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BP, Tony Hayward and Leadership Legacy

May 3rd, 2010 · No Comments · Follow the Leaders, Organizations at Their Best, Thoughts on Life and Leadership

Many executives talk about the legacy that they want to leave.  The current challenges of British Petroleum with the massive oil leak in the Gulf of Mexico provide a clear set of lessons about the legacy any executive leaves.

Lesson One: A Leadership Legacy is Built in the Past

BP was a company under fire until a few years ago.  When Tony Hayward took the reigns in 2007 he made it clear that changes were imperative.  He went after a culture of swagger and arbitrage, refocusing on business operations, safety and engineering.   He simplified an organizational model that was so complex even Bain and Company was cross-eyed trying to understand it, streamlining and cutting unnecessary cost.  It was his choice about where to focus his efforts and the agenda he set for the organization that began his legacy.

Lesson Two: A Legacy is Strengthened or Destroyed by Disaster in the Present

In a feature article in The Wall Street Journal today, Guy Chazan is not optimistic, saying “Mr. Hayward’s legacy could be marred as BP heads into the crisis grinder that has chewed up big names like Toyota and Goldman Sachs”  Well, maybe.  But Toyota’s disaster was not the accelerator issues.  It was the culture of denial and attempt to sweep it under the rug.  Look for more here in Friday’s PonderThis on Goldman, but the same applies.  What has put them in the grinder is not actually the fact that they made a lot of money from the collapse of the real estate market.  Instead it is the hubris of being out of touch that has painted a target on them.

Can Tony Hayward do better?  If this interview with BBC is any indication, he is off to a good start.  He cannot undo BP’s past decisions, including the challenges the he prioritized 3 years ago which did not prevent this disaster.  Perceptions on the ground (at least those of locals published widely in the press) are that BP has not done enough.  But when the worst is happening and no one can stop it, there may not be such a thing as enough.  BP contracted with another firm to establish and manage the drilling platform.  But Hayward was very clear that BP understands that they are accountable for the oil and will pay for the cleanup.  Only time will tell if the company is as good as their word; but he has not started by denying, ignoring or passing the problem to someone else.  That may be his legacy when all is said and done.

Lesson Three:  History is Written by Victors

BP now has to be able to execute and survive.  This will be an expensive and painful process that will influence the rules of engagement in offshore drilling for decades.  If they are unable to clean up the mess and mitigate the damage, then Hayward’s willingness to take accountability will be forgotten- except perhaps by extreme shareholders who believe that he should not have accepted the liability as he did.  If BP does get it done- his will be a case study for ethical leadership and public accountability.  What better legacy could any executive ask for?

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