The Secret of Dramatic Change at BP

No question about it, BP, the British oil company, has had a glorious past. Founded as British Petroleum in Persia (now Iran) a century ago, this well-regarded company was a leading producer of oil throughout most of the twentieth century. But in the 1970s and 1980s, the industrial giant had fallen on hard times. Part of this decline in fortune was due to outside forces: In the years following the oil embargo of 1973-1974, the petroleum industry was subjected to a roller coaster of unpredictable political and economic events.7

Yet some of BP's decline can be blamed on ill-adapted conditions within the company. BP had a huge and poorly disciplined employment force scattered all over the world. Nor was the company sufficiently strategic; for example, much effort was spent digging for oil in the Netherlands, though mega-rival Shell was much more likely to succeed on its home soil. Neither highly positioned managers nor ordinary workers were held accountable for their achievements and lapses, let alone their specific contributions to profitability. In crude behaviorist terms, there were few rewards (or positive reinforcements) for outstanding performance and few penalties (or negative reinforcements) for failure. Far too much of the company's business was focused on oil, though the extent of world reserves was unknown and the possibility of seizure by nationalistic leaders (or followers) was ever present. Perhaps most disturbingly, there were no plans for dealing with such destabilizing situations. BP stood at considerable risk of becoming an industrial dinosaur, going the way of once-dominant companies like Westinghouse, American Motors, and Montgomery Ward.

In the early 1990s, however, BP began to change. First under the leadership of David Simon (CEO from 1992 to 1995), and more recently under John Browne (Lord Browne, as of 2001), BP revamped its profile within the petroleum industry and among corporate giants more generally. It cut down its core workforce by over half, from 120,000 to 53,000, in the 1990s;8 at the same time, it acquired major natural resource companies. At the start of the twenty-first century, BP had climbed from being the fifth largest and least profitable of leading petroleum companies to the second largest and most profitable; in the first quarter of 2001, a bleak period for most corporations worldwide, BP reported a record-breaking $4.13 billion profit.9 Its main activities include the exploration and production of crude oil and natural gas, manufacturing and marketing, and solar generation—activities that have earned it the nickname "Beyond Petroleum." Having long been viewed as one of the principal contributors to pollution, BP now aims to become an environmentally friendly, self-styled "green company." It regularly reports on its performances vis-à-vis health, safety, environmental care, social investment, and responsiveness to local conditions.10

But perhaps most astounding are the shifts that have occurred within BP itself, introduced by CEO Browne and his top executives. Once a conventionally hierarchical firm, BP is now organized in a flat way. Once an organization where responsibility was diffuse or altogether absent, it is now a company where each individual is expected to contribute directly to profits or to engage in creating or distributing knowledge that will ultimately increase profits. Those who cannot justify their contributions are rapidly and, some would say, ruthlessly dismissed from the company.

How did this dramatic turnaround occur? BP became a "learning company," trafficking (self-consciously or not) in the creation and alteration of mental representations. For example, BP executives now spend a great deal of time in strategy sessions—reflecting on the current state of the petroleum industry as well as the opportunities available, the possible pitfalls, and alternative courses of action. Moreover, the company is now characterized by considerable experimentation and virtually instantaneous communication of all knowledge within the company.

But let's step back for a moment. It is one thing to instigate such changes; it is quite another to weave them into the well-worn corporate fabric and the DNA of its workforce. Indeed, few goals are more challenging to achieve than significant, lasting change in adult human beings. So, even when everyone agrees in broad terms on what needs to change, someone still needs to work out a plan to implement change in a lasting way. To put this in terms of a cognitive perspective, a leader must proceed from her own internal representations of both the present and of the desired (new) state of affairs to some kind of a public presentation that captures this vision. Moreover, each member of the leadership team will likely have his own mental representation, and each will likewise utilize modes of expression that are comfortable. The team must hammer out an acceptable consensual representation. The leadership team then needs to communicate this representation widely—preferably in a number of discrete yet compatible forms—and test whether it can gain support. In our terms, a leader must first define the content of the message she wishes to convey and then find the formats that convey that message well enough to create meaningful and lasting changes of mind—first in the leadership team, eventually throughout the company.

Let's say that most members of the company still believe in the traditional hierarchical authority structure. How should the leader attempt to change this mind-set? A simple announcement that this is no longer true is unlikely to prove effective. A graphic presentation or film of new kinds of decision-making entities will at most capture the attention of some employees. Say, however, that each month a pressing new problem in search of a solution is posed to various groups of frontline managers. The managers are given time each week to meet on this problem as well as resources to hire consultants and carry out experiments. After some months of such problem solving, a diverse set of managers is constituted as a special review group. These managers examine each of the candidate solutions, review the newly conducted research, and choose the most promising one. The designated leaders of the company then pledge to institute this new procedure, evaluate it, and, if it proves successful, announce that it has become company policy.

No one of these moves is likely to change the minds of most employees. But if the company leadership approaches the problem in a number of different ways, and if these methods work well together, then mind change becomes a distinct possibility. Consider such a BP-style agenda in terms of our mind-changing levers. Foremost, there needs to be a clear and reasoned statement of the proposed mind change (which includes research into why traditional authority structures no longer work); substantial resources need to be devoted to the change (which would involve several teams working over many months); powerful resistances must be recognized (e.g., most employees are used to a top-down structure); resonance must be cultivated (e.g., reinforcing the idea that it is pleasurable to work together on consequential problems with individuals whom one likes and respects); and real world events (for BP, the threat that oil supplies will be seized or that this old, venerated company will collapse altogether) must be recognized and exploited. Perhaps most important, the leaders who seek to bring about changes of mind must attempt to capture and convey the desired shift in a multiplicity of formats (representational redescription). If the new way of thinking is embodied in multiple forms over a significant period of time—if it is well stated and well embodied in spoken policy, in modeled behaviors, in groups that actually do what they are empowered to do—then and only then is a major change of mind likely to occur throughout the company.

Let me add one important note about resistances. One can—and must—go through an exercise of deep and pervasive mental surgery with respect to every entrenched view: Define it, understand the reasons for its provenance, point out its weaknesses, and then develop multiple ways of undermining that view and bolstering a more constructive one. In other words, search for the resonance and stamp out the resistance. Consider three such entrenched views—each familiar to anyone who has worked in any organization—and the ways in which these views might profitably be reformulated:

• Early representation: Bigger is always better.
• Better representation: It all depends. Sometimes small is beautiful. Assets of scale are often at odds with flexibility, comfort, innovation. The behemoths of one era may well become the dinosaurs of the next.
• Early representation: It you don't like your situation, scream, quit, or do both.
• Better representation: All niches have pros and cons. If you act shrewdly, you may be able to improve your situation, not only benefiting yourself but also improving the atmosphere for others. It is also important to listen to what others are saying because you might not grasp the whole picture.
• Early representation: I've done it this way so long that I know it is right.
• Better representation: There is merit in tried-and-true practices, but sometimes—and particularly at a time of rapid change—such practices can become dysfunctional. Items of inferior quality that are less expensively made sometimes dislodge quality products. Keep an open mind, be willing to experiment, blend the best of the old and the new.

There are usually good reasons why such entrenched views persist and defy ready abandonment. Yet there are times when the entrenched view is counterproductive, the need for a "counterstory" acute. Having identified this challenge, it is the task of the authorized leaders to determine the best ways in which to challenge the "earlier representation," demonstrate its limitations, suggest reasons for another perspective, and embody the alternative stories in as many impressive and diverse formats as possible. Only if an individual truly becomes convinced that bigger is not al-ways better, that all niches have their advantages, that experimentation can be empowering is she likely to begin to think and to behave on that new basis.

Excerpted with permission from Changing Minds: The Art and Science of Changing Our Own and Other People's Minds. Published by Harvard Business School Press. Copyright 2004 Howard Gardner; all rights reserved.

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Howard Gardner is the John H. and Elisabeth A. Hobbs Professor of Cognition and Education at the Harvard Graduate School of Education and Senior Director of Project Zero.