Category winner: British Petroleum:
From Texas City to the Gulf of Mexico and Beyond

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This case won the Free Case category at The Case Centre Awards and competitions 2018.
 
The case

BPWho – the protagonists

Former BP CEOs Lord Browne and Tony Hayward, and current CEO Bob Dudley.

What?BP

BP is one of the world’s leading integrated oil and gas companies, worth $147billion in 2017 according to the FT 500.

Why?

The first two decades of the 21st century has been very much about crisis management for BP, with two oil disasters in 2005 and 2010 leading to a review panel concluding on the second tragedy: “BP has not provided effective process safety leadership and has not adequately established process safety as a core value.”

The oil giant also had to deal with the disgraced Lord Browne resigning in 2007, while his successor Hayward was discharged in 2010 due to the fallout from the Deepwater Horizon disaster in the Gulf of Mexico.

When?

In 2005 BP was the largest energy company in the world, but on 23 March of that year a hydrocarbon vapor cloud exploded at the ISOM isomerisation process unit at BP’s Texas City refinery, killing 15 workers and injuring more than 170 others.

Two years later on 1 May 2007, then CEO Lord Browne stepped down from his position, after he was caught lying in court about a relationship with a man while losing a four-month battle to supress newspaper reports about the relationship.

Lord Browne’s replacement Hayward only lasted until 1 October 2010, as he paid the price for the Deepwater Horizon rig explosion on 22 April 2010, which killed 11 workers and injured 18 more.

deepwaterWhere?

Texas City is a busy deepwater port on Texas’ Gulf Coast, while the Deepwater Horizon rig was based far offshore in the Gulf of Mexico.

Key quote

“We have a responsibility to set high standards to be, and be seen to be, a business which is committed to integrity.” – Tony Hayward, ex-BP CEO, responding to criticisms of his company’s safety standards.

What next?

BP

After the 2010 disaster, BP has gradually recovered under Dudley’s leadership, which has been dedicated to environmental safety.

Board members felt they implemented many initiatives, such as, imposing a corporate code of conduct to increase a sense of responsibility across the company, and reduce the likelihood of major incident.

But working together with different suppliers and partners in exposed locations made the sustainability challenges very complex, so the board needed to decide how to handle the situation and influence the corporate leadership in a positive way going forward.

 
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British Petroleum: From Texas City to the Gulf of Mexico and Beyond
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The authors

authorsTorben Juul Andersen and Christine Bang Andersen

Torben explains how recent crises at BP have made for an enrichening case.

Just rewardsJust rewards

“It is a very rewarding feeling that so many people think the case can be a useful tool for teaching and learning purposes,” said Torben.

Covering all bases

Torben continued: “The case spans across all parts of a large organisation from the boardroom and executive suite to the many individuals working in various operating entities. They are all important decision-makers that will influence outcomes – positive and negative – often in extreme and unexpected ways. 

“That is also what the case is about, and it shows how the pressures in decisions at all levels of the organisation matter can influence both the company itself as well as its surroundings.

“The case captures a fascinating set of circumstances in a highly complex global industry as is often observed in reality.”

Organisations mistakesLearning from organisations’ mistakes

“A few years ago, I was travelling to different parts of the world with the International Finance Corporation (World Bank Group) to promote good risk governance practices,” added Torben.

“We used a very neat Ivey case on the Texas City Refinery incident that led to major executive changes in BP at the time, and which spurred many interesting discussions with our audiences.

“However, the truly fascinating thing is, that another incident, the Deepwater Horizon oil spill, which was different but in many ways comparable to Texas City, occurred only three years later, despite all the apparent efforts devoted to circumvent these kinds of events from ever happening again.

“So, the case illustrates how difficult it is to make organisations follow the intended direction despite the good intensions.”

CBS’ commitment to the case method

He explained: “The case was supported by the Copenhagen Business School as part of its commitment to the Principles of Responsible Management Education (PRME), which provided the means to engage a really smart and capable CBS student to research and co-author the case.

“This support enabled us to write what we considered a significant story to be fascinated by and to learn from. It reflects the devotion of CBS to develop good teaching material for business students.

“Indeed, the case has been used with undergraduate, graduate and executive audiences, with equal success, because it is so versatile and speaks to the real challenges of managing and governing a large organisation in a turbulent and competitive global setting.”

The need for published sources

Torben concluded: “In truth the managers and executives at BP were subconsciously influenced by their established common beliefs – like we all are – and hence they would not necessarily be truthful witnesses to describe and explain events.

“Hence, all the material and information used in the case derive from publicly available press releases, news agencies, industry journals, newspaper articles and public hearings widely referenced and cited as sources.

“Although being familiar with some of the senior figures, the case is solely based on a diversity of public news reports.

“The purpose was not to illustrate good or poor management, which would defeat the purpose of learning, but rather to bring to life and illustrate as objectively as possible why it is so difficult to make things happen the way we want them to despite good intentions. That is something many business students at all levels find intriguing and worth their consideration.”

About the authors

Torben Juul Andersen is a professor of Strategy and International Management with the Department of International Economics and Management at Copenhagen Business School.
e tja.int@cbs.dk

Christine Bang Andersen was a research assistant at Copenhagen Business School when the case was written. She was trained as a Military Linguist and Officer with the Danish Defence and is currently pursuing Security Studies at Georgetown University. 
e c.bangandersen@gmail.com

 

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