BP's Only Hope For Its Future

It must throw out its formula for success.
By: Adam Hartung
 
June 28, 2010 - PRLog -- Beyond Petroleum?" BP looks anything but that now. How could a company that spent so much money trying to make us think it was something else remain so tied to, and now so damaged by, that product? Was it just trying to fool us with those ads? Or is there something more fundamentally wrong here? Perhaps something wrong in the management system used not only by BP but by almost all companies today?

That's the first paragraph in my latest column on Forbes.com (Read BP's Only Hope For Its Future at http://www.forbes.com/2010/06/24/british-petroleum-bp-success-formula-leadership-governance-future.html).  British Petroleum's situation was avoidable - if the company hadn't simply remained so dedicated to "Defend & Extend Management" - the practice of doing more of the same because it's what the company does best.  Unfortunately too many companies follow this "best practice," sticking to their "core," and don't use White Space to find new opportunities for growth.  All the way into disaster!

The Harvard Business Review web site describes the mismatch between BP's claim of heading in a new direction versus company reality in "The BP Brand's Avoidable Fall."  British Petroleum's campaign is now a decade old, trying to convince everyone they weren't just an oil company.  Looking back HBR recalls that authors then claimed about BP's campaign "this [strategy] seems to be at variance with organizational reality and the [firm's] actual identity....[BP's] stated corporate aim of being green-oriented...is an aspiration which to us bears arguably questionable resemblance to near-term reality. At the time, environmentalists estimated that only one percent of BP's activities came from sustainable sources...Now, the stark contrast between BP's image and reality has substantially weakened its reputation."  

BP simply couldn't quit drilling for oil - because it was so dedicated to Defending & Extending the BP legacy.  So it kept moving into more difficult fields, at higher cost, with lower yields.  Now all those billions of dollars in advertising are lost, along with all the money for the clean up.  Costs it will take shareholders years to recover.  Even while leadership knew it had to move in a different direction - and advertised the need!

The spill costs of course move well beyond BP.  For example, the network of small businesspeople that run BP refilling stations have been hurt as Crain's Chicago Business reported, "Chicago Gas Station Owners Hit By BP Spillover." Miles, and billions of dollars, removed from BP headquarters decisions, thousands of independent small businesspeople are losing revenue, due to the brand destruction created by BP taking greater and greater risks to Defend & Extend their oil business.  Customers have a choice, and when a reputation is sullied many often change suppliers.  Remember how Toyota car sales tanked as reports of their safety mishandling became available?

Despite the problems of Defending & Extending a business, leaders don't give up easily.  The Daily Caller reports "Experts Say Obama's Drilling Plan Could Cause Another Disaster."  Amidst this huge clean-up effort, there are many who want to maintain drilling activity - because short-term they want the jobs and economic benefits such drilling creates.  Just the sort of marginal, Locked-in decision-making that is now hurting BP.  The region is already losing fisherman, tourists and other businesses from this disaster.  When will the Gulf Coast identify other ways to grow besides the economically and ecologically risky deep-water drilling activity?  

BP, and the states affected by this disaster, desperately need to move "Beyond Petroleum."  But doing so will require extensive use of White Space for finding and cultivating new businesses.  It can be done.  Yet so far, despite the horror of this disaster, there is more effort being expended to find ways to continue on the same route than disrupt old behaviors and find new sources of revenue.  Not even a disaster of this magnitude disrupts those really dedicated to Defend & Extend their locked-in success formula.

As the article says, once you succumb to a Locked-in Defend & Extend strategy - like British Petroleum - management just can't help itself but to do "more of the same."  Dedicated to Defend & Extend Management, no company could move "Beyond Petroleum."  Are all (or most of) your resources dedicated to Defending & Extending your legacy business? Do you have White Space in your organization to move beyond your legacy?  Or will it take a disaster to demonstrate how risky your strategy has become?

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Adam Hartung helps companies innovate to achieve real growth. He began his career as an entrepreneur, selling the first general-purpose computing platform to use the 8080 microprocessor when he was an undergraduate. Today, he has 20 years of practical experience in developing and implementing strategies to take advantage of emerging technologies and new business models. He writes, consults and speaks worldwide.
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Source:Adam Hartung
Email:***@sparkpartners.com
Zip:60049
Tags:Beyond Petroleum, bp, British Petroleum, Defend & Extend, Forbes, Lock-in, Success Formula, White Space
Industry:Energy, Business, Environment
Location:Illinois - United States
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