By Jerry Levine
Today’s Machining World Archives September 2010 Volume 06 Issue 07
I am a chemical engineer and spent my entire 36-year career working for the company formerly known as Amoco, retiring a few months before it was acquired by BP. I have a few friends who continue to work there, but most of my coworkers were fired shortly after BP took over.
Almost no one (including current and former employees) has anything good to say about the former CEO John Browne, or Lord Browne of Madingley, as he insisted on being called in the office. Coming from this perspective, I was intrigued to read his recent autobiography, Beyond Business, An Inspirational Memoir from a Visionary Leader. Looking at the title I didn’t know whether to laugh or puke.
To be fair, Browne took BP, a relatively small, lackluster, formerly national oil company, through a series of acquisitions and transformed it into the second largest super-major, just one acquisition (Royal Dutch Shell) away from surpassing Exxon-Mobil. The Shell acquisition would have made BP not only the world’s largest oil company, but also the world’s largest corporation. Just before the BP board dumped Browne for a non-business related personal issue, he made the initial proposals to the board for acquiring Shell.
Browne grew the company by focusing on higher risk/higher reward “elephants” (big oil reservoirs) and ruthlessly cutting costs, as well as people. The company was run not as an engineering company, but rather as a financial holding company—contracting out much of its needs.
Browne was obsessed with cutting costs. His slogan was “more for less.” He demanded a 10 percent production increase annually with only 90 percent of the previous year’s resources. Browne never overtly said that maintenance or safety should be compromised, but deferring these non-productive costs was tolerated. While failure to meet goals led to firing, this also led to unmanageable risk taking.
Browne rotated managers into top jobs, gave them tough profit and cost cutting goals, and then moved them before they had to deal with the consequences. The Texas City refinery, for example, had five managers in six years. Each new manager had to either deal with the accumulated maintenance deferrals of his predecessors, which might mean being fired, or kick the can down the road for another year, and hope nothing went wrong.
The resulting can-kicking led the company into a series of major disasters in every BP operation—the Texas City explosion, which killed 15 people, the collapse of the $1 billion Thunder Horse oil production platform in the Gulf of Mexico, two major oil spills on the Trans-Alaska Pipeline, and most recently the Deepwater Horizon disaster, which killed 11 people and created the largest oil spill in U.S. history.
The penny-wise, pound-foolish approach led to many smaller, less publicized problems, which have made BP the most heavily fined oil company. BP’s total safety and environmental fines exceed the rest of the industry combined.
Both internal BP and U.S. government studies conducted a few years ago showed that while one or two bad accidents over a relatively short timeframe could be random chance, so many large and small accidents indicated a systemic problem. Browne’s ruthless cutting of people and costs left an unsafe environment ripe for disasters.
I am no psychologist, but Browne is a relatively short man, standing just over five feet tall. Pervading his autobiography is an insecurity that can be felt on almost every page. I’m sure this insecurity drove him to his successes, and they are many. But there is sadness in reading it, where on one page he uses the word “I” 13 times interspersed with references to Margaret Thatcher, Intel CEO Andy Grove, Exxon CEO Lee Raymond, and the Dean of Stanford Business School. Other pages and photographs link him to Bill Clinton, Al Gore, Tony Blair, Arnold Schwarzenegger and many other prominent people.
I also found much of the book quite disingenuous. Browne portrays himself as a great humanitarian, concerned about the environment and colonialism and poverty in the Third World. This is all very hard to reconcile with his real world performance—the record oil spills and the ruthless treatment of his own employees.