With Tony Hayward out as CEO and Chairman Svanberg under pressure, Bob Dudley has an almost impossible job. Dudley’s Dilemma: repair the damage in the Gulf of Mexico, create a zero tolerance culture on safety issues throughout BP–and manage the liabilities, litigation and backlash that could ultimately threaten the survival of the company.
Dudley was chosen because the crisis in the Gulf isn’t over, and it helps that he is an American, not a Brit. He was effective in Russia, where despite problems during his watch, BP to this day operates profitably and without incident. The board likely approves of the job he’s done since he took over the spill cleanup from Hayward. Yet, there is a strong argument to be made that he is a transitional CEO, not the leader of the future.
The Amoco Connection. Dudley was chosen over the heirs apparent to Hayward, BP insiders Andy Inglis, Ian Conn and Byron Grote. Since Dudley originally came from Amoco in the merger with BP 12 years ago, his appointment could signal BP’s return to a culture and asset strategy resembling Amoco’s. As a leader in safety, environmental standards and strong operating practices, Amoco operated accident-free upstream and downstream operations onshore U.S., in the Gulf of Mexico and around the world. Dudley knows the Amoco model and what needs to change within BP, but long-term tenure as CEO doesn’t necessarily follow.
Protecting the Insiders. Choosing Dudley could in fact be a smart move to protect Hayward’s assumed successors from the ongoing bad press and public uproar in the Gulf. Dudley might be able to get the company through its worst days and shield the younger insiders until it’s safe for one of them to take the helm. Dudley’s first significant operational role was in Russia; he doesn’t have the deep experience to elevate him above the competition.
Outside Influence. If the board is also wrestling with the idea of an outsider as its future CEO, Dudley buys them time. Who really wants to be CEO of BP right now? A real succession plan considers every possible contingency, especially the most terrifying (a reminder to all boards). The Gulf spill forces the board to rethink all options, a process that can’t be rushed. In the short term, BP needed an American and someone who could help change its culture. Dudley fit the bill. A year from now he might not.
But then again. Could Dudley conceivably keep his title? Can he gain respect in the Gulf? Can he convince regulators and politicians that BP will operate safely and responsibly? Can he protect the deepwater leases BP already owns and wants to operate around the world? Can he restore market confidence? Can he help BP deliver on a promise of no more mistakes, no spills, no violations, no excuses? It would take a Herculean effort by a gifted leader.
No one could wish Bob Dudley anything but great success. A terrible accident made him CEO, but don’t bet on him staying as CEO when the waters finally run clear in the Gulf of Mexico.
Keith Meyer is vice chairman and head of the Global CEO and Board Practice at CTPartners based in Chicago. He has more than 20 years of experience advising Fortune 500 boards, CEOs and senior executive teams in all areas of corporate governance and board effectiveness best practices. Meyer was an executive at Exxon Mobil during the Valdez oil spill in 1989.