BP’s cultural failings

I see in this morning's Financial Times the headline 'Cultural failings leave BP engulfed'. Instantly I'm attracted to it to see if it would have been a useful case study to put in my new book. (It's too late now as yesterday it went to print. It's the Economist Guide to Organisation Culture and is coming out in mid-July). The piece opens with:

"In the storm of public and political fury that has hit BP in the US since the Deepwater Horizon disaster on April 20, the company's shortage of native knowledge of America and how it responds to crisis has been painfully exposed."

OK so I do cover the difficulties companies have in moving into new (for them) countries. The concepts of cultural fluency at an individual and organizational level are discussed. There are lots of examples of companies pulling out of countries that they didn't understand the culture of: Walmart leaving Germany is one, IKEA leaving Japan is another (although IKEA is now having a second go at Japan hopefully having learned some lessons).

Cultural fluency, by the way, means familiarity with cultures: their natures, how they work, and ways they intertwine with our relationships in times of conflict and harmony. It means awareness of several dimensions of culture, including communication, ways of naming, framing, and taming conflict, approaches to meaning making, identities and roles, diversity .

I also discuss how companies respond to crises. There are some who do it well (Gap and its handling of sweat shops) and others (Shell over estimating its oil reserves) do it very badly. The 2008 financial crises showed in glorious detail the various ways of handling crises. It's hard to say whether the companies who manage crises well outweigh the companies who handle it badly. The latter get a lot more publicity. There's not a great deal of on-going news in a crises well-handled although it makes good case studies for MBA students – but have they learned from these when they get into high positions in organisations?
The article goes on to remark that:

"Yet in spite of the country's importance, BP is short of Americans in senior roles. Tony Hayward, the chief executive who has become the lightning rod for American anger, is British, as are the heads of its two main operating businesses and Andrew Gowers, head of media, a former editor of the Financial Times."

This is an interesting point that western companies entering China and other emerging markets are grappling with. I was speaking the other day with a VP for Talent Management for a large western manufacturing company with an expanding presence in China. She herself is Chinese but has lived in America for 20 years. Now going back to China with a specific brief to develop local leadership she is alarmed by the youth of the local senior executives, the scarcity of them, and their lack of experience. She feels she has very little time to get a robust local leadership strategy successfully up and running, and without local leadership she feels her company is in a very risky position.

Thus it may be that we see many more mishandled crises and large scale damage as companies wrestle with the supply/demand difficulties of getting local, good leadership in place.

Another point to note in the article is the legacy aspect. In this case it is the name

'Even Thad Allen, the US Coast Guard admiral who is the public face of the effort to fight the spill and talks about his good working relationship with BP, refers to the company as "British Petroleum", which has not been its name since 1998.'

I do look at the power of history and legacy in shaping a company's culture and the perception of it. It is very strong – not just internally but also externally. I remember working for British Airways 15 years after the merger between BOAC and BEA that formed BA. People still dismissed what another person said on the grounds that 'they don't know anything. They're from BEA'. (or BOAC depending on who was talking).

So I'll be watching the BP crisis unfold in terms of the cultural implications. I may not be able to offer much scientific or engineering expertise in how to stop the spill but I could give some useful suggestions on how to build a healthier culture.

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