When David Simon became Chief Executive of BP, at a time of difficulty for the company, he made a simple promise, which became known a 1 2 5, that is, that the company would reduce its debt by $1 billion a year, would make $2 billion in profit, and would limit its capital spend to $5 billion. Very simple, covering almost all the main drivers for the Corporation. Everyone inside and outside could understand it, and could know whether the Company had kept its promise.
Not long after that, the Technology leadership of the Company was meeting with John Browne, who was our managing director, and we talked about the way forward. We had just done a major reorganization, the entire way we thought about technology in the Corporation had changed, and the way we delivered it had been radically altered. So what do we do in the first year? John put it in a very simple way: We are going to make some promises, and then we are going to deliver on those promises. Next year we will make some more promises, and deliver on those. In this way we will build a track record.
This notion of a company that makes promises and keeps its promises is a very useful one. Whether internally or externally. It is at once both a company culture and an ethic that is fundamental to performance. In essence, it is what stands behind the manager-direct report negotiation of specific objectives for the year, the business unit leader-team leader agreement on deliverables, the CEO-managing director negotiation of what his areas of accountability will mean to corporate performance, and of course the commitment to shareholders. It is what allows all of us to go forward with confidence that everyone is committed to delivery, and that once we are agreed, there is not going to be an ongoing negotiation about performance.
Keeping promises is also important in relationships. A group of us were in a discussion with senior executives from Ford about a long term change to fuels and vehicles. The Ford guys were concerned that they might come up with their new vehicles and we would not be there at the right time with the fuelling infrastructure to support them. No, we said, that is part of our relationship. We are promising you that we will be there. But how do we know you will do it? Because we always keep our promises.
About Leadership is a series of 52 columns on corporate leadership - essential skills, leading teams, managing your career, the strategic and business practices to make a company and its leader distinctive from competitors. These columns will be of interest to people leading small and medium sized companies today, many of whom have not had much formal training in management skills and techniques; for the many people in big companies who aspire to senior management; and for anyone who thinks: Give me a hint, how can I do this better?