Learning from BP's nightmare scenario

Learning from BP’s nightmare scenario: Three brand lessons

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Learning from BP’s nightmare scenario: Three brand lessons

by Graham Hales

Let’s face it: things don’t get much worse for a brand’s health than the BP disaster. £44 billion was lost in its share price, which was about 45 percent of BP’s market capitalization. The CEO has been replaced, employee morale can only be at an all-time low and the brand has sunk without a trace from Best Global Brands. Annus Horrilbilis, doesn’t begin to describe BP’s 2010.

We can only imagine the sighs of relief from other oil companies that it was BP that went through the doomsday scenario and not them. While it’s difficult to find crumbs of comfort among the wreckage, there are three thematic lessons that BP’s implosion will make increasingly evident to businesses in the oil sector.

1. Revaluating the concept of fair profit Whatever happens next, brands in the oil industry and beyond will certainly shape up their operations to minimize environmental risks. The disaster, paired with the recession, has led to a global re-evaluation of the relationship between profits and standards.

Customers now value the community and businesses that act responsibly. Corporate citizenship has become an important

differentiator, and overall this means better business for those focused on fair profit – and a decline in business for those who fail to live up to these standards.

2. Leaders must be effective communicators As the media’s treatment of Tony Hayward, the outgoing CEO of BP makes clear, we live in a world where cameras will be placed in front of leaders without invitation. Any stumbling comments will be picked up upon and there’s rarely an opportunity for recourse.

For example, when Hayward said he “wanted his life back,” the media and public fixated on the off-hand comment. It ultimately became symbolic of BP’s insensitivity toward the 11 people that had lost their lives on the rig and the many other people who had been affected by the disaster. Then, when Hayward sailed his expensive yacht around the clear waters of the Solent on his day off, he soured his – and BP’s – image even further. The public’s response to the media coverage demonstrates that every action communicates, not just the words we utter.

As a result, it was clear that BP could never

prosper again under Hayward’s leadership and he left the position.

Not too long ago, leaders used to be able to just be “good at their job.” The BP disaster has driven home the point that, these days, they need to be increasingly well-rounded and adaptable. Above all, they need to be media-savvy and media-friendly. These sorts of skills and instincts can be hard to find in an existing generation of CEO’s that were brought up in and influenced by a different era when media relations were more premeditated and pre-planned.

3. Everyone has a point of view (and it counts) Whereas brand once seemed to play a relatively minor role in consumer demand of petrol retail, the negativity surrounding BP increased that role – much to its competitors’ benefit. This underscores a larger shift that brands must face in regards to their audience.

Brands used to be able to talk about their audiences and prioritize them. Today, however, while the concept of targeting is always front-of-mind, brands need to

Learning from BP’s nightmare scenario: Three brand lessons

recognize that they must cater to everyone.

Digital and social media’s increased role in daily life allows customers to see inside an organization. Customers are even encouraged to interrogate brands regardless of whether or not they have a commercial relationship with it. As a result, who the brand is for and, by implication, who it is not for, is no longer the question.

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deeper than most, it is likely that BP’s work in this area will take a long time to complete.

Turning the tide of public opinion will not be easy. It will require BP to show that it has truly learned its lesson and eradicated any risk of a spill again. It will also require that it rethink its “Beyond Petroleum” promise – a tagline that has proven impossible to hold true to. ■

In order to stay afloat in this landscape, brands need to embrace a certain amount of chaos when devising segmentation strategies. The idea is to allow for prioritization as well as a broader universe for the brand to operate in. While this complicates any branding strategy, it may actually serve to enhance the brand’s potential areas of operation in the future.

In many ways this approach isn’t all that new. For example, auto manufacturers have always recognized that our dreams and aspirations of what car we want to drive often start way before we can afford the purchase. Similarly, luxury brands often recognize that their exclusivity can only be maintained if their primary advocates are not actually their purchasers.

BP’s future In general, brands facing disasters usually focus on three-pronged strategy: acknowledging their mistake, eradicating the mistake and communicating that they’ve eradicated the mistake until public opinion turns back in the brand’s favor. BP has acknowledged its mistake and is now focused on the next step. But while capping the well and compensating for the losses the mistake created are a start, because the social value of this specific crisis runs much

Turning the tide of public opinion will not be easy. It will require BP to show that it has truly learned its lesson and eradicated any risk of a spill again.

Graham Hales Graham Hales is Interbrand London’s CEO. His consulting work for some of Interbrand’s most high profile clients has taken him across a diverse range of business agendas, geographies and cultures.

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