Performance Management and Learning at British Petroleum (D)

In June of 1995, John Browne left his post as managing director of BP Exploration (BPX), the British Petroleum (BP) Company’s world-wide exploration and production business, to become CEO of all of BP. Taking over the reins at BPX was Rodney Chase, an almost 30-year veteran of the company. By 1996, BP was the fourth largest oil company in the world and Britain’s largest company overall. Although BP was the leading oil and natural gas producer in the North Sea and Alaska and BPX was in a strong position financially and strategically, Browne and Chase both grappled with how to keep the division growing over the long term. The case details the changes that Browne made as head of BPX to improve the division’s ability to capitalize on exploration opportunities, leverage BP’s considerable experience, and increase operational performance. BPX revamped its exploration strategy, removing many layers of management bureaucracy and decentralizing decision making responsibility. The organization upgraded its performance metrics and monitoring, as well as performance incentives, and implemented various mechanisms to share knowledge throughout the company. In part due to the excellent performance of BPX, BP had excellent years in 1996 and 1997 with profits of $3.98 billion and $4.62 billion, respectively. Browne and Chase, however had concerns around growth, well aware that BP’s shareholders were always focused on improving the bottom line. While some of the growth might come from the downstream assets, BPX would also have to make its contribution, and many within the company worried about from where growth would come.