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Robert Goodwin

Robert Goodwin

Robert J. Goodwin is CEO and co-founder of Executives Without Borders; former deputy assistant secretary of the Air Force and appointee at USAID, the State Department and the White House.

Taking a tip from Johnson & Johnson

Q: BP chairman Carl-Henric Svanburg asserted today that his company "cares about the small people," yet the company has also decided to suspend payment of its quarterly dividend, a move that is sure to hurt small shareholders. How can a leader effectively convey empathy to constituents when he or she is not able to please them all?

BP's veritable existence is at stake. Hence, their leadership needs to be articulating to the company's investors that the only way to salvage any hope of a profitable future is to accept responsibility today, and do everything possible to make the situation right. Investors need to understand that suspending dividend payments so spill victims can be made whole is a step toward BP once again being seen as a responsible entity that is worthy of the public's trust. While stockholders could take their money and run with a dividend payout it would continue to erode confidence in BP's leadership and ultimately hurt their brand.

Consider Johnson & Johnson's now famous response to the Tylenol tampering episode of the early 1980s. After several learning that several caplets laced with cyanide had been found in and around Chicago, Illinois, the company voluntarily pulled every one of its over-the-counter medications from shelves across the country. It was a massively-expensive move - one that cost J&J investors millions of dollars. But at the same time, it was also a powerful statement about J&J's commitment to consumer safety. As a result, shareholders that stuck with the company through several tough quarters were later rewarded with nearly 30 consecutive years of market dominance.

While many CEOs and corporate boards are evaluated by their quarterly returns they have a deeper responsibility to create and protect enduring value. BP has great talent, resources and capabilities, but how they respond to this crisis in the short and long term will determine if it can keep its leadership role in today's oil-dependant society and leverage its capabilities to help build a greener energy future.

By Robert Goodwin

 |  June 18, 2010; 11:22 AM ET
Category:  CEOs Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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With every respect, the only way BP can show its "compassion" for the damage it has done is to cap the well.


No amount of CEO visits, commercials featuring concerned Gulf locals, or payouts is going to impact American fury at BP for the disaster.

And while every effort needs to be made to get to the bottom of the disaster and assess liability for civil or criminal charges, the USG has been disturbingly opportunistic and capricious.

Under what authority does the USG force a non-American private company to turn over $20 billion, not to a legit third party, but to a USG official, who will decide the justness of claims?

Does anyone in corporate America feel a sudden shiver right now? Not because payment was due and owing, but because there was no legal basis for the taking.

And the $100 million BP was forced to set aside for American workers who the President forced into idleness with his 6 month "no off shore drilling" proclamation?

Nothing short of jaw dropping astonishment to force a non-US entity to pay for the actions intiated by the federal government.

BP is sitting on over $1 trillion in potential oil wealth around the world and should be able to manage through the current crisis in the US.

That is, only if the USG does not put so much pressure on the company as the "golden goose" of blame and salvation that it has no choice but bankruptcy once the markets and investors go against it for good.

Everyone loses then.

BPs best strategy is to cap the well as fast as possible. With that achievement -- never before done - it can begin the long haul job of revamping its procedures and rebuilding trust.

Posted by: CoughlinC | June 18, 2010 9:36 PM
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