SUZANNE PRATT: BP is eliminating its dividend and setting up a $20 billion fund for victims of the oil spill. Joining us with a look at how these moves could affect BP’s tarnished images is Dean Crutchfield, senior partner at Method. Method is a New York agency that specializes in building corporate brands. Dean welcome back to the program.
DEAN CRUTCHFIELD, SENIOR PARTNER, METHOD: Greetings. Thanks for having me on the show.
PRATT: Is it too little too late for BP today?
CRUTCHFIELD: Not at all. I think first and foremost, let’s congratulate Mr. President. This is a case where he’s actually promised that he’d give some actions and today he finally gave some. So I think it’s delightful news. The crisis is still grim, but I think that this will be well-received as a part of the process to make amends to what is horrific for the country and for the Gulf.
PRATT: How about that apology from BP’s chairman, a man that we haven’t seen very much of. How important was that do you think?
CRUTCHFIELD: I think it shows a critical step change in terms of how they’re handling this. I think it’s fair to say that Mr. Hayward tried to do a good job, but ended up looking like the dexterity of crude and the personality of ash. We have Mr. Svanberg coming on board. He is a seasoned executive. He’s bringing change with his leadership and now he has met with the president. He is putting a face to the name and he is driving that change through.
PRATT: So you have been very critical though of how BP has handled this crisis.
CRUTCHFIELD: I have.
PRATT: What is your primary complaint? What would you — if you were advising them, what would you tell them?
CRUTCHFIELD: I think they fell down on four key areas. First of all, though they’re trying to correct that now, was a failure to analyze failure, especially when it was one that looks light it could be avoided in the first place. Number two, they lacked a real crisis plan in the beginning. What happens in these situations is you need a bold and virtuous response and this wasn’t happening. And I think also there was too much inspection, not enough execution. Again today there’s plans to correct that. And finally, there’s that gulf between gestures and results. And all we’ve heard a lot of is gesturing. That again today I think is being capped and we are going to see some significant change going through.
PRATT: So at the end of the day however, BP is an oil company. And a tarnished image really doesn’t necessarily mean much in terms of their product. People are still going to go to a gas station and buy gas if it is in a good location and a good price, correct?
CRUTCHFIELD: Absolutely correct. Let’s face facts here. BP generated $ $6.5 billion of profit in the first quarter of this year. So a $20 billion fund is a substantial amount of money, but it is not the kind of money that is something that they would be frightened of generating because they are such a profitable well-established business.
PRATT: But they’re not going to lose customers because of a tarnished brand?
CRUTCHFIELD: I think they’re going to lose some customers who really are put off by how they’ve behaved over these last 50 odd days. I think there’s certainly a lot of criticism. There’s a lot of angst. But at the end of the day, I think it is a question of what they do now. Is their action going to be bold enough? Is it going to be big enough? Is it going to be fast enough? And if it is, then people will have more patience with them in the coming months and years ahead.
PRATT: So tomorrow Tony Hayward is going to be grilled by Congress. We’ve seen a copy of what he’s going to say. He’s going to apologize. What else should he say and what else should the company be doing?
CRUTCHFIELD: I think they need to be getting down to the fact of accepting some liability here which they’re very careful not to take on too much. The statement that I’ve actually looked at is a classic media crisis response. It has a purpose in the sense of describing the company and what it does in the face of such a catastrophe. It then goes on rather long- winded to explain the reasons why they’re doing what they’re doing. It then gives a list of examples from dispersants to boom in terms of all the various elements they’re putting together and at the end, a pledge that he promises to do everything he can to resolve the crisis and back to the purpose again of the company. Let’s be honest here, what are you going to say — that you’re not going to pledge to actually resolve the crisis? So I think it doesn’t go far enough. It was certainly an effort. It’s a stake in the ground, but today’s statement today from Svanberg is far more positive in terms of what they really are going to do over these coming weeks and months.
PRATT: OK. Let’s leave it there, some very interesting thoughts. Thank you Dean for joining us.
CRUTCHFIELD: Thank you.
PRATT: Dean Crutchfield, senior partner at Method.