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Jun 17, 201012:00 AMMad @ Mgmt

with Walter Simson

A Turnaround Manager Takes on the Gulf

A Turnaround Manager Takes on the Gulf

Mad @ Mgmt addresses the concerns of middle market companies, including banking, family & succession issues, turnarounds & performance improvement and economic life in general. Walter Simson is founder and Principal of Ventor Consulting a firm dedicated to middle market companies.

The President's address on June 15 came nowhere close to addressing the crisis. A seemingly one-time disaster has become a chronic toxic episode; responses from those in charge demonstrate that no one is in charge; the ugly face of politics seemingly colors the reactions of the communities affected and the wider world. And on June 16, BP — the world's fourth largest company by revenues — announced the suspension of its dividend.

It is time to turn the situation around:

  1. Destroy the well. The root cause continues to poison both the water and the national psyche. The attempts that have been taken so far to close off the gushing oil have been junky. Golf balls thrown at oil plumes? Bah.

    That's because the owner of the well has tried to remediate the problem while at the same time trying to save its investment in the hole. Now it is time for someone to reverse that de-facto decision with a mindful one. Destroy the well so the task of saving the gulf's wildlife and human economy can proceed — and, importantly, so that BP's daily liability can be capped.

    My defense of this rests in part with the testimony of U.S. Airways Captain Chesley Sullenberger III who has related that, in a split second after a bird strike crippled both the engines of his Airbus A320 in January 2009, he made a critical decision: to save the people, at the probable expense of the aircraft. That judgment lead to a river landing, rather than the aircraft-sparing but more distant runway landing he was offered by air traffic control.

    To go forward in the gulf we must spare the people and ditch the company assets.

    How? Conventional explosives of sufficient power will crater the rock, sand, and the 21-inch metal riser, filling the hole to overcome the reported 12,000 PSI well pressure.

    There will be howls and recriminations. Troubled companies, perversely, never want to change. But until the poison is stopped, real financial and physical remediation cannot begin.

  2. Remember the Powell Doctrine. It is, briefly, to use overwhelming force when confronted with an intractable enemy. There are other conditions General Powell requires, none of which I will repeat but all of which have been met. So that means not just watching sad-looking day-workers pushing mops on sandy beaches, but having the country's assets mobilized to confront the problem. Nationalizing barges and industrial equipment is not extreme — it is necessary.

  3. Create Data. We need assurances that the practical problem is being addressed. But right now, we don't know how many people are working on the problem in their various capacities, or how much territory is at risk or deemed safe from risk. We need to have enough thoughtfully-chosen data so that a few metrics can be used to define the problem.

    The news media and local politicians will always look for a unique angle that seemingly demands our attention and confounds the task at hand. My advice: ignore it: decide on your yardsticks, work hard to make them succeed, and publish the results real-time.

  4. Be Present. The sad truth is that when politics confronts practical realities, politics always wins. This is a huge practical problem, but when there is no assurance that the situation is improving, the politics takes huge precedence.

    There is no substitute for a personal approach. No judge, admiral, commodore or commission can make high-enough executive decisions or garner the support required. The President must be the face of the day-to-day struggle for improvements. He can not subsume the rest of his presidency to the crisis, but as he famously said during the 2008 debates, Presidents must deal with more than one crisis at a time.

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