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Feature

Sir Robert Horton
Former Chairman
British Petroleum Co. PLC

‘Surprise’ Governance

When you never know how your company is going to be surprised from day to day, the great need is to meet each surprise with more knowledge and creativity.

By Sir Robert Horton

Ed. Note: This is an abridged version of an article that originally appeared in Directors & Boards in 1992. At the time, the author was chairman and chief executive officer of British Petroleum Co. PLC (now BP PLC).

For perhaps a decade now, business has been talking about global marketing, global finance, global operations, global strategies, and even global managers in a changing world. I have no quarrel with the word “global.” My argument is with the word “changing.” We are in a world of surprise.

Faced with the unpredictability of almost every aspect of business in today’s chaotic world, the average corporate leader might be forgiven an erosion of will, if not a failure of nerve. But there is no substitute for success. Whatever happens, however buffeted by surprise, a company must respond effectively to every event. It is up to the company’s leaders to see that it does.

Currency fluctuations, trade statistics, combined inflation and recession (not to mention wars and rumors of wars) all provide object lessons about the interconnections among the great business regions of the world.

Here we are today, in a world where business forecasts are likely to be obsolete before the ink it took to print them has dried. Where a basic aspect of every company’s strategies must be to take part in environmental improvement. Where your most damaging new competitor rarely comes from your own industry at all--but instead is the inventor of a substitute for your entire industry’s range of products. Where information technology expands your mental reach so widely that you’ll never get your brain to grasp all the important facts--and only them--amidst a welter of data.

What is happening, right now, in global business is both worrisome and exhilarating.

A Fundamental Oxymoron
Today, one new management axiom is that the most powerful threats and opportunities for a compay do not come from within normal business but from outside--as complete surprises. By definition, the businessman cannot plan for surprises. A surprise foreseen is an oxymoron.

So, being unable to know what may occur, the businessman or businesswoman must try and make the company ready to meet whatever comes. The solution is not to make changes in the company but to completely transform the company to make it able to constantly change.

This transformation covers the entire range of corporate activity: mission, values, structure, process, and human behavior. In short, its culture. The anchor for this effort begins by articulating a brief statement of mission and values that is compelling to people within the company. This task must be led from the very top.

The management cadre and work force must validate the mission if it is to be credible. So, they must debate that mission and values statement, polish and amend it to their satisfaction, and sign on. The mission and values then become the new foundation on which everything else in the company is rebuilt. The goal is constantly growing productivity.

The Crucial Question
The crucial question is how to manage a company for maximum productivity while constantly seeking improvement. Rigid organizational structures give way to networks and shifting, ad hoc relationships for particular purposes. Business processes and decision pathways must be pruned ruthlessly to reduce bureaucracy and friction.

Managements must be delayered to take out unnecessary roadblocks and levels of redundant authority. Top managers must delegate far more decision-making power than they have ever done before. Junior managers must learn how to make better decisions, more quickly, using all relevant information and judgments. The result is that middle managers are in some danger of losing their jobs.

Surviving in this new world requires a newer kind of behavior than what has been the norm for nearly any manager, traditional or global.

We are what we learn to be. Across the world, business has been a hierarchy--a meritocracy, by and large, yet a pyramid. All this is passing away. Pyramids are being replaced by networks. So not only must today’s company make new decisions about who should decide what, today’s manager rnust learn to decide some things, delegate others, and create consensus for others still. The art of management always was getting things done through other people. Now the art of management must be getting everything done well by everybody--with no time for constant supervision.

When you never know how your company is going to be surprised from day to day, the great need is to meet each surprise with more knowledge and creativity. One thing about surprises is that rarely do you get to repeat a previous solution.

Moreover, no company can ever draw up sufficient policies governing what might have to be done on the spur of the moment. Individuals must be quick to see connections and grasp the implications of events. And they must be given the power to respond without bogging down.

New Traits to Learn
In today’s business world, the people in place must learn to meet surprise with flexibility and grace, and there is no recourse for people at the top but to develop more faith in their colleagues. Fortunately for modern business, all of these behaviors can be learned.

The prime value is shifting from respecting experience to treasuring understanding. Beyond all the other attributes out of business history, today’s global manager must learn new traits of flexibility, collegiality, openness, and trust.

Sir Robert Horton joined British Petroleum Co. PLC (now BP PLC) in 1957. He served for several years in the U.S. during the 1980s as CEO of Standard Oil Co., and, following Standard Oil’s merger with British Petroleum, as CEO of BPAmerica Inc. He was elected chairman and chief executive of BP in 1990, during which time he authored the above article that was published in Directors & Boards in 1992. More recently, he had been serving as executive chairman of Betfair, an online gaming business based in the UK. He stepped down from that position in January 2006.