Corporate humility goes a long way

Businesses are getting better at owning up to mistakes. But the accountable individuals should stop hiding behind corporate spokesmen

Those who believe that Britain joined the invasion of Iraq with the United States for no more noble cause than to secure lucrative oil reserves may be tempted to believe that even this objective has proved futile, if Royal Dutch Shell’s recent experience is anything to go by.

In January, when speculation over Prime Minister Tony Blair’s motives for going to war with Iraq was at its height ahead of publication of the Hutton Report, the world’s fourth-largest oil company announced that it had lost 3.9 billion barrels of its reserves – a balance-sheet asset that amounted to about one-fifth of Shell’s stated oil reserves. As I say, there are those who argue that, if the Iraq war was not about weapons of mass destruction, then it must have been about oil. But now oil reserves, for one of the global oil conglomerates at least, have turned out to be as elusive – if not as non-existent – as WMD. Perhaps other oil-rich states now need to be invaded.

The main difference between this oil company and our Government, however, is that when Shell can’t find what it is looking for it owns up. And, having ‘fessed up, it expresses regret for having handled matters badly. Shell chairman Sir Philip Watts told a packed shareholders’ meeting in a London hotel: “I’m sorry, I got it wrong.”

There was a time when Blair used to employ this technique of humble apology, indicating that he was a pretty straight kind of guy. He could, perhaps, relearn some of its effectiveness, because Watts pulled off a fairly successful meeting, putting himself back in the driving seat of Shell in the eyes of many important institutional shareholders.

But Watts’ chastening experience over the past month offers wider lessons on how corporations tackle issues such as Shell’s, beyond comparisons with the world of politics, in which deceit is these days taken for granted.

We are, thankfully, still less tolerant of deceit and obfuscation in business. This is partly why Watts was so swiftly held to account. There isn’t even any allegation that Watts lied. He simply failed to lead from the front when his oil inspectors told him that his barrels of mass valuation never existed.

Shell, like many oil companies, has not been famed historically for its humility. From the days when the oil majors, known collectively as The Seven Sisters, largely ran the Western – if not world – economy, comes a considerable amount of inherited arrogance. It was really none of our business how they ran their businesses.

That’s why, in January, neither Watts nor his finance director, Judy Boynton, appeared either for shareholders or the media when the billions of barrels went missing. It was left to some luckless hack in investor relations to address the oiks of the outside world.

But the media are no more likely to be intimidated or browbeaten in the business world than they are in politics. An informal campaign was instigated under the slogan of “Where’s Wattsy?”, harking back to the children’s game Where’s Wally?

Hence Watts’ recent public penance. He had hoped to be able to review a reasonably successful 2003 for Shell. Some hope. Watts acknowledged, not without some wit, that “sadly this meeting is overshadowed by other questions.”

He also apologised for the high-handed manner in which he failed to appear in a teleconference when the phantom barrels were exposed: “Frankly, with hindsight, that was a mistake. I regret that I wasn’t there and I hope today will make amends.”

Again, this is the sort of comment that has become familiar at another corporation, the BBC, but has yet to be heard from a government for whom WMDs have gone missing. In this context, Shell can these days be seen psychologically to have more in common with the BBC than the Government – a welcome development for an industry that used to believe it ruled the world.

But the lesson is not just one about humility in big business, welcome as that is. It’s also about the responsibility that people have for fronting businesses.

We are fond, in the marketing services industries, of describing our agency and consultancy enterprises as “people businesses”, as though there is any other kind.

The truth must be that Watts and his senior colleagues fell into the common belief of large corporations that there is some sort of identity to an organisation beyond the people who own it and run it.

This attitude was most apparent at the time of the missing barrels debacle, when Watts and his opposite number at Royal Dutch in Holland issued a joint statement. Their action implied that individuals don’t say things, but that something called the corporation could speak in its own right.

Naturally, corporate statements can be agreed by committee. They can even be delivered by anonymous spokesmen. But for Shell, the only response when faced with such a big issue should have been a statement made by an accountable individual.

To think otherwise is to believe that successes and failures are unconnected with the people who make them. And that’s for the world of politics, not business.

George Pitcher is a partner at communications management consultancy Luther Pendragon

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