by Tom Bower
Browne’s enthusiasm for rebranding had not been approved by all BP’s directors. A minority feared that he was reacting against BP’s original name, “British” Petroleum, and was preoccupied by the creation of a global corporation divorced from Britain, albeit one that would still rely on the British government’s support. To those dissidents, Browne had also become excessively enamored of Tony Blair’s zeal for rebranding everything — including Britain itself as “Cool Britannia.” In reality, they argued, BP would remain an oil company, reacting in traditional ways to familiar challenges. Adamantly Browne insisted that BP would become environmentally friendly. The precedent was the company’s reaction in 1997 to Greenpeace activists climbing onto a rig in the North Sea to disturb seismic survey vessels. To avoid a repeat of the Brent Spar disaster, BP officials had soft-pedaled their initial public reaction, offering the protestors tea and helping them return to land. After minimizing the problem, BP began a High Court suit to recover £1.4 million of its costs from Greenpeace that would eventually lapse. The company had, however, placated Greenpeace by expressing sympathy with its opposition to fossil fuels and its support for solar power. But skeptics in BP’s boardroom were not convinced. “How can you prove BP is ‘Beyond Petroleum’? ” Browne was asked. “We’re only a petroleum company. It’s a simplistic and provocative slogan. The press will be cynical. They’ll murder it. And so will Exxon.” Browne was unmoved. No one, he knew, would dare to formalize a challenge to him. He was thrilled by Ogilvy & Mather’s stunning logo, using Helios, the sun god of ancient Greece, with a vibrant burst of green, white and yellow, BP’s traditional colors, shaped like a sunflower. Browne’s intellectual strength and dogmatism smothered the dissenters. This was personal. “Beyond Petroleum” captured the spirit of the times, emphasizing Browne’s insightful understanding of the future.
Browne was gratified that BP’s rebranding, costing $200 million, was hailed as a triumph, amplifying his reputation as a trailblazer. Once again he had calculated the odds correctly. Overnight he was anointed “Sun King” by the media, increasing the reverence in which he was held and his seeming invulnerability. “There’s nowhere to run and hide from me,” he declared. To secure his destiny, Browne set about removing potential successors. Rodney Chase was delegated to “squeeze out Peter Backhouse,” among the most capable oil experts of the younger generation. No one on the board, including Peter Sutherland, the former attorney general of Ireland, banker and international functionary, could challenge Browne, and 28,000 gas stations were rebranded as environmentally friendly “bp.”
Inevitably, some critics emerged, especially Lee Raymond, regarded by some as a heretic for championing the denial of global warming. In 1997 Raymond had defied the growing sentiment in favor of protecting the environment at the World Petroleum Congress. The following year, he dismissed renewables as “fashionable” and “scientifically unfounded scare scenarios.” The API’s chairman cited a petition signed in 1998 by 17,000 scientists questioning the evidence for global warming. Evidence emerged that the headquarters of the organizer of the petition, the Oregon Institute for Science and Medicine, was located in a tin shed, and that among the scientist signatories were “Ginger Spice” and a character from MASH. Undaunted, Raymond castigated “Beyond Petroleum” as “greenwash.” “You’d better deliver,” he sniped at Browne, irritated by his self-promotion. He, better than Browne, understood the fatal flaw of American governments. The oil industry’s hopes for improvement under President George W. Bush after 1997 had been dashed. Recoiling from accusations of “blood for oil,” Bush had distanced himself from the industry in the aftermath of the terrorist attacks of September 11, 2001. In the majors’ eyes, Bush’s only redeeming feature was that, unlike Jimmy Carter, he refrained from openly castigating the oil industry. In Raymond’s opinion, Washington was congenitally deaf to the industry’s predicament, and equally incapable of solving any big problems or of grappling with global warming.
Raymond’s anger evoked Browne’s disdain, even pleasure. More disappointing was Greenpeace’s cynicism. BP, suggested a spokesman, stood for “Burning the Planet.” The corporation, said the protestor, was financing the reelection of US congressmen with the worst anti-environmental records. Politicians voting in support of drilling in the Arctic National Wildlife Refuge had received donations from BP, including $7,000 for Senator Frank Murkowski, the chairman of the Senate Energy and Natural Resources Committee, and $11,000 for Representative Don Young, chairman of the House Committee on Resources. Two Republican senators, Trent Lott and Don Nickles, had received finance from BP toward their 1997 campaigns despite opposing Kyoto and other policies to combat global warming. Senator Nickles had voted for opening up the Arctic National Wildlife Refuge.
Browne ignored the criticism. Amid the euphoria, he presented his next ambition: BP’s merger with Shell to create the world’s biggest oil company. Browne knew the obstacles. His plan was not formally approved by BP’s directors, and even informally it attracted limited support. Its opponents recognized Browne’s indifference to the financial and regulatory hurdles, and to Shell’s directors’ disdain toward himself. In the Shell directors’ opinion, he was a brilliant strategist, but was self-obsessed, the antithesis of Shell’s management by consensus. To them Browne was a magpie, prone to stealing Shell’s ideas. First, knowing that Shell was preparing to announce a sustainability program, Browne had jumped ahead to publicize BP’s own program, despite the lack of adequate preparation to implement his plans. He had performed a similar wile by announcing BP’s diversity program during a speech in Germany. Again, he had anticipated Shell’s initiative without commissioning adequate research. Undeterred by the carping from Shell’s directors, Browne was confident about his cause. Whatever the price of oil, all the majors were threatened by gradual decline. BP’s union with Shell would forestall that threat. The alternative was the seeds of self-destruction.
Browne was determined to leave nothing to chance. If BP was to become the world’s biggest oil corporation, both it and he had to be endorsed in the United States. An inspiration was his regular visits over the previous three years to Silicon Valley. As a nonexecutive director of Intel, a notable star of the dotcom boom, Browne had frequently discussed the prospects for growth with Andrew Grove, Intel’s founder. On his return to London from the latest such meeting, he appeared motivated but depressed. Intel, he told his advisers, was planning 30 percent annual growth: “Why can’t we do the same? I want growth from everyone.” With a mixture of bravado and self-belief, Browne decided to commit BP to an annual growth rate of 5.5 to 7 percent, higher than Shell and ExxonMobil, the benchmarks against which he sought to be judged. He was prepared to bet the house that, despite sluggish oil prices, the higher volume would generate higher profits. Peter Sutherland and the board could not object, and Dick Olver, the head of exploration and production, reluctantly confirmed his ability to deliver Browne’s target after persuading his boss not to aim publicly for 10 percent. Success would depend upon increasing the existing 30–35 percent recovery rate to above 40 percent. Since the production facilities existed, the additional oil would be pure profit. On July 11, 2000, Browne went for broke. In a dramatic presentation to analysts and the media, he announced that BP’s oil and natural gas production over the next three years would grow by 5.5 percent to 7 percent every year, mostly in the Gulf of Mexico and Angola. That growth would generate an additional 10 percent in profits. “We are now ready to move from a phase of retrenchment to a phase of expansion,” he said. His announcement was hailed in Wall Street and the City of London as proof of his genius, and BP’s share price reflected his glory.
In 2001, BP was ranked fourth by Fortune magazine among American oil companies. Browne’s targets and rebranding, he hoped, would improve that ranking, but “Beyond Petroleum” had generated problems. Surveys showed that the American public was puzzled by the word “Beyond.” Investors were asking, “What is BP?” Was the exploration and production of oil BP’s
prime objective, or was it an oil company that did not want to be an oil company? Browne was undaunted. During 2001 he commissioned a “reputation renewal program” to refocus BP’s employees and the American public on the importance of the company’s size, scope and values. A “war room” was established in Houston to wage the equivalent of a political campaign to rebrand BP as a global player blessed by a visionary leader. Once again Browne was a pioneer. Although ExxonMobil and Shell had spent millions in self-promotion, neither had rebranded itself so aggressively as a friend of the environment. BP’s competitors, Browne smiled, were taken by surprise.
Within the 200-page “Reputation Manual” dubbed “the cookbook” was an exhaustive list of BP’s activities, investments, financial donations and scholarships to be cited during an unforgiving series of events, conferences and media appearances to promote BP as both America’s biggest oil and gas producer and a company with deep American roots that was fulfilling its ethical and environmental responsibilities. Browne, the Reputation Team knew, expected to be at the center of the campaign, symbolizing BP’s “humanization, personalization and identification.” Thousands of opinion formers across the USA were targeted to attend the “engagement opportunities” at which BP’s ambassadors would deliver the message. Invitations were also sought for Browne to attend important international meetings including the Aspen Institute and the World Economic Forum at Davos, and flattering profiles were arranged to appear in America’s most prestigious newspapers and magazines, especially Fortune. BP logos and flags were attached to newly planted trees and balloons, and were brandished at a back-to-school parade by 200 BP employees and their families in Chicago. Browne spoke at Stanford, Harvard, chambers of commerce and on The Charlie Rose Show about corporate governance and BP’s reinvention of itself to support the environment. Before each event, he required intensive briefings about the issues and the people he would encounter. After every “Big Moment,” his advisers would spend hours analyzing the benefits and deficits.
Early results confirmed the program’s success, and in 2002 the Reputation Team anticipated building on its achievements. Fortune magazine’s survey in the 2003 Petroleum section would elevate BP from fourth place to first. But by then the message from London was negative.
At the end of December 2001, Enron’s fraud had been exposed. Thousands of Houston’s citizens had lost their jobs and savings because of their misplaced trust in the corporation. In a speech in Houston in August 2002, eight months after Enron’s bankruptcy, Browne lamented that “Public trust in companies has deteriorated in recent months due to investigations into companies’ financial record-keeping and other operational procedures.” An opinion poll, he mentioned, showed that 84 percent of those questioned did not believe the statements issued by corporations. “I find this deeply concerning. The importance of trust,” he emphasized, was linked to “the crucial responsibility of leadership.” He added, “Trust comes not from size, or from words, but from practical action.” Corporations, he believed, should show “practical commitment” to being fair and impartial. So BP was stopping funding political parties. To demonstrate BP’s “practical commitment” to being fair and impartial, in March 2002 he had withdrawn the company’s annual $1 million of donations to politicians and political parties, although the corporation continued to provide facilities and material assistance worth many millions of dollars. Browne’s authority was barely enhanced by that pledge. In Britain he had taken a slew of Labour politicians and activists onto BP’s payroll, including Baroness Smith, the widow of former party leader John Smith, as a director of BP’s Scottish Advisory Board, and Anji Hunter, Tony Blair’s former gatekeeper, as BP’s director of communications. Neither woman knew much about oil or finance, but both enjoyed privileged access to Blair’s inner sanctum.
Despite appearances, there were fundamental problems at the heart of BP. To speed up growth, Browne ordered that the business units should be linked by computer into a “virtual team network,” to encourage internal competition and beat financial targets. Trusting as ever the advice he received from McKinsey, he added new criteria to the system of cascading contracts to enable his staff to monitor whether the 5.5 percent growth target would be met. The corollary was his self-immunization from those questioning his ambitions. In 2001 Browne’s sense of infallibility was bolstered by his elevation to the peerage, as Baron Browne of Madingley, by Tony Blair. Dressed in ermine, he swore loyalty to the Queen and took his seat in the House of Lords. A subsequent letter signed “Lord Browne” to employees in Amoco refineries in America evoked the riposte from one recipient, “I only believe in one Lord.” None of those employees had ever seen Browne. Only his closest advisers had noticed the significant behavioral change following the death of his mother Paula in 2000.
Browne had lived with his mother in Chelsea since his father’s death. She often accompanied him to official functions, and was his partner at dinner parties. Following her death, Browne began for the first time to enjoy an unfettered billionaire’s lifestyle. Dazzled by his fame, the respect he received from the City and Wall Street, and his popularity among grateful shareholders, his fellow directors tolerated his vanity. Challenging him about his preference for delivering speeches and attending A-list parties, enjoying unlimited expenses and the private jet available to the chief executive of the world’s second-largest corporation by revenue, rather than wading through dirt in BP’s refineries and distant oilfields, would have been churlish. Browne was trusted to ensure the reliability of the company’s industrial processes using the management methods perfected by McKinsey. After all, unlike some of his predecessors he had actually trained as an engineer, although he no longer showed much interest in the details of exploration, production or refining. Nevertheless, the board of directors, with limited engineering expertise, relied upon Browne to integrate Amoco and Arco into BP. Distracted by the glorification of Browne, they were unaware that the early results, as Rodney Chase admitted, “felt more brutal than even we expected.”
Until their first meeting in autumn 1998 in the cafeteria at BP’s headquarters, Amoco’s executives had believed Browne’s pitch of a merger of equals. Their first surprise was Britannic House, a squat building rather than an imposing tower. They were equally surprised by the agenda proposed by McKinsey to impose BP’s culture, structure and system upon what was privately called an “amateur oil company.” Amoco executives had urged Browne to retain their centralized management. Browne insisted on the opposite. “We have to get through the harvesting of low-hanging fruit,” he said, recalling BP’s botched acquisition of Sohio. Culture clashes during integration could not be ignored. “I learned that you had to have clarity with an acquisition. You can’t just let these things work themselves out,” Browne, rarely troubled by the condition of the human spirit, explained. The two companies were to be consolidated within a single world market. Integration, in Browne’s opinion, meant Amoco adopting BP’s organization and jargon. He appeared impervious to the sentiment that Americans, Russians and other nationalities could not be easily assimilated into BP’s culture.
Ever since their dismissal of Sohio as “flabby and costly,” Browne and Chase had become antagonistic toward multilayered organizations with lengthy chains of command. Browne had championed his direct access to the asset performers. Amoco executives who spoke of “aspirations” discovered that BP talked about “hard targets.” Browne accepted that McKinsey’s plan of breaking BP down into four business units was the key to making a global company work. Each unit, he said, would have “operational freedom” to allow individuals to see their own achievements: “It’s like they’re running their own businesses.” Each unit director would report quarterly to Browne during a one-and-a-half-day review. Success was rewarded with a bonus; failure earned dismissal. McKinsey’s vocabulary of “peer group challenge” and “peer group assist,” remarked Doug Ford, who was among the senior Amoco executives selected to remain, “takes getting used to. We weren’t prepared for this
.” Doug Ford, a genial and talented engineer, attempted to adapt to Browne’s “targets” culture, and Browne appeared pleased to receive obedience from the Americans rather than being challenged. Ford, responsible for refining at Amoco, and appointed to manage all BP’s refineries, rarely contradicted Browne, and concealed his dislike of Rodney Chase, who appeared to delight in making others’ lives uncomfortable. “Anyone showing weakness in front of Chase is fucked,” said one BP executive. “He’s an uncharismatic, complexed bully.” Chase’s mantra “More for less,” which demanded that 100 percent of a task be completed at a cost of only 90 percent of the previous resources, was embraced despite its Orwellian overtones. As Tony Hayward would later describe the penny-pinching philosophy, “We have a management style that has made a virtue out of doing more for less.”
In the first months after the Amoco and Arco mergers, Browne regularly commuted across the Atlantic to consolidate BP’s American empire. Each visit confirmed the difficulty of managing the company’s assets from London. “America is too serious a place to be used as a branch office,” he admitted, anticipating the obstacles of integrating two cultures but impatient to micromanage the solution. Curiously for a man steeped in research papers and intensive discussions, Browne resisted adopting ExxonMobil’s formula for success. Unlike BP and Chevron, Exxon imposed a military-style monoculture on its recruits. Every graduate was channeled through every experience in the industry, and conditioned to refer every issue to superiors and then to await their considered response. Cultural assimilation during the merger with Mobil had been relatively unproblematic, because Exxon’s deep-rooted culture allowed no doubts about the guidelines. By contrast, BP’s culture, with its mavericks shooting from the hip, was based on Browne’s personal interaction with the business units. Unlike the managers of Exxon and Shell, where every decision was endlessly discussed and performance was minutely scrutinized, Browne gloried in the swift challenge: “Perform or you’re out.” While Exxon’s and Shell’s engineers constantly checked the technical performance and safety of each refinery, offshore platform and wellhead, Browne had dispensed with the layers of scrutiny as cumbersome and costly, in favor of personal responsibility.