What is a Premium service?

The Transport Minister Norman Lamb justified the rising cost of commuter rail travel by saying that customers are paying for a "Premium Service". I don't think that Mr Lamb understands the concept of what "Premium" means - so let me help him.

Products and Services can be segmented by the "extras" over and above the functional commodity that they offer. Let's take a couple of examples. When I go to the theatre I can decide to pay as little as possible for my ticket and watch the performance from the Gallery. Or I can decide to pay more and watch it from the Stalls. The performance I see is completely unaffected by my personal choice. It is my call whether I pay a "premium" for a better view and a more comfortable seat. Similarly with Air travel. If I'm flying on a particular airline's scheduled flight from London to New York I probably have three ticket options. "Economy" ( or "Coach), Business Class (or "Club") or First Class. The latter two classes offer benefits over and above the basic deal in Economy. But in all three classes the plane arrives at the same time at JFK!. It's my call whether I pay more for the "Premium" advantages of the higher two classes.

In both of these examples (and one could add thousands of product or service related offers which make the same point) the basic offer is functional, affordable and (in the horrible cliche) they "do what they say on the tin". With commuter rail travel the same does not apply. True there are some longer journey commuter lines where First Class is available as a premium offer. But the vast majority of commuter rail travel is single class with no alternative to the standard available - even for those who can afford it. There is nothing "Premium" about the service at all. Indeed arguably many commuter rail lines offer the bare minimum. Crowded trains where standing is the norm. Unreliable performance with delays and breakdowns common. The prices may be "Premium" - but the service certainly isn't !

Open letter to Shell CEO Peter Voser in respect of the Bahrain Grand Prix

Dear Mr Voser

 

Bahrain Grand Prix
I write this open letter as a private individual, a former long-term employee, a shareholder and a Pensioner of Royal Dutch Shell. I call on Shell to take the following action in respect of the 2012 Bahrain Grand Prix:

 

1. To instruct Ferrari to remove all Shell branding from their competing cars (and other items) for the duration of this year's Grand Prix event.
2. To rescind invitations to customers and other third parties in respect of Corporate Hospitality in the "Formula One Club" and elsewhere at the event.
3. To withdraw all staff from the event other than those required to fulfil Shell's contractual obligations to Ferrari.
4. To remove or otherwise cover up any Shell branding and advertising at the Bahrain Grand Prix circuit.

 

 

Rationale

 

1. Royal Dutch Shell has made a commitment to Human Rights in the past and has communicated in public its support for the UNIVERSAL DECLARATION OF HUMAN RIGHTS of the United Nations.
2. A recent comprehensive report by Amnesty International documented the continued and flagrant abuses of Human Rights in the Kingdom of Bahrain and by its Government.
3. The leaders of Formula one, and the teams, have decided to go ahead with the 2012 Bahrain Grand Prix despite the fact that the Kingdom of Bahrain oppresses its citizens and denies them the Human Rights to which under the UN Charter they are entitled.
4. Royal Dutch Shell (Shell) has contractual obligations to Ferrari which it must honour. However there is no reason why Shell should not take the action I have outlined above in order to protect its reputation and to show its concern about the going ahead of an event which has been strongly condemned by all who take the UN Declaration seriously

I hope that you will feel able to take the action I have asked for.


Paddy Briggs

 

  

Corporate Social Responsibility - what it really means

 

The calamity of BP's Deepwater Horizon disaster continues to put corporate reputation as a subject very much in the spotlight and, hardly surprisingly, many commentators contrast BP's past attempts to claim the moral highground on environmental matters with the stark reality of what happened in the Gulf of Mexico. The idea that corporations should be "socially responsible" whilst fashionable is not new - and it remains an extremely controversial concept. Let me try and delve into what Corporate Social Responsibility (CSR) really means - and explain that all too often CSR has been just a tool of a company's reputation management/Public Relations activities rather than something that sets strict behavioural norms. In all too many cases CSR reports are selective, partial and glossy window-dressing - leading to charges of "Greenwash" - rather than true reflections of a corporation's actual non-financial (Health, Safety, Environment etc.) performance.

It is no exaggeration to say that that over the past two hundred years or so virtually everything that we value - even take for granted - about our way of life has happened because of the operation of regulated free markets. I put the adjective "regulated" in this statement not to over-emphasise the need for laws, rules and controls but to suggest that whilst the principal driver of progress and change has been the action of entrepreneurs and entrepreneurial corporations a measure of regulation has always been necessary. If the first half of the nineteenth century was the age of untrammelled industrial growth the 150 years since then has been no less spectacular - but there has been, as there needed to be, increasing legal restraint on corporate behaviour.

There has always been the same dynamic underway between free-enterprise companies and regulators - mainly governments. The companies from Standard Oil through Philip Morris to Microsoft always argue that any regulation of their freedoms will inhibit their business to the disadvantage of their customers and, most important of all, their shareholders. They harp back, in sprit if not always in rhetoric, to Adam Smith who said:

"Every individual endeavours to employ his capital so that its produce may be of the greatest value. He generally neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own security, only his own gain... [but] by pursuing his own interest he frequently promotes that of the society more effectually than he really intends to promote it". Adam Smith in "the Wealth of Nations". 1776

The argument of Smith was that the pursuit of self-interest is inevitable and desirable and that an unintended consequence is that society is thereby "effectually" promoted. This theory is a bit like "trickle-down economics" - let us entrepreneurs get on with running businesses and benefits will cascade to all - even the worthy poor. Well not long after Smith his theory was tested as the nineteenth century Industrial revolution took hold in Europe and the United States. Before the century was out a raft of legislation was enacted to restrain industry as it became abundantly clear that whilst industrialisation brought many benefits it brought horrendous unintended consequences as well - from child labour to exploitation of workers to unsafe working conditions and monopoly power - and more. The break-up of the monopolistic Standard Oil in 1911 was amongst the most dramatic of instances where Government saw the need to restrain business in the public interest - but there are hundreds of other examples. It is no exaggeration to say that each successive wave of legislation was resisted by business - and that companies often claimed that self-regulation would be sufficient and that laws were unnecessary. In more modern times we have seen the tobacco industry fighting tooth and nail not to have to restrain the promotion of their brands and products - and we have seen self-interested bodies like the International Advertising Association (IAA) supporting them. To this day the IAA says, in respect of tobacco advertising, that they "…believe in the right to truthfully and responsibly advertise legal products to appropriate audiences and oppose efforts to restrict such advertising." The "Mad Men" live on!

The reason for this lengthy preamble on the history of regulation is to put the modern-day CSR debate into a historical context. There has always been a battle between legislators and businesses and one of the business defences has always been "Trust us - what we do is in the public interest and we accept the responsibility to police ourselves". However that most free-market of all economists, Milton Friedman, poured scorn on the idea that companies could or should be self-regulating over and above their legal obligations. Here is what Friedman said in 1962:

"The doctrine of "social responsibility" [is a] fundamentally subversive doctrine in a free society … in such a society there is one and only one social responsibility of business – to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." Milton Friedman in "Capitalism and Freedom" 1962

Whatever else he might have been Friedman was no hypocrite and he abhorred obfuscation and window-dressing. Whilst he would no doubt have had no problem with the idea of lobbying to influence legislators he would have resisted any "voluntary codes" and overblown statements of "Business Principles". What, for example, would he have thought of this statement in the 1999 Annual Report of a major American corporation "Our philosophy is not to stand in the way of our employees, so we don't insist on hierarchical approval. We do, however, keep a keen eye on how prudent they are and rigorously evaluate and control the risk involved in each of our activities"? Whilst Friedman might have applauded the broad sentiment he would not of course have condoned any illegal behaviour and lack of internal controls. When the true story of Enron (for this is from their Report) emerged then Friedman's general position was vindicated. Enron did not stay "within the rules of the game" and broke the law in almost everything that they did. Whatever self-policing there was (and most of it was in reality non-existent) failed abysmally.

Enron lied about most things so it is not surprising that they lied about their internal controls. But much less venal companies fall into a similar trap in some of their rhetoric - not least in their so-called commitment to the principles of Sustainable Development. Here, for example, is what Mark Moody-Stuart said on the subject when he was head of Shell: “[Sustainability] is a three-legged stool balanced between economic, environment and social considerations”. This type of rhetoric has been common amongst those who believe that companies' commitments to CSR really are meaningful - it is par for the course. Milton Friedman would have been horrified at the underlying premise of the "three-legged stool" - that there is a precise equivalence between a company's economic driver and its social and environmental behaviours. Note that there has to be equivalence if the metaphor is to work. If one leg is longer than the others are then the stool is unbalanced and falls over! In reality, as we see time and time again, the economic driver is far, far more important than any incidental social and environmental obligations that a company may propound. The line of questioning that BP CEO Tony Hayward faced recently in the U.S. Congress was substantially about whether cost and profit issues (Economic) had outweighed Environmental considerations in BP's decision making regarding Deepwater Horizon.

So history teaches us that we should be deeply sceptical about any corporation's claim to self-regulation or allusion to "Principles" over and above their legal obligations. Not least because the directors of corporations have a statutory and fiduciary duty always to act in the interest of shareholders - and shareholders interests are monetary above all. A shareholder wants stock prices to perform well and dividends to be good - and that's about it! And the Directors want the same thing - their bonuses, stock options and performance-related remuneration rely on it! So the more self-righteous and superior Companies seem to be in their CSR statements the more sceptical we should be! Some companies make their position on social responsibility matters crystal clear and with a pleasing lack of hype. The often-vilified Ryanair is one. In their "Code of Ethics" they say:

"Ryanair is committed to conducting business in an ethical fashion that complies with all laws and regulations in the countries in which Ryanair operates. As employees and representatives of Ryanair, we must consider how our actions affect the integrity and credibility of the Company as a whole"

Contrast this frankness (Friedman would have been proud of Ryanair!) with the page after page of "Business Principles" bombast and self-congratulatory hype in the Annual Report of British American Tobacco which includes the following two "core beliefs" (there are a dozen or so more of these platitudes):

· We believe our businesses should uphold high standards of behaviour and integrity.

· We believe that high standards of corporate social responsibility should be promoted within the tobacco industry.

This from a corporation that actively seeks to promote its brands and noxious products wherever it can - especially in the developing world! If ever there was an oxymoronic statement it is the idea of "corporate social responsibility …within the tobacco industry". Mad Men again!

Multinational corporations sometimes claim that their commitments to Corporate Social Responsibility are such that they always apply their own global standards of behaviour - which means that that will override local standards where those local standards are lower. BP, for example, says "We’re proud to set universal standards of behaviour across our entire operation…developing our own set of rigorous guidelines - [which are] often more rigorous than local laws and regulations". Intellectually, of course the logic of this is inescapable. If your CSR commitment is absolute then even if you don't legally need to apply your standards you will do so anyway - because that is what you believe in. Sadly, however, this is all too often a chimera. As The Guardian's environment correspondent John Vidal put it recently in respect of BP's Gulf of Mexico problems "If this accident had occurred in a developing country, say off the west coast of Africa or Indonesia, BP could probably have avoided all publicity and escaped starting a clean-up for many months." Vidal is right. Similarly if Shell had been treating an oil field in the U.S. or Europe in the way that it has its assets in the Niger Delta, where 2,000 major spillage sites have never been cleaned up, then the political and media fallout would be similar to what BP is now struggling with in the United States.

So what does Corporate Social Responsibility really mean? It is not about putting a favourable gloss on a company's activities and drawing a veil over its less salubrious actions. It is not about being a generous donor to charities, however commendable that may be - you cannot buy yourself a good reputation by making donations to good causes. It is not about a re-branding or stakeholder engagement programme - however useful such things may be from time to time. What it is about is first and foremost obeying the law - and then, if you believe it is necessary and in the interests of shareholders, going the extra mile in respect of your health, safety, environment and community relations behaviour (etc.). It means respecting all your stakeholders - especially including those, like suppliers of goods and services and often employees and sub-contractors, over whom you may have the whip hand. These commitments have to be codified, managed, funded and rigorously and consistently applied. In my view there are few if any big companies and perhaps no multinational corporations that have such a commitment and act with such integrity - although some of course are better than others. Which is why it is only by regulation at a national and international level that society at large can be protected - history teaches us nothing less!

News International's brand new opportunity

News International (NI), the UK newspaper arm of Rupert Murdoch’s News Corp, has been in serious trouble with one of its brands. However unlike, say, BP it is a sub-brand, “The News of the World”,  which has turned toxic not the corporate “mother brand” and whilst there is fallout on NI, and even to a small extent on News Corp itself, the Murdoch empire has really only suffered collateral damage.

Corporations of the size of News Corp are used to managing a proliferation of brands in different markets. News Corp has literally hundreds of separate brands across its diverse media businesses and its senior executives understand well that brands have strengths and weaknesses and that, as in the case of the “News of the World”, they can be damaged. They have decided that the damage to the News of the World is beyond repair and so they are closing the title. Such drastic action is quite rare but even the most skilled brand practitioners have to bite the bullet sometimes.   Coca Cola, for example, had a brand disaster with Disani a bottled water brand in the UK a few years ago. They withdrew it rather than try and repair it. The “News of the World” is a much older and formerly a very strong brand entity but the phone hacking and police bribery stories were such that the brand was judged by NI executives to be beyond repair – they were no doubt right.

News International's main revenue generators have been “The Sun” and the “News of the World” and these titles’  income streams have cross-subsidised the loss-making “The Times” and “The Sunday Times”.  Indeed without the ad revenues of the tabloids NIs whole business model collapses. The shareholders of News Corp have every right to expect that NI will seek to minimise the effect on the bottom line of the “News of the World” closure – and there is only one way to do this. The Sunday tabloid, with a circulation of 2.6million, has to be replaced urgently and a sound advertising driven business has rapidly to be built up.

A definition of a strong brand is one that generates income over and above is basic utility or commodity value. When it became apparent that the “News of the World” could no longer do this there was no choice for NI but to withdraw the brand. But the business infrastructure of the newspaper remains intact. The editors,  journalists, reporters and support staff are in place. The advertising sales teams have not been disbanded. These employees can be switched instantly to a new title and that is what will happen. Out of the ashes of the “News of the World” a new NI Sunday tabloid will emerge.

Which brings us back to the brand. A sign of a strong brand is when it is used in the vernacular one step removed from its actual business. So just as we once talked of the “Pepsi Generation” so the idea of the “Sun reader” is fixed in the awareness of marketers and commentators. Whilst this descriptor may be used by some in a derogatory way in fact the Sun readers are very valuable indeed. There are 7.5 million of them, spread fairly evenly across the age ranges and with 88% of them in the CDE social class groups. They have a very high collective purchasing power and they are firmly in the sights of the FMCG marketers – like the supermarket chains.  And it is this huge group which NI will want to attract to their new Sunday tabloid – and how better to do this than to give it the Sun’s brand name?

The launch of a “Sunday Sun” or, more likely, a “Sun on Sunday” could happen immediately – indeed it is not too far fetched for the switch from the News of the World brand to the Sun brand could happen on consecutive Sundays. This might politically be a step too far for NI, although I wouldn’t put it past them. But whether the Sunday Sun title appears immediately or whether there is a short hiatus doesn't really matter – it will happen. And for a marketer it is a dream project to launch the Sun’s Sunday sister. The promotional and advertising budgets can be guaranteed. Cross promotions from the weekday title will be straightforward to arrange – expect coupons which when saved during the week will give a free copy of the Sunday to loyal readers at launch.

The Sunday version of the Sun will have a huge head start over any other new title – this is because the brand values of the Daily will simply be transferred to the Sunday. You don't need to explain to a “Sun reader” what a “Sun on Sunday” means – it all in the name.

It’s the brand stupid

When the news broke, on Twitter inevitably, that the “News of the World” was to close there was a mighty gnashing of teeth and no little wailing form the journalist community. Job losses. Innocent victims. That sort of thing. But actually it’s no big deal. Here’s why.

When a brand is damaged beyond repair, but there is a market position to defend, then rebranding is the obvious choice. At the moment BP is rebranding many of its gas stations in the US “Amoco” and the reasons for that are obvious. For News International its the same. They have a very strong brand in “The Sun” which has a circulation of 3million –nearly one million ahead of its next competitor. Their fatally wounded “News of the World” brand is similarly strong in circulation terms 2.7m and a lead of over 800,000. There is no way that NI is going to give up that inco0me stream – and they don't need to.

The introduction of a “Sunday Sun” (or “Sun on Sunday” ) has huge benefits. The toxic News of the World brand is shed. The Sun brand can extend seamlessly into a seven day operation. There will be some economic savings. And online they can concentrate on one Sun branded website for all their communications.

One can expect that those Sun readers who don't currently buy the NOW will be heavily incentivised to switch their Sunday paper to The Sunday Sun. Or in some cases to buy a Sunday paper where currently they don't. Cross promotions will be the order of the day – NI has the financial resources to really build the Sunday Sun as a successful sub-brand of the generic Sun brand.

The people who should worry about  Mr Murdoch’s clever coup are the publishers of NI’s competitors! A seven day Sun will be formidable.  

Shell's latest corporate advertisement

LET'S DELIVER ENERGY
FOR A CHANGING WORLD.
LET'S GO

Today's consumers are smarter than ever about energy. Naturally they want it to heat, cool and light their homes, get them to work, and power their mobile phones. But they are also keen to help build an energy system that sustains the lives of future generations. They want their energy to come from cleaner sources. They want to get the most out of every drop. And they want to see positive results now.

At Shell, we're listening. Consumers' raised expectations inspire us to come up with ever more innovative products and services.

Take the quest for cleaner air in our cities. We have created a fuel oil, which can cut soot emissions from factories by up to 75%. That should help people breathe a little easier.

Customers at our service stations want to play their part, too. They want fuels that are more efficient. We've responded with new blends that help drivers save fuel with every fill-up. And we're working with transport companies, combining the latest fuels and lubricants with satellite technology to reduce fuel consumption.

Low-carbon biofuels are another way to meet rising expectations. They can help reduce emissions from road transport right now. We're already the world's largest distributor of biofuels and are pursuing plans for large-scale production.


We're also working with technical partners to develop future biofuels from non-food sources, like crop residue and even algae.

Of course, our customers' horizons stretch beyond transport to more responsible living, whether through cleaner electricity or more energy-efficient homes and offices.

That's why we are boosting production of cleaner-burning natural gas, which emits less than half the carbon dioxide of coal when used to generate electricity. And why we are investing in vital technology to capture emissions from power plants and other industrial sites and store it safely underground.

Despite all this change, one thing remains the same. After more than a century, our customers still expect reliable and affordable energy every day. With global energy demand set to double by mid-century, that will be a challenge. But together with our partners we will continue unlocking energy from hard-to-reach places like frozen Siberia and delivering it to customers around the world.

At Shell, we're grateful to have millions of customers asking for better energy. They demand as much of us as we ask of ourselves.

Commentary
In its latest corporate advertisement (above), expensively placed in some influential publications like "The Economist", Shell claims to be "listening". We have heard this claim before of course and we should treat it with some scepticism - Shell pulled its online feedback forum "Tell Shell" some years ago - presumably because of the virulence of the criticism on it. But no matter - let's take this latest request for feedback at face value and offer some.

The dark arts of advertising are notoriously " economical with the actualite" - but I would guess that nobody really minds a bit of hype and "accentuating the positive" - where would copywriting be without the need to put a brand's products or services in the most favourable light? But there are limits - the need to be "Legal, decent, honest and truthful" is required of any advertiser and the rules say that your ads shouldn't mislead, lie or even tell half-truths.

So in the context of the need to be at least credible in your ads, and at best transparently truthful, how should we judge Shell's latest offering? Remember we are talking big bucks here - not principally to the ad agency for preparing the ad and writing the copy but definitely to the media for running it. A few hundred thousand dollars at least - and possibly much more. Has Shell's budget been wisely spent?

The first paragraph claims that "Today's consumers are smarter than ever about energy". It goes on to say that these consumers are "also keen to help build an energy system that sustains the lives of future generations". How many consumers (that's you and me folks) speak in anything like these terms? I don't know what an "energy system" is - and I worked in the industry for nearly forty years. I doubt that my neighbours would have a clue what it is either. Presumably somebody can define the term "energy system" - but there's little point in using such opaque language in an ad - even in "The Economist"!

So that first paragraph is at best patronising and trite and at worst gobbledegook. But the second paragraph is far worse. The claim is that "Consumers' raised expectations inspire us to come up with ever more innovative products and services". The conceit of this statement is breathtaking. It purports to suggest (a) That Shell is innovative and (b) That innovation is consumer led. Now lets be charitable and agree that Shell can indeed be innovative. Virtually all of this innovation comes from the upstream - and impressive some of it is as well. But there is no way that this highly technological activity can be seen as consumer driven. Then in the following paragraph we get mention of a low soot fuel oil for factories. In Britain, which is where this ad appears, a tiny minority of factories burn fuel oil - most of them switched to cheaper and more environmentally friendly natural gas years ago. Not too many people will be breathing any easier as a result of this innovation!

So what about the "service stations" (paragraph 4) - a curious and old-fashioned term by the way. They mean petrol stations I think. Here we are told that customers want "fuels that are more efficient". Well yes - but not if they have to pay through the nose for them. The "new blends" that are referred to (presumably like V-Power) cost a premium, which negates any efficiency savings. Most motorists want cheap petrol - and there's not much of a promise about this in the ad. If V-Power and its like really saved money through efficiency don't you think that Shell would give us the data to prove the case?

The statements about "Low carbon biofuels" (paragraph 5 and 6) are another utterly misleading bit of hype. It is no doubt true that Shell is a big player in these products - but there is nothing much new about them. The Brazilians have run some of their cars on biofuels for a generation or more but in the UK they are virtually non-existent - and will remain so unless governments create a tax regime which make them viable. Some chance!

The seventh paragraph about "customers' horizons" is just poor copywriting and is virtually meaningless. It's an unsubstantiated claim - hardly surprising as it is hollow and patronising. It leads on to the next paragraph where the implicit claim is that Shell's driver for the expansion of its Gas sector is in some way environmental and that it is driven by these "customer horizons". The real reason for Shell's drive to boost its production of natural gas is because this sector is growing and is profitable - good business in other words. Yes it is cleaner than coal - but Shell has no influence at all on utilities' decisions to build Power stations that run on Gas rather than coal. True Shell can supply the gas, at a price, if the utility makes that decision but the determiners of the decision are primarily governments and local authorities - they are the ones one should thank for the resultant cleaner air - not Shell!

The penultimate paragraph is platitudinous and one again trite. If you asked them my guess is that many consumers would be very disturbed about some of the side effects of Shell's ambition to "…continue unlocking energy from hard-to-reach places". The Tar Sands of Canada is just one example of where this ambition is, to say the least, controversial!

Shell is not a bad company - although it does some indefensible things at times. But it does itself no service by running advertisements which claim distinctiveness when little exists, claim to have a unique understanding of consumers without any evidence being provided and lapse into self-congratulatory and highly selective hype.

GREENWASH – The drama and the reality

“He’s a PR man. For an oil company. That’s bottom of the list!

Below TV evangelist. Just above child molester.”

Michael in “Greenwash” by David Lewis

I have just been scanning through the last seven editions of “The Economist” newspaper – and as always it’s a very good read. And in these troubled times it is arguably an essential source to inform about what really might be going on in the world. The pointers to today’s realities come from The Economist’s excellent but anonymous correspondents, the letters and especially for the advertisements – or at the moment the lack of them. The good news is that the “Greenwash” ads, which featured strongly in the newspaper until recently, have vanished! A year or so ago, and for some years before that, upmarket print media was full of mostly disingenuous corporate advertising from oil and energy companies with a common theme. In short Shell, BP, Total, Chevron and even ExxonMobil wanted to convince their “special publics” (as Shell called us) that they were public-spirited companies. In particular the message was that they had a unique contribution to make to the resolution of the world’s energy problems – global warming and all that. A common message was that the “proof” that Shell and the rest really cared was their alleged commitment to not just their traditional oil and gas businesses but also to a whole raft of non-traditional energy initiatives such as renewable forests, solar, wind, hydrogen and the like. It wasn’t just former oil company insiders like me who were sceptical of these claims – all the NGOs and most of the other proponents of Renewables saw through the chimera and christened it “Greenwash”.

The tiny “Orange Tree” theatre in the London Borough of Richmond–Upon-Thames has a justified reputation for putting on original drama – both revivals of forgotten classics and new writing. In the second category we have recently seen David Lewis’s new play “Greenwash” a satirical and very funny demolition job on the PR industry in general and the oil industry in particular – hence the title. The hero of “Greenwash” – or rather the anti-hero – is Alan a middle-aged PR consultant working for a company which sounds very like Shell! “We’re working with the realists and isolating the radicals. That’s accepted strategy! You have to divide them up! If you’re simply confrontational, you just unite them, make them more powerful!” he says talking about his company’s approach to the NGOs. It rings true. Shell, for example, would from time to time cuddle up to NGOs like “Friends of the Earth” whilst distancing themselves from Greenpeace. A divide and rule tactic which worked exactly as Alan suggests that it does.

The mantra chanted by Alan and his like is that managing opinion and reputation is all about managing perceptions. Sure you might need to modify some of the grosser excesses in your business or in your behaviour but in the main you carry on doing what you have always done and carry on doing in the way you have always done it – you just present it in a more palatable way. It’s a bit like a politician saying that they better “get the message across more clearly” – much easier than actually changing what they do. And this is where the Greenwash advertising comes in. Shell’s business, and that of all the other Oil majors, was 99% about exploiting hydrocarbon resources. That’s what they do, what they are good at and what in truth they expect always to do in the future. Shell in particular was hopeless at diversification – only the Petrochemicals sector (itself of course based on hydrocarbons) has survived as a significant business which isn’t directly oil and gas. All the rest, from Nuclear to Metals to Forestry to Agrichemicals to Power Generation have gone. Shell couldn’t (or wouldn’t) make them work. But, so went the argument, Renewables was different and Shell was prepared to put its money where its mouth was.

Take Wind Energy. Back in 2006 Graeme Sweeney, head of Shell Renewables, said that the giant offshore wind project known as the “London Array” would provide a “major breakthrough in the UK low-carbon energy mix”. Shell was part of the consortium that wanted to build the array and was awaiting a planning decision later that year. 'A positive decision would be a clear signal that a substantial contribution could be made by renewable energy if we could all drive this through to a successful conclusion” said Sweeney at the time. A year ago Shell pulled completely away from this project and more recently we have seen an announcement that Shell is pulling out of investments in all renewable technologies (wind, solar and hydro power) completely because they are “not economic”.

There was never a proper balance between rhetoric and reality. The advertising that extolled Shell’s commitment to Renewables in The Economist and in similar publications around the world was clearly designed to deflect criticism that Shell was an old-fashioned smoke-stack loving corporation whose principal business was exploiting the planet’s depleting oil and gas reserves. One TV commercial promoting Shell’s Renewables commitment even said that “One Day it may be our biggest business”. It was bullshitting Greenwash when it appeared and many of us who knew this said so at the time. But Shell was impervious to criticism and this disingenuous corporate advertising continued until quit recently. Shell’s recent virtual withdrawal from the Renewables sector shows what a shameful sham all this was.

Alex Carey quoted in "The Public Relations Industry's Secret War on Activists" said that the “20th century has been characterized by three developments of great political importance: the growth of democracy, the growth of corporate power, and the growth of corporate propaganda as a means of protecting corporate power against democracy." Multinational corporations are subject if not to democratic processes at least to judgment by the media and to revelations by honest activists who seek the truth through all of this propaganda. Despite their almost unlimited budgets and the ability they have to employ PR professionals like Alan in the play “Greenwash” to tell their lies for them eventually hubris will catch them out. Shell was arrogant enough to think that they could present their miniscule and largely irrelevant Renewables business as significant. It wasn’t - but that didn’t stop the Greenwash claiming that it was. And now that the deception has been revealed can we expect an apology and a commitment to tell the truth in the future – don’t bet on it!

Shell and the shocking bonfire of its vanities

When corporations act as dysfunctionally as all too many in the world of banking and finance have been doing over the past few years it gives the opponents of capitalism a field day. The charge, which is impossible to refute, is one of greed and incompetence and we have seen what happens when these twin venalities work together. The pursuit by directors of a level of personal wealth beyond the comprehension of most of us has been shown to have skewed their decision making and brought their businesses down.

Less in the public eye, but only marginally less venal, have been the multinational oil companies who whilst their behaviours may not have been as borderline fraudulent as some of the banks, have nevertheless been overtly deceiving us for years in a shameful way. Let’s take Royal Dutch Shell for example. Shell was worried about the public perception of its behaviour and, in particular, was concerned that its reputation was damaged in the eyes of some of its key stakeholders. This damage was caused back in the 1990s by insensitive decision-making over such issues as Brent Spar and Nigeria and in the early years of the new century by its “reserves” scandal – the revelation that senior Shell directors had been lying about the corporation’s hydrocarbon reserves. The internal analysis of this reputation problem led to the launch of a series of corporate communications initiatives - including extensive and expensive advertising. Much of this advertising was predicted on the premise that Shell was “corporately responsible” and the reasons to believe this claim was, they said, that they had some sort of unique understanding of the world of global energy.

The communications initiatives that Shell launched focused in particular on the need for energy diversity and claimed not only that renewable energies such as solar, wind and hydrogen had to be part of the mix but that Shell was committed to the Renewables sector for the long term. “One day this may be our biggest business” was the tag line of one of the TV commercials which lauded Shell’s involvement in this sector. But as we have seen recently all of this was a chimera. Those of us with personal experience of working for Shell over many years knew that Shell is the most risk averse of all the oil majors in both its diversification and its acquisition policy. In the main they stick to the knitting – and the knitting is Upstream Oil and Gas – with a bit of downstream thrown in (until, that is, they decide to walk away from marketing and refining which many us believe that they will before too long).

So why did Shell make a fool of itself and open itself up to criticism by getting involved in Renewables in the first place? Why did they get even tentatively involved in a business about which they knew nothing and into which they were clearly, from the start, not prepared to invest any serious money? The answer lies in the reputation management problem referred to earlier. If Shell wanted to be seen as “Responsible” than what better way to do this than to claim that they really cared about the global energy future to such an extent that they would be involved across the energy mix? So small scale and tentative investments were made and Renewables was even given its own status as a “Core business” for a time – along with the real core businesses like the Upstream. But from the start it was always a lie – the executives appointed to run the Renewables sector were far from being the most able around and the amount of time that the company’s really senior executives spent on this sector was minimal. Shell’s heart was never really in it.

Shell had the vanity that it could run a series of self-promoting advertising campaigns that would portray them as energy responsible, innovative and forward thinking. In truth Shell was retreating more and more to the familiar world of dirty old hydrocarbons about which they had a genuine corporate memory. Does this story mean that you can’t believe a thing that Shell tells us in its communications? Sadly I think that it does and that it will be a long time, if ever, before you can believe a word that they say again. Unless there is a proper feedback loop between behaviour and actions, on the one hand, and rhetoric, on the other Shell will not be in a position to do any credible corporate communications at all. It isn’t complicated. Do the right things responsibly. Tell the truth about what you do. Don’t claim that you are committed to things that you are not. Walk the talk and talk the walk. Too much to ask? We shall see…

The scandal of the grotesque rewards that accrue to failed executives

Enron, Lehman Brothers, Royal Bank of Scotland…Royal Dutch Shell - what have these corporations got in common? Quite a lot actually but what I was thinking of in particular is that they all have issued glossy and self-promoting documents extolling their “Corporate Social Responsibility” (CSR) – and all of them have been brought to their knees by the grotesquely dysfunctional actions of their most senior executives.

I have written before about the illusionary myth that is CSR and I suppose that the one good thing that might come out of the global financial crisis is that none us will ever again trust the disingenuous garbage that corporations choose to throw at us from time to time. The idea that, say, a tobacco giant like BAT can be socially responsible is absurd but they still peddle this nonsense even though they surely can’t expect us to believe it. Do they really believe it themselves? - I doubt it.

But of all the current areas of public disquiet about the behaviour of the top men in multinational corporations it is the obscenely high levels of remuneration that they pay themselves that comes out top. Here is how it works. The Board of Directors appoints one of their number – usually a Non Executive Director – to head up some sort of Remuneration Committee. That Committee is charged with ensuring that the Executive compensation of the CEO and his colleagues is competitive with the remuneration of executives in other corporations. If it isn’t then it is adjusted – always upwards of course! The fallacy of this whole process is for all to see – it creates a spiral of remuneration excesses. To illustrate this I looked back ten year to the late 1990s when I was a middle ranking Shell executive and Mark Moody-Stuart was the CEO. At that time Mark was paid ten times what I was paid. Fair enough you might think – he had a pretty big job. Roll forward to today and the same ratio is now fifty to one! If I was in the same job in Shell, and allowing for inflation of my salary as well, Jeroen van der Veer would be paid at least fifty times what I would be paid – probably much more than this.

But as we have seen with the case of Sir Fred Goodwin of RBS the excess doesn’t stop even when a failed CEO is unceremoniously booted out of his job. Sir Fred qualifies for a pension of £693,000 a year – an entitlement that has caused a furore in Britain, and understandably so. And back in 2002 Sir Philip Watts’ (shown in photograph) severance payment following his forced removal as Managing Director of Shell consisted of a lump sum payment of £1,057,971 and an (index linked) pension of £584,070 per annum. Goodwin and Watts and their ilk would no doubt have justified their extraordinary levels of remuneration by reference to “the market” – that spiral of excess that I described above. And perhaps they would also have said that extremely high levels of responsbility require extremely high rewards – and perhaps they do, but only if these responsibilities are discharged with competence and with honour – which in both their cases certainly did not happen.

Sorry Jeroen it just won’t do…

A friend who knew that I have been a rather vocal critic of Shell’s corporate advertising over the past few years asked me if I felt vindicated by the admissions in George Monbiot’ s recent interview with Jeroen van der Veer: Of course for Jeroen to admit:

"If we are very big in oil and gas and we are so far relatively small in alternative energies, if you then every day only make adverts about your alternative energies and not about 90% of your other activities I don't think that - then I say transparency, honesty to the market”

is a big step forward. The disingenuousness of Shell’s advertising over the years, which has concentrated on the minuscule and unimportant Renewables sector and excluded much mention at all of Shell’s core oil business, was one of my main complaints. But, as Monbiot points out in the article which accompanied the van der Veer interview, Shell continues to mislead in its advertising. The position that the company tries to establish is that it has something unique to offer the energy world and, further, that this something is primarily driven by some sort of altruistic motives. The whole campaign over the years has been and continues to be utterly misleading – as I argued here and here:and here:

It may be an old fashioned concept but when you communicate with stakeholders the first thing that you must do is tell the truth. This not only means that you must make statements that are verifiable but also that you should answer legitimate questions.

Hats off to Jeroen for agreeing to be interviewed by George Monbiot who is arguably the most vocal journalist and writer around on the subject of climate change and whose criticism of the oil industry over the years has been determined and always well researched. But sadly in the interview Jeroen at times looked like a bumbling fool (which he is not) and at other times like a corporate cover-up king - which he certainly is.

Monbiot asked Jeroen pointedly to tell him what the quantum is of Shell’s investment in Renewables. It is a reasonable question – not least because Shell has spent plenty of advertising bucks over the years assuring us that it is committed to alternative energy. But van der Veer absolutely refused to tell Monbiot what the figure is. If you go to Shell’s most recent Annual report you won’t find the answer either. If you do a word search on this huge document for the word Renewables you draw a blank – Shell which so recently trumpeted its commitment to Renewables doesn’t even use the term any more. And if you try and find how much the bits and pieces of wind, solar and the rest are worth you won’t be able to find that either. It’s all hidden away. And, as George Monbiot found out, Jeroen won’t tell you either!

As a long-time Shell employee and now a Shell Pensioner I have always been and remain a Shell loyalist. This may be hard for some to believe in that I have been vociferous in my criticisms over the years. But if you look at my extensive report on the Corrib Gas project, which is now available free as a download here, you will see that I continue to have a high regard for Shell people and in the main what they do and how they do it. What I cannot tolerate, perhaps because I spent so much of my later Shell years working in Marketing and Corporate Communications, is when Shell lies about what it does.

Shell is in a vulnerable state at the moment. A huge cost cutting exercise is in the pipeline which will probably radically change the structure and imperatives of the organisation. Certain business sectors look very vulnerable and with the oil price so low any project which requires oil at, say, $80 a barrel can expect to be mothballed. The downstream receives inadequate investment – especially in the Shell brand, and whilst is may stutter on for a while eventually Shell has to dispose of all of its assets from the refinery fence to the consumer.

As a shareholder and one who is concerned that Shell succeeds I would actually rather see a smaller, fitter, more profitable Shell which concentrates on what it is really good at – upstream oil and gas. Such a corporation would not only be more viable but it also would not need to create illusions about its business and ridiculous boasts that it is “creative”. Sticking to the knitting and transparency would be the strategy that many of us would welcome – and if in his few remaining months Jeroen can set this in motion then that would be a legacy of which this eminently decent man could be proud.

The origins of Shell's "Greenwash" were back in 1997

In this article former Shell executive Paddy Briggs explains the background to the oil company's predilection for "Greenwash

Greenwash is in the news again as the oil companies are pilloried for the disingenuous corporate advertising they propagate in a naïve effort to boost their reputations. Shell has been twice criticised by the Advertising Standards Authority and BP and others have also outraged the environmental lobby by the sheer effrontery of many of their claims. But where did it all begin? Take a look first at this video on YouTube, and then I will explain!

The purpose of advertising is to persuade – usually to convince a consumer to favour your branded goods or services over those of your competitors. And a perfectly honourable profession it is as well – or I wouldn’t have spent quite a bit of my Shell career commissioning advertising campaigns! In essence the task was to find a way of differentiating Shell products in such a way that the motorist (in particular) went to our petrol stations rather than those of Esso or Caltex or Mobil. We always tried to find a genuine edge – perhaps in respect of the product quality, or the levels of service or the range of goods or the location and extent of our network. We were required, as every advertiser is required, to ensure that what we said in our ads was legal, decent, honest and truthful. Of course there was an element of selectivity in our message. If, for example, Shell did not have the largest network in a particular country or area then we might try and ensure that we gave the best service. This is the famous Avis pitch – we might not be number one but we are trying harder because we are number two! But if you do this you better deliver - the public is not a fool and if you try and bullshit them they will soon learn to ignore or discount your future messages! So the task was to persuade by telling the truth about what we offered – not the whole truth, perhaps, but the truth nevertheless. Verifiable, defendable messages that worked.

Corporate advertising is another game. Here you are not trying to sell a product or a service but you are still trying to persuade – usually the persuasion task is to raise your profile or enhance your reputation. It’s a different game – but the same rules and principles apply. The perception of your advertising must be a perception that you are telling the truth and also, and vitally, that the message is credible and relevant to the receiver. Whereas in product advertising you are seeking a purchase following exposure to the advertising in corporate advertising you are generally seeking not a direct response but an altered attitude. “Before I was exposed to the advertising I thought that Shell was only an OIL company but now I know that they are a big GAS company as well” (for example). Consequently there is often a greater degree of information dissemination in Corporate Advertising.

The oil companies have received a lot of bad press from environmental groups and others because the plethora of corporate advertising they have been indulging in for some time seems inaccurate, nuanced and highly selective in its content and themes. The term “Greenwash” was invented to describe this advertising. Having worked for over five years on corporate communications for Shell in my last assignment in the Middle East (and off and on in other locations before this) I think that nearly all of the criticism and the charge of greenwash is justified. All too often Shell’s advertising tells highly selective stories and half truths and makes bizarre and indefensible claims about aspects of Shell’s business. There are many examples but the concentration on Shell’s Renewables business (Solar, Forestry, Wind etc) was a particular case in point. Clearly the intention of this advertising was to try and persuade that Shell is not only active in renewable energy but is a serious player. Do you remember the “Forestry ad” where a Boris Becker lookalike “Shell project engineer” “has a thing about trees” and believes that in the future “half of our energy can come from renewable sources like…sustainable forests”. The tagline of the ad was that “Damian Miller works for Shell Renewables. What was once just a small research project is now a major business. One day it could be our biggest business.” That was in 2004 - but the business featured in the ad (Forestry) was disposed of by Shell in 2005 – so it didn’t become Shell’s biggest business – or even remain a Shell business at all!

When corporate advertising is as disingenuous as the Forestry ad it brings the whole genre into disrepute. But notwithstanding this debacle Shell has continued to make claims in its corporate advertising which are at best narrowly and deceptively selective and at worst just plain lies. That is why Shell has been wrapped over the knuckles twice in recent times by the Advertising Standards Authority for it misleading claims. But what was the original stimulus for this style of advertising and why has Shell persisted with it despite the tumult of “Greenwash” criticism? To find the answer to this question we need to go back to 1997 when Shell management was battered and battle-weary from the criticism that had been thrown at them after a series of events which had seriously dented their and Shell’s reputation. There had been, in particular, the debacle over the disposal of the offshore oil production platform “Brent Spar” and the almost simultaneous crisis resultant from Shell’s activities in Nigeria. In this benighted country a corrupt and despotic government had brutally judicially murdered the Ogoni activist Ken Saro-Wiwa, and Shell was accused of indirect complicity in this repulsive act of vengeance.

As a result of Brent Spar and Nigeria Shell’s probity, and the integrity and judgment of its senior staff, were brought into question. By coincidence the new leader of the corporation at the time was a man, Cor Herkströter, who was something of an outsider (he was not an oilman at all but an accountant inherited with the takeover of Billiton). Whereas the hard-headed oilmen who had traditionally run Shell might have weathered the storm Herkströter was cut to the quick by the criticism – much of which was personal. He launched an exercise which was designed to restore Shell’s reputation – an exercise which had the ambitious task of making Shell the “World’s Most Admired Company” (this even carried the acronym “WOMAC”). Extensive research was carried out amongst “key decision makers” and one of the conclusions was that Shell needed to present its image to the outside world in a more positive light.

One day Herkströter was introduced to one of the doyennes of British advertising and the man credited with the successful marketing of Margaret Thatcher – (Lord) Maurice Saatchi. Saatchi was always one for the main chance and bypassing all the usual brand and reputation management processes and people in Shell he persuaded Herkströter that Shell need to reposition itself as a company that was indisputably a force for good in the world. The Saatchi message was that progress in the twentieth century had been attributable to the global spread of the capitalist and free enterprise system - and because Shell had been a major player in this system then Shell must have been partly, even substantially, responsible for this progress.

So when Herkströter came to a meeting of senior executives of Shell in the summer of 1997 it was the Saatchi inspired message that he was selling to them. The brief video clip posted on YouTube culminates in a three-minute film, made by Saatchi, which presented the message about progress and Shell in an emotional way. It also introduced the idea that Shell’s core purpose (no less) was to “…help build a better world”. And that its corporate identity was that “The future is a better place”. There were many in Shell, particularly those of us who had had a long career in the Group and who specialised in brand and communications, who thought that Herkströter had lost his marbles. That most of his colleagues lined up to support him in this bizarre endeavour worried us as well. In the event some of the brand and reputation management advisers in Shell were able to tone down the worst excesses of the planned campaign but much of it went ahead anyway and the effects of it still linger.

What we witnessed back in 1997 was a commercial company trying to justify its existence not by pointing to the genuine fact that it was a world leader in the perfectly respectable activities of oil and gas production (etc.) for which it was famous. Instead we were exposed to a pitch that Shell was somehow a sort of a quasi benevolent organisation whose core purpose was not to make a return for shareholders over time (the real core purpose, of course) but to “help build a better world."

The communications proposed by Saatchi, and bought lock, stock and barrel by Herkströter were toned down somewhat and as a result at the time excessive ridicule was avoided. But the vestiges of this ill-thought-through campaign remain and can still be seen in the continued attempts to present the beneficial by-products of some of Shell’s activities as the reasons for them rather than as what they really are - indirect consequences. The speech-writers, the advertisers and the other corporate advisers need to reflect in the light of this history (which if they don't know it, they should study) that if you try to present yourself as something that you are not then you will be found out. Shell has been rumbled - and they need seriously to reflect on how they present themselves to the world in the future. The time of lies and obfuscation is over.

It pays to advertise - so why doesn't Shell hard sell V-Power?

Wally Olins, one of the most knowledgeable writers and thinkers on brand management in modern times, wrote back in 1989 in his seminal book on “Corporate Identity”, that “…oil companies are poor retailers.” The irony was that then, as now, the brand identities of Shell, BP or Esso were amongst the most ubiquitous in the market-place. Today with over 40,000 petrol stations in around 100 countries Shell is by some distance the most visible retail brand in the world. Other great and international retail brands like McDonalds or Starbucks or HSBC have recognised the power inherent in their brands and have ensured not only that their brand image is constantly renewed to be fit for purpose but also that it is extensively promoted in mass media advertising and other communications activity. Meanwhile Shell and the rest in the oily world only occasionally burst onto the media at all – and then with ever more questionable and disingenuous “corporate” advertising self-praising their green credentials or their capability for innovation and lateral thinking. Sadly such innovations never seem to be directed at their motoring customers despite the fact that there are countless millions of them visiting their myriad of retail outlets every day.

So what then should we make of the trackside advertising for “Shell V-Power” that you will see on television at the Hungarian Grand Prix and throughout this year’s F1 season? You may not know what “V-Power” is; it would be fairly surprising if you do. The brand is a brand of petrol that Shell would like you to buy and pay a premium for. Yes, that’s right, in a time when petrol prices are at a record high Shell would like you voluntarily to actually pay even more for your fuel every time you fill up your tank. At the time of writing you can buy standard unleaded petrol here for around 122p per litre or, if you wish, you can buy “V-Power” for around 131p per litre – a premium of around £5 per tank full. If you follow this link you will see Shell’s argument as to why you should do this.

Now I am not going to try and argue the merits of premium fuels - suffice it to say, that although my car will go perfectly well on standard fuel (as will all modern cars) I do pay the premium myself. This is because in my long Shell career I was impressed by the technological skills of our fuel development people and I do believe that V-Power is better for my car and that it provides performance advantages. Silly me? Maybe, but that’s my choice.

But back to marketing and to Wally Olins charge that oil companies are lousy retailers - which they are. What other branded retailer would have a premium offer at their outlets and not advertise or promote it? Shell has sorted the technology, the manufacturing and the distribution logistics to make V-Power available at their outlets in the UK and elsewhere in the world - but they hardly spends a cent in creating a “reason to believe” about the brand. Sure they will get some brand name recognition from their trackside advertising and from their point of sale displays on site. That is a necessary condition for the promotion of a differentiated product brand such as V-Power – but it is not a sufficient condition. If you want the punter to stump up nearly 10p per litre more for the premium in these difficult times then you absolutely must give them a reason to do so. You do this by presenting the benefits not on websites (helpful support though that can be) but with mass media advertising. The fact that you, gentle reader, may at best be vaguely aware of the V-Power brand is because Shell has never tried very hard to make you aware of it - and not at all to create brand preference for it.

Shell meanders on with its appeal to what it calls its “special publics” with its highly questionable and, I suspect, largely ineffective corporate advertising. Full page ads in The Economist don’t come cheap but every week it seems Shell is there promoting its green credentials. Meanwhile when it has, as I believe it has, a product in V-Power that many might choose to try if they knew about it they comprehensibly fail to give these people a reason to do so. No doubt V-Power sells a bit to folk like me who are either deluded or in the know. Meanwhile the rest of the petrol market sits low in the public’s esteem and it is simply a commodity that most people try and get for the lowest price whenever they can. And if they see Lewis Hamilton whizzing past a hoarding at the Hungaroring which carries the “V-Power” brand logo they might wonder what it is. If they do wonder then Shell won’t be telling them – which is why Shell and the rest of the oil industry have such deservedly low reputations as marketers.

The day we demolished a childrens' playground...

I’ve told this story before – but ten years on it may be due a retelling! Back in 1998 Shell was going through a top down generated change management process. This one was called “BFI” but I can’t for the life of me remember what the initials stood for. It had two main elements. The first was about measuring the business and trying to improve performance. The idea was that you “drilled” down to examine the business in minute detail to try and find your business strengths and weaknesses. Where did the money come from – or where did it go. It was a bit dull and a bit accountant led and rather micro in scale - but it wasn’t totally daft. The totally daft bit came from the other part of BFI.

We were supposed to bond better by revealing our feelings and aspirations as individuals - one member of one of the groups I was in was a Managing Director of Shell (he is now Chairman of a very big company). He removed his tie (the first time anyone had been him without neckwear in an office) and shared with is how his marriage had been in difficulties when he was GM of a Shell company years ago. Curious stuff and rather embarrassing. Anyway to bond us all better as a unit we had to go into the community to do “good works” one afternoon. The good works in our case involved the demolition of a perfectly good childrens’ playground in a small town in Holland. The playground had recently failed an HSE Test (although it looked pretty good to most of us). So it had to go. Quite why a group of middle and senior Shell executives had to demolish it I to this day have no idea.

It was a dreadful day – pouring with rain throughout and the playground resisted our efforts to reduce it to rubble. The swings and roundabouts were cemented hard into the ground as were the slides and the other play things. One of my colleagues, who was from Nicaragua, said that if the playground had been in Managua it would have been by far the best playground in the city. But here in Holland it had to go – and we had to send it on its way. It was an utterly pointless even offensive thing to do. Most of us were not in the first flush of youth and certainly unused to too much physical effort (away from a golf course bunker that is!). And the pouring rain drenched us all and turned us from puzzled to angry – as well as wet. Did this farrago achieve its objective – did we bond better as a result. I very much doubt it. Did our opinion of senior management increase at the end of this utterly senseless day – what do you think?

Shell walks away from its drivers - and from its customers as well

One of the modern shibboleths that businesses seem to worship is that of "contracting out" wherever possible - hire an outside contractor when you need to rather than managing that activity yourselves, especially when that activity is problematic in some way. But what if that activity is pretty crucial to your business and what, even more importantly, if it is crucial to your reputation?

Here in the UK the tanker drivers who deliver to Shell gas stations are striking but Shell, which walked away from involvement in oil product distribution years ago when they sacked their drivers and "contracted out", is powerless to help resolve the problem. The drivers work for independent contractors and neither these contractors nor the drivers owe any loyalty at all to Shell. In the past the drivers were Shell employees. Sure there were industrial disputes but in my experience the drivers and other blue-collar workers were part of the Shell family in the UK and essentially loyal. Within Shell there was an expert team working on Industrial Relations whose task was to understand the needs and aspirations or unionised staff and to dialogue with their representatives. I'm not saying that it was a golden age, but at least there was a forum for debate and discussion and at least we were all in receipt of a Shell pay cheque at the end of the month. That all went when Shell stopped employing drivers and the basis of a dialogue just does not exist any more. Shell may be talking with the contractors' bosses - but I doubt that they are talking with the drivers or their representatives.

So why has Shell walked away from employing drivers and abrogated responsibility for managing the product distribution process? Why has this supremely rich and immensely powerful multinational decided that its customers, motorists and others, can be abandoned and that it can walk away from the responsibility of ensuring that the products that Shell sells them will actually be delivered? Why has the great God of "contracting out" been worshiped whereas the principle ("Business Principle" indeed!) of the need to look after your customers been abandoned? When I was a Sales Representative more than thirty years ago my wise boss told me that a sale has never been made "Until the product has been delivered and it has been paid for." Shell seems to have decided that delivery can safely be left to someone else.
To understand the dogma that is driving this management imperative in Shell I have told the story about how it applied some years ago I was working for Shell in Dubai. In Dubai there was a small but successful downstream (marketing) operation. This was a fairly conventional business involving the marketing of a wide range of petroleum products to a variety of different customers across the United Arab Emirates. A key element of this business was, and always had been, the operation of a product distribution/transportation activity involving oil depots, vehicles and drivers. For more than thirty years this business had been built up as a professional, cost-effective and customer focused operation. It also had an admirable safety record (in a high-risk area) and the staff of thirty or so tanker drivers were a loyal, skilled and motivated team.

In the late 1990s Shell’s Central offices sent a new Distribution man to the region and, operating out of Oman, he visited Dubai charged with the responsibility of "outsourcing" the transportation operation. When challenged by me and others in the management team in Dubai as to why this was necessary he said that it was now "company policy" to outsource this business (i.e. to sack the drivers and sell the vehicles). A number of us were incensed by the insensitivity of this and we demonstrated that not only would no cost savings occur but that we would be needlessly disposing of the services of a team of loyal and skilled drivers each of whom was proud of his personal safe driving record and a motivated member of the local Shell family.
Well the battle raged on for a while with the argument that to go arms-length in an area as safety sensitive as dangerous fluids distribution was bad practice – especially as no possible cost savings would result. Furthermore to dispense with the services of the drivers many of whom had up to thirty years service hardly sat well with "Corporate Social Responsibility"! But this was ideology at its most sinister. The man from Oman had on his "scorecard" the target of outsourcing in Dubai. If he succeeded his remuneration would benefit – as well, of course, as showing that he was a loyal implementer of the new edict. He didn’t care one jot about the employees or their futures – all he cared about was showing himself off in a good light. Well we did fight on but in the end we lost. The drivers were sacked and the operation was outsourced. The irony of this story is that there was no financial benefit to Shell at all from the decision. Outsourcing (in this instance) wasn’t cheaper – it was simply the application of a dogma!

The ideology that Shell follows in its ignorant obsession with contracting out is, of course, the fantasy that such a practice will always reduce costs. The requirements of the customer stakeholder (who would wish to see no interruption in the supply of the products he buys) or the employee stakeholder (who would wish to offer his labour for adequate rewards and security of employment) are subordinated to the ambitions of the management apparatchik who wants to show his "skills" and loyalties to the new ideology by sacking staff (reducing costs) and contracting out. But the more arms-length an activity becomes the less control that you have over it. In negotiating contracts far and away the most important component will be how much it will cost - standards are inevitably secondary. So how a contractor treats his drivers (especially how much he pays them) is, of course, a matter for him not for Shell. And the contractor knows that the less he pays his drivers the more chance he has of getting or retaining the Shell contract. And drivers are two a penny aren't they - and who needs loyalty as long as the driver has a licence and can do the job?

© Paddy Briggs

June 2008

Shell's non-executive director's failure of his duty of care

The British Institute of Directors says that "…the non-executive director's role is to provide a creative contribution to the board by providing objective criticism." Well "objective criticism" was distinctly absent from the non-executive directors who appeared at the Annual General Meeting of Royal Dutch Shell plc this week. To be fair Jorma Ollila, Shell's Chairman, handled the meeting skilfully, although he rarely ventured into comments about the business. But the others were either almost completely silent or, in the case of Sir Peter Job (right), seriously inept in what they said.

Maarten van den Bergh, a former Managing Director of Shell of course, must have struggled at times to hold his tongue as his erstwhile colleagues sometimes floundered or were particularly 'economical with the actualité' And Lawrence Ricciardi might wonder about his one contribution, which was to say, as I recall, that he "hadn't foggiest idea" to the one question referred to him. Wim Kok could also have enlightened us rather more about his views on Shell in Nigeria instead of just referring us to the answer he gave at last year's AGM. And what is the point of having people like Christine Morin-Postel and Nina Henderson at the meeting if you don't actually ask them to say something? Presumably they were just passing go to collect their £200.

But it was Sir Peter Job who was the Non executive "star" of the meeting (I use the word "star" ironically). Job is on the Shell board with a primary role for overseeing the integrity of senior executive remuneration. Quite what qualifies Sir Peter for this onerous, but well remunerated, role is unclear but shareholders at the Annual General Meeting of Royal Dutch Shell had a good chance to see him at work on this subject. He bluffed and blundered to little effect and showed precious little understanding of the issues. There was absolutely no justification given for the scandalous "retention bonuses" and a series of oxymoronic non-sequiturs from the well-upholstered Job did not lead to one. The bonuses are designed to keep the three executives (Malcolm Brinded, Linda Cook and Peter Voser) in the company, but, Job assured us, they are all uber-loyal to Shell and have no intention of leaving. Hmmm! Work that one out!

And Job's justification for the fat cat gravy train was interesting (and ignorant) as well. He frequently mentioned Shell's record profits as a reason to reward the Board so handsomely. But, as any fule knows, oil company profits in the short and medium term are almost wholly dependent on the movement of the oil price - a factor over which no oil company CEO or Director has any control at all. Finally the revelation that the high-priced help got a substantial bonus despite not reaching their target to be number 3 in the multinational oil performance tables (Shell was fourth out of five) showed what a farce the whole thing is.

Sir Peter Job is the conscience of the shareholders as a non-executive Director in respect of the matter of remuneration. A huge number of shareholders have rapped him and Shell hard over the knuckles and many will now call for him to walk the plank.

The Tragedy of Corrib

The Tragedy of Corrib

by

Paddy Briggs

“The Tragedy of Corrib” is a twenty page personal analysis of the main issues surrounding the controversial Corrib natural gas project in County Mayo, Ireland. The analysis is not a technical one but revolves around the management of the external and community relations aspects of the project from its inception to 2008. The report is a frank assessment of the mismanagement of some aspects of the project by Shell and others, which led to the infamous jailing of the “Rossport 5” in 2005. The report makes some recommendations as to how a resolution of the difficulties of the project might be achieved. Paddy Briggs draws on his long experience as an executive with Shell (37 years) and his specialist knowledge and professional understanding as a commentator on reputation and issues management.

To find out more and/or buy the book click on the button below:

Shell pulls out of Wind Farm project

Sometimes Shell’s actions are so extraordinary that you wonder if the announcements that they make are a wind up – thrown into the ether just to see what might happen. The withdrawal from the “London Array” wind farm project is just such a decision. I know nothing about the business plan for this project except that I doubt that there were any “unknowns” which have suddenly become “knowns”. Indeed Shell’s statement that the decision is a consequence of an "ongoing review of projects and investment choices" suggests that they just went off the idea – as they have with so many other non traditional business ventures over the years. Shell’s definition of their “core business” becomes narrower and narrower over the years – step-outs into Renewables being walked away from with the same disregard for their reputation for veracity as many of the previous wimp outs.

As an ex-employee, pensioner and small shareholder I have consistently argued that unless Shell is really prepared to diversify into alternative energy wholeheartedly then they really shouldn’t bother at all. The track record of management success at anything but the oil and gas business is deplorable – so why bother? But as a commentator on brand and reputation management I find Shell’s mismatch between rhetoric and reality a continuing and monstrous disgrace. Remember the “Say No to no” ad shown here? I thought when it was launched a few months ago that it was deceitful, self congratulatory and facile. The wind farm decision is sadly not the only example which proves my point – what is Shell doing but saying “Yes to no” with this walk away from wind energy? But it gets worse.

The latest so-called “Shell brand campaign” featuring the disingenuous “Clearing the Air” campaign about which I have written before on this Blog is apparently a new initiative designed to communicate “What Shell stands for” - the campaign material states what this is:

SO WHAT DOES SHELL STAND FOR?

We are positive about energy
We are anti-complacent
We are creative, persistent problem solvers

So let’s take a look at the withdrawal from the wind farm project about which Shell UK Chairman James Smith boasted less than eighteen months ago: "The London Array offshore wind farm will make a crucial contribution to the UK's renewable energy targets. " Is this withdrawal being “Positive about energy”? Isn’t the abandonment of the project so precipitously extremely “complacent”? Can’t Shell be seen not as “creative, persistent problem solvers” but as mendacious knee-jerkers who when they encounter the unknown or the uncertain they run like hell for cover?

As I have said before I don’t really mind what Shell does as long as it is legal and in the interests of their stakeholders. What I vehemently object to is when they fail to walk the talk. When they promulgate bullshit in their brand campaigns about innovation and creativity when the reality of their business decision-making is anything but creative, original or innovative. It’s not the most elegant phrase to use but it seems appropriate – come on Shell “Cut the crap”.


© Paddy Briggs
May 2008

Shell's Brand shame

Shell’s Brand shame
By
Paddy Briggs

Take a good look at the photograph. What do you see? It’s a Shell petrol station, of course, and easily recognisable as such but when do you think that the photo was taken? If you said sometime in the 1970s or 1980s you would be logically correct. The visual style of the site is certainly that of an era some twenty or so years ago. Indeed professionals in the area of petrol station design, Shell brand management specialists and quite a few customers as well will recognise an identity from the past - one that was superseded by a new more modern identity more than a decade ago. But this is not an archive photograph – I took it a few days ago (April 2008) in New Zealand as I was driving to Auckland on the main East Coast road in a small town called Paeroa. Now you may think that it is a bit peculiar, even rather tragic, for an ex Shell executive, retired nearly six years, to want to photo petrol stations whilst on holiday in New Zealand. Let me explain.

For five years from 1990 to 1995 I was the project manager for the largest brand repositioning project ever undertaken in the oil industry. It involved the development of a new visual design system for implementation on all of the more than 40,000 Shell petrol stations in 120 countries. Research had shown that the then current design (known as VM2) was outdated and uncompetitive and that a radical redesign was necessary. This new design (called RVI) was introduced in 1993 and gradually implemented around the world over the next few years. Key elements of the new design included the representation of the Shell emblem (known as the “Pecten”) on a white background, the introduction of new colours, including a brighter and fresher red and yellow, and the replacement of the old logotype (the way that the Shell name is written on the canopy) with a much more modern font style. There was also a completely new signage and visual system which included a curved canopy edge and extensive new elements across the site. If you go to a Shell petrol station anywhere in the world today it is this new “RVI” design that you can mostly expect to see – it became the “new” standard fifteen years ago and was a significant success winning accolades in the design industry as well as boosting Shell’s competitive position significantly.

Back to New Zealand. As I drove around the country recently I realised that not only had RVI been implemented poorly with non standard design elements having been used (including a completely non standard “Prime sign” – the sign you see from the road) but that in many cases it had not been implemented at all – including the photographed site in Paeroa! What you see in this photograph is a site which conforms well to a design system (VM2) which was withdrawn fifteen years ago. The canopy, the way the “Pecten” is presented, the logotype are all from the 1970 – outdated, uncompetitive and long since not current as Shell’s brand identity. And this petrol station in Paeroa was not the only site of its type I saw in New Zealand – there are many others which sit firmly in the past. And it is not some sort of “heritage site” either – a deliberate and considered decision to keep a site in its old identity for nostalgic reasons. So what is going on? Shell might like to comment but I think that I can easily get to the heart of the problem without their help, but first why does it matter?

There are two inseparable aspects of the design/visual identity elements of a brand – they must be fit for purpose and they must be consistently applied. It doesn’t matter whether we are talking about a Coca Cola can or the livery on British Airways planes or the “Starbucks” brand name and colour system (or that of almost any other global brand) you have to get in right and you have to apply it with rigourous consistency. And when you change a design you have to apply the new design as quickly as possible and with a non-negotiable adherence to the agreed standard. In a company like Starbucks or Coke which are customer driven this happens without question – these great corporations wouldn’t be successful if the customer was not in the minds of everyone from the CEO downwards. But in the oil industry, and sadly particularly in Shell, this just doesn’t apply. Despite Shell being a huge branded retailer (there are more Shell petrol stations in more countries than there are Starbucks or even McDonalds outlets) Shell is today quite hopeless at brand management – scandalously so.

The Shell business imperatives are, as we know, not customer driven at all but are overwhelmingly concerned with exploration and production of oil and gas (the “upstream”). The board of Shell is rarely concerned with marketing matters and the customer barely gets considered at all at the top. Wade through Shell’s most recent Annual Report and see now much of the focus in it is on the customer or the Shell brand. Not a lot. Combine this with an almost complete absence of marketing experience and capability amongst Shell’s most senior management and an obsessive cost control mindset and you perhaps begin to understand how brand neglect of the type on view in New Zealand can happen. Join this to cost driven organisational changes which mean that key marketing decisions in respect of the New Zealand market are no longer taken locally but outside the country (in Australia and elsewhere) and you see that there is really no place in today’s Shell to apply the “All markets are local” imperative which all good marketers know to be true.

Branded marketing has always to be placed in a competitive context and it is important to record that in New Zealand Shell’s main Retail competitors (Caltex, BP, Mobil and local companies like Gull) look far better than Shell and certainly have more consistently applied visual identity systems. Shell’s appearance is shambolic and shameful – a disgrace for which there is no excuse and an insult to those of us who strived to give the Shell brand a global competitive edge all those years ago.

Finally let me say that whilst Shell New Zealand’s Retail network is a dire example of how a corporation that increasingly seems to have lost its way can utterly neglect some of its stakeholders (whilst, of course, proclaiming otherwise in its PR output) it is of course not the only one. I am aware that there are other countries where Shell operates in Retail where the implementation of RVI has been scrappy and incomplete and where the maintenance of good brand standards on site has been the victim of the application of cost minimisation mantras. I have argued in the past that the only solution is entirely to split marketing away from the rest of the Shell businesses and set up a completely separate Shell Marketing company which would be led by marketers, who know what they are doing, and within which there would be a culture which puts the brand and the customer first. Shell in New Zealand is a living example of why this is so necessary and what happens when the brand and the customer is forgotten.


© Paddy Briggs
April 2008

An extended version of this article will be published in April 2008. For details please visit the http://www.brandaware.co.uk/ website.

Happy Birthday "SITME"

One of the more satisfying initiatives that I was involved with in the latter part of my Shell career was the launch and management of the magazine “Shell in the Middle East”, popularly known internally as “SITME”. The intention of the magazine was to promote Shell in the Middle East and we put together a substantial mailing list of recipients across the region including not just the top decision makers but also those in influential executive positions in the public and private sector. The magazine was published in separate English and Arabic editions and it had a clear editorial philosophy. This philosophy was to let our partners, customers and other external stakeholders speak for us in the articles of the magazine – not to use it as just as an opportunity to boast about ourselves! The logic was that in an increasingly “Show me” world we would be more believable if we ensured that it was those who knew us who spoke about us. This seemed to work well and the magazine, under the skilled editorship of Bobby Schuck and his wife Sue (both highly experienced and skilled journalists) the magazine went from strength to strength – it has just celebrated its tenth anniversary and 40th edition.

SITME was deliberately different not only from other more overtly PR style magazines elsewhere in Shell but also from anything that the Middle East region had ever seen before (or since). The dead hand of corporatism was kept away from SITME and I and later Managing Editors were able to pursue a style and agenda that was distinctive and appropriately designed for its task. I hope that SITME will continue to flourish in a Shell world that is increasingly dirigiste and centralised and that its uniqueness will continue to be valued. Happy Birthday SITME!