By Mike Mulvihill
Back on July 27th, when BP announced that Bob Dudley would replace Tony Hayward as CEO, the Buzz Bin suggested six tips for the new guy in charge to follow. Last Friday, October 1, Mr. Dudley finally took over the reins of BP (a full nine weeks after the announcement). So how well has BP measured up against our tips? Let’s see:
- Rally the Troops – Our tip was the new chief must persuade thousands of employees to embrace a culture of safety. BP’s progress on this tip is pretty poor. Nine weeks of lame duck leaderless-ness during the most critical juncture in BP’s life. From our experience with change management, the lag time likely resulted in nine weeks of little getting done and a further decline in morale. In my book, that’s a “fail.” What exactly is so hard to understand about the need for fast, decisive management action when it comes to crisis management? As regards a culture of safety, the NY Times reported that Mark Bly, BP’s current safety chief, will become the head of BP’s new safety division. He will sit on BP’s executive committee and have personnel throughout the organization with broad powers to set safety policies. While he has more power, Bly is still the same guy who was in charge of safety under Hayward. Keep in mind, this is the same company that according to the Center for Public Integrity accounted for 97 percent of the “egregious, willful” violations handed out by the Occupational Safety and Health Administration (OSHA) at just its refineries in Ohio and Texas over the past three years.
- Show Up, Be Human, Be Credible – The first American to head up BP, Dudley has done a reasonably good job on this front. However, as soon as he took over as CEO last week, he started talking more like he was willing to duck BP’s responsibility for the incident. In a NY Times interview, he applauded the safety efforts of his predecessor, Tony Hayward, (really?) and rejected the view that BP had been solely responsible for the Deepwater Horizon explosion. An internal BP investigation concluded in a 193-page report that contractors were primarily responsible for the accident. Transocean, which owned and operated the rig, and Halliburton, which performed the cementing jobs, have called the report self-serving and have pointed to errors in BP’s well design and other factors. “There is nothing in any of the investigations we’ve seen that there are any indications of gross negligence on what we have done,” Mr. Dudley said of the accident. “What we failed to see was the consequences of a whole series of equipment failures that turned it into not just a blowout, but a sustained oil spill.”
- Assurance and Stability – BP has done a reasonably good job of making sure they are compensating impacted businesses and communities. Their most recent advertising effort has been credible and culturally connected with the impacted individuals. And, BP PLC said Friday it has spent $11.2 billion of the $32 billion it has set aside to deal with the blowout, which began April 20.
- Housecleaning –Our recommendation was that Dudley needed to clean house, especially since several top U.S. executives had been tainted or had soured their relationships with the public and government. On Friday, he announced that the head of upstream production, Andy Inglis, was gone. But as already mentioned, the new head of safety is the same guy who was the old head of safety during a time when BP’s safety record was dismal. Not much of a start on this one, but let’s wait and see if Dudley steps up the rate of management change.
- Be Forthright, Compassionate and Honest – Except for some of his legal cover comments at last week’s press conference, Dudley has done a relatively good job in this category.
- Businesslike and Pragmatic – All indications are that Dudley wants to get BP’s dividend payout back on track. More than half of the $32 billion local remediation set aside remains unspent. So progress is good on this front.
As the Harvard Business Review’s blog said, “One over-used word sums up BP’s problems: communication. There was inadequate communication between BP and its contractors, between employees on the Deepwater Horizon rig, and between the company and the US public.” A second HBR observation was that while BP may have thought it was speaking in clear and intelligible English (aka British), the company took too long to work out how to speak to an American audience.
Decisive action is the key to any crisis and BP – like so many other companies the past 24 months – failed to get it. Large corporations often have trouble getting out of their own way, and for that they pay a price and so do all of us.