BP: in very Deepwater, but not drowning yet

If you were looking for a suitable image to convey what a crisis in reputation looks and smells like, you could scarcely do better than this. Hundreds of thousands of barrels of sticky crude oil leeching daily into the Gulf of Mexico, and washing up week after week on the shores of the country that is still the world’s biggest power, ruining people’s livelihoods along with the coastal environment and sending American politicians into apoplexy. The clever tagline that BP devised a few years ago to position itself as part of the new, sustainable future now looks like a bad joke. Far from being ‘beyond petroleum’, the company may now be about to drown in it.
Or so the conventional wisdom goes. What chance does BP have of emerging from the current crisis?
There’s a case for saying that, once the flow of oil has been staunched and the immediate crisis has passed – easier said than done, apparently - the company has a reasonable chance of returning to some semblance of business as usual. BP is a colossal company – the world’s fourth biggest – and its many other operations across the world continue to earn it healthy profits, particularly in an era of high oil prices. Unlike a company producing consumer goods, whose market appeal might be fatally damaged by an incident of this scale, consumers have limited scope to boycott BP’s products, even if they wanted to. Most of BP’s revenue is from its upstream rather than downstream business, in contrast to some of its competitors, and it’s hard to see how the drive to ensure BP covers the full cost of cleanup and compensation would be served by turning off its funding tap.
And there is some reason to believe the effect on its reputation may not be as seismic as has been suggested. BP has faced other problems – the Texas City oil refinery explosion killed 15 back in 2005, and corrosion problems in an Alaskan pipeline caused a spill of an estimated million barrels of oil there in 2006. But when GlobeScan tested awareness of these incidernts among UK and US consumers at the time, we found that most had not heard of them; those that had tended to feel BP were doing a reasonable job in trying to resolve them and – critically – the great majority did not feel that their respect for BP had been damaged as a result.
Of course, the scale of the current disaster dwarfs those two accidents, and together with the BP leadership’s hapless media performances this may mean that all bets are off. But it’s worth considering this: for many years, our data has shown that the oil companies across the board are not popular corporate citizens, and accidents like this are a major reason why. Deepwater Horizon may be a stark reminder of the price we pay for our collective addiction to oil, but for now, there’s no obvious alternative to hand. That, for now, may be enough to save BP’s skin.

A see-through world

What makes a responsible company? It's a fair question. Terms such as CSR, sustainability and corporate citizenship are on everyone's lips these days. Even so, there is often a sense that they mean different things to different people.

But sometimes an issue cuts through. As the world economy attempts to put itself back on its feet, somewhat bloodied and bruised after the experience of the last couple of years, transparency is suddenly the buzzword du jour.

Our annual study of consumer views of CSR across 30 countries asks people to say what they consider to be the most important thing a company could do to be considered socially responsible. Treating employees fairly still tops the list, but behaving transparently and ethically is coming up hard on the rails – it was named spontaneously by just 8% of our global sample of consumers in 2005, 10% in 2008 but 20% this year. In the wake of the economic crash, when lots of apparently sound businesses turned out to have feet of clay, consumers increasingly want the whole picture about the companies they deal with, warts and all.

This is backed up by a Business Week survey of the world's top 100 brands, as Sustainable Life Media reports. Trust and transparency top the list of consumer concerns in 2009. The piece also makes the point that as well as expecting companies to keep them fully informed of what they're up to, consumers are quite prepared to use the opportunities the internet affords them to make sure that, when a company falls short, everyone knows about it.

We also share the assessment here that water use is going to be a big, big issue for companies over the next decade – and increasingly, one of the issues on which consumers will be expecting them to be transparent and lay their cards on the table. Water emerged as one of the most pressing issues in our survey of sustainability experts around the world at the end of last year, and our 15-country study of consumer views on the issue revealed that 72% considered water pollution to be a 'very serious' issue and 71% felt the same way about fresh water shortages.

Responsible water use is, in one way or another, a pressing issue for all sectors, not just heavy industry or beverages – and the way companies handle it is likely to be a litmus test of how they respond to the challenges of an increasingly see-through world.

You can take the company out of Japan, but…

Have you noticed? It’s been several weeks now since Toyota had to recall any cars. The temptation to be wise after the event, of course, is almost irresistible - but if the crisis is, at last, over, what can the rest of us learn from this unhappy episode in Toyota’s history?

Jonathan Hemus of reputation management consultancy Insignia argues in The Guardian that it was actually a corporate strength - Toyota’s hard-earned reputation for quality and an internal culture that regarded anything less than perfection as shameful - that meant that its first instinct may have been to ‘put a lid on the stink’ rather than come clean and thus precipitate the crisis.

But is that sort of culture really so particular to Toyota? Perhaps if there are morals to be drawn, they may have to less to do with Toyota itself and more with the influence that a national culture can have on the way a global organization behaves.

It’s arguable that the very same combination of respect for authority, hierarchical management structure and fixation with the ideals of craftsmanship that allowed Toyota to grow to be the world’s leading car maker and define the much-lauded Toyota Way – but left it unable to respond in a credible and sure-footed way to a major crisis- is the very same one that is espoused by many top Japanese companies. In a culture where successful product liability claims by consumers are, moreover, few and far between, Japanese companies rarely respond to crises well – a point made recently by Jeremy Cato in the Toronto Globe and Mail.

This, then, may be one feature of the rise of the global corporation – the way that nationally-defined company cultures shape the fate of their organization, for good or bad. In the same way, perhaps the most important distinguishing feature of the buccaneering high-profile casualties of the recession – Lehman Brothers, AIG, Bear Stearns, RBS – was their very Anglo-Saxon-ness.

The evidence of this national DNA in organizations is something we see a lot of as we work with global companies – and their local offices - around the world. Scratch the surface, and maybe the multinational corporation isn’t as bland and homogeneous an entity as we all thought.

Weapons of Mass Delusion

GlobeScan is in the business of measuring perceptions, not facts. This is something I frequently find myself reminding clients when presenting research findings that sometimes show that their stakeholders or consumers have a much hazier - or just plain wrong - sense of what their organisation is doing than they might like. Unless you've invested almost as much time, energy and thought in understanding your stakeholders' perceptions and communicating to them what you're doing as you have in actually doing it, don't expect to be given the credit.

That said, while they can be serious and expensive, misperceptions are rarely a matter of life and death for our clients. The same could not be said of the various misperceptions that led up to the second Gulf War in 2003 - the most glaring one being that Saddam Hussein possessed the infamous 'weapons of mass destruction'. I was interested to read in last week's Washington Post that Saddam told the FBI that he allowed the myth to be perpetuated largely because he was worried about appearing weak to the 'fanatic' (as opposed, presumably, to just regularly psychopathic) Iranian leaders - and would in fact have been open to a 'security agreement' with the USA to protect Iraq from a potential Iranian attack.

Given the human, political and economic consequences of the decision to invade, this could be one of the costliest perception misreadings of all time. At the very least, it's a reminder to the rest of us take some time to make sure we really understand what other interested parties are thinking before embarking on our own risky projects.

All In The Game, In Theory

There's a fascinating article in the New York Times about Bruce Bueno de Mesquita, a game theorist who models the way networks of influence behave, and predicts the outcome of complex situations 'where parties can be described as trying to persuade or coerce one another'.

His work leads him to make some bold and far-reaching predictions about the outcome of currently unresolved political conflicts and standoffs. Some are optimistic (Iran will not make a nuclear bomb), others less so (most nations will welsh on the commitments they make to reduce carbon emissions at Copenhagen).

Bueno de Mesquita's track record in making successful predictions appears to be rather better than, say, Nostrodamus'. So why isn't he better known and continually in demand by corporates and politicians the world over? Bueno de Mesquita himself puts it down to his being a lousy salesman. But the Times also suggests that there's significant resistance to the idea that a mathematical model - however sophisticated - can take the place of intuition, inside information and gut instinct - the stock-in-trade of many political analysts when making predictions.

At GlobeScan we use statistical models of a different (and rather simpler) kind in our corporate reputation work, and this resistance is something I've noticed on more than a few occasions when presenting to clients. If we're looking at patterns in survey data to identify how issues cluster together in the minds of stakeholders, or using regressions to identify what factors really do drive an organisation's reputation, there's often a sceptic or two who will question whether we can really believe what the modelling is telling us. 'Is the way we're seen to treat our employees or our environmental track record really more important than our ads in driving our reputation?' Valid questions, for sure - but like Bruce Bueno de Mesquita, we've seen enough over the years to have confidence in our models.

I hope he's wrong about Copenhagen, though.

Filling his Boots

Losing billions of pounds as the CEO of a major bank is no obstacle to furthering a stellar business career, it would seem. The Guardian reports that Andy Hornby, former chief exec at HBOS, is to be installed at the helm of major British pharmacists Alliance Boots. HBOS, you may recall, nearly collapsed at the height of the financial crisis last year, was swallowed up by Lloyds TSB, and ended up being bailed out by the British government to the tune of many billions of pounds.

If Hornby’s reputation – bewilderingly – seems to have survived the crisis, his recruitment by Boots looks unlikely to do much for the reputation either of CEOs in general or the banking sector in particular, both of which have suffered in recent years. One of our latest multi-country polls shows that the proportion of the public in 32 countries who think the banking sector is fulfilling its responsibilities to society has dipped sharply since the financial crisis hit last year, whereas the pharmaceutical sector still fares rather better in public esteem. For how much longer, one wonders.

Strong Emotions to Corporate Abuse

“In Bad Taste: Evidence for the Oral Origins of Moral Disgust,” an article by psychologist Hannah Chapman at the University of Toronto, proves that immoral acts appear to promote a visceral reaction in people akin to how our bodies react to poison or contaminated food.

We have always known that corporate abuses can evoke strong emotion - just look to the seething anger directed at AIG executives and John Stewart’s ripping of Jim Cramer on The Daily Show - but this goes one step further. It seems that people really can’t help but respond bodily to moral transgressions (we have witnessed this in many a focus group!). GlobeScan has been tracking awareness and reputation impacts on a range of corporate crises - petroleum company environmental problems in the US, corruption scandals in Germany, pesticide contamination in India, financial crashes in the UK, etc. - regardless of the type of scandal, people do indeed respond with a great deal of negativity towards companies when they become aware of perceived misbehaviour.

So, in addition to a range of other reasons why there is a demand for responsible corporate behaviour we can add evolution!