THE BLOG

Exhibit A in the Case for Corporate Responsibility

07/07/2010 02:42 pm ET | Updated May 25, 2011

I wonder what it must feel like to be BP CEO Tony Hayward, the most besieged person on the planet and the biggest poster boy for corporate irresponsibility in the wake of an oil spill that's ultimately his personal fault. I won't say that avoiding gigantic misfortunes like the gulf oil spill are easy, but it's a pretty basic requirement for a CEO.

I say that as a former CEO who knows just how hard it is to run a small company with a hundred or so employees and can't imagine what it's like to helm a corporation with more than 97,000 people corralling dozens of complex supply chains on multiple continents. That's a lot of coming and going, and I can see how it would be impossible to keep tabs on every single activity. With a corporate hierarchy a mile long, I doubt that before the accident Mr. Hayward knew much about the doomed Deepwater Horizon oil rig beyond the fact of its existence and suspect he didn't know what the many subcontractors on board were really up to. I could be wrong, but if his experience is anything like mine, he had a lot of things going on and could only assume that his company's many vendors were behaving well and being diligently monitored by employees honoring the rules.

Yet Mr. Hayward is the CEO, and his desk is where the proverbial buck stops. He may not have been present when safety cheats, engineering shortcuts, and rules violations doomed the Louisiana seaboard, but as the head of BP, he's responsible for everything done in his company's name and must be held ultimately accountable for every square inch of poisoned coastline.

That makes that Gulf of Mexico Exhibit A in the business case for corporate responsibility (CR). Because if Mr. Hayward had chosen to build a strong ethic of authentic CR inside BP, the disaster would have likely been prevented by employees who would have demanded doing the right thing and blown the whistle on anyone who wasn't.

But that didn't happen, and the company has seen its market valuation drop precipitously, losing more than $100 billion as of this writing. And then we should add in accounting for the actual cost of cleaning up the mess and paying for the liability, which so far is approaching $1 billion. Analysts point out this is not that much given BP's $20 billion in expected 2010 profits, but I think the longer this spill drags, the angrier people are going to get and the more blood will be demanded. When the final costs are tallied, BP could get a bill as big as the entire Gulf of Mexico and it could force the company into bankruptcy or to be sold to a competitor.

Regardless, the $100 or so billion in value already lost is significant, and it makes one of the strongest business cases I've ever seen for CR, which would have organically reduced the company's drilling risks significantly. I hate to say we told them so, but if BP had followed the advice coauthor Bill Breen and I offer in our new book, The Responsibility Revolution, it is dramatically less likely that any of this would have happened.

We believe that the key to preventing corporate outrages like these lies in adopting a new and deeper brand of CR in which higher purposes are translated into the missions and purpose of business, embedded in every aspect of corporate strategy. This new model of CR is intentionally poured into every crevice of a company's DNA to inform all the individual systems it maintains and create a conscious and conscientious culture that stops situations like the Gulf oil spill from ever getting started.

Superficial CR efforts and compartmentalized initiatives don't cut it. BP had those. The kind of CR the oil giant needs has to go deep to reach each employee and influence every decision whether it's in an office or on a rig. Everything else is just window dressing. But when a business can successfully build a genuine company-wide commitment to serious environmental and social ethics, and get the whole staff on board -- whether it's a staff of 100 or 100,000 -- great things happen and terrible things do not. In BP's case, that's a place it wouldn't have cost anywhere near $100 billion to get to. If I were Mr. Hayward, right about now I'd be wishing I'd chosen this route instead.