Julius Hussain: BP as Shakespearean drama is now playing world-wide

April 14, 2011

The BP drama is now playing world-wide. Tony Hayward has been cast as the flawed leader brought down by his recklessness. Echoes can be heard of the tragedy of Saddam Hussain, and his defeat by the coalition of the willing

QUOTE FROM THE BBC

BP could face a wave of protesters and angry shareholders at its first annual general meeting since a disastrous oil spill in the Gulf of Mexico. It is almost one year since 11 workers were killed when a drilling rig leased by BP exploded, unleashing millions of barrels of oil. Fishermen from the US are set to be among protesters at the AGM in London. Meanwhile, BP is trying to save a £10bn alliance with the Russian state-owned oil company, Rosneft, from collapse. The share swap deal would have resulted in both companies jointly exploiting potential vast new energy reserves in the Russian Arctic Circle. It was a key part of BP’s turnaround strategy and aimed at delivering future growth…

JULIUS HUSSAIN

ACT THREE
Scene one

The shareholder’s forum

Angry shareholders
Lord Browne and Dudley [a BP executive]

Dudley: In faith, can these be holders of our shares
Our people, true to our venturings?

Lord Browne: What’s friendship when the chips are down?
They come from deeply watered gulf
And arctic wastes with angry tales
Of treachery. Hear what they say:

1st angry shareholder: You killed our hopes, our family, our shores

2nd angry shareholder: And now abandoning the wasted West
You freshly seek alliances of shame
To the East ..

Lord Browne: Enough. The West is done I say

1st angry shareholder: Not done for us. Nor yet enough by far
The evil Julius did not act alone

Dudley: Nor did he, though he bore the shame alone
And works now but to right those dreadful wrongs

Lord Browne: ‘Tis said he raises a new army for those purposes

2nd angry shareholder: His purchases. How will they meet our needs?
All must be paid, repaid and paid again
And still will not put right our angry wounds

Lord Browne: Friends, bondsmen, journalists, lend me your ears
I come to bury Julius, not to praise him


BP leadership and the line between determination and obsession

March 24, 2011

Author Shahzad Khan

by Shahzad Khan

John Brown, former CEO of BP wrote in his biography of the dangers of losing balance when ‘determination and enthusiasm turn into obsession’. The outcomes of his leadership and that of his successor Tony Hayward seem to confirm this

BP is a major energy company globally in terms of oil and gas reserves. Its progress has been accompanied by a range of mergers and acquisitions (US Standard Oil Company, Britoil North Sea Exploration Company, ARCO, Amoco, Solarex and Burma’s Castrol.) However, the company’s growth has been accompanied by a number of accidents and safety-related violations which have had tragic environmental and personal consequences.

Lord Browne the deal maker

Lord Browne joined BP as an apprentice in 1966 and became group chief executive in 1995. He was credited for much of BP’s success during his 12 year reign. He is considered a charismatic deal maker. His political connections with head of states were reported as significant negotiations in some of his business deals. Such a high-profile leader is seen as achieving the positive but also the negative results of his organization. Lord Browne was eventually forced to resign in 2007 three years ahead of his planned departure from the company for a personal scandal.

After its merger with Amoco in 1999, the former British Petroleum company was renamed and rebranded with a new Helios logo associated with the Sun God Helios. The media even began to label Lord Browne as the new Sun King.

The rise and fall of Tony Hayward

His favored replacement Tony Hayward was also to be forced to resign. The press seized on remarks cited by Harvard business guru Rosabeth Moss Cantor:

About a week after the April 20 explosion, Hayward was quoted in the New York Times asking his executive team, “What the hell did we do to deserve this?” Recently, he declared that “I want my life back.”

The dark side of charismatic leadership?
.
The patterns of behavior of both BP leaders is similar can be found in discussion of dilemmas of charismatic leadership by the American leadership scholar Jay Conger. Both Browne and Hayward believed in their ‘visions’. Admiration by media and business associates fuelled their charismatic styles. The dark side of Lord Browne as mentioned in his own accounts is that commitment to his vision for the company’s future meant that he ignored day to day operations of the core business activity. Someone noted that he used “I” a lot versus “we” in his book, in reference to BP’s successes. He may also fit a description of a pseudo level-five leader by Jim Collins: someone with an inflated ego presenting or promoting themselves as the most valuable asset for the company. One lesson from these cases may be the danger of letting a vision blind a leader from evidence that things are going seriously wrong at ground level.

To go more deeply

1. Mason, R. (2010). Beyond business: by Lord Browne: a review. The Telegraph
2. Irving, C. (2010). Why is BP’s former boss a UK hero? The Daily Beast
3. Campbell, R. (2007). BP corporate culture lambasted. Thompson Reuters,
4. Salama, A, Holland, W and Vinten, G. (2003) Challenges and opportunities in mergers and acquisitions: three international case studies-Deutsche Bank-Bankers Trust; British Petroleum-Amoco; Ford-Volvo, Journal of European industrial training 27(6), 313-321.
5. Kanter, R.M. (2010). BP’s Tony Hayward and the failure of leadership accountability. Harvard business school publishing

6 After the post was written: The Guardian reported that Lord Browne is considering acquiring assets up for sale by his old organization [Editor, LWD].

The case was written from an assignment prepared as past of the Global Events and Leadership module which introduces the Manchester Business School’s Global MBA program. The views expressed are those of the author.


BP Oil-spill: Official report spreads blame

January 6, 2011

The offical report into the Deepwater Horizon disaster spreads the blame around BP, Transocean, bad management, and government regulatory laxness

Broad culpability was always likely. The offical report summarized today [January 6th 2011] leaves plenty of scope for years of legal wrangling.

The oil spill in the Gulf of Mexico was an avoidable disaster caused in part by a series of cost-cutting decisions made by BP and its partners, the White House oil commission said last night. In a preview of its final report, due next week, the national oil spill commission said systemic management failure at BP, Transocean, and Halliburton caused the blow-out in the Gulf of Mexico, and warned that such a disaster would likely recur because of industry complacency. “Whether purposeful or not, many of the decisions that BP, Halliburton, and Transocean made that increased the risk of the Macondo blowout clearly saved those companies significant time (and money),”

See also the Leaders we deserve reports in the months following the oil-spill.


BP Oil Spill: August-Sept Updates

August 4, 2010
Least Terns - one of many birds affected by Gu...

Image by flythebirdpath~} teddy (heart still in YOSEMITE) via Flickr

September 8th “It’s not all our fault”

BP provides oil-spill report. Accepts errors but begins cautious spreading of the errors (blamestorming?)

September 5th

Unified Command has released a video of Saturday’s [September 5th] retrieval of the Deepwater Horizon Blow Out Preventer

Just when I thought the story was going to sleep another oil-rig explosion in the Gulf (Marine Energy operated) …. Great quote: “Just when we thought we’d had a wake-up call we hit the snooze button”.

August 30th

Evidence that BP’s prospects into the future will be severely limited.

August 20th

[1] An interesting stat. Oil Spill at 6 million barrels huge. Note combined spills from three tanker spills exceed that figure.

[2] Lawyers for Transocean, the company that owned the oil rig is alleging that BP is denying them access to information they needs.

According to the BBC:

The claim is made in a letter from one of Transocean’s lawyers sent to members of President Barack Obama’s cabinet. BP rejected the allegation, saying the letter contained “misguided and misleading assertions”. Nevertheless, the claim risks piling further pressure on BP.

August 16th President and daughter swim in Gulf.  Brits recall a politician (John Gummer) who fed hamburger to daughter in Mad Cow drama some years ago.

August 13th Bloomberg’s Joe Mysak writes of Oil-Spill Hysteria.

Never before has a disaster like this been accompanied by such an unrelenting torrent of hysteria, speculation and inexpert testimony… The pronouncements grew madder and madder. This was nothing less, they said, than the oil apocalypse.

What looks like what happened is that BP Plc shut off the well, after some trial and error. As they were doing so, they were also siphoning off oil, burning some and dousing a good portion of the remainder with chemicals meant to break it up so that the ocean could do the rest. Some oil was skimmed at the surface, some was collected in various barriers and some inevitably made it to shore. What’s next? The oil company still has to seal the well. Then there’s more cleanup, which will last months or years.

There’s still a lot we don’t know about how the oil-spill drama will conclude. People talk a lot about the fishing industry, almost as though we were living in 1890. The fishing industry is a relatively unimportant part of the modern Gulf, which is why everyone there is eager for the real business, drilling for oil, to resume. Then of course there is tourism. Can it be restored to pre- spill quality and levels?

Americans are an impatient lot. Something tells me that you don’t clean up the biggest oil spill in the nation’s history overnight. It seems, though, the Deepwater Horizon disaster could have been much worse. Not too long from now, within our lifetimes, people may ask, “Remember the Gulf oil spill?”

August 8th Lawsuits loom. A class action suit has been filed against BP and Nalco related to use of dispersant Corexit.


August 7th
BP stands down Doug Suttles. Replacement is a less senior executive who seems likely to be there for the longer-term, and more full-time. Mike Utsler becomes lead representative in the Unified Area Command and the chief operating officer for the oil giant’s Gulf Coast restoration organization. Suttles, who has led the company’s overall response to the Gulf of Mexico oil spill will now return to his role as chief operating officer

August 6th “seal or sell”. Now the story shifts towards economic issues. The leak seems sufficiently under control to raise the question of the economic future of decisions being made. We have a strategic dilemma here around the decisions of selling off the well, or keeping options open of recovering revenues.

August 5th A government report says only a quarter of the oil from the BP well remains and that it is “degrading quickly”. According to the BBC, the report was compiled by 25 of “the best government and independent scientists”.

August 4th: The “Static Kill” to seal the well has begun. First indications are promising says BP senior vice-president Kent Wells (Nice name for a Wells manager?). He now will presumably front up the BP communications. US Government representative Admiral Thad Allen is now “designated incident commander”. Project management, governance, and leadership roles are coming into focus.

See Also July Entries Updated July stories


BP’s Hayward goes: How we get the leaders we deserve

July 26, 2010

Tony Hayward, BP’s CEO has been dubbed the most hated Businessman in America in the wake of the Oil Spill disaster in the Gulf of Mexico. His removal was inevitable. But does it make much sense, beyond being a symbolic gesture of a leader falling on his sword?

There is little surprise in the news that Tony Hayward is to be removed as CEO of BP. The BBC’s Robert Peston among others felt that Hayward’s days were numbered from the earliest days of the Deepwater Horizon fatalities. Peston reveals that the BP board had decided that its future would require a new CEO:

Directors also felt that the sacrifice of Hayward should not happen until serious progress had been made on staunching the oil leak and until it was possible to quantify the financial cost of fixing the hole, providing compensation and paying fines. In the last couple of weeks, there has been such progress. And if the moment has more-or-less arrived for BP to start building a post-Macondo future, then it also needs a new public face, a new leader.

The most significant charge appears to be his ‘PR gaffes’.

The demonization of Hayward

Since the Oil-Spill a storm of adverse publicity has been sustained against him. President Obama joined in with remarks in a television interview that Mr Hayward “wouldn’t be working for me after any of those statements”.

Mr Hayward has been demonised as being responsible for the world’s worst environmental disaster – and, let’s not forget, for the deaths of 11 men in the rig explosion that preceded it. Critics argue that, as the man in charge, it is Mr Hayward’s job to take the heat. Nor has he helped his cause with some misguided remarks about wanting his life back and optimistic comments about the clean-up operation. Other public relations own-goals included his refusal to answer questions put to him by a Congressional subcommittee and his decision to participate in a JP Morgan yacht race around the Isle of Wight. END

Leaders we deserve has followed this story closely. The background to Dr Hayward’s appointment in 2007 suggested that he had demonstrated top leadership potential, and had been selected for one of the most challenging of CEO positions with any global organization.

Growing stale in the saddle

CEO tenure remains a complex area for study. Danny Miller’s work is much quoted. He suggests although CEOs may ‘grow stale in the saddle’ that for many organizations, a change of CEO is most likely to take place only as a consequence of catastrophic performance. By generally accepted organizational criteria, Tony Hayward had appeared to making a good start in his job at BP. He declared intentions were to address issues to deal with unsatisfactory operational practices. But should he have been able to put enough changes in place to have prevented the specific errors that contributed to the catastrophe which led to the deaths of eleven people, and environmental disaster

What makes a good leader? How heroes become zeroes

Research into leadership has moved away from universalistic theories. We have stopped looking for presence or absence of a set of properties which differentiate a good leader from a bad one. Even success or failure of itself is insufficient to reveal a simple answer, because all leaders deal with uncertainties and make judgment calls.

In times of crisis, orchestrated anger against a leader builds up. His statements are analysed as evidence of his or her callousness, stupidity, duplicity. The symbolic significance of speech-acts are just as important as physical actions. Sound-bites become replicated in headlines and become elements within a dramatic narrative.

Psycho-analytical models of human behaviour suggest that social groups seek ways of dealing with fear and uncertainty which address inner phobias rather than practical means of overcoming unpleasant circumstances. Under stress and distress group members react as if a leader has betrayed them. According to one text-book such reactions draw on a basic assumption of dependency: a world in which

“The leader is the all-providing and all-knowing saviour who may also become another hate figure”

Lessons to be learned

Under such circumstances it becomes a social imperative to change the leader we have to the leader we deserve. There are lessons to be learned here, about leaders, dilemmas of leadership, and the social processes which result in complex issues being reduced to a leader’s incompetence.


BP Oil-Spill Battle Update July 2010

July 19, 2010

As the BP Oil-Spill story unfolds, Leaders we Deserve analyses and updates the leadership stories emerging in the last weeks of July. The notes are provided for students of business and leadership.

Friday July July 30 Up-date discontinued as month and the well-capping story draw to an end. First accounts emerging of blatant exaggeration of the environmental consequences of spill.

Tuesday July 27th. Tony Hayward goes. Weather conditions improving. BP says it has been given permission to prepare for a “static kill” – pumping mud into the top of the well through the new cap – a step viewed as an intermediate measure. The firm would then need final approval from the US to carry it out.

Earlier Posts:

Monday 19th July

Overnight came news from Reuters. The U.S. government released a letter to BP Chief Managing Director Bob Dudley from retired Coast Guard Admiral Thad Allen that referred to an unspecified type of seepage near the mile-deep (1.6 km-deep) well along with “undetermined anomalies at the well head…I direct you to provide me a written procedure for opening the choke valve as quickly as possible without damaging the well should hydrocarbon seepage near the well head be confirmed,” Allen wrote. His concern was backed up with chilling evidence from the sea-bed.

Latest developments

Publically-available information reveals more enthusiasm for opening the restraining choke-valve by the Admiral than by the BP leadership. We have here a typical situation in which leaders have to take decisions in the absence of all the information they would like to have.

BP and the US Government would both like to minimise the damage to the environment. Where they differ is concerns for damage to BP’s future , the importance of being seen to be doing the right things for important stakeholders, avoiding possible criticisms of ‘doing the wrong things, not acting decisively enough and so on.

BP prefer to leave the well capped. US Govenment sources may agree to some degree but also feel the need to avoid risks of being accused of tardiness, and of weak leadership.

In a further Reuter’s press release, we learn:

Doug Suttles, BP’s chief operating officer, said the company now hopes to keep the damaged well shut until the relief well is completed in August and the leak is sealed off with heavy drilling mud and cement. “We’re hopeful that if the encouraging signs continue that we’ll be able to continue the integrity test all the way to the point that we get the well killed,” he told reporters before Allen issued his statement. “Clearly we don’t want to reanimate flow into the Gulf if we don’t have to.” Suttles’ statement could indicate diverging viewpoints between BP and the U.S. government on plans for the well integrity test. It prompted Allen who will ultimately make the final call on the test to issue a statement that “nothing had changed” in the joint plan going forward.

There is apparent willingness from the US side to permit a further highly visible oil-spill in to the environment to protect against a possible hidden leakage in the future. BP, without such influence, would favor treating the capping as a stage reached, and from which attention can be focussed on the more permanent plans of sealing off the well completely.

Tuesday July 20th 2010

The broad story remains uncertainties over the capping procedure. http://www.bbc.co.uk/news/world-us-canada-10692360. Seepages on the sea floor have been detected near the leaking Gulf of Mexico oil. But Thad Allen, now named as the government’s incident commander suggests they may be unrelated to the oil-spill, or even to the entire drilling operation. The BBC report provides figures for the low pressure at the well-head. The pressure inside the cap is currently at nearly 7,000 pounds per square inch and rising at 1 psi per hour, while the expected reading was 8,000-9,000 psi.

Two side-issues

[1] Drilling of one of the two relief wells has been ‘temporarily suspended’, some 2000 feet above its target at the base of the original well.

[2] Estimates of another kind suggest that the big leakage will be into the bank accounts of the lawyers who will be gainfully employed for years

Thursday 22nd July

Cap remains in place. Weather forecasts suggest bad weather may disrupt plans of progress. There is a 50% chance that a weather pattern currently over the island of Hispaniola will turn into a cyclone by Friday, the National Hurricane Center says. It is currently moving west-northwest.

Friday 23rd July

Weather pattern firms up and heads for the Gulf. Possibility of delays to plans ‘a judgement call’ Allen says

Saturday July 24st 2010 Weather conditions worsen. Ships withdraw from the area, and the entire operation may be left unmanned for up to 48 hours. ‘Hurricane Bonnie’ seems to be making a beeline for the area (do Hurricanes travel in beelines?). Little more news overnight [7am GMT]


BP Oil Spill: Encouraging signs of more collaborative leadership

July 15, 2010

As BP prepares its crucial tests of the capping procedure, there are signs of a more participative leadership style between BP and the US government authorities

Reports [July 15th, 2010] suggest a less combative stance is being taken by the US government representatives dealing with the BP Oil spill in the Gulf of Mexico. Although great technical problems and dangers surround their efforts, the collaboration is a welcome sign that rhetoric is taking a second place to problem-solving. This is at odds with other news that BP faces a ban on deep-water exploration in American costal waters. In this post we examine the more positive story.

Scenario planning

“Upon completion of the tests, the federal government will possess valuable data regarding both the condition of the well – important when action is taken to ultimately kill the well with the relief well efforts – as well as an understanding of our capacity to shut the well in for brief periods if needed to prepare for a hurricane,” the White House said in a statement.

This suggests encouraging efforts at serious worse-case scenario work going on by US officials and BP technical executives.

According to the BBC

According to the BBC, Admiral Thad Allen reported that: “When BP is ready, we will start to increase the pressure in the capping stack”

During the test process, BP will monitor the pressure of the oil in the well. High pressure will mean the oil has been contained inside the wellhead. But if the tests show there is low pressure, this may indicate that oil is leaking elsewhere in the well. BP officials said that if the pressure proved to be low, the cap would not be kept shut and ships on the surface of the Gulf would continue collecting oil. BP has temporarily suspended work on drilling its two relief wells – which offer the only prospect of permanently plugging the leaking well – because of the planned test.

The steps in the testing are reported as

1. The middle ram regulating the oil flow out of the big valve on the top of the new cap is closed
2. The kill valve is closed off
3. The choke is closed; this takes a couple of hours and once it starts the pressure test can be said to have begun
4. Once the well is shut in, BP and government experts will assess progress every six hours
5. But if low pressure is detected they will open the well up instantly
6. Other precautions include extra monitoring, such as by remote vehicles on the sea bed


Participative leadership

The BBC report explains the technicalities of the capping in its usual lucid style. For me, the most powerful point was not technical but behavioural. For the first time, the message coming out is of joint BP/US efforts and a sharing of responsibilities. [But who are the persons referred to as “they”? BP? BP with US Government advice/control?] This is a nice example of a rather old theory, namely that of participative leadership. A rather more grown-up approach than blamestorming, I would say.

Good news, bad news

It is rared to report on a ‘good news’ story that does not have a down side. Around the time I noted the more positive collaborative efforts above, the news was also breaking of a severe blow to BP’s prospects in America. Plans are moving ahead for legislation which will effectely ban BP from deep water drilling in American waters.