Tag Archives: Exxon Valdez

The Parable of the Great Fire of London

This is from the book Aftershock:  Protect Yourself and Profit in the Next Global Financial Meltdown by David Wiedemer, Robert Wiedemer, and Cindy Spitzer.

It was fairly obvious, even in the seventeenth century, how major urban fires could be prevented and how a city should be built to be more fireproof and less vulnerable to extremely large fires.  However, the political reforms that would have been required to make London safer from large fires were so great that the changes needed to prevent a fire were never implemented before the Great Fire.

But, as is often the case, ignoring a potential problem was not enough to prevent it from happening.

Eventually, a serious fire broke out and destroyed all of London.  Once London was destroyed, people became far less resistant to making the big political reforms needed to keep it from recurring.  Previously resisted reforms were rapidly implemented and London never had a fire of that magnitude again.

Detail of painting from 1666 of the Great Fire of London by an unknown painter, depicting the fire as it would have appeared on the evening of Tuesday, 4 September from a boat in the vicinity of Tower Wharf. The Tower of London is on the right and London Bridge on the left, with St. Paul's Cathedral in the distance, surrounded by the tallest flames.

How bad was this fire?  From Wikipedia:

The Great Fire of London was a major conflagration that swept through the central parts of the English city of London, from Sunday, 2 September to Wednesday, 5 September 1666.  The fire gutted the medieval City of London inside the old Roman City Wall…  It consumed 13,200 houses, 87 parish churches, St. Paul’s Cathedral, and most of the buildings of the City authorities. It is estimated that it destroyed the homes of 70,000 of the City’s 80,000 inhabitants.

There was no shortage of warnings about the danger. Voices spoke loudly and clearly against the danger.  But no one was willing to do the hard work, the quite “unpopular” work, of making decisions that could have lessened the consequences — until after the worst case scenario finally happened.  No one took the worst case scenario seriously enough to act.  And I would say that 70,000 homes destroyed in a city of 80,000 inhabitants qualifies as the worst case scenario.

So, here is the lesson of this parable.  It would be a wise move indeed to pay attention to worst case scenarios, and act before these scenarios become reality.

But to take such action requires massive courage in the face of opposition.

Just think…  If only Exxon had learned this lesson before the Valdez.  Or, if only BP had learned this lesson before the great oil spill.  A lot of money spent early (admittedly, a hefty amount) would have saved a much greater amount of money, and significant destruction — to the environment; to the economy; and, in the BP case, to the very real lives of the families of those who died in the explosion.

I think that companies, and cities, and governments need to heed the parable of the Great Fire of London.  Because, the real lesson is this (quoting again from the book):

But, as is often the case, ignoring a potential problem was not enough to prevent it from happening.

And here is the obvious next question that we really need to answer:  what warnings are we not giving enough attention to today?

3 Business Lessons from the Great Oil Explosion/Crisis of April, 2010

News item:
So far, engineers have been unable to seal the leaks that were discovered after the April 20 explosion of the Deepwater Horizon rig. Eleven rig workers are missing and presumed dead. Crude is leaking into the Gulf from three breaches in a pipe called a riser that once ran to the rig from the well under almost a mile of water. (from the Houston Chronicle, here).

The offshore drilling rigs off the coast of the United States are not required to include an “acoustic switch,” which can be triggered even from a lifeboat…
This Remote Activated Device, called an acoustic switch, is considered a weapon of last resort when it comes to sealing off ruptured offshore wells, but isn’t required on platforms operating under U.S. laws.
The Acoustic Switch’ is used by other industrialized nations, but not considered mandatory by U.S. Regulations.
(from Reuters, here).

——————

So here’s the thing.  One of these days, something will go wrong. Really wrong. And the bigger the damage that can be caused when it does go wrong, the more important that there be back up systems, and then back up systems for failed back up systems.

And the reason we are still arguing over government regulations (safety, financial, and other) is that many companies will try to get by with the least amount of expense “required by law.”  So when they can keep some requirement out of the law, then they can get by with the lesser expense.

Until that really big thing goes wrong.

So – we come to the great oil spill, following the explosion that cost 11 people their lives, of April, 2010.  It may do little good to cast blame.  But it does a lot of good to ask “could the oil leakage have been stopped?”  And the answer might be yes.  Yes, I said might.  But – I think that BP wishes they had installed that $500,000 acoustic switch to see if it might have worked.

How much oil are we talking about making its way to the shoreline of our country?  No one knows for sure, but the experts have increased the estimate of the oil leaking out at least four times, and the current estimate could result in this spill potentially matching the 11 million gallons of the Exxon Valdez loss.  And the worst case scenario could rise much, much higher if they cannot stop the leak soon.

So, here are some lessons for people making decisions in business. And though I am thinking of the big decisions, where the consequences of something going wrong can be massive, the lessons might be valuable for us all.  (Have you ever seen a speaker not be able to get his/her technology working properly?  Have you ever been that speaker?)

1.  Expect, and plan for, the worst case scenario. Because it really, really might happen. It only took one Exxon Valdez for the environment of the Prince William Sound’s Bligh Reef, and surrounding areas, to be damaged for a very, very long time.

2.  Budget for every possible back up system. Redundancy in back up systems was a necessity for NASA.  Regarding this explosion and aftermath, I heard one expert describe how the back up systems all failed (yes, they had more than one) – a truly rare occurrence, according to this expert.  But now that we know that there was one more that could have been included in the construction, don’t we all wish (from BP, down to all of us) that they had spent the extra $500,000 dollars to put it in place and give it a chance to work?

3.  Maybe the biggest lesson — regarding those folks who try to persuade us to let them build big projects, and they say “we are confident that nothing will go wrong” – don’t believe them! They mean well.  They are not intentionally misleading us.  But – they really can’t promise that nothing will go wrong.  We learned that one the hard way – again.

This is truly a tragedy, with the loss of human life, and a crisis — with the threat to the environment, the food chain, jobs along the coast – of monumental proportions.  I hope we learn the big lessons.