Lessons in leadership

where did John Browne go wrong at BP? that - rather surprisingly - was the question that came up at a two day festival of leadership at Michael Portillo's alma mater of Peterhouse Cambridge (nice orchard) last week.... All CH rules so can't go into too many details -- but I joined a group on whether leaders needed crises in order to lead. And the proposition was that it was opposition within BP to the JB rebrand to Beyond Petroleum and the replacement of the shield by the helios that lead inexorably to his downfall. Not surprisingly, that thesis was advanced by someone who had worked on the rebranding....

Nice to put yourself at the centre of the story - but the link between people who did not like Beyond Petroleum and the people failing to invest in safety in Texas City is pretty tendentious. So I put forward my alternative critique of what went wrong at BP under John Browne (notwithstanding that an awful lot went right as well).

The first - and biggest - BP mistake was the performance culture. There is nothing wrong with a performance culture - indeed I have never felt under so much performance pressure as I did at BP. But the BP performance culture became a macho obsession -- every quarter better; no admission of failure; no recognition of reality. The result was that any manipulable number was manipulated -- to make it -look good. No surprise that when sarbanes-oxley hit, an awful lot of underprovision - of environmental clean-up; pension provision was discovered. And that is the same mentality that starts cutting back on routine maintenance.

The second problem was the interlocking incentives that became a high performance mirage conspiracy. If my bonus depends on your performance I don't have too much incentives to question the phoney numbers you are serving up. So what should be a way of giving the Board assurance on delivery becomes a virtual performance Ponzi scheme.

The third was a culture of sycophancy. Hardly anyone ever dared challenge John Browne. he knew more about your business than you did. He was always right (and his one error - on Sidanco in Russia would be forgotten by the triumph of the TNK JV - well that was the theory). Everyone was jostling for the succession -- and knew that they were all part of a prolonged beauty contest with only one judge. Not an environment conducive to serious internal challenge - more like the court of Henry VIII.

But what about the non-executives ask the corporate governance groupies? But that exposes the weakness of the non-executives. It is simply unrealistic to expect non-execs to be able to see off an apparently all-conquering executive team. And if the right numbers and messages aren't coming up to the top of the executive tree, hard to see how the part-timers even more distanced from the business are going to be able to do it.

So what are the lessons? John Browne was the most impressive leader I have come across. But he would have been even better if he had encourage a culture of internal challenge and honesty and not ruled by terror. And then someone might have dared admit that there was a big safety issue in the US refineries. Or that things were going wrong in the Alaska pipelines. And his reputation - deservedly high for transforming BP from second division to top player - would not have suffered a torrid final year.