some obscure “unconscious” process. Its only what we elect not to see.

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[...] Selective attention is what we choose to pay attention to: and currently, that is our own desire to mete punishment and blame to BP. Management needs to understand “why” if it is to contain that spill. My current hypothesis is that as consumers, we wish NOT TO SEE: we don’t want to know the messiness, corruption, damage, and plain ugliness that supplies our needs. And like Oz, outed from behind the curtain by Toto, BP’s terrible Gulf accident disturbs us because we now see something that we have chosen not to see in order that our lives proceed without disruption. [...]

Accord Advisory Group » Blog Archive » Beneath the Headlines: BP’s Radical R&D added these pithy words on Jul 23 10 at 6:28 am

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