Lord Browne: What BP taught me about business engaging with society
08 June 2016 -
The former chief executive of BP great brought success to the oil giant during his tenure, but his time with the company also taught him lessons on how business interacts with society and what that relationship means for corporate success
During his time at BP John Browne, the Lord Browne of Madingley, was praised for the success he brought to the oil giant, despite controversies surrounding safety deficiencies at the company.
In 2005, an explosion at an oil refinery in Texas claimed the lives of 15 workers and injured more than 170, an event that subsequently led to BP facing fines that totalled more than $70m.
Despite the subsequent troubles facing BP since Lord Browne’s resignation, including the recent rejection by shareholders of now CEO Bob Dudley’s £14m pay out, much of BP’s success during Lord Browne’s tenure came through a series of mergers and new overseas ventures.
One such new venture took the oil giant to South America, which at the time was a very dangerous environment to operate in, and instead of properly engaging with the community, BP took the decision to cut itself off the from the local people in a very obvious way.
“I remember going into Colombia at a time when it was literally life-threatening,” says Lord Browne, speaking at CMI’s Bouncing Back event . “BP’s solution was to build a very large fence around our operations. So we built a big fence and then we decided that we wanted to engage with the people in the community.
“Of course that doesn’t make sense and so the relationship got off on the wrong foot.”
This ill-founded relationship meant that BP staff were unable to connect with local communities and therefore did not understand the resentment felt towards BP’s presence in the region.
European media outlets subsequently accused BP of being complicit in human rights abuse committed by the Colombian military and, while the company was cleared of all wrongdoing, BP’s brand and reputation was already tarnished.
Importantly, Lord Browne says the oil giant was able to learn from these mistakes and adopted a different approach in later overseas ventures.
“We learned from that when we went to Indonesia where we did something very different,” he says. “We thought the way to get things done was to engage with the community rightly and help solve their problems and from that we learnt a big lesson, which is to speak to people not in a condescending way but ask them: ‘What’s on your mind? What do we need to do to make this work?’”
Real commitment from senior leaders, he adds, is vital: words have to be backed up by actions. “If I said something, I had to dedicate time to doing it” – something that he learned through his experiences, but which many CEOs fail to do.
The 30% rule
Analysis has shown that proper engagement with society not only helps an organisation’s reputation, it is also vital for the future success of the company.
Research conducted by Lord Browne with McKinsey for his recent book, Connect, found that there is a definite link between a company’s engagement with society and its financial performance.
The research found that, on average, “30% of a company’s value is at risk as a result of breaking its bond with society”, a fact borne out when Volkswagen’s share price plummeted by 30% off the back of the emissions scandal that rocked the motoring world.
Find out more about CMI’s Bouncing Back series of events
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