Browne, Haywood and the BP Leadership Transition

May 13, 2007

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Lord Browne’s resignation as head of BP on May 1st 2007 gets the Tabloidification treatment. Browne, credited with the rise of BP as a global oil company, and an exceptional businessman, has been brought down ultimately after admitting to lying in a court case. But the transition at BP to Tony Hayward as CEO is an equally instructive leadership story.

May 1st 2007

The Mail on Sunday has won the right to publish details of Lord Browne’s homosexual lifestyle. In his attempt to prevent publication, Lord Browne fabricated evidence to support the story he told in court. When this came to light, his resignation from BP followed.

The Economist this week called it the sad downfall of a Business Gernius.

A more interesting business story

A more interesting business story can be found accompanying Lord Browne’s decline and fall at BP. In his forty years with the company, his rise to CEO was hailed as a model of a self-made leader. He earned numerous honours for his significant part in BP’s transformation into one of the seven sisters, the billion dollar global oil giants.

Increasingly, the exploration game became less profitable. Efforts were made to cut back on expenses. A major disaster at the company’s Houston refinery, and a pipeline maintenance crisis in Alaska brought BP’s leadership under scrutiny. At a time when executive remuneration packages were increasingly challenged by investor pressure groups, Lord B’s arrangements were drawn to more public attention.

In January, 2007, Lord Browne who had planned to retire at the end of 2008, announced plans to bring forward his retirement to July. His chairman, Peter Sutherland described the out-going chief executive as

“the greatest British businessman of his generation .. his vision, intellect, leadership and skill have been a wonder to behold and he will be a difficult act to follow.”

A few weeks before he resigned, it was reported that Lord Browne would be leaving the company with a £5.3m pay-off, £21.7m pension, and millions of pounds in shares from his incentive arrangements. This was itself a controversial story, and opposition from individual shareholders was only resisted by support from institutional investors at the company’s AGM.

Meanwhile

As BP’s problems accumulated, another senior executive at BP critically reviewed the company’s leadership in light of the Alaska and Texas City issues. A speech to company employees found its way on to the internet.

Head of exploration Tony Hayward made the comments at a town hall meeting in Houston, BP confirmed to the BBC.
Mr Hayward said leadership does not listen enough to what “the bottom” says and that safety needed more work.
The remarks, put on the intranet by staff, comes with BP in the firing line over recent incidents affecting safety.
A blast in March 2005 at BP’s Texas City refinery near Houston killed 15 people and injured 180.
And in the past year it had to close half its Alaskan oil field due to severe corrosion along its pipeline there.

Within weeks

Within weeks, Tony Hayward was appointed CEO designate, to take over when Lord Browne stepped done. This came to pass on 1st May 2007 on Browne’s resignation.


Match Of The Day: Brown versus Osborne

April 18, 2007

Many of us missed Match Of The Day, Brown against Osborne, in the Westminster League. Although televised, the match attracted fewer viewers than the Manchester United/ Sheffield United Premiership football clash, which I watched. Sheffield United seemed to drag the front-runners down to their level. Meanwhile, at Westminster …

The Westminster match was a hastily arranged fixture in advance of more serious contests over the coming months. Brown had been challenged to defend his actions of a decade ago. It was to turn into a one-on-one battle between Chancellor Gordon and his Conservative man-marker, George Osborne.

Two hundred miles to the North West, Sheffield’s finest were at Old Trafford, where they were fighting for their place in the Premier League against the table leaders Manchester United.

Sheffield Manager Neil Warnock said that his team would be facing the best team in the world. While this would be contested by many fans from teams in the English league and beyond, he was effectively making the point that Sheffield were massive underdogs (you could have placed a bet at 14 to 1 for a Sheffield win).

What Sheffield did at Old Trafford

What Sheffield did at Old Trafford was to compete physically, never giving up, against more talented opposition. Young and energetic defenders followed their manager’s plan in man-to-man marking against some of the most elusive and skillful players in the world. Tackles flew in which sidelined United players, and added to concerns about the casualties sustained in recent battles.

The result was as predicted by the bookies a win for the table-toppers and likely Champions. But the win was a narrow 2-0. A week ago, also at Old Trafford, Manchester United had scored seven goals to win a quarter final match against one of Italy’s top teams. General consensus was that Sheffield had dragged the Manchester team down to their level.

Meanwhile in the Westminster League …

Please understand: I am just playing with this metaphor to see how a sporting battle might offer insights into a political contest. In this metaphorical sense, Gordon Brown might be seen as the odds-on favorites, entering the field with a ten-year record for financial success. His opponents’ tactics (like those of Sheffield United) were to challenge public perceptions of the top dog.

Over a decade, Gordon Brown has been regularly called upon to defend his financial actions, in such matches. He has been largely successful in preserving his reputation as a skillful and prudent Chancellor. (Let’s not forget his long-time ally Prudence).

I only caught the highlights in a late night news broadcast, which also indicated the final score had been a comfortable but not overwhelming victory for Gordon Brown. Had the conservatives set up a dogged man-to-man marking system that had minimized the nature of their defeat? Possibly. Had they dragged the Government forces into a scrappier sort of tussle than they would have liked? Again, possibly.

The BBC reported that

The arguments have been well rehearsed over the past few weeks, even years, but shadow chancellor George Osborne was not going to let that stop him .. The “raid” on pension funds had been a con, had devastated the funds leaving Britain with the worst system in Europe and been done in the face of official advice warning him of the consequences ..

The Conservative party went all out on this anti-Brown campaign, even producing a mock newspaper, imaginatively called The Moon, to hand out to rush hour commuters at train stations around the country, and declaring “Gordon Brown ate my pension”.

Gordon Brown ate my pension.

Yes, these are the defiant words of a street fighter.

Did the conservative battle plan work?

To the extent that they had shaped the nature of the fight. To the extent that the Tabloidification of the argument may contribute even marginally to a public perception of the Chancellor (shortly to become Prime Minister) as a man of stealth. It may be a dirty battle, but it may not have been totally futile.

In business, I have reflected on smear campaigns for many years. I’d like to see some decently researched evidence. If there’s anyone out there with some solid evidence I’d like to hear from you. In absence of such evidence I hold to a business principle. You smear your opponents at your peril. It’s a kind of wicked problem-solving. The unintended consequence is to risk a wider reaction of ‘a plague on all your houses’ among the neutrals. It contributes to the low opinion held of politicians by increasing proportions of voters (or perhaps, I should say non-voters).

These are the leaders we deserve, for as long as we accept the tactics of the playground which too often we are witness to.

Postscript

It was The Times wot done it. Originally, the story of Gordon the Pension Snatcher was broken exclusively by the Times newspaper. Today, it tucked away its report of the Brown-Osborne battle on page 22. Perhaps the accompanying Parliamentary Sketch by Ann Treneman rarther spoiled the Thunderer’s thunder. The headline ran ‘Hurricane Gordon sweeps in and demolishes his opponent’. Ouch!


The Leaders we Deserve: Is John Reid really so incompetent?

January 28, 2007

The Home Secretary Dr John Reid has replaced Tony Blair as the prime target for negative political stories of someone who is egregiously bungling his duties. Is John Reid really so incompetent? Are we fortunate to be part of a democracy in which there can be such robust criticism of our leaders? Or are we seeing the emergence of a culture in which apparent increased freedom of expression blanks out access to more thoughtful analysis in a torrent of simplistic rhetoric?

In an earlier post it was suggested that John Reid’s political honeymoon had come to an end. Reflecting further has helped me become more aware of the mostly simplistic treatment within the flood of stories about John Reid and his personal competence.

This weekend, The Sun offered a cartoon-like representation of John Reid as the head of a Frankensteinian monster, which has a space where a brain should be. This follows an earlier representation in the same newspaper of an unpopular England football manager with a turnip for a head. No prizes for guessing what image was provided in more recent times, when the team had a Swedish manager.

The Sun’s campaigns can, arguably, be seen as in the spirit of the grotesque and hugely popular cartoons in the tradition of Gilray , or the social commentary of Hogarth

It’s the Sun wot does it, innit?

The Sun has its own justification for the content and style of the paper. Unlike politicians, it can claim to win the popular vote every morning of the week. Sir Terry Leahy of Tesco made much the same point recently when asked whether there would be a Tesco party for voters at the next election.

A case can be made that The Sun may influence the voting intentions of a considerable number of people at the general election, and that Rupert Murdock may have a further influence on the words and deeds of politicians. But should we buy their claim made after one election that it was ‘The Sun wot did it’ ?

The contrary view is that the overall effect of The Sun’s political messages on voters is rather weak. Possibly, although political leaders such as Tony Blair at very least will put some effort into wooing the Sun lest its opposition will cost them valuable votes at election time. I am inclined to believe that the popular press, including its largest circulation daily paper, has some political impact (perhaps not as much as they might wish or claim).

It’s the heavies wot don’t do it: tabloidification

Less obviously, the impact of the so-called free press (The popular press in Liberal Democracies) is in sustaining a cultural norm accepting the rhetoric of the banner headline and the cartoon images. We may reach differing conclusions over whether the popular press influences political opinions. It seems clear to me that there is little doubt over the way in which the daily diet reinforces cultural behaviours. There are reasoned arguments to be found – publications such as The Economist maintain an admirable level of analysis on a range of business and political issues. In general, however, what used to be called the heavies, or the broadsheets, (or even The Quality papers) have become closer in format (and arguably even in style and content) to what used to be called the tabloids. Tabloidification has won the day.

The Case against Charles Clarke

The Home Secretary took on the job after his predecessor, Charles Clarke, was encouraged to resign by Tony Blair. A succession of damaging stories had emerged about failures in the Home Office. The leader took the rap.

The strongest ‘quality’ case against Charles Clark might be expected to be found in a paper such as the staunchly conservative Daily Telegraph. Shortly before his resignation the paper identified ‘three strong reasons why he should go’. These were mismanagement of his department; failure to address the problem when it came to light; and refusal to accept responsibility for the problem.

The problem turns out to be that the Home Secretary has failed in his primary function of ‘maintaining public order by effective management of the systems under his control. Mr Clarke has allowed some hundreds of foreign nationals, sentenced to prison in this country, to go free without even a formal consideration of whether they should be deported’.

This all sounds reasonable at first reading, and suggests that there was a case to answer. Further reading leaves me unconvinced. I am reaching a conclusion that we have here an illustration of The Nimzowitch effect.

This, simply put, is a state of general anxiety about what might happen, so that the threat appears more important than its execution. (See the earlier post on chess cheating for more on the Nimzowitch effect).

The Case Against John Reid

John Reid bought himself a honeymoon period by announcing energetic measures to put things right, and was equally energetic in indicating what a shambles he had inherited which would require quite a lot of fixing.

The combination worked for a while, but another series of stories (‘scandals’) emerged from the Home Office. The specific details now blur in the memory, but were often concerned with poor record-keeping, and the potential implications of such bureaucratic failings – ‘disappearances’ of various kinds.

The BBC has followed the stories diligently. Individually they are in varying degrees illustrative of our old friend The Nimzsowich effect. From just this week, for example, the time-line of crises includes

27 January…The News of the World claims 322 convicted sex offenders are missing across the UK
26 January….Home Secretary John Reid denies telling judges to give softer sentences to ease prison overcrowding
26 January….England and Wales Youth Justice Board head Rod Morgan quits over youth prisons’ overcrowding
25 January….Risk of being a victim of crime in England and Wales rises for the first time since 1995, figures suggest
14 January Senior civil servant suspended over failure to update police records of Britons convicted abroad

I leave others to decide the evidence of actual rather than threatened harm to the public.

So is John Reid really incompetent?

We are sometimes reminded that you may be paranoid, but you could still be persecuted. I believe that the various stories will have within them evidence that there continue to be problems that need fixing at The Home Office. But on balance, I see the evidence as demonstrating powerlessness of a political leader grappling with ‘events’. Powerless yes. Incompetent? I remain open to a reasoned argument. The view would be the stronger if it offered specific actions that could have improved things. Until then I will hold to the view arguments (stripped of political purposes) are based on a peculiar belief that a leader ‘ought to be able’ to fix everything going wrong in connection with his organization or department. It is the belief that grants the charismatic leader the high road to power, and the low road to eventual defeat.


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