Lessons from the Tanker Industry for Avoiding Catastrophe

Karlene Roberts

[***Editor’s note: Tom Peters asked colleagues to guest-author his column while he was traveling abroad. Tom returned a month later to resume his duties.***]

As life becomes more complicated, we learn that complex systems can break—through carelessness, bad training, lousy communication, dumb decisions, or poor priorities.

When these systems involve chemical manufacturing (Union Carbide at Bhopal), a space shuttle (Challenger), a nuclear power plant (Chernobyl), or an oil tanker (Exxon Valdez) the collapse can be disastrous.

Some of this nation’s most complex systems rarely break. U.S. Navy aircraft carriers, commercial nuclear power plants, and the air traffic control system prove it is possible to design procedures to minimize the probability of catastrophic failure.

By contrast, the deep troubles of the oil-tanker industry have shown that industrial disasters have less to do with acts of God than failures of management. Fifty-two percent of U.S petroleum—12 million gallons a day—is imported. (That’s about as much oil as the Exxon Valdez dumped into Prince William Sound.) Between 1960 and 1980 the number of tankers doubled, and tonnage increased sevenfold. Yet, as operating costs have risen, maintenance has been deferred, crew sizes reduced, and turnaround times increased.

Legislation passed in response to the Exxon Valdez spill expanded oil transporters’ liability for accidents. An unintended consequence of the law is that the tanker industry is moving more and more to Third World countries that are considerably less attentive to environmental issues than developed nations. As a result, the world has become increasingly vulnerable to devastating shipping accidents, and observers argue that the petroleum-shipping industry simply cannot operate safely.

Is there a cure for this disease? The answer lies in three essential areas: command and control, communication, and culture.

Command and control. Large organizations, in particular, must be able to shift decision making in times of need. But the maritime industry is hierarchical. On most ships, the captain controls all power and decision-making; crew members with critical information may not have access to the bridge.

When the Exxon Valdez hit Bligh Reef, no one on the bridge was sufficiently trained to see the “big picture,” as the captain might have, had he been present7mdash;and in control.

Yet, mechanics on aircraft carrier flight decks can shut down flight operations if they perceive a danger. The network of interdependent relationships onboard a carrier makes formal
hierarchy irrelevant. If the U.S. Navy can entrust decision making to the front line, so can commercial operators. (A few already do.)

Communication. Communication breakdowns abound in large, complex systems. But in oil shipping the problem has been exacerbated as developed nations exit the industry. Third World-based shippers sometimes hire seamen with questionable skills and no common language.

In January 1993, when the oil tanker Braer developed an engine problem off the Shetland Islands, the bridge and engine-room crew literally did not speak the same language. Eventually, the ship broke up in a storm, spilling 25 million gallons of oil.

Culture. Beliefs and values determine behavior. To build a safety-and-reliability culture, high-risk businesses must re-examine their values. As major oil companies subcontract more of their shipping, the necessary culture of reliability may be at risk. In any mega-system, safety demands team skills and knowledge rather than individual performance. No organization can afford a John Wayne, iron-men-and-wooden-ships attitude.

Double-hulled tankers or similar quick fixes won’t cure the industry’s ills (though increasing the number and strength of interior compartments isn’t a bad idea). The problem is deeper. Tanker owners and users must design systems to ensure that command and control, communication, and culture are inextricably linked to safety. Piecemeal reform will not work.

Savvy leaders everywhere know that although systemic change is expensive, the status quo is more so. In an unforgiving marketplace—and a fragile environment—safety, reliability, and unflagging performance are essential. All too often, catastrophes are rooted in top management’s neglect of the three Cs. The time to pay attention is before the ship is reefed. As the tanker industry has proved through bitter experience, prevention is always cheaper than damage control.

Karlene H. Roberts is professor of business administration at Haas School of Business, University of California at Berkeley.