Friday, September 03, 2004

Article published in PR Week 3rd September 2004

Shell and Saatchi - and the failure of the attempt to build an “inspiring identity”

In 1997 the Royal/Dutch Shell Group called in advertising legend Lord (Maurice) Saatchi to help it improve its image. Saatchi produced a number of adman’s slogans - but amongst all the hyperbole he said one very wise thing. “No communication”, said Saatchi “can work effectively unless backed by real action”. The years which followed Saatchi’s brief involvement with Shell were characterised by a plethora of communications initiatives – but also by actions at the top which have mortally wounded its reputation. The rhetoric and the reality were poles apart.

Society’s expectations of what is required of businesses generally (and multinationals in particular) underwent a major change in the last two decades of the twentieth century and Shell was not alone in neither fully anticipating these changes nor in developing a strategy to cope with them. Shell has always been essentially unideological – which is why when it was persuaded of the need to create a set of quasi-ideological values and “Business Principles” it struggled. An organisation dominated by technocrats (for whom the processing of a series of inputs in a structured way always leads to entirely predictable outputs) was suddenly confronted by new “stakeholders”. The NGOs were active and the media relished stories about the insensitivity or amorality of big business. It became clear that companies operating in the Energy sector were going to have to get their act together if they were to protect their reputations.

Shell was initially slow to move. The Group’s technological imperative was so powerful that there was a presumption that decision-making would lead always to the “best” technical/environmental solution. And there was also a strong belief in Shell that, because it had operated in more than one hundred countries for well over one hundred years, it was therefore a culturally understanding and caring organisation. It was in 1995 that two events blew Shell’s presumptions of superiority out of the water. The extensive protests against Shell’s plans to dump a redundant Oil Platform “Brent Spar” in the North Atlantic caused much heart-searching and around the same time, in Nigeria, the political activist Ken Saro-Wiwa implicated Shell during his “treason” trial by saying “…the ecological war that [Shell] has waged … against the Ogoni people will … be punished.” When Saro-Wiwa was executed some of the world-wide condemnation of the act was aimed at Shell who by association was implicated.

In 1996/7, in response to “Brent Spar” and “Nigeria”, the then Group Chairman Cor Herkstroter became obsessed with the need to protect Shell from the type of vitriolic criticism that it was then receiving. It was at this time that Maurice Saatchi became involved in the project. With his unique ability to get through to the very top of organisations Saatchi had befriended Herkstroter and persuaded him that Shell needed more value based communications.

Saatchi told Shell that what it needed to do was to define what its “Core Purpose” as a corporation was and, under his guidance, Shell’s senior management was convinced that it should define its corporate raison d’ĂȘtre as being “To help people build a better world”. Shell staff were told that this “Core Purpose” would be a “foundation for all our activities and communications”. By the end of 1997 this was launched externally along with a declaration that it was Shell’s belief “…that the future is a better place”. Saatchi said at the time:

"The strongest identities are built on simple truths. It is true that the future is a better place. History proves this. The condition of mankind has continually improved, and …it is also true that Shell invests more in the future than any other company. Together, these two truths provide Shell with an inspiring identity, one which is emotional but underpinned with logic."

To some of us these developments were a striking revelation of how lacking in knowledge the then senior management was of some of the basic rules of PR and corporate communications. That they had been seduced by Lord Saatchi into accepting the “Core Purpose” (which, we believed, was at best incomprehensible and irrelevant and at worst would hold Shell up to ridicule) was astounding. Whilst there was a need for a moral and behavioural underpinning for our business surely it was not credible to claim that Shell’s principal purpose was anything other than the pursuit of growth, reliable future profit streams and the need to offer shareholders good returns. To do this with due regard for all stakeholders was desirable and admirable and necessary. But to claim that our core purpose was to “Help people build a better world” made us sound like the United Nations – not like an energy company.

To manage the reputation enhancement process many professionals were externally recruited to produce both the multi media communications material and a shelf-bending series of manuals for employees. Whilst some of the worst excesses of the Saatchi recommended hyperbole were eventually toned down Shell was soon to launch a series of advertisements and other communications which were highly deceptive. For example by the 1990s Shell was dipping a toe in the water of non-traditional energy (Wind, Solar and Forestry) a business for which it coined the descriptor “Renewables”. Much of the advertising and other communications launched in the reputation campaign focused on this area despite the reality that “Renewables” was a very small business indeed.

A raft of other communications and PR initiatives was also launched - including the publication of the “Shell Report” which itemised how Shell said that it contributed to sustainable development. Shell introduced a positioning that it had a “triple bottom line” which included the need to take account of the “social” and the “environmental” aspects of business as well as the “economic” consequences. There was also the publication of a seemingly unequivocal commitment to Human Rights - although where such a commitment might be frowned upon (e.g. in Saudi Arabia) it was not promoted at all.

The intellectual rigour with which the reputation management systems and processes were developed was exemplary and a huge effort was put into this attempt to secure the moral high ground - but other forces were at work that would ultimately make such an ambition unattainable. Shell managers’ primary challenges were not concerned with Shell’s reputation but with the more prosaic need to achieve short term business targets. Although the communications rhetoric said differently the reality was that Shell’s actual behaviour, particularly in the era of Phil Watts’s chairmanship, was as single-mindedly commercial as ever. This became suddenly and shockingly clear in early 2004 when it was revealed not only that Shell had been systematically overstating its oil reserves for some time but that senior executives recognised that they had been mendacious. Heads rolled – including that of Watts and the resultant crisis was far, far greater than anything that had occurred in the 1990s. Ironically Lord Saatchi had warned that communications need to be backed up by real action – but that warning was ignored when the going got tough. And all of those carefully documented reputation management processes and procedures stayed on their shelves as Shell lurched into cover-ups and confusion at the top.

The “reserves” issue has shown beyond doubt that there was a complete disconnect between the reputation enhancement and communications activity, (on the one hand) and the reality of top management behaviour (on the other). The reputation of Shell has been destroyed by hypocrisy, mendacity and deceit and whether we will ever be able to be “sure of Shell” again is very doubtful indeed.