Why BP's New CEO Is Lucky -- and the BP Board Is Shrewd

Earlier in the week, I was interviewed by Michael Krasny at KQED (our local public radio station) about BP's new CEO Robert Dudley and the more general question of CEO accountability. You can listen to the interview here if you like. To get ready for the interview, I took a bit of time to read up on the infamous outgoing CEO Tony Hayward--who even as he was departing, continued to stick his foot deep down his throat. As The New York Times reports, Hayward admitted that it was time for new leadership at BP, but then emphasized how hard he had worked to improve safety standards at BP, but "sometimes you step off the pavement and get hit by a bus." I was surprised that this comment did not get more play, as one of the worst things that a leader can do is to convey that they have no control and no responsibility when things go wrong. As is well-documented, this is just one of many misguided comments by Mr. Hayward, his most infamous being his comment that he wanted his life back.

Robert DudleyAs I was reading such reports, and thinking about research on the romance of leadership, executive succession, and the illusion and reality of CEO influence, I realized three things.

The first, as my headline says, is that the new CEO Bob Dudley is mighty lucky to follow someone like Mr. Hayward. Indeed, because of the power of psychological contrast, the more that Mr. Hayward comes across as an insensitive buffoon, the better a scapegoat that Mr. Hayward becomes--and the better that Mr. Dudley looks in contrast. If I were Bob Dudley, I would be delighted with Mr. Hayward's final gift--the comment about the bus--as it makes it appear that BP's leadership has been repaired by his promotion to the position. The fact that Dudley is from the U.S. (Louisiana in fact), has been focused on managing the fiasco and thus spent a lot of time in the Gulf, and has made no major gaffs so far, all look even better when contrasted with Mr. Hayward's English accent (because confidence in the U.S. market is so important), the relatively little time that he his spent in Gulf and of course his many gaffs.( As an example, look this attack on Hayward by Harvard's Rosabeth Moss Kanter)

There is an interesting lesson here, a broader one, for every boss who is offered a new job. If you are lucky, or perhaps strategic, following damaged goods like Mr. Hayward will make things a lot easier (at least at first) than if you follow a widely admired boss. This is also a pattern that I commented on in The No Asshole Rule--where quite a few bosses explained to me that it was great to take a job where the last boss was a certified asshole because, in comparison, they seemed to civilized.

The second thing I realized was that, although calls for Hayward's resignation have been ringing for months, the BP board was very shrewd to leave Mr. Hayward in the position and to let him take all the slings and arrows on behalf of the company and his colleagues. He was beat-up by Obama, the U.S. Congress, and many many others until the leak was (apparently) stopped. By doing so, Mr. Hayward served as an excellent scapegoat. If Mr. Dudley had stepped in before the leak was stopped, he would have taken heat that would have undermined his honeymoon period and, by association, BP's credibility. But since Dudley was in charge in Gulf operations, the "symbolic repair" appears credible even if it is left unsaid: "It was Hayward's fault, so he is gone, and the guy who fixed it is now in charge." So I have to give the board credit for playing a lousy hand pretty well. (I would also note that if you look at the level of responsibility that the board is still giving Mr. Hayward, it appears they have faith in his technical skill, if not necessarily his ability to deal with press and public--which further suggests that this is necessary scapegoating rather than a complete loss of confidence in his abilities).

The third thing I realized is that all these theatrics are an interesting sideshow that may distract BP insiders and outsiders from fixing the real problems. As is well-documented, especially when a company is large, old, and complex, leaders almost always get far more credit and blame than they deserve. As such, although it appears that BP's board has been wise in terms of handling CEO succession, the real question is if BP can ever change from what is a culture that has had ethical and safety problems for a long time -- apparently worse than other major oil companies. That will be the real test of Bob Dudley's leadership and the board's skill.

Although should add, as I emphasize in Good Boss, Bad Boss, that if a leader can create the illusion that he or she is charge and has the power to make positive organizational changes, the confidence and effort that it inspires can help bring about such changes. A great example is George Washington--check-out David McCullough's 1776. In other words, sometimes such theatrics are pure bullshit (like BP's "Beyond Petroleum" campaign), but if a leader is persistent and authentic, a symbolic change can be a powerful step toward real change. There are lot more oil wells in our oceans, so for everyone's sake, I hope that the symbolic change at BP leads to real changes.

As a final comment, although I have vented plenty of anger at BP, at the same time, I have some sympathy for BP's board, Mr. Dudley, and most people who work for BP, as they are in a very difficult spot because of both the the stigma and the difficulty of what they are trying to accomplish. I would not want to be in their position right now, and finding a way out of this mess isn't going to be easy.

MoneyBall for Startups: Invest BEFORE Product/Market Fit, Double-Down AFTER.

P.S. Tom Davenport--a brilliant knowledge management guy--just put a great post over at HBR called "If Only BP Knew Now What BP Knew Then." Tom makes a compelling case that BP's narrow focus on speed and profit helped destroy an emerging safety culture. I was especially intrigued by this link to a Financial Times post on BP's narrow focus, which ends by reporting BP's motto in recent years "every dollar counts, every seat counts." A seat is an employee at BP. Surely, that is true in every company, but if you are just hyper-focused on every penny, it turns attention away from other things, like safety.

Reprinted from Work Matters

Robert I. Sutton, PhD is Professor of Management Science and Engineering at Stanford. His most recent book is The New York Times bestseller The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn't. His next book, Good Boss, Bad Boss: How to Be the Best...and Survive the Worst, will be published September 2010. Follow him at twitter.com/work_matters.

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