Consequences
-
Following the tragedy, “BP’s stock has lost a market value of $25 billion” () and they had “to suspend dividend payments” ()
Changes
- As a result, BP claim to have changed by : “having established a powerful safety and operational risk function”, “having enhanced risk management” and also by reviewing “when and how they outsource operations” (BP Annual Report 2010)
- What they learned from this awful experience is stated by the chairman in the Annual Report :”We must ensure that safety and responsibility are at the heart of everything we do. We must show that we can be trusted to understand and manage our risks. And we must demonstrate that we respect the environment and the needs of local communities and society as a whole”
Future plans
- Looking at the future, they have an optimistic view: “Clearly, after a very troubled and demanding 12 months, BP is a changed company. As a board we have much to do, and we are working with the executive team to ensure successful implementation of a refocused strategy built on the pillars of safety, trust and value creation...The full board will continue to maintain close oversight of matters related to safety. And we will have even greater engagement on the strategic implications of risk.” (BP Annual Report 2010)
Discussions
BP, one of the largest global oil and gas companies, founded in 1909, has a culture which relies on four characteristics, described by them as “progressive, responsible, innovative and performance driven” (. Is BP a culture itself, or it actually has its own culture? There are different visions, the first one belonging to Pacanowsky and O’Donnell-Trujillo who truly believe that a company is a culture, while Brown (1998,7) states that any culture “has norms, values beliefs and ways of behaving” that are embraced by all the employees. Consequently, all cultures are defined by people who are in a continuous movement and progress and may switch from one company to another, bringing new concepts and values along with them. So, which one is right? Judging critically, Brown’s vision seems to apply more for BP, as such a large corporation can only exist through employees, who come with their own assets and influence the group of people they are working with.
The firm position of BP was severely afflicted by a major oil spill, which took place in April 2010 on the Deepwater Horizon, causing serious environmental damage and killing 11 people. This is considered to be the start of a major crisis and as an evidence for this serves Alvesson’s statement, that ‘the transformation of existing ideas, beliefs or values which are regarded as problematic’(2002) and immediately lead to the need for culture change. Why is that? Because following the tragedy BP lost its credibility and trust, “BP’s stock has lost a market value of $25 billion” () and they had “to suspend dividend payments” ().
On one hand, by analysing Handy’s typologies, the task culture seems appropriate for BP because it is ‘job orientated, relies a lot on its employees, brings together professionals from different areas, and is team focused’(Brown,1998). In addition, as the chairman claims, „to encourage excellence in risk management throughout the organisation, we are reviewing how we incentivize and reward people” (Annual Report 2010), rewards for results being another characteristic of the task culture typology. On the other hand, Deal and Kennedy identify “bet your company” typology, applies to BP because this major oil company operates in a risky environment and as a result the chairman sees the need to “ensure that safety and responsibility are at the heart of everything we do. We must show that we can be trusted to understand and manage our risks” (Annual Report 2010). Furthermore, “bet your company” typology applies to big companies such as BP, where ‘feedback takes long and huge amounts of money are invested’(Brown, 1998). Also, they focus a lot on the future:” As a board we have much to do, and we are working with the executive team to ensure successful implementation of a refocused strategy built on the pillars of safety, trust and value creation”(Annual Report 2010). As all these statements show, it can be clearly understood that BP is aware of the disappointment they caused and seek new ways of making important changes, by using words such as “responsibility”, “safety” or “trust”.
Having decided the fact that culture change is indispensable for BP, socialisation can be defined as ‘the process which each employee has to be involved in to adapt to the new ideas, beliefs and behaviours’(Brown,1998). For this case study, socialisation is closely linked to safety. One of BP’s priorities is “to become safer” and they “are working with governments, service contractors and industry peers to take risk management and equipment design to the next level”(Annual Report 2010). The three stages: separation, transition and incorporation apply to BP in this way: separation rites, a divorce from the previous aims, values and customs, transition rites which reinforces the previous process and emphasises on the new values, in this case improved measures of safety and risk management promoted by BP and lastly, the incoporation of these new values in the company’s structure.
Exploring Schein’s life-cycle model, BP seems to be in the organisational midlife phase because it has a complex structure, strong subcultures and due to the fact that it was founded in 1909, its culture is deeply embedded into routines & structures. It might be claimed that BP belongs to the organisational maturity stage because it is highly complex, but at the same time this stage is inappropriate because it describes a highly stable company, which is not one of BP`s characteristics at the moment.
Any culture change can only be achieved through a successful mechanism of change. There are several mechanisms that could be useful for BP: the ‘managed revolution through outsiders’ involves a crisis as a starting point, which applies to BP entirely and the fact that outsiders are brought in, which also happened in BP’s case, as they have made significant changes to the board, including a new chief executive, Bob Dudley and the former head of the US Nuclear Navy, the Admiral Frank L ‘Skip’ Bowman who “will help BP improve its safety measures”(Annual Report 2010). The ‘managed evolution through hybrids’ may fit because BP’s leaders recognise that after 12 months of struggle, Bob Dudley claims that BP “will emerge from this accident as a company that is safer, stronger, more sustainable, more trusted and, in time, more valuable” (www.fuelfix.com). Also, culture change began to be implemented systematically, step by step. The “Turnaround” mechanism may be a suitable one because it requires leadership skills, which is one of the main rules when starting culture change. Due to its size and financial resources, BP is entitled to have the power to implement a new culture, but which one of these mechanisms fits better?
Conclusions
Overall, it needs to be stated that because of the major oil spill which lead to a crisis, BP needs culture change in order to rebuild its corporate identity and regain people’s trust. Culture change is a long-term process and BP has already started it by bringing a fresher attitude, new members of staff and new aims which focus more on safety, protection of the environment and taking care of humans.
Drawing some general conclusions, firstly, BP fits in the “bet your company” typology better than in the “task” culture because in most of the cases it relies on highly skilled individuals rather than on teamwork. In addition, characteristics which define the “task” culture, such as rapidity and speed of reaction seem inappropriate for a big company as BP. Secondly, BP categorically fits into the “organisational midlife” phase, at the moment, due to its lack of stability, but it has strong chances to upgrade to the next level after their current process of change proves to be successful. Thirdly, from all the mechanisms of change previously described, ‘the managed revolution through outsiders’ seems to be taking place now according to Dudley’s declarations, who mentions a new board.
Critically examining the actual situation, some progress has been made since the accident; however, the culture change needs further improvement and continuity, as some additional measures will be suggested in this report.
Recommendations
To continue successfuly the process of culture change, some suggestions will be made below:
- Bring the voice of customers in the organisation. Give plenty of opportunities to the public to provide feeback so that there is permanent awareness of the quality of the services and what needs improvement
- Encourage officials to get more involved in writing their speeches; this will make them look more ‘human’ and closer to the public
- Modify socialisation tactics because the primary way that people learn the corporate culture is through the socialisation process at the beginning of their employment, so if these socialisation processes are changed, an organisation’s culture will change
- Combine caution with optimism and try to keep a friendly attitude towards employees; this will lead to a better communication and a positive response from them
References
Books
Alvesson, M., 2002, Understanding organizational culture, London: Sage
Alvesson M. And Sveningsson S., 2008, Changing organizational culture, New York: Routledge
Brown, A., 1998, Organisational Culture, 2nd edition, London: Pitman
Drennan, D. ,1992, Transforming Company Culture, London: McGraw-Hill
Hofstede, G., 2005, Cultures and organizations, London: McGraw-Hill
Journals
Pacanowsky, M. E. & O’Donnell-Trujillo, N. (1982), “Communication and Organizational Culture”, The Western Journal of Speech Communication, 46(spring), 115-30
Websites
BP,2011,Ourlogo,available: ,[accessed 21 March 2011]
BH,2011,TheBritishPetroleumCompany,available: ,[accessed 21 March 2011]
BP,2011,Our culture and values,available:
,[accessed 21 March 2011] )
Visual economics, Cost & Effects of the BP Oil Spill, available: , [accessed 3 April 2011]
ICW, The BP crisis in depth, available:
,[accessed 3 April 2011]
TF,BP’s Bob Dudley apologizes, available: , [accessed 4 April 2011]
Appendices
Hofstede,G.(2005) “Cultures and organizations”, London: McGraw-Hill
282- Without exception, the dominance and coherence of culture proved to be an essential quality of the excellent companies
282-There is no standard definition of the concept, but most people who write about it would probably agree that organizational culture is: “Holistic, historically determined, related to the things anthropologists study, socially constructed, soft and difficult to change”
282- Culture in general was defined as“ the collective programming of the mind that distinguishes the members of one group or category of people from another”. Consequently organizational culture can be defined as “the collective programming of the mind that distinguishes the members of one organization from another”. An organization`s culture, however, is maintained not only in the minds of its members but also in the minds of its other “stakeholders”, everybody who interacts with the organisations (such as customers, suppliers, labour organizations, neighbours, authorities, and the press).
284- Probably the most basic distinction among writers on organizational cultures exists between those who see culture as something an organisation has and those who see it as something an organization is. The former leads to an analytic approach and a concern with change. It predominates among managers and management consultants. The latter supports a synthetic approach and a concern with understanding and is almost exclusively found among pure academics.
309-Back in the 1980s, Geert claimed that “organizational culture represents the psychological assets of the organization that predict its material assets in five years` time.” As we see it now, the crucial element is not the organizational culture itself, but what management does with it.
310- Organizations may be culturally divided according to hierarchical levels: top management, middle- and lowe-level managers and professional employees. Other potential sources of internal cultural divisions are functional area, product/market division, country of operation, and, for organizations having gone through mergers, former merger partners.
310-Measuring the development of organizational cultures over time, by repeating a survey after one or more years. This will show whether attempted culture changes have, indeed, materialized, as well as what have been the cultural effects of external changes that occurred after the previous survey.
312-Structural changes may mean closing departments, opening other departments, merging or splitting activities, or moving people and/or groups geographically. The general rule is that when people are moved as individuals, they will adapt to the culture of their new environment; when people are moved as groups, they will bring along their group culture. People in groups have developed, as part of their culture, ways of interacting that are quite stable and difficult to change. Changing them means that all interpersonal relationships have to be renegotiated. If new tasks or a new environment force such a renegotiations, however, there is a good chance that undesirable aspects of the old culture will be cleaned up.
312-Training programmes, often the first thing managers think of when wanting to change cultures, are only functional after the need for retraining has been established by structural, process, and personnel changes. Training programmes without the support of hard changes usually remain at the level of lip service and are a waste of money. In attempted culture changes, new symbols often receive a lot of attention. They are easily visible: new name, logo, uniforms, slogans and portraits on the wall- all that belongs to the fashionable area of corporate identity. But symbols are only the most superficial level of culture. New symbols without the support of more fundamental changes at the deeper levels of heroes, rituals, and the values of key leaders just mean a lot of hoopla, the effects of which wear out quickly.
Brown, A. ,1998, “Organisational Culture”, 2nd edition, London: Pitman
7- The culture of an organization refers to the unique configuration of norms, values, beliefs, ways of behaving and so on that characterize the manner in which groups and individuals combine to get things done.(Eldridge and Crombie, 1974:89)
- A set of understandings or meanings shared by a group of people ( Louis,1980)
- Culture... is a pattern of beliefs and expectations shared by the organization`s members(Schwarz and Davis, 1981:33)
- Organizational culture is not just another piece of the puzzle, it is the puzzle. From our point of view, a culture is not something an organization has; a culture is something an organization is.(Pacanowsky and O`Donnell-Trujillo, 1982:126)
- 8- By culture I mean the shared beliefs top managers in a company have about how they should manage themselves and other employees, and how they should conduct their business. These beliefs are often invisible to the top managers but have a major impact on their thoughts and actions.( Lorsch, 1986:95)
- Corporate culture is the implicit, invisible, intrinsic and informal consciousness of the organization which guides the behaviour of the individuals and which shapes itself out of their behaviour (Scholz, 1987:80)
- Culture represents an interdependent set of values and ways of behaving that are common in a community and that tend to perpetuate themselves, something over long periods of time. (Kotter and Heskett, 1992:141)
- Culture is ‘how the things are done around here’. Is what is typical of the organization, the habits, the prevailing attitudes, the grown-up pattern of accepted and expected behaviour(Drennan,1992:3)
9-Most commentators have, however, chosen to think of culture as an objective entity. Agreement on this point still leaves room for a broad spectrum of opinion on other details. According to Pacanowsky and O’Donnell-Trujillo (1982) an organisation is, quite literally, a culture, and all the features of an organisation including its systems, policies, procedures and processes are elements of its cultural life. While this is an intellectually coherent position many theorists have resisted the view, because if everything is culture, then it is not possible to use the concept to frame causal explanations of other aspects of organisational activity. In contrast, other authors such as Schein (1985) have suggested that culture is best thought of as a set of psychological predispositions that members of an organisation possess, and which leads them to think and act in certain ways.
10-A large number of different aspects or elements of organisational culture generally have been identified by theorists, including: artefacts; language in the form of jokes, metaphors, stories, myths and legends; behaviour patterns in the form of rites, rituals, ceremonies and celebrations; norms of behaviour; heroes; symbols and symbolic action; beliefs, values and attitudes; ethical codes; basic assumptions and history
26- Values and beliefs are part of the cognitive sub-structure of an organisational culture. Values are intimately connected with moral and ethical codes, and determine what people think ought to be done. Beliefs, on the other hand, concern what people think is and is not true.
27-Attitudes connect beliefs and values with feelings. An attitude may be thought of as a learned predisposition to respond in a consistently favourable or unfavourable manner to a particular thing or idea. Attitudes, therefore, involve evaluations based on feelings.
57- Organisational socialisation, sometimes termed enculturation, refers to those processes by which participants learn the culturally accepted beliefs, values and behaviours, so that they are able to act as effective members of the group. Large corporations make extensive efforts to construct formal socialisation mechanisms, usually in the form of new employee orientation and induction courses, training programmes and mentoring systems. Most organisations, however, rely on informal socialisation processes, in which new recruits learn what is expected of them by trial and error under the guidance of their work colleagues.
Informal socialisation processes are often more significant than an organisation`s formal and official procedures, because they allow more relevant information to be transmitted in a more personal manner and by means that new recruits are more likely to remember. Formal socialisation processes are often termed rites of passage. Well-constructed rites of passage usually have three distinct phases. First, there are separation rites, which divorce individuals from their previous context and unfreeze them from the roles they have previously filled. Second, there are transition rites, which reinforce rites of separation and the unlearning of previously held work norms. They frequently involve debasement experiences such as being refused entry to certain parts of the building, or not having a reserved car parking space, secretary or certain office equipment. This transitional or liminal state lasts until the individual experiences rites of incorporation. These may be more or less well defined, but always inform new recruits that they have been accepted and what their new responsibilities now are.
66-In 1972 Harrison suggested that there are four main types of organisational culture, called power, role, task and person. Six years later in 1978 Handy reworked Harrison`s ideas, describing the four cultures using simple pictograms and making reference to Greek mythology. This simple classification scheme has been extremely influential, and played a primary role in shaping the way in which culture scholars, students and practitioners have come to understand how organisations work.
A power culture has a single source of power from which rays of influence spread throughout the organisation. These rays are connected by functional and specialist strings which facilitate co-ordinated action. The internal organisation of a power culture is highly dependent on trust, empathy and personal communication for its effectiveness.
67- A role culture is a bureaucracy, the organising principles of which are logic and rationality. The strength of a role culture lies in its functions or specialities which can be thought of as a series of pillars which are co-ordinated and controlled by a small group of senior executives. Rules, procedures and job descriptions dominate the internal environment of a role culture, and promotion is based on the satisfactory performance of individuals in their jobs.
A task culture is one in which power is somewhat diffuse, being based on expertise rather than position or charisma. Task cultures focus on accomplishing the job in hand, and the internal organisation of such institutions centres on bringing together the appropriate people and resources to make the project successful.
69- A person culture develops when a group of people decide that it is in their own best interests to organise on a collective rather than an individual basis. Such organisations exist solely for the individuals who comprise it , and may be represented diagrammatically as a cluster in which no individual dominated.
From their examination of hundreds of companies Deal and Kennedy (1982) claim to have identified four generic cultures: the tough-guy, macho culture, the work-hard/play-hard culture, the bet-your-company culture and the process culture. These cultures are determined by two factors in the marketplace: first, the degree of risk associated with the company`s activities, and second, the speed at which the company and its employees receive feedback on their decisions and strategies.
70- The tough guy, macho culture – This is an organisation composed of individualists who are frequently called upon to take high risks and receive rapid feedback on the quality of their actions and decisions. As a result internal competition, tension and conflict are normal. While these sorts of cultures can be highly successful in high-risk, quick-return environments they are unable to make long-term investments, tolerate temperamental personalities and breed superstition.
The work hard/play-hard culture- This is a low-risk, quick-feedback culture which emphasises fun and action. Such organisations tend to be highly dynamic, and sales organisations with work-hard/play-hard cultures are often customer-focused. Sales organisations also encourage games, rallies and competitions which keep morale up and momentum going.
Bet-your-company culture- These cultures exist in environments where the risks are high and the feedback on actions and decisions takes a long time. Such organisations are invested with a sense of deliberateness which manifests itself in ritualised business meetings. Focused primarily on the future, decision making tends to be top-down, reflecting the hierarchical nature of bet-your-company cultures.
The process culture –This is a low risk and slow-feedback culture typified by banks, insurance companies and the civil service. Employees in process cultures work with little feedback on their activities with memos and reports seeming to disappear into a void. People in these cultures are often protective and cautious, keen to protect the system`s integrity, and focused on technical perfection in the performance of their duties.
71- Based on the analysis of the nature of the transactions associated with information exchange in organisations Quinn and McGrath(1985) have identified four generic cultures: the rational culture (market), the ideological culture (adhocracy), the consensual culture (clan) and the hierarchical culture (hierarchy). The intellectual basis of their typology is the notion that whenever an interaction between individuals or groups takes place valued things are exchanged.
116- Models of culture change differ in terms of the scale of change to which they are relevant. A distinction is usually made between small-scale changes and large-scale change.
118- The five models for understanding culture change are:
- Lundberg’s model, which is based on earlier learning-cycle models of organisational change, and is notable for its attention to external environmental factors as well as the internal characteristics of organisations
- Dyer’s model, which posits that the perception of a crisis in conjunction with a leadership change are required in order for culture change to occur
- Schein’s model, which is based on a simple life-cycle framework, and which posits that different culture change mechanisms are associated with different stages in an organisation`s development
- Gagliardi’s model, which suggests that only incremental culture change can properly be described as a form of organisational change
- A composite model, based on the ideas of Lewin, Beyer and Trice, and Isabella, which provides some insights into the microprocesses of culture change
146- In terms of Lewin’s framework, culture change occurs only when a crisis leads to individuals experiencing a felt need for change by providing evidence for organisational and personal failure
According to Dyer’s model a new leader or leadership team is vital if a new culture is to be promulgated within an organisation.
In order for a new culture to become established it must be identified as the factor responsible for solving the initial crisis. The Lundberg learning cycle could not be completed without the organisation experiencing success because employees would be unlikely to accept the leader’s new cultural vision. In Dyer’s model for the new leader’s solutions must work in order for the internal conflicts and tensions to be dissolved.
The models agree that culture change is essentially a process of relearning.
147- The more committed to the current frame members of an organisation are the less likely
culture change is. Participants in a culture will tend to be more committed to the current frame if it is thought to have brought stability and success to an organisation, especially if it is supported by stories telling how the frame has been used to survive past challenges.
149-Conclusions
- Four common themes that the models of culture change share were examined. It was pointed out that all relied on the notion of a crisis, suggested that leadership was crucial, attributed an important role to perceived success and portrayed change as a form of relearning.
- It was argued that more plausible models of culture change may be developed in the future by taking three culture-related factors into account. These factors are: the availability of alternative cultures, the participants’ level of commitment to the current culture, and the fluidity of the current culture. It was also suggested that culture change models which relied on the notion of a crisis or general conceptions of leadership require further elaboration and refinement.
161- Cultures are highly dynamic entities which are prone to change as a result of a variety of internal and external prompts. It could be argued that the ability to manage culture implies not just a capacity to change and maintain it, but to create, abandon and destroy it as well. As long ago as 1983 Fortune magazine carried an article which suggested that ‘anybody who tries to unearth an organisation’s culture, much less change it, is in for a rough time’ (Uttal, 1983:69)
Alvesson, M., 2002, “Understanding organizational culture” , London: Sage
2- Culture is highly significant for how companies and other organizations function: from strategic change, to everyday leadership and how managers and employees relate to and interact with customers as well as to how knowledge is created, shared, maintained and utilized
3-Talking about organizational culture seems to mean talking about the importance for people of symbolism – of rituals, myths, stories and legends- and about the interpretation of events, ideas and experiences that are influenced and shaped by the groups within which they live ( Frost et al.’s 1985:17).
174- ‘Managing culture’ is often equated with ‘changing culture’. Culture is then frequently focused because existing ideas, beliefs, values and meanings are viewed as problematic and need to be transformed.
175- Perhaps the most influential idea, Lewin’s refrigerator-model, is unfortunate as it tends to lock us into a rather odd view on changes. He suggests three stages in an intentional change project: unfreezing, change and refreezing. He imagines a frozen, fixed social world, which can be heated up and then frozen again at will, through a correct intervention. As the world is constantly in change this is misleading. In organizations, people mature and get new impulses, they quit and are replaced, old customers leave, new ones enter. The gradual changes in society means the ongoing changing of organizations.
Organizations are part of a continuously changing social world.
Alvesson M. And Sveningsson S. , 2008, “Changing organizational culture”, New York: Routledge
20-Lewin proposed a three-step model in order to target group norms and values in change projects: unfreezing, change, refreezing
The first step is a preparatory and planning stage where employees can be included, partly in order to reduce friction and resistance. Unfreezing means destabilizing the status quo of group norms and values and can include activities such as projects, education or inspiring talk from significant persons. Unfreezing involves making those concerned of the change convinced of its necessity. The second step is about moving the organisation to a new and, for organisational members, acceptable state. The last stage involves stabilizing the new state and preventing it from regressing into previous behaviour. A central theme is that through knowledge, commitment and learning it is possible to reduce resistance to change and create a need or will to change among employees : ‘Managing change through reducing forces that prevent change, rather than through increasing forces that are pushing for change’ (Dawson 2003:30). Organisations are seen here as containing forces of change and stabilization. Change is accomplished by continuously undermining the stabilizing forces. Unfreezing should create a disequilibrium that facilitates the implementation of change activities that re-create equilibrium in the direction perceived as healthy and effective for the organization.
33-Organisational change is driven by a variety of external and internal conditions and actors. These do not automatically force change in a particular direction but are always interpreted by organisational trends promising a lot but unfortunately neglecting real life complexities.
35- The term ‘organisational culture’ was introduced more systematically in organisational analysis at the end of the 1970s and beginning of the 1980s. There is agreement that organisational culture remains a central aspect behind a range of organisational topics such as commitment and motivation, prioritization and resource allocation, competitive advantage and organisational change.
36-When talking about culture we usually think of people sharing something, whether this sharing refers to traditions of doing and thinking in particular ways or systems of meanings or basic assumptions governing people in certain directions. It is common to talk of the following seven characteristics when referring to culture (Hofstede et al. 1990):
- Culture is holistic and refers to phenomena that cannot be reduced to single individuals; culture involves a larger group of individuals
- Culture is historically related; it is an emergent phenomenon and is conveyed through traditions and customs
- Culture is inert and difficult to change; people tend to hold on to their ideas, values and traditions
- Culture is a socially constructed phenomenon; culture is a human product and is shared by people belonging to various groups. Different groups create different cultures, so it is not human nature that dictates culture
- Culture is soft, vague and difficult to catch; it is genuinely qualitative and does not lend itself to easy measurement and classification
- Temrs such as ‘myth’ , ‘ritual’ , ‘symbols’ and similar anthropological terms are commonly used to characterize culture
- Culture most commonly refers to ways of thinking, values and ideas of things rather than the concrete, objective and more visible part of an organisation
40-Broadly, three positions on the manageability of organisational culture can be identified. One is that organisational culture, at least under certain conditions and with the use of sufficient skills and resources, can be changed by top management. A second is that this is very difficult. There is a multitude of various values and meaning-influencing groups, and ‘depth’ structures are not easily accessible for influencing. People do not respond predictably to efforts to change their orientations. Still, change takes place and management is one resourceful group exercising influence. A third view emphasises that culture is beyond control. How people create meaning in their work experiences is related to local culture, contingent upon educational background, work tasks and interpersonal interactions,etc.
42- A cultural change is not that management tries to impose new behaviours, but a change of the ideas, values and meanings of large groups of people.
43- Efforts to change culture frequently degenerate into changes to behaviour, commonly leaving higher levels of culture untouched (Ogbonna and Harris p.274)
44-Cultural change calls for receptiveness amongst the collective for new ideas, values and meanings. Without such openness cultural change is very difficult. Some shared notion of problems and feelings of significance and urgency is probably necessary for radical change.
49- It is generally believed that openness and receptiveness to new ideas, values and meanings are central to accomplishing cultural change.
Appendices -2-
Newspaper articles
BP pipeline leak in Alaska rattles oil prices—The Independent-
By Nikhil Kumar
Tuesday, 11 January 2011
Oil prices rose and BP shares fell last night amid nervousness about the leak that caused the shutdown of the Trans Alaska Pipeline, the supply route for more than 10 per cent of US crude oil.
BP, which is still recovering from the fallout of the devastating Gulf of Mexico oil spill over the summer, is the biggest shareholder in Alyeska Pipeline Service Company, the operator of the 800-mile long system which carries oil from Alaska's Prudhoe Bay field. The shutdown, which entered its third day on Monday, was prompted by the discovery of a leak at the north end of the pipeline.
As a result, oil companies, including BP, have temporarily cut their output from the field by 95 per cent. The operator said there were "no injuries or apparent impacts to the environment as a result" of the incident. The leak was discovered in the basement of a pump building, with Alyeska adding that engineers were "evaluating options, including developing a plan to bypass the affected piping in order to safely restart the pipeline".
Hit by the disruption – the latest in a series during the pipeline's 33-year history – US crude oil prices rose to nearly $90 per barrel before easing to about $88.8 in mid-afternoon trading. BP shares closed 1.25 per cent down at 486.35p.
Despite the reaction, analysts played down the incident, with ING's Jason Kenney saying that "if BP had not had the Macondo incident [in the Gulf of Mexico] last year then this would have just been a minor operational incident for the company".
Separately, in a spot of good news for the group, BP and the China National Offshore Oil Corporation signed an agreement on deepwater exploration in the South China Sea, the British Government said during a visit by China's Vice-Premier Li Keqiang yesterday.
New BP Head Of Comms Peter Henshaw Faces 'Tough But Not Impossible' Task – PR Week
Reports hit the wires yesterday that BP has appointed BG Group head of government affairs Peter Henshaw as its new director of comms.
Henshaw, a former long-time BP employee, will take up the position next month, heading both internal, press and government relations at BP. Henshaw previously headed up comms at BP's Russian joint venture, TNK-BP, from 2003 to 2008.
Weber Shandwick chairman of corporate comms and public affairs Jon McLeod said: ‘The challenge to BP is its capacity for it to project itself being a strong company. It’s tought but not impossible.
'It’s not just about comms, it’s going to be all along the DNA of the company. But comms is critical to getting that right.’
Last October, PRWeek reported that BP was seeking an in a newly created position to take control of comms, as it seeks to rebuild its image in the wake of the Gulf of Mexico oil spill.
Luther Pendragon partner Mike Granatt added: ‘They need somebody who knows how to fight on two equally difficult fronts. The first, of course, is the long job of rebuilding public and political trust. The second is no less important - winning the trust and co-operation of an engineeering-dominated culture, people who instinctively dismiss soft power.
‘Unless BP learns to listen to good PR advice, it will walk blindly into the next crisis.’
BP has revealed that no replacement will be sought for Gowers, and that press officer David Nicholas will take over responsibility for the press office.
In December, PRWeek revealed that BP is using Bell Pottinger to help stress its credentials as a biofuels company.
- Fuelfix
BP CEO Robert Dudley said started off his CERAWeek luncheon keynote with an apology:
“Everyone at BP deeply regrets the loss of life, as well as the impact on our Gulf Coast neighbors and the environment,” Dudley said. “And that of course includes the disruption of offshore activity in the Gulf.”
“No matter what else we recall about this accident, that will always remain our most grievous loss, the lives of friends and family members we will never get back.”
Below is the text of the prepared statement from Dudley:
New Era, New Responsibilities
Thank you for that welcome. I very much appreciate the invitation by CERA to speak to you all here today. CERA has been a part of our industry for such a long time, and it is a privilege to be here.
Let me start by saying that no one is more conscious than I am, in some ways, of the unique responsibility I bring to this podium today on behalf of my company – BP.
Last year, our company was involved in an accident that triggered a major spill, led the U.S. government to shut down the deepwater drilling in the Gulf of Mexico, and most importantly, cost the lives of 11 men.
No matter what else we recall about this accident, that will always remain our most grievous loss, the lives of friends and family members we will never get back.
Since that accident, this is the first chance I have had to address such a large gathering of industry colleagues and the first thing I want to say is that I am sorry for what happened last year.
Everyone at BP deeply regrets the loss of life, as well as the impact on our Gulf Coast neighbours and the environment. And that of course includes the disruption of offshore activity in the Gulf.
I also want to say thank you to all the companies here in Houston and elsewhere that offered their help and support to us last year. And I’d also like to thank everyone who has given me and my BP colleagues such a warm welcome here today.
We need to earn back your trust, along with that of state and federal leaders and the trust of Gulf Coast residents and customers. We are determined we will once again restore that trust and I realize this requires action, not words.
So today, I want to outline to you the actions we are taking, and the actions we think our industry needs to take based what we have learned since the accident.
Last month, after we announced our results, one magazine ran a headline saying ”BP wraps up year to forget” That’s not how we see it at all. Let me assure you – we will never forget 2010.
Often the response to a tragedy defines the character of an organization. And I am determined that we will emerge from this accident as a company that is safer, stronger, more sustainable, more trusted and, in time, more valuable.
As well as meeting our commitments in the US, we have a duty to take what we have learned deeply into the fabric of our organization. It means strengthening the way we manage our operations and concentrating on the things that drive long-term value – safety, capability, technology, portfolio choices and relationships.
I want to start today by talking about how we are meeting our responsibilities. Then I will ask how we as an industry can respond to this unprecedented event and the larger implications that it raises.
We have a number of responsibilities.
We have a responsibility to the people of the Gulf Coast states who are still feeling the after-effects of the spill.
We have a responsibility to the US, and we are under no illusions about the task involved in rebuilding trust.
We have a responsibility to our employees, giving them reasons to believe in BP.
We have a responsibility to you, our industry colleagues, so you can have confidence in BP as a partner going forward.
We have a responsibility to share what we have learned, to demand more of ourselves and from our industry overall.
And we have a responsibility to our shareholders – to renew their faith in the value of our company and its ability to operate safely.
So how are we meeting these responsibilities?
Last year’s crisis response involved 48,000 people, 6,500 vessels and 125 aircraft. That phase is over but we are still very much in action in the Gulf, where we are going beyond our legal obligations to do what is right.
The joint Incident Management Team is completing its response activities and our Gulf Coast Restoration Organisation is working towards the longer-term environmental and economic restoration of the affected areas.
We continue to plan for the transition of day-to-day management of further activities from the existing Gulf Coast Incident Management Team.
We have paid over $5 billion to meet claims by individuals, businesses and governments, and the Natural Resources Damages Assessment process is underway.
We continue to have a local presence through our state offices and staff. We are supporting initiatives to promote tourism, as well as seafood testing and marketing.
We have also voluntarily funded independent research to help restore the unique environment of the Gulf, including an investment of $500 million in the Gulf of Mexico Research Initiative.We have taken a charge of nearly $41bn against income in expectation of potential liabilities. We believe that the $20billion Trust Fund, within the overall provision, positions us to meet individual, business, and government claims, as well as the cost of the Natural Resource Damages.
Our internal investigation into the causes of the accident was completed and made public in early September of last year, and we continue to co-operate with the other inquiries that are in progress.
But our responsibilities stretch further than the Gulf of Mexico. We have a responsibility to embed the learning from this accident across BP’s business, worldwide. And we are taking a series of steps to this end.We have created a powerful, central safety and operational risk organization headed by Mark Bly, who led our internal investigation of the accident. Mark reports directly to me and sits on our executive team.
His organization has the resources and the mandate to drive safe, reliable, and compliant operations, including intervention rights, in BP’s exploration and production operations anywhere in the world.
The new organization is now in action across BP in four main areas:
First, it is strengthening and clarifying requirements for safe, compliant and reliable operations.Second, it is deploying around 500 specialist personnel within our businesses to guide, advise, and if necessary, intervene.Third, it is providing deep technical expertise to our operating businesses.And fourth, it is intervening where needed to stop operations and bring about corrective actions.
The BP crisis in depth- Investors chronicle-
When leading BP executives met President Obama on 16 June and faced the media shortly afterwards, a BBC correspondent covering the event remarked that they "looked like they were waiting to be shot". That's probably a fate some Americans think they should face. Rarely has a global corporation faced such political and public opprobrium in the US.
As a result of the failure of a blow-out preventer on 20 April, the Deepwater Horizon rig was destroyed and the Macondo well-head, almost a mile beneath the surface, began spewing oil into the Gulf of Mexico. Estimates of the rate at which it is doing so have risen from an initial 5,000 barrels a day to as high as 60,000 barrels a day. By comparison, the entire average daily output across all the assets of Dana Petroleum (a North Sea operator with a market value of £1bn) was 38,700 barrels a day in 2009.
BP has agreed to pay a total of $20bn (£13.5bn) into a escrow fund over the next three years to compensate those affected, and to suspend dividend payments for the remainder of 2010 - meaning three out of four of its quarterly dividends will not be paid. The escrow fund will be secured against its US asset base, and excludes fines and penalties.
This page aims to provide comprehensive coverage of the Deepwater Horizon from the point of view of the UK investor: how the shares will be affected, whether to buy them for recovery, and where to go to replace the dividend income lost.
