Reputation speaks of the esteem held for a company – whether people recommend it as a place to work, a company to do business with, or to have manage a project in your community. A good reputation has direct and positive impact on the bottom line in terms of sales, staff turnover, cost of sales and market share, on financing costs and share price.
Research has shown us time and again that companies with strong positive reputations attract better talent, may be perceived as providing better quality products or higher value customer service, and can often charge higher prices.
Reputational risk is the gap between stakeholder expectations of corporate behaviour and our experience of it. Beware the company claiming the mantle of human rights champion while paying governments in countries where there is no such thing. Beware the organisation claiming high regard for community, while trampling all over it. Beware the company that produces pretty sustainability reports, while indulging in unconscionable environmental practices – even if adhering to law – where such laws would not stand up to any measure of environmental care.
Just because you can, doesn’t mean you should.
Such incongruities earn the all encompassing benign term of ‘greenwashing’. This must have been invented by one of those consultants – the type that like to put things into neat politically correct boxes all tied up with bows. In case you haven’t guessed it yet, I’m not one of those. I call this kind of disparity between claimed behaviour and demonstrated, deliberately misleading, unethical and unacceptable.
There are good companies who enjoy exceptional reputations, that do indeed make mistakes. While we all do (make mistakes), how we are perceived as a result depends entirely upon our response. Exceptional reputations demand exceptional responses. Response matters.
And there are ordinary companies who enjoy exceptional brand strength. Do not confuse brand strength with reputation. Where a corporation does so, and seeks to trade on the brand while making errors of judgement (or worse) that could impact its reputation, the reputational risks are greater still.
BP – one of the biggest, strongest brands in the world – is now one of the most maligned corporations for precisely this reason. Once standing for British Petroleum, BP became the acronym for its advertising slogan Beyond Petroleum, with BP selling itself as the greenest, kindest, nicest oil company in the business. (No, I’m not going there – move on.) Today it is more likely to stand for Biggest Polluter.
The Deepwater Horizon was a massive floating rig drilling an exploratory oil well 66 km off the Louisana coast in the Gulf of Mexico.
At 9:45 pm on April 20, 2010, methane gas under high pressure shot all the way up the drill column and ignited. Fire engulfed the platform. Eleven people were killed, two later died of oil-related injuries, and 17 people were hospitalised.
After burning for 36 hours, on the morning of April 22, 2010, the Deepwater Horizon sank. An oil leak was discovered that afternoon.
By mid-August, official estimates put the leak at 4.9 million barrels – approximately 206 million gallons, or 780 million litres.
The damage to the environment, the loss of fisheries and wildlife, of the livelihoods of fishing and tourism industries will run into the billions of dollars. They health of individuals and communities is at risk. The health of the economy is already in intensive care.
There is a lot of anger for BP in the United States and worldwide because of the Deepwater Horizon oil spill. But BP is today, the subject of an extraordinary political vitriol not so much because of the oil spill, but because of its response.
Now don’t get me wrong, BP followed text-book PR procedure for brand management.
It set up a section on its website called Gulf of Mexico Response complete with a ‘response in pictures’ page. It started a Twitter account, quickly amassing 18,000 followers desperate for updates as to what was happening.
It launched a YouTube channel and Flickr account, it hired PR people to write for its corporate magazine, called Planet BP, sending them into the Gulf of Mexico to report on the clean up, and immediately put to air a television advertisement featuring its CEO saying all the right things.
So what’s the problem?
All the while the company’s TV advertisement was running promising BP would pay for the clean up and make things right, Hayward was negotiating with the US government, trying to get the liability capped at the $75 million oil fund limit.
And what about the photos in BP’s ‘Response in Photos’ page…What do you see? Everyone seems to be wearing BP’s logo colours they are all very bright, colourful, happy snaps in stark contrast to the news images in the earlier slideshow.
What don’t you see in any of these pictures?…
WHERE’S THE OIL? THERE’S NO FREAKING OIL!
There’s no oil anywhere in the photos, no visible oil in the TV advertisement, no mention of oil or oil spill On the BP Response website. It’s not even the BP Oil Spill Response, it’s the Gulf of Mexico response! (Take that Gulf of Mexico!)
But there were other images too, that were released to the press and uploaded to this BP Gulf of Mexico Response website. One in particular showed the BP command centre.
John Aravosis, a blogger in DC took a closer look and was astonished to see it had been ‘Photoshopped’. Clearly, pictures had been overlaid to the screens. It was a massive embarrassment for the company. The story made the Wall Street Journal and BBC, the company apologised, and promptly released new images of the clean up effort, including this birds’-eye view from a helicopter of the rig site…
Alas, Gizmodo took a closer look, and found a half-dozen issues in the image that proved it too had been ‘Photoshopped’. The giveways were things like oh, you know, naval aircraft carrier bridge, the chopper’s break was on, it was at sea level, parts of boats were missing, the sea was different…
Not only were these photographs deliberately misleading, but the ‘Photoshopping’ was so appalling, Gizmodo was inundated with readers’ own offerings of new and improved versions of the image – some of which are included in the above slideshow.
At the same time that this was happening, BP had banned journalists from clean up crews. It hired police to keep them away from BP headquarters and the Coast Guard was charged with keeping them off the beaches and their boats off the water. BP stage-managed all the site visits it could from journalists, showing them only sanitised versions of the oil spill and clean up. This is misleading, obfuscation and unacceptable behaviour.
Watching the CBS news on the morning of May 19th was 26-year-old Josh Simpson. He said:
I was home sick from work, just perusing the news when I saw a CBS reporter was told by the U.S. Coast Guard that if they didn’t get off the beach they’d be arrested.
When the reporter asked how the Coast Guard could do that the officers responded, “it’s BP’s rules.”
It was very obvious to me BP was more worried about its image than about letting people see and understand what was happening on the Gulf.
And then I had this idea – How could I be BP’s public relations team on Twitter?
Josh started a Twitter account called BPGlobal PR. His initial motive was just to mock them.
At first, people didn’t know what to think. When you Google BP Public Relations, the top organic result is this Twitter account.
The parody is priceless. He has nearly 190,000 followers. BPGlobalPR dominated the online conversation. When BP tried to shut it down, Josh Tweeted: “We are doing everything we can to stop the information leaks in the gulf.”
Twitter allows parody accounts, as long as they don’t deceive. So BPGlobalPR is here to stay. Today, Josh has a team of about 15 people who write the tweets with him.
So, poor old BP, couldn’t get a break. But never fear, it still has its own magazine, with its own ‘journalists’, remember? I wonder, how did Planet BP cover the unfolding disaster?
On June 22nd, The Wall Street Journal revealed the spin in a story headlined: BP Magazine Discovers Bright Side to Oil Spill
In Planet BP — a BP online, in-house magazine — a “BP reporter” dispatched to Louisiana managed to paint an even rosier picture of the disaster. “There is no reason to hate BP,” one local seafood entrepreneur is quoted as saying, as the region relies on the oil industry for work.
Indeed, the April 20 spill on the Deepwater Horizon is being reinvented in Planet BP as a strike of luck.
“Much of the region’s [nonfishing boat] businesses — particularly the hotels — have been prospering because so many people have come here from BP and other oil emergency response teams,” another report says. Indeed, one tourist official in a local town makes it clear that “BP has always been a very great partner of ours here…We have always valued the business that BP sent us.”
Fortunately the articles — on which BP declined to comment — don’t go as far as praising that new treat: seasonal shrimps in (crude) oil.
It is estimated BP spent $50 million on its PR efforts including the purchasing of Google search terms. It is using a multitude of media channels old and new, to tell its story.
But BP’s problem is not a lack of communication, it is a lack of credibility. Because of the misleading statements, obfuscation of real images and real stories, the overriding thought in everyone’s mind was if they’re lying about the little stuff, then they’re probably lying about the big stuff too.
And they were.
Despite all the claims in annual reports and sustainability documents produced in the history of BP with regard to the importance of safety, people, procedures and the environment, we now know that safety procedures were not followed, crisis training had not been conducted for three years, emergency drills had not been instigated, cost cutting had led to shortcuts, safety warnings from contractors were ignored. And that’s just on this rig.
In May, The Center for Public Integrity published an article entitled Renegade Refiner: OSHA Says BP Has ‘Systemic Safety Problem’.
With three different companies involved in the Deepwater Horizon project, there was no clear leadership, no chain of command in the event of an accident on this rig. THIS RIG – the deepest undersea drill rig creating the deepest well ever drilled. What were they thinking?
The company failed, and still fails to understand:
- the insatiable demand for real information in a crisis;
- that being used to dealing on B2B or B2Gov channels, it was totally unprepared for the global audience of stakeholders on the Internet;
- because it modelled the Friedman philosophy, it was in the habit of accounting only to its shareholders on issues of growth and profits, and did not expect the scrutiny from consumer stakeholders worldwide that it got on things like governance, environment and safety;
- or the impact of the Internet and Social Media and citizen journalists on the news flow.
Not only did the company take its reputation for granted it revealed a complete ignorance from the top down as to what constitutes reputation, how to manage reputational risk and deal with a reputational crisis.
It was the deepest undersea oil well ever drilled.
- the biggest oil spill in world history;
- the biggest environmental disaster in the United States;
- the fastest fall of a corporate reputation,
- and the biggest PR disaster in history.
Of all the things this case shows us in terms of reputational risk – the three key points it proves is that brand strength and reputation are separate assets; that brand management strategies cannot be applied to reputation management, and however good your PR machine, PR is not the appropriate response to a reputational crisis.
Reputation is above all else subjective – a perception thing. It is judged on a meeting of minds (or not) on values – ethics, governance, transparency, honesty, relationship and trust. Reputational risk is, in its simplest form, the gap between stakeholder expectations of corporate behaviour and our experience of it.
A subsequent 8 minute video on the cleanup and dispersants used is of value to watch, for those still in doubt:
© 2010 – 2013, Alex Harris. All rights reserved.