What a turnaround.
BP was once the standard-bearer among the virtue-signalling climate warriors emerging from the oil and gas industry. It wasn’t merely participating in the transformation. It wanted to lead it.
British Petroleum became Beyond Petroleum. The logo changed. The language changed. The corporate identity changed. The company appeared determined to demonstrate that one of the world’s great oil majors could somehow reinvent itself as something else entirely.
BP was hardly alone.
Statoil became Equinor. DONG became Ørsted. The oil and gas industry discovered the fashionable vocabulary of transition, sustainability and a glorious future beyond hydrocarbons.
But BP was different.
It was not some regional utility experimenting with a new identity. It was one of the world’s genuine oil majors, with a global footprint and the assets, expertise and cash flows that come with operating at that scale.
Which makes the obvious question rather uncomfortable:
Is BP still a major?
The events of the past fifteen years have done considerable damage to the company. But the damage was not simply the result of bad luck, difficult markets or an unfortunate sequence of events.
BP also pursued a strategic vision that was increasingly detached from the economics of the business it was supposed to run.
The company doubled down on its green strategy even as it became increasingly obvious that the transition it was betting on was not developing in the way its architects had imagined.
The consequences were not particularly mysterious.
Capital was directed away from the business that generated the company’s traditional returns and toward projects whose economics were considerably less compelling.
The balance sheet suffered.
The company became weaker.
And eventually the question ceased to be whether BP could successfully transform itself.
The question became whether it had transformed itself into a much smaller and less strategically important company.
That is the remarkable part.
It wasn’t simply that the strategy failed.
It was that the people running the company continued to pursue it long after the warning signs had become impossible to ignore.
There is a particular pathology in large organisations where ideology becomes more powerful than evidence.
Once a strategy has been declared morally correct, questioning it becomes more difficult than implementing it.
The people who designed it acquire reputations.
The board has endorsed it.
Consultants have built careers around it.
Executives have attached their identities to it.
The corporate machinery begins defending the strategy rather than testing it.
At that point, arguments about economics become almost irrelevant.
The strategy has ceased to be merely a strategy.
It has become a belief system.
And believers are notoriously difficult to negotiate with.
Eventually they have to be removed.
That, finally, appears to be what happened.
But there is another part of this story that I find almost more remarkable.
The architects of corporate destruction do not necessarily disappear into obscurity when the destruction becomes visible.
Take Lord Browne, one of the central figures in BP’s transformation and one of the most celebrated corporate figures of his generation.
He remains a prominent member of the British establishment, surrounded by the sort of reputation, honours and influence that ordinarily accompany enormous corporate success.
There is something deeply strange about that.
We are perfectly capable of recognising failed political leaders.
We are considerably less willing to apply the same standard to corporate leaders.
A chief executive can preside over the destruction of enormous amounts of shareholder value, pursue a strategy that turns out to be disastrously wrong and still emerge with his reputation largely intact.
The examples are legion.
Corporate history is full of executives who wrecked companies and then moved on to prestigious positions, speaking engagements, advisory roles and comfortable retirement.
The system seems remarkably forgiving when the person responsible is sufficiently well connected.
And perhaps that is the more important lesson from BP.
The problem was never simply that one company made a bad bet.
Companies make bad bets all the time.
The problem is what happens when the people making the bet become so convinced of their own righteousness that evidence ceases to matter.
Markets eventually impose discipline.
Physics eventually imposes discipline.
Customers eventually impose discipline.
But none of them necessarily act quickly.
By the time reality arrives, the people who made the original decisions may already have moved on.
The shareholders inherit the consequences.
The employees inherit the consequences.
The company inherits the consequences.
The architect gets the biography.
And BP?
BP gets to discover that Beyond Petroleum was considerably easier to print on a logo than to build into a viable business.