GCs have much to learn by comparing two monumental global powers: BP and JPMorgan Chase.
The 2010 Deepwater Horizon Oil Spill had a defining impact in the sense that one can barely mention BP without the spill coming immediately to mind.
JPMorgan’s mortgage debacle, a more recent event, had the bank’s $13 billion settlement making headlines this past fall and numerous derivative government actions are just getting underway. JPMorgan is in danger of being defined as a result of the scandal. In both cases, we’re talking about more than just a stain on the corporate escutcheon. We’re talking about reputational damage that many observers argue might be permanent historic legacy, dwarfing what’s been achieved in the past.
Yet, while their legacies face similar pigeonholes, the companies’ responses, as of this writing, are studies in contrast.
BP cannot be indifferent to the economic impact, but the company realizes that reputation, a less tangible but nonetheless indispensable asset, must be managed in and of itself.
Indeed, the familiar “we’re going to make it right” tagline now vies to define BP’s culture, particularly since it follows a decade of successful marketing efforts. The message was powerfully underscored in June 2010 with the $20 billion Deepwater Horizon Oil Spill Trust brokered by the White House. The trust became, with BP’s endorsement, an integral part of the public narrative.
BP still faces the specter of litigation, but the trust was undeniably helpful air cover for the company. President Obama abetted BP’s purpose by emphasizing that it would be an independently administered escrow trust. Message: BP wants to do the right thing even if it means ceding some control of the process.
It’s all about redress of grievances and the compelling message of lessons learned. “We’re going to learn a lot from this incident…We’re going to learn a lot. The industry is going to learn a lot,” said BP chief executive Bob Dudley. “…there’s no question that we will change as a company…We’re going to emerge from it wiser…stronger.”
By contrast, JPMorgan seems to have geared its entire communications strategy to protecting short-term shareholder value and mitigating the torrential litigation ahead. As the message was carefully constructed to include no admission of wrongdoing, the bank was depicted as carefully dancing around its own liability so as to head off future claims.
The approach did work in terms of immediate stock value. “We didn’t say that we acknowledge serious misrepresentation of the facts,” CFO Marianne Lake told analysts. “We would characterize potentially the statement of facts differently than others might.”
It’s naïve to contend that such verbal gyrations aren’t sometimes necessary when shareholder value hangs in the balance. Yet what’s been missing from the financial services industry since the meltdown is a parallel communications track, not unlike BP’s—and thereby hangs the tale for corporate GCs. Yes, the most assiduous strategy to avoid exposure should be implemented, but GCs must speak two languages in the cause of reputation management.
As Harvard professor Nancy Koehn said, “it’s no longer enough for a leader to excel at one thing [emphasis added], even if it’s improving profits.”
Among corporate officers, GCs are often the most guarded participants in corporate crises. Yet their job now too demands an increased quotient of emotional intelligence—of “we’re going to make things better” and “we’ve learned a lot and we’re going to be better”—if they’re to contribute to the real mission at hand.
That mission involves a great deal more than simply staying out of court.