BUSINESS
How to keep the oil flowing in a dangerous world
Rupert Steiner talks to Britain’s most admired businessman, BP chief executive Lord Browne, about Middle East conflict and management philosophy Click, click, click, but no amount of clicking brings to life the silver and gold lighter in Lord Browne of Madingley’s hand. The chief executive of BP, Europe’s largest oil company, has run out of fuel and the irony is not lost on him. But colleagues rush to bring the lighter to life; one more click, and Browne is billowing smoke. ‘You’d better not write about that,’ he says, a huge grin emerging from the fog. John Browne is Britain’s most admired businessman, and has catapulted BP from a market value of £20 billion in 1995 to a global supertanker worth £139 billion today. Last month BP topped forecasts for its first quarter results with underlying profits of $5.3 billion. It is now the second largest oil company in the world behind Exxon Mobil. As the price of crude continues to rocket, Browne explains what’s driving the market — fears that ‘a divide’ in the Middle East might affect crude supplies. He is having to make contingency plans to pre-empt supplies being shut off should the worst happen and relations between the Islamic world and the West deteriorate. A conflict with Iran could send the price of oil on an upward spiral far north of $75 a barrel.
While Browne is planning for the worst he is measured in his prognosis: ‘The new slant on oil production is a questioning of our security. Can someone use political reasons to shut off my supply? They haven’t done it in the past, but people are concerned that it could be used because of a divide in the culture of the Islamic and Western worlds. What I would say is that we have to look at all eventualities as a company, and make sure that we maintain security of supplies to our customers. We have diversified sources of oil production, which now come from different parts of the world. There’s all sorts of circumstances that could create a divide but I don’t think it’s likely. But it’s something in people’s minds at the moment. It’s post 9/11.’ Since we last met, Browne has been focused on a different east–west divide a little closer to home. His corporate offices have hopped from the City to the West End. Gone is the oak panelling and marble of Finsbury Circus harking back to the days of empire. In their place is a modern wood and glass affair in St James’s Square which is stylish enough to be a boutique hotel. Perma-grin receptionists stand beneath moody art-house photographs. An ingenious umbrella-wrapping device hermetically seals wet items in plastic, and green LED floor lights lead to the lifts. Up on the fifth floor, Browne has transported his collection of David Linley furniture to a corner office bigger than a filling station forecourt.
Size is obviously important when you are boss of Britain’s biggest company. Browne also likes his James Bond-style gadgets. At the touch of a button a frosted glass wall slides away to reveal an adjoining boardroom. A second frosted glass wall is supposed to turn transparent at the flick of a switch to reveal a team of support staff, but ‘it gets stuck’, says Browne, unable to make his staff appear. ‘They complain they can’t work with me watching them, so I mustn’t play with it.’ Browne is a short man, slightly built, with a kind face and an unwavering gaze. He takes a few more puffs on his Cohiba and starts to effuse about BP’s green credentials. Many businesses try to balance making big profits with paying lip service to the environment, but Browne says the only way for there to be any substance is for the two to be one. ‘First, I don’t like the idea of corporate responsibility as something separate from business,’ he says. ‘I really don’t, otherwise it sounds like an add-on. In our business we have to think about the cost of our wants, what society wants, and how we can be part of society, and be in a business that lasts more than just the next transaction. We have a new business in alternative energy which makes money. We can make a decent real business out of it that makes the sort of returns shareholders want. But sometimes you have to do things which don’t pay back in the next quarter — not everything does. We are in the business of looking at things over a longer term.’ Browne has certainly played a long game with his career. Next month he will have achieved 11 years in the top job — the average life expectancy of a FTSE chief executive is 40 months. He has been voted Britain’s most impressive businessman for six years in a row, and both friends and colleagues rate him. Sir Frank Williams, owner of the Formula 1 team that bears his name, says, ‘What carves him out as a great business leader is his strategic genius and an iceclear logical reasoning that he employs in everything he executes.’ Sir John Bond, HSBC’s outgoing chairman, calls him ‘unquestionably the outstanding business leader of his time in the UK, if not the world’.
But Browne has managed to remain modest. ‘The key is to remember why you are in business,’ he says. ‘Everything starts with a purpose and the big purpose of any business is to serve human needs. If we don’t serve needs we pretty quickly go out of business. Our values are to do business in such a way that it can be done again and again and again. It is very unwise to think that anything is the last transaction. There are always going to be errors and mistakes because organisations aren’t machines. Businesses are made of people and that’s the exciting thing. People create wonderful things, but all of us are frail so things always go wrong.’ He says the best business decisions come from a combination of vigorous analysis and assembling the right team of people to do the right jobs. ‘I’ve learnt over time how to match the right people to the right bit of business, because not all people can do everything. I also learnt you have to balance aspirations and delivery.
‘On the one hand you must always aspire because businesses have to work with a sense of optimism — you can’t motivate people by saying the worst is yet to come. You have to believe the best is yet to come. On the other hand you have to be incredibly realistic and think about what could go wrong. People have to think about downsides as well as upsides. The trick is to separate the aspirations from reality. While you need to have both you can’t muddle them, otherwise people get a sense of unreality.’ Browne’s own career has combined aspiration with a touch of the unconventional. An only child, he was born in Hamburg after the war. His father left the army and joined BP as a management consultant, which led to the family travelling the world. His mother was an accomplished milliner. Browne was sent to King’s School, Ely, and got a first in physics at St John’s, Cambridge. All pretty textbook so far. He was sponsored through his degree by BP and joined on graduation, but only after his father had retired to avoid potential conflicts. He has been there ever since, apart from a sojourn in Stanford for his MBA.
But here is the unconventional bit. Browne, who is 58, must be one of the few chief executives never to have left home. He lived with his mother, Paula, into his fifties. Until she died six years ago, she attended oil industry dinners beside her son, and had as much of a profile as many of the oil barons. Browne has never been married, something of a rarity among chief executives, and I ask him whether being single has had a bearing on his success. Has it caused less distraction?
‘It’s impossible to tell because I haven’t been married,’ he says. ‘I don’t have anything to compare it with and I haven’t actually done an analysis. I enjoy people and spend a lot of time with my friends and my surrogate family. I have a big surrogate family. You need to make sure you have a balanced life and for me it takes a little bit of extra effort.’ When not working, Browne, who admits to having been a Dallas fan, likes to collect artefacts. Britain’s foremost businessman is also an unlikely eBay-er: ‘I understand how to use the internet but I’ve only bought reference books. I’m an eclectic collector of paintings, pre-Columbian art, and 18th-cen tury Italian engravings. I don’t do it with a mind to liquidation value. I buy things I like. The chase is really important.’ With the Cohiba shrunk to a mini-mountain of ash, two hours have elapsed and I sense the glass wall is about to retract, my time up. Browne himself has nearly run out of gas at BP and when his tenure expires in two years he will most likely head to nonexecutive heaven. He has been testing out four ‘apprentices’, à la Sir Alan Sugar, charging them with various tasks, and will recommend one to the board by the end of next year.
As for his future, Browne won’t be found on the putting green or sunning himself in Marbella. ‘Leaving a job like chief executive of BP doesn’t mean to say that you retire,’ he says. ‘I don’t know what I’m going to do yet, but I’m hooked on business.’
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