Why BP's New CEO Is Lucky -- and the BP Board Is Shrewd

Earlier in the week, I was interviewed by Michael Krasny at KQED (our local public radio station) about BP's new CEO Robert Dudley and the more general question of CEO accountability.  You can listen to the interview here if you like.  To get ready for the interview, I took a bit of time to read up on the infamous outgoing CEO Tony Hayward -- who even as he was departing, continued to stick his foot deep down his throat.  As The New York Times reports, Hayward admitted that it was time for new leadership at BP, but then emphasized how hard he had worked to improve safety standards at BP, but “sometimes you step off the pavement and get hit by a bus.”  I was surprised that this comment did not get more play, as one of the worst things that a leader can do is to convey that they have no control and no responsibility when things go wrong.   As is well-documented, this is just one of many misguided comments by Mr. Hayward, his most infamous being his comment that he wanted his life back.

As I was reading such reports, and thinking about research on the romance of leadership, executive succession, and the illusion and reality of CEO influence, I realized three things.

The first, as my headline says, is that the new CEO Bob Dudley is mighty lucky to follow someone like Mr. Hayward.  Indeed, because of the power of psychological contrast, the more that Mr. Hayward comes across as an insensitive buffoon, the better a scapegoat that Mr. Hayward becomes -- and the better that Mr. Dudley looks in contrast.  If I were Bob Dudley, I would be delighted with Mr. Hayward's final gift -- the comment about the bus -- as it makes it appear that BP's leadership has been repaired by his promotion to the position. The fact that Dudley is from the U.S. (Louisiana in fact), has been focused on managing the fiasco and thus spent a lot of time in the Gulf, and has made no major gaffs so far, all look even better when contrasted with Mr. Hayward's English accent (because confidence in the U.S. market is so important), the relatively little time that he his spent in Gulf and of course his many gaffs.( As an example, look this  attack on Hayward by Harvard's Rosabeth Moss Kanter)

There is an interesting lesson here, a broader one, for every boss who is offered a new job.  If you are lucky, or perhaps strategic, following damaged goods like Mr. Hayward will make things a lot easier (at least at first) than if you follow a widely admired boss.  This is also a pattern that I commented on in The No Asshole Rule -- where quite a few bosses explained to me that it was great to take a job where the last boss was a certified asshole because, in comparison, they seemed to civilized. 

The second thing I realized was that, although calls for Hayward's resignation have been ringing for months, the BP board was very shrewd to leave Mr. Hayward in the position and to let him take all the slings and arrows on behalf of the company and his colleagues.  He was beat-up by Obama, the U.S. Congress, and many many others until the leak was (apparently) stopped.  By doing so, Mr. Hayward served as an excellent scapegoat.  If Mr. Dudley had stepped in before the leak was stopped, he would have taken heat that would have undermined his honeymoon period and, by association, BP's credibility.   But since Dudley was in charge in Gulf operations, the "symbolic repair" appears credible even if it is left unsaid:  "It was Hayward's fault, so he is gone, and the guy who fixed it is now in charge."  So I have to give the board credit for playing a lousy hand pretty well. (I would also note that if you look at the level of responsibility that the board is still giving Mr. Hayward, it appears they have faith in his technical skill, if not necessarily his ability to deal with press and public -- which further suggests that this is necessary scapegoating rather than a complete loss of confidence in his abilities).

The third thing I realized is that all these theatrics are an interesting sideshow that may distract BP insiders and outsiders from fixing the real problems.  As is well-documented, especially when a company is large, old, and complex, leaders almost always get far more credit and blame than they deserve.  As such, although it appears that BP's board has been wise in terms of handling CEO succession, the real question is if BP can ever change from what is a culture that has had ethical and safety problems for a long time -- apparently worse than other major oil companies.   That will be the real test of Bob Dudley's leadership and the board's skill.

Although should add, as I emphasize in Good Boss, Bad Boss, that if a leader can create the illusion that he or she is charge and has the power to make positive organizational changes, the confidence and effort that it inspires can help bring about such changes. A great example is George Washington -- check-out David McCullough's 1776.  In other words, sometimes such theatrics are pure bullshit (like BP's "Beyond Petroleum" campaign), but if a leader is persistent and authentic, a symbolic change can be a powerful step toward real change.  There are lot more oil wells in our oceans, so for everyone's sake, I hope that the symbolic change at BP leads to real changes.

As a final comment, although I have vented plenty of anger at BP, at the same time, I have some sympathy for BP's board, Mr. Dudley, and most people who work for BP, as they are in a very difficult spot because of both the the stigma and the difficulty of what they are trying to accomplish.  I would not want to be in their position right now, and finding a way out of this mess isn't going to be easy.

P.S.  Tom Davenport -- a brilliant knowledge management  guy -- just put a great post over at HBR called "If Only BP Knew Now What BP Knew Then."  Tom makes a compelling case that BP's narrow focus on speed and profit helped destroy an emerging safety culture.  I was especially intrigued by this link to a Financial Times post on BP's narrow focus, which ends by reporting BP's motto ion recent years "every dollar counts, every seat counts."  A seat is an employee at BP.  Surely, that is true in every company, but if you are just hyper-focused on every penny, it turns attention away from other things, like safety.

Comments

[Steve Freeman]

The real winner in this scenario is surely Lord Brown, the previous CEO--even though he was forced out over a personal scandal. Over a decade he stripped out and outsourced much of BPs internal skills in pursuit of "shareholder value", and now it's lost its resilience. He'll still be collecting his pension whatever the eventual cost of this mess.

[Bob Sutton]

Jonathon,

I think your point of view is reasonable from an OBJECTIVE point of view. But in terms of how the theatrics unfolded, he played the role of a nearly perfectly scapegoat whether he deserved it or not. I would also add that the implication that the accident was a complete surprise is not very convincing given BP's lousy safety culture (by far the worst of any major firm; this is well-documented) as well as specific reports from workers on the oil platform that BP managers were pushing them to work faster and take greater risks. Moreover, in terms of the art of symbolic management, there is strong evidence that CEOs who make statements that they have no control over important organizational outcomes lead firms that suffer lower stock prices and are more likely to lose their jobs. This is pretty well-documented. It reminds me of someone who knew he was on a busy street and stepped off the curb without looking both ways, and was totally shocked when he get hit by a bus. But to return to the main points: 1. He was the perfect scapegoat in this situation, objective facts aside and 2. I think the BP board did a great job of timing has removal to protect the new CEO and the firm's reputation. Whether we like it or not, leading a large firm is partly about impression management, not just making the right objective decisions, and CEO's who can't hold the confidence of relevant constituencies need to be removed -- that is a big part of the job, some researchers argue by far the most important part.

[Jonathon]

Some interesting points but I disagree. The US media and government decided from day one that Mr Hayward was enemy number one and every story and article that features him seeks to reinforce that point of view.

I agree - he got it wrong. But at least he admitted he couldn't fix everything. Honestly - how does the CEO know an oil well pipe is going to explode? And if he did know - what was he going to do about it?

What this story is really about are the differences in communication stles. That is the slick and polished for the media US style vs the tell like it is British style.

I think the bus comment is a tour de force and sums up the whole situation nicely.

Ye she got some things wrong and doesn't speak with an american accent - but that doesn't make him public enemy number 1.