When Tony Hayward took over at the helm of BP in May 2007, he appeared to be the obvious successor to his widely respected predecessor, Lord Browne, and few commentators demurred with that perspective at the time. Yet, a little over 3 years later BP would announce his resignation as CEO in the wake of the Gulf of Mexico oil spill disaster and a series of gaffe prone responses by Hayward during the crisis management. A highly intelligent man, who had risen relatively rapidly through BP’s corporate ranks, with several notable achievements behind him, Hayward is widely vilified in BP’s major market, the US, and reduced to an object of ridicule by much of the US media. That’s not to mention the economic damage done to BP and investors through its share price fall and the legal and environmental costs of cleaning up. Although some argue that an oil spill such as this was always going to be career challenging for any oil company boss, much of the damage was self inflicted and can perhaps be explained by failings in Hayward’s leadership style and ability.
Ironically, it is said that Hayward first came to his predecessor’s notice as a high-flyer during a leadership conference in Arizona in 1990. Promotion thereafter seems to have been rapid. Shortly before becoming CEO, he very publicly criticised BP’s leadership style, saying it was too directive and that the company didn’t listen sufficiently well. And yet it is precisely the failure to “listen”, to attune to the wavelength of a key constituency, that was at the heart of Hayward’s problems in managing the fallout from the initial oil platform explosion and leakage. Repeated utterances by Hayward struck entirely the wrong note to a US audience shocked and angered by what appeared to be a catastrophe on their doorstep. Early on, Hayward predicted that the environmental damage from the spill would be modest and he denied suggestions that underwater oil plumes were forming. Most damagingly, on NBC’s Today programme on 10th May, he observed; “There’s no one who wants this over more than I do, I’d like my life back.” It is not that Hayward didn’t care; he was probably trying to stress that he of all people was anxious to sort the problem and was attempting to reassure that BP was committed to capping the leak and cleaning up. However, his language and unassuming manner came across as blasé on the one hand and his rejection of claims of likely environmental damage, together with his defiance before the US House Energy and Commerce Committee in June, appeared arrogant and confrontational on the other, exactly the opposite of what ‘reputation management’ required in the context. Even though much of what he was saying at the time in terms of downplaying the extent of the potential environmental damage seems now to be borne out¹, this approach was inept and naïve to say the least. It is often assumed by Brits that, because Americans speak the same language as us, they perceive things in the same way and react in similar fashion. Wrong – ‘mistake number one’ in dealing with cross-cultural perception. Although the USA is a vast melting pot of different regions and cultural heritage, as a nation they usually respond homogenously to threats and require urgency and energy in finding solutions.
Barack Obama’s leadership performance over this can also be criticised as having unnecessarily “upped the ante” but this was entirely foreseeable and something Hayward should have appreciated. Having experienced how George W. Bush’s tardy reaction to Hurricane Katrina in 2005 was the final nail in the coffin of his reputation, it seems obvious that President Obama was never going to “under-react” to an environmental crisis on his watch. Overnight, BP became British Petroleum despite the fact that its US operation is staffed mainly by Americans, the oil platform was owned by Transocean (essentially a US company) and the exploratory well casing was installed and cemented by Halliburton. Nevertheless, it is Anglo-US relations that have been impacted and Tony Hayward’s career as CEO ended. He is being replaced by Bob Dudley, a US director who has been responsible for BP’s activities in the Americas and Asia since 2009.
So, how come a ‘company man’ as intelligent (first class honours degree in geology) and experienced as Tony Hayward could fall so fast? What lessons can we learn from this?
- Leaders, especially in business, frequently feel that they have to take personal charge of important matters and be seen to be doing so. This is partly a matter of ego and partly the nature of the pressures of the modern business world.
- Tony Hayward became the personal face of BP’s response operation. He located himself in Houston and fielded most of the TV and other media interest. And yet, what personal experience of crisis management did he have? What experience of dealing with the US media at this level did he have? After all, PR was going to be crucial. Michael Cherenson, head of US public relations advisory firm Success Communications Group says; Hayward is “breaking some of the basic rules of reputation management” by being arrogant and confrontational. “He is actually doing the opposite of what he should be doing. He is spending most of his time talking rather than listening”.
- Understandably, Hayward wanted to be visible at the start but, arguably, he should not have relocated to Houston and taken personal control. That should have been delegated to Bob Dudley, as executive head of BP’s Americas operation, with Dudley reporting directly to Hayward on the well-capping and clean up. It should have been left to Dudley and his US colleagues to be the front face of the campaign.
- It takes great leadership to give others the limelight in such high profile situations and to be comfortable with responsibility being exercised by subordinates more suited or qualified to deal with the particular situation at hand. To do so is neither a slight on the appointed leader’s authority or position, nor an indication of inadequacy, yet many can feel defensive and want to be seen to be “in charge”. Perhaps this explains why Tony Hayward felt compelled to project himself into a situation and environment for which he was not best equipped.
- Too often, “leadership” is equated with function, status and power. Such an approach is most dangerous when people who in reality are unsuited to leadership acquire positions in organisations through the passage of time, or are promoted because they are successful in manipulating the organisational hierarchy. They then jealously guard the exercise of leadership functions, a defensive approach that does not optimise outcomes. In the hands of inadequate leaders, it is downright dangerous (though that is not to say this applies to Tony Hayward).
- The concept of “dispersed leadership” seeks to de-couple the role of “leadership” from function, status or power. Actual leadership on any particular issue at any particular time should be exercised by those most qualified or suitable in the circumstances. The ‘organisation appointed’ leader takes a back seat supervisory role consistent with the organisation’s governance responsibilities, lending advice and support where it is sought. This minimises ‘ego defensive’ leadership. ‘Organisation appointed’ leaders should be comfortable with such dispersal on a case-by-case basis but this does require a whole new mindset. Not all are ready for it.