There are times when the fallout from a company crisis seem insurmountable. When everyone - the public, industry peers and the government - is opposed to your business. And unlike Domino’s, a case which we examined last November, it’s impossible to overhaul the product itself. Or is it?
You likely know the story of the BP oil spill. If not, to express a very traumatic incident as briefly as possible: BP had been working with Transocean and Halliburton to dig a deep exploratory well, 18,360 feet (5,600 m) below sea level. On April 20, 2010, pressured methane gas rose into the drilling rig and exploded, spilling 210 million gallons of oil into the U.S. Gulf of Mexico. Besides the obvious environmental destruction, 11 people working the rig lost their lives. To date, it is still the largest oil spill in world history. In addition to the tragedy all around, this was a public relations nightmare, which many companies could never repair.
Re-Brand Failure
This incident was doubly traumatic in light of the company’s brand history. BP had been a trailblazer with respect to its concern for its environmental impact. Its 1998 corporate responsibility report outlined the company’s plans to address greenhouse gas emissions, along with other environmental data and information aimed at providing transparency about the company’s business around the world. BP had also been the leading U.S. solar panel manufacturer.
In 2000, ten years before the oil spill, BP, which had been known as “British Petroleum” rebranded itself, to “BP,” at a cost of over $200M. The company’s new tagline, “Beyond Petroleum” reflected the company’s identity as an environmentally-concerned player in the oil and gas space and its interest in moving beyond offering strictly petroleum-based products.
The original logo (above) reflected classic gasoline logos of the early twentieth century. The new one (also above), modeled after the Helios - the Greek god of the sun - implicitly alluded to a clean, natural energy source (rather than petroleum). In the wake of the incident, Greenpeace offered a challenge to the public to design “a new logo design” for BP. Some of the results are below:
Clearly these logo designs indicate the public’s view of the company, thus negating the benefits of its rebranding work. After having been so progressive in its corporate responsibility and having poured all of that interest into its public persona, the oil spill was certainly a blow to the company’s confidence in its future.
Governmental Penalties
Not to mention the governmental penalties. after the spill, BP agreed to four years of government monitoring of its safety practices and ethics; it was temporarily banned from new contracts with the US government; and the company agreed, with the Department of Justice, to pay record fines of $4.525 billion.
Still, BP was wisely penitent and submissive with the government. Michael Bromwich, President Obama’s top regulator of offshore drilling safety stated that "BP was appropriately remorseful and dealt with us forthrightly and transparently. They fully cooperated with our investigation and with countless others."
"The rest of the industry tried to paint BP as the black, noncompliant sheep of the Big Oil family," Bromwich said. "That was its way of arguing that company-specific rather than industry-wide reforms were called for. We disagreed with that line of argument, and independent studies exposed it as nonsense."
BP’s new CEO, Robert Dudley, understood one thing very well: that a government that institutes billions of dollars in damages, fines and coastal science research, is a government that will want to keep BP around to pay for all that. By submissively complying, BP established the US administration’s desire to protect the company.
Time Heals…Some Wounds
That said, the US government’s interest is only step one. The business must go on. And that’s something that only the company can orchestrate. As we’ve talked about before, there’s much that time will heal. Eventually, if a company makes the right choices for long enough, the public will forget (or choose to overlook) the past.
For an oil company, that can be a hard road. There will always be people and entities who object to the oil & gas industry for one reason or another. To some extent, those in controversial industries can never truly overcome the opposition of those who are determined to act against them. However, assuming nothing illegal is transpiring, the only way to move forward is often to go back to business as usual.
That’s what BP did. After settling payments totaling close to $70 Billion (from fines and lawsuits), BP focused on its production. Recently that has included the acquisition of BHP’s onshore U.S. shale portfolio. Currently, the company is investing in sizeable massive oil and natural gas projects including a gas pipeline in the Caspian Sea, offshore Egyptian wells and shale fracturing projects in Louisiana.
Of course, the safety concerns of the past also had to be addressed. One of BP’s notable initiatives was to rework its facilities and to give every employee the ability and empowerment to stop the company’s operations in the case of safety risks.
Fresh Product, Fresh Image
And in 2017 BP did the seemingly impossible: launching a new product in a commodity market: new, “dirt-cleaning, “ultimate” fuels. BP marketed these as part of its new “Active” technology.
This new branding move did two important things for the company.
First, it was a return to BP’s pre-2010 reputation to focus on clean energy and environmental responsibility. BP diesel fuels help engines run more efficiently, enable smoother driving and protect a vehicle against breakdowns. BP claims that the BP Ultimate fuel with Active technology removes more than 50% of the harmful dirt deposits in the essential components of the engine, and also protects it from future build-up.
Second, the company made a strong move towards the consumer by launching a new brand character ambassador: “Orby.”
As the UK head of marketing, Natalie Cattermole, explained, “[Orby] helps us have a different conversation around fuel. We’re shifting from an engineering focus to something that is more relevant. We wanted to make the campaign friendly and approachable, so that’s a shift for the brand. It is important for the brand’s communications to stand out in a ‘cluttered’ market, which is something Orby can achieve for us.”
In short: BP launched Orby in an effort to relate to the consumer and to express the importance of the car and, by default, fuel in everyday life. Orby makes an international oil company accessible to the average consumer.
End Result
That said, what has the impact of all of these initiatives been? After the firing of two executives and the sale of $75 billion in assets to cover government fines, private damage claims and legal bills, BP posted a strong 2018.
Part of this was due to the company’s focus on its production. Investment reports cited “record utilization” of its oil and gas fields and refining capacity as the bulk of the substance behind the company’s improvement. But the other part of it is due to a positive focus on renewing its brand and reaching the consumer in ways that are relevant for the future.
Whereas after the spill, the company’s stock dividend had dropped to zero, in 2018 BP reported a doubling of profits. Now BP is producing over 3.6 million barrels of oil and oil equivalents a day. This is approximately 10% lower than the output prior to the 2010 oil spill, but the company’s output increased 10% from 2017 and is forecasted to rise.
BP's 2018 profit reached a five-year high of $12.7 billion, double the previous year's $6.17 billion. And their adjusted net income was the highest since 2012. Chief Executive Officer Bob Dudley said the shale acquisition will "transform" the company's position in the U.S.
Conclusion
As we’ve talked about before, never lose hope. A new approach to branding and public relations, such as BP’s Orby character ambassador, and a strong record of performance today can do much to lay the groundwork for a profitable future. Even in the most sensitive industries, it’s never too late to move forward with a new brand image.