Author: ken

Business as Usual for BP

BP denies it “cut corners” in its drilling operations in the Gulf of Mexico, but how do you distinguish “cutting corners” from making a series of “cost conscious decisions”?  According to The Wall Street Journal, being “cost conscious” seems to have meant cutting out a number of safety steps.

In one email, written shortly before the explosion on Deep Water Horizon, a BP official wrote about a decision to deploy 6 stabilizers, instead of the more costly and time-consuming 21 recommended by its contractor:  “Who cares, it’s done, end of story, will probably be fine.”  Needless to say it wasn’t “fine.”  (See, “BP Focused on Costs.”)

Why should we be surprised? No doubt this sort of thing happens all the time. Cutting costs is what business is supposed to do, whether it is designing more efficient assembly lines or distribution centers, streamlining benefits, outsourcing services, replacing domestic workers with robots or local operators with sophisticated call centers, etc.  This has become all the more crucial as the pressures of investor capitalism have made the bottom line more important than any of the other factors that businesses have normally tried to balance.

According to The Journal, Tony Hayward, the CEO of BP, “repeatedly said he was slaying two dragons at once: safety lapses that led to major accidents . . . and bloated costs.”  But an internal report noted a common theme:  “a failure to follow BP’s own procedures and an unwillingness to stop work when something was wrong.” (“As CEO Hayward Remade BP, Safety, Cost Drives Clashed.”)

This reflects a disconnect inside the organization.  No doubt Hayward was sincere in his efforts to improve safety, but it wasn’t translated into procedures and policies in the field.  That is, it did not lead to an awareness of how the pressure for greater efficiency would in fact drive employees to take risks when the alternative was to increase expenses or miss deadlines.  Success in production was noted, safety seldom seen – until disaster struck.

“Workers had ‘high incentive to find shortcuts and take risks,’ said a former BP health and safety manager on rigs . . . . ‘You only ever got questioned about why you couldn’t spend less—never more.’”  One consequence of such a management style, of course, is to push blame further down the chain of command.  Upper managers can think they are doing their best to promote safety because they ignore the pressure they are putting on employees in the field to compromise.  Employees are congratulated and rewarded when they make their targets  — and blamed when “accidents” happen.

This is a typical feature of bureaucracy.  But how to correct for it?  One solution would be to install an officer at the top whose job it was to monitor safety, a Chief Safety Officer, who had the power to intervene in operations as needed.  But a cruder and perhaps better solution would be to make sure the cost of such a mistake was so high that the company would be profoundly incentivized actually to put safety first.

If the cost of a major accident was the risk of bankruptcy, that might lend new meaning to the term “cost conscious.”

Another Way to Combat Financial Intimidation

Most of us who approach bankers — or even lowly “loan officers” or “relationship managers,” as they have come to be called – experience some form of intimidation.  They have the money we need and the power to say “no.”  It’s an unequal relationship.

Emphasizing that fact, banks used to be housed in imposing fortresses or temple-like structures.  Moreover, they were usually staffed by members of the establishment, coming from families that enjoyed privileged relationships with old money.  That was before banks got into consumer services and started making a concerted effort to be more friendly.  But they still have a lot of power, and they still make us anxious.

Dylan Ratigan, former financial advisor on CNBC, coined the term “banksters” to help us shift perspectives.  The difference between banksters and gangsters, he argues, is simply that banksters have the government behind them:  “the ‘vampire’ banks ‘have assumed control of our government.’” (See, “From CNBC Business Journalist to Critic of Bankers on MSNBC.”)

Like gangsters, they often have cozy relationships with “friends” in high places, friends who instead of monitoring their actions offer tips about opportunities to make a killing.  They help to change the rules when the banksters can’t find ways around them.  The banksters get richer and richer, even when they don’t seem to earn the “profits” they generate.  And when they make disastrous mistakes, they manage to make it the public’s business to rescue them, because they are “too big to fail.”

Most of us, to begin with, tend to be anxious and insecure about our own personal financial decisions.  We think banksters know better – and maybe they do, as that is what their business is all about.  But they’re not on our side.  We can’t count on them to have our interests at heart.

But, more importantly, apart from the analysis Ratigan offers of the specific sins of banksters, the term he uses takes them down a notch and strips away the mystique.  And because in my mind, at least, it echoes with “prankster,” it makes them also a little silly.  That helps to undermine the intimidation.

Anything that restores the balance, that minimizes our perception of their omniscience and increases the power of our own judgment, gives us more of an advantage in this unequal struggle.   Skepticism, is helpful.  We may not actually think they are thieves and scoundrels, but they do not deserve the unthinking respect they have been receiving.

The recent credit meltdown also makes clear that, at the very least, they are fallible and careless with other people’s money.  We shouldn’t forget that.

What You Can’t Say About Your Boss

By all accounts – including the now infamous profile in Rolling Stone – Stanley McChrystal is a brilliant, resourceful, brave and aggressive general.  So how did he manage to get himself fired?

It wasn’t because his strategy is failing, though it may be.  Nor was it because of his shortcomings as a leader.  Even Obama praised him for that last week for that.  His failing was being disdainful and contemptuous towards the civilian diplomats and politicians in the administration with whom he was forced to work.

According to Rolling Stone, in the year he has been in charge, “he has managed to piss off almost everyone with a stake in the conflict.”  But the article singles out derisive comments by his staff about Vice-President Biden, National Security Advisor Jim Jones, a “clown,” Special Representative to Afghanistan Richard Holbrooke, “a wounded animal,” and long-standing hostility towards U.S. Ambassador Karl Eikenberry.  McChrystal was also critical of politicians like McCain and Kerry who, says another aide, “turn up, have a meeting with Karzai, criticize him at the airport press conference, then get back for the Sunday talk shows. Frankly, it’s not very helpful.”  (See, “The Runaway General.”)

The profile makes it clear that McChrystal has a strong rebellious, anti-authoritarian streak, one that has gotten him into hot water a number of times in his career.  Moreover, it is not surprising that generals engaged in combat are often hot-tempered and impatient of the restraints that impede their job.  They are, after all, closer to the action and to the men whose lives are on the line.

Nor is it a bad thing that those burdened by such responsibility have the opportunity to let off steam, expressing their frustration at those who are more detached from battle, more caught up in their own careers.  Indeed, it is probably a sign of his effective leadership that McChrystal was able to wield together a team that encouraged loyalty and the frank expression of feelings.

So all of this might never have become a problem if Michael Hastings, reporting for Rolling Stone, hadn’t quoted their comments so fully.  On the other hand, Hastings was doing his job of covering the war and providing journalistic insights.  And he was operating in a culture that more and more has come to value transparency, unfettered access to raw information and frank opinions.  Indeed, it was a sign of McChrystal’s sophistication and self-confidence that he was willing to let journalists have access to the nitty-gritty details of running a war, unwilling to settle for the canned and carefully spun information they usually get.

No doubt that was also another way for him to be anti-authoritarian and unpretentious.  And yet, clearly, it was also disastrous.  According to Rolling Stone, he had the chance to review the article before it was published, but did not object.  Once published, the President had no choice but to fire him.

Was it just McChrystal’s arrogance that made him think the truth of his raw opinions could be – or ought to be – tolerated by the administration?  Or was he so angry that he didn’t care?  If they couldn’t stand it, he may have thought, did he want to keep his job?

Chances are he did not think through the implications of allowing the public a candid look at his frustrations.  Perhaps he did really believe in the overriding value of transparency.  But, perhaps, he wanted the public to know how inept the diplomats he had to deal with were – and, in the heat of the moment, he didn’t care what the price of that disclosure might be.  Maybe it was simply retaliation.

Spinning It Just Right

Was the President angry enough at BP?  Too angry?  It’s interesting to see the range of opinion.

*Charles Blow in The New York Times thought he ran the risk of seeming too detached and ineffective.

*Adam Serwer of American Prospect complained that his “kick ass” comment, stepped over the line.

*Lori Ziganto, blogging on RedState, thought the problem was he just didn’t do it convincingly enough.

*CNN’s John Blake warned that the American public doesn’t like angry black men.

*Greg Sargent of The Washington Post thought the public will judge Obama on the substance of his response.        Political commentators are too eager to rush into filling the gap. (In Newsweek see, “Is Obama Angry Enough?”)

There seem to be as many points of view as there are commentators, which is reassuring in a way.  Obviously different sectors of the population have different reactions.  It doesn’t surprise me, for example, that Charles Blow, who is black, wants our first black president to be more assertive, while Lori Ziganto, blogging for a conservative site, takes a skeptical and dismissive stance.  But what is the rush?

On one level, it’s obvious that this is what commentators do.  Journalists and bloggers are keeping themselves and their readers busy with a steady stream of interpretation, cultivating an illusion of understanding what is really going on in the world, what we need to think.  The public verdict is far from having been delivered, but, as usual, it is being anticipated and shaped.

At the same time, though, I wonder if the public verdict isn’t also being forestalled.  Before one has much of a chance to have a reaction of one’s own, the whole range of potential reactions is on display.  The instant and insistent stream of commentary virtually occupies the space of public discourse.  In a sense, it has become the public discourse.

Have commentators become afraid that people won’t have their own ideas, that they are standing in for a public that is confused and inarticulate?  Perhaps the public itself is becoming hesitant to speak its mind without their opinions being vetted by some journalistic authority.  Or is the commentary simply irrelevant?

It’s hard enough to have an original idea – much less a new perception — as those who study human consciousness know all too well.  The brain holds on to its past formulations pretty firmly.  But this barrage of all conceivable opinion virtually ensures that we will keep on talking to each other in all the old familiar ways.

Sooner or later, of course, a consensus will emerge about Obama and the oil spill, one that it will then be up to historians to challenge and reshape.  But now we seem to want to ensure that the dead hand of the past comes down hard and fast, before anyone has too much time to think about what is really happening.

What Is the Right Language?

Our ordinary language has always had colorful terms to describe emotional and mental disorders.  “Vapors” was particularly popular in the late nineteenth century, soon succeeded by “nervous breakdown” and “crack-up.”  Other terms included “lunacy,” “bonkers,” “mad,” “mental,” “unhinged,” “loopy,” “bananas,” and so forth.  Now we have added “stress” and “burnout” at one end of the spectrum, and “freak outs” at the other.

Never a real diagnosis, nervous breakdown “always struck most doctors as inexact, pseudoscientific and often misleading,” according to an article in The New York Times.  “But those were precisely the qualities that gave it such a lasting place in the popular culture, some scholars say. ‘It had just enough medical sanction to be useful, but did not depend on medical sanction to be used,’ said Peter N. Stearns, a historian at George Mason University.”  (See, “On the Verge of ‘Vital Exhaustion’?”)

Today, however, members of the general public seem to feel increasing pressure to diagnose themselves with professional accuracy.  Are we Bi-polar?  Do our children have ADHD?  Or just ADH?  Are we depressed?  Perhaps it is just an Adjustment Disorder?  Moreover, patients not only want to know their exact diagnoses, they also often seek to prescribe and find their own medications on the internet.

But mental health professionals themselves are not always happy with the categories and codes they are required to apply to patients by insurance companies.  An exact nomenclature implies a degree of certainty that seems often unwarranted.  So they have cultivated a certain skepticism and detachment.  Yes, they use the terms.  They have to in order to help patients get the services they need, but they are also aware of the danger of believing in them too firmly.

The paradox is that just as the authority of professional knowledge is increasing with the general public, supplanting the informal language of popular culture, the authority of mental health professionals is eroding.  The public increasingly appears to believe in the certainty of the diagnoses professional are required to provide while losing access to the detachment and skepticism of those who have learned to question their usefulness.

The decline in the authority of professionals is widespread, not just confined to the field of mental health.  The irony is that the public is losing confidence in their judgment at just the point we are coming to understand that much of the value they have to offer to others is not in what they know but in what they know they don’t know.