Paul Strebel and Brian Rogers, IMD, discuss their case series on British Petroleum (BP). Set in 2007-2010 the cases explore issues of strategy, leadership and crisis management with a backdrop of the Deepwater Horizon explosion.
The (A) case begins with Tony Hayward’s appointment as CEO and looks at how he defined a strategic vision for BP. The (B) case highlights some of the changes Hayward made after becoming CEO and ends with the Deepwater Horizon explosion. The (C) case looks at the crisis management by Hayward and BP and at whether BP is on a path to economic and environmental sustainability under the leadership of new CEO Bob Dudley.
I teach in programs geared to senior executives and board members as well as to MBAs and high-potential executives who are interested in learning about leadership at the top. What initially attracted me to the BP story was the conflicting need for investment in safety on the one hand and cost control on the other, that Tony Hayward faced on taking charge prior to the explosion and the sheer volume of negative press the company received in the aftermath of explosion. Upon learning more about the role the board played in the lead up to the crisis and how the board and the CEO responded during the crisis, I knew that this story would create a unique learning opportunity for those who might find themselves in a similar position, having to deal with a trade-off between short term profitability and long term sustainability and then, deal with a major crisis, resulting in part from how the trade-off was made.
A wealth of information
The amount of information available on BP was simply staggering, after all, it is the fourth largest company in the world! It took some time to filter through the many interesting documents that I uncovered during the research phase, and the wealth of information available allowed me to write the case from publicly available sources. Given that the case was written at the time the scandal was unfolding, it would have been very difficult to gain direct access to the company. Nevertheless, I found many interviews, videos, and great quotes from the CEO and the board, some of which are featured in the case.
I found it very useful to collect and synthesize as much information as I could before revisiting the teaching objectives to identify where the gaps were. It can be very tempting to follow the information narrative and lose sight of why the case is being developed in the first place.
Why a case series?
Given how much publicity BP received in 2010, most people know about the Deepwater Horizon explosion that dominates the public narrative. To get participants to reflect on the difficulty of choosing between short term profits and long term sustainability in a publicly listed company, we broke the case up into the three parts: the first case focuses on BP’s strategy, safety concerns and its board of directors prior to the disaster. The second case covers Tony Hayward taking charge as CEO and the choices he made, which were exposed as wrong by the explosion. The third case focuses on what happened in the aftermath, showing how inept communication nullified the technically competent response to the disaster. Breaking the case up gives participants a chance to understand and appreciate the sometimes conflicting objectives and pressures that managers at the top face and the trade-offs they make.
We initially prepared a four part case, but after teaching the case the first time and discussing it with colleagues, we opted for a three part case. We also added some additional information about BP’s culture and the closest competitors, Shell and Exxon, to help participants develop a better idea about the relative strategic positioning of the company.
Teaching the case
This case series can be used in programs that target those at the highest levels of management (C-suite, board) but can also be used with MBAs to highlight the importance of coherent short and long term decision-making, and how that affects communication during an unexpected crisis.
These cases demonstrate the importance of integrity at the top, the role of governance in reconciling economic and environmental sustainability, and how difficult it is to communicate effectively under pressure during a crisis. Since the case series addresses a range of issues, it is important to adapt the learning script to the audience, for example, providing more time for the role of the board with top management groups.
In the teaching note we reference some video clips of CEO Tony Hayward that can be used in class. By seeing the clips participants get to create their own impressions of him before the crisis. They also get to observe how differently he comes across once the crisis erupts. The video clips also underscore the importance of “walking the talk” and having one’s words match one’s actions.