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BP exploits past triumph over disaster to camouflage new one welling up

April 12, 2011

In an access of self-congratulation, BP’s current press advertising campaign trumpets the oil company’s success quelling one of the world’s worst natural disasters  – caused by, er, itself (and, in fairness, a few commercial collaborators such as Transocean and Halliburton). An irony in itself, you might say. But, as will be seen, not the only one.

The ads, created by Ogilvy, feature an image of the Macondo oil site in the Gulf of Mexico taken on September 28th last year, showing a crystal-blue ocean lapping around an oil rig. Below it is the strapline: “One year later. Our Commitment continues.” And, just to give the flavour, here is some of the body copy: “From the beginning, BP has taken responsibility for the clean-up. Much progress has been made and our commitment to the Gulf remains unchanged.” The campaign marks the anniversary of a massive explosion on April 20th last year, whose after-effects devastated the wild life, fishing and tourist industry in the Gulf. It should be added that the disaster nearly brought BP, one of the world’s largest companies, to its knees, and cost its chief executive, Tony Hayward, his job.

BP, under new management headed by Bob Dudley, is now breathing a huge sigh of corporate relief. Predictions that it would be broken up, that its share price had undergone irreparable damage, that it would be a blighted brand shunned by consumers, or even that it would be excluded from further drilling operations in one of the world’s most prolific oil fields, have all proved wide of the mark. Meanwhile, almost all the beaches are back in business in the Gulf. So a triumph of sorts .

But what’s this? Dudley, the squeaky-clean new CEO, is in trouble already. An American with extensive experience of the Russian oil market, Dudley’s big strategic idea is to call in the Old World to redress BP’s damaged balance in the New. Specifically, he has crafted a smart but high-risk deal with Russia’s state-owned oil group Rosneft, which would give BP a free hand in exploiting some of the world’s richest oil reserves, languishing under the Arctic shelf. Rosneft does not have the expertise to do this on its own, and the deal – involving a massive $16bn share-swap between BP and Rosneft – would put BP in the enviable position of being the only oil major able to tap into these reserves, while also lessening the company’s dependence on the USA as an upstream (oil exploration) market.

At the time it was announced a few months ago, the Rosneft deal was greeted with much hoopla in the investment community, which had the desired elevating effect on BP’s share price. Now, however, the deal has reached an impasse and Dudley’s reputation is potentially oil-tarred. The politics are complicated but, essentially, BP’s partners in its existing Russian joint-venture, TNK-BP, have – apparently unexpectedly but so far successfully – injuncted the deal. Time is running out: the deadline is April 15th. Either the deal fails, in which case BP will receive another massive blow-back to its reputation. Or BP comes up with a huge bung (said to be $2bn) so that the green-mailers go away. Option B is of course preferable, but still leaves Dudley, BP, his chums at Rosneft and in the Kremlin looking like a bunch of chumps who have been outwitted by a few greedy oligarchs.

Either way, a bit of tactical diversion aimed at BP’s investment community – which is still largely London-based – seems highly desirable while things are sorted out. And what better manner of doing it than to remind investors, via the Sunday press, the dailies, The Spectator, New Scientist and the Economist, of BP’s earlier triumph? Or rather, triumph over a self-manufactured disaster.

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BP brand plunges from Deepwater to Ground Zero

May 11, 2010

I’m beginning to feel sorry for Andrew Gowers. Having had an exemplary career at the Financial Times, he had the misfortune to become its editor. In the wake of a complex and expensive libel case, he was ‘let go’  by senior management in 2005. With contacts like his, why worry though? A glittering future in PR beckoned.

And so it proved when he became head of communications at blue-chip investment bank Lehman Brothers London. How was he to know that, in two  short years, he would be at the epicentre of the global financial meltdown? Never mind, pick yourself up, dust yourself down and move on to…BP. Weeks later, the Gulf of Mexico explodes into uncontrollable life.

Avoiding reference to Jonah, I’ll confine myself to the observation that, for a man with Gowers’ peerless experience of crisis management, he seems to have been pretty slow on the uptake. Yes, he’s been indefatigable on the airwaves, mainly pointing out that it’s not all BP’s fault. Which it isn’t: try the Swiss-based company which leased the rig to BP, and the US maintenance outfit which passed the defective shut-down valve as fit for purpose. Also, BP is only a two-third investor in the oil well. But no one wants to hear about that; certainly not President Barack Obama and the American people.

What Gowers, and his colleagues, conspicuously failed to do was mobilise their chief executive fast enough. The oil rig explosion took place on April 20. BP may not have known the leak’s rate of flow, but it certainly knew this was a very serious industrial accident indeed. Yet it was not until three days later that the company released its first statement from group ceo Tony Hayward and, as far as I can make out, not until May 3 that Hayward himself made a broadcast public statement.

Did it really take that long to determine this oil spill is quite possibly the worst man-made ecological disaster to date? Not in the minds of journalists who – like nature – abhor a vacuum, and fill it with speculation. And not – crucially for any crisis management specialists these days – in the social media space, where any half-way decent speculative theory gets magnified a gigafold. Does Gowers or BP viscerally understand this? I suspect not. Until very recently, if you had looked up “BP Oil” on Google you would have found hundreds of references to the incident – on blogs, Twitter, YouTube and the rest, but almost none seeded by BP itself. Does BP imagine its investors take no notice of all this? £19bn knocked off the share price suggests otherwise: they will get their information wherever they can.

Credit where credit is due, Hayward is now cleverly framing the disaster as a common threat, with BP in the front line of resistance. His language has an appealing Churchillian ring to it. But the initiative may already be lost.

Of course, from a corporate standpoint, BP’s caution is entirely understandable. Make light of the disaster while it is still unfolding and it projects an uncaring image which will do endless damage to the brand later. Rash admissions, on the other hand, will expose it to years of litigation, with its toll on management focus and corporate profits. No one knows this better than Hayward, who has spent three years cleaning up the company’s reputation and settling claims after the March 2005 explosion at  BP’s Texas City refinery, which killed 15 workers and injured about 170. Corporate negligence ill fits the image of a company that has struggled hard to position itself as environmentally friendly with a cuddly logo and a $4bn alternative “Beyond Petroleum” energy initiative.

And yet all that misses the point. The speed of mass communications these days no longer permits – if ever it did –boardrooms to dictate the pace of events. Another fine example of crisis mismanagement, admittedly on an infinitesimally smaller scale, reinforces the point. Johnson & Johnson is rightly considered a model in consumer marketing circles for the way it dealt with the 1982 Tylenol scare, in which seven people died after some pain-killer capsules were laced with cyanide. But now it has come a cropper, after the US Food and Drug Administration warned that some of its proprietary over-the-counter medicines for children (including Tylenol) had too much active ingredient in them, and thus failed to reach the acceptable public safety benchmark.

Although there is no evidence of anyone being harmed, and J&J acted promptly and efficiently in organising a voluntary recall, it failed to explain itself to anxious parents, who have become increasingly restive. They quickly availed themselves of Twitter, Facebook and various parenting blogs to express their frustration at not being able to get a straight answer out of the company about what was going on. This is only the latest of a number of poorly explained recalls, which could have catastrophic knock-on effects for the company’s reputation. As one parent, quoted in the New York Times, put it: “Another recall for baby Tylenol. Well no more baby Tylenol, back to generic brand.”

Although J&J can scarcely blame the forces of nature for its self-inflicted disaster there are, nevertheless, parallels with the BP situation. In both cases, the companies seem obsessed with procedures and asserting internal control, which conveys the unfortunate impression that cover-up rather than communication is the ultimate agenda.

As I commented in my blog post on the Maclaren baby pushchair crisis last autumn, a bunker mentality is the default company reaction in these situations, and it’s actually disastrous. True, some crises are worse than they seem; acting upon them could aggravate their severity, whereas left alone they may quietly subside. But can you really afford to take that risk? Suppose this is the big one, the corporate reputation-wrecker?

Whatever you do, don’t hide behind PR flunkies and hope it will go away. Get the chief executive out there early, personally engaging with the media. Maclaren didn’t do that, with disastrous results for sales in its main market, the USA. BP and Toyota eventually did, but I bet they wish they had wheeled them out earlier.


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