Monday, June 15, 2015

Michael Porter Recommends Fracking CEOs Drill Right

In yet another indictment of poor leadership Harvard professor Michael Porter spoke to Fareed Zakaria on CNN's GPS on perceived problems with fracking oil shale to produce natural gas and oil.

PORTER: Well, I think we should worry about them all. And I think one of my big concerns here is how the U.S. industry has really been working counter-productively to its own long-term interests. There has been too much denial in the industry. There's been - oh, no, we're not causing those earthquakes. Oh, no, the water is not a problem. And it is. I mean there are - real documented problems that are significant

The good news is that - and we've done a deep-dive on this. In all of these areas, and there are areas of congestion and there's even more than you mentioned. In all these areas, practice is improving. We're getting better. We're able to control most of these problems. And what we did also was to actually do a study, and it doesn't cost much to reduce these problems. You just have to do things right. We can control these problems, including earthquakes. But we're not telling that story. The general public hasn't heard that story. They think that these problems are endemic and unfixable but they're really not. 

What's endemic and apparently unfixable is widespread management greed and hubris.  Time is money and oil executives issued edicts that cause staff to cut corners.  An oil exploration attorney shared his views with me last fall.  The first thing he said is "We're drilling a lot of bad wells" which he attributed to management's perennial cost cutting and focus on executive pay optimization.

He shared his CEO approached him for a green light for something that was clearly illegal.  The attorney struggled with what to do.  In order to be able to look at himself in the mirror and avoid the first step in a slippery slope that produced Enron, the attorney advised his CEO that his desired action was not legal.  The CEO did it anyway.

The attorney approached his board chair with the delicate matter.  Nothing happened to the CEO, but the attorney got pink slipped.  Welcome to our "shoot the messenger, defend the person in charge at all costs" culture.  It's image management 24/7.   

When Libya went bad the media took Michael Porter to task for advising Colonel Ghadafi, while ignoring the spate of private equity underwriters (PEU) currying favor to invest Libya's billions in oil money.  The media ignored Ghadafi pandering billionaires, instead going after a high priced consultant.  Somehow Fareed Zakaria forgot about Michael Porter being a putz, returning him to the advising spotlight.

Who else didn't do things right?  Blue team Presidential hopeful Hillary Clinton didn't handle her e-mails right between earning huge PEU speaking fees at the firms that once courted Libya's Ghadafi.  Red team Presidential candidate Jeb Bush didn't handle his board slot with Innovida with any level of business credibility.

The perfect may be the enemy of the good, but the sleazy and incompetent are a greater enemy of the good.  We've had poor leadership with the wrong priorities for far too long.  That includes business and political leaders, married in the Government-Corporate Monstrosity, Eisenhower's Military-Industrial Complex engorged by trillions ($) in federal steroids.

The will to do things right has been subjugated to greed, power and hubris.  Fracking is a fractal for abysmal leadership.  It appears endemic and unfixable as greed and the lust for power infects board rooms, C-suites and our once hallowed halls of government.  There's no one to to put things in check, bring management back to balance.

It's fixable, but not by the people currently in charge and certainly not by brands Clinton or Bush.

Update 6-19-15:  Evidence of the bad leadership fractal can be seen in Gallup poll numbers on American institutions.  Trust has evaporated.

Update 6-27-15:    There are problems with fracking methods used in Pennsylvania: Between January 2009 and March 2015, fracking operators in the state have been issued more than 4,000 violations with fines totaling $6.1 million.