British Petroleum (BP) Peer Groups Collaboration Case Study

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British Petroleum was able to reduce its greenhouse gas emissions by 10% in just four years. For our presentation at OD Network 2012, Solvable built this case study on how BP used a combination of technology and culture change initiatives to meet this ambitious goal. This case study is drawn from research by Michael Goold, “Making Peer Groups Effective: Lessons from BP’s Experiences” in Long Range Planning Journal (2005); and David G. Victor and Joshua C. House, “BP’s Emissions Trading System” in Energy Policy (2006).

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British Petroleum (BP) Peer Groups Collaboration Case Study

  1. 1. BRITISHPETROLEUMCIRCA 1997* *CASE STUDY DRAWN FROM RESEARCH BY MICHAEL GOOLD, “MAKING PEER GROUPS EFFECTIVE: LESSONS FROM BP’S EXPERIENCES” IN LONG RANGE PLANNING JOURNAL (2005) AND DAVID G. VICTOR AND JOSHUA C. HOUSE, “BP’S EMISSIONS TRADING SYSTEM” IN ENERGY POLICY (2006) PHOTO: “BP LOGO” © 2011 LOUISE MCLAREN, USED UNDER A CREATIVE COMMONS ATTRIBUTION 2.0 GENERIC
  2. 2. BIG HAIRY AUDACIOUS GOAL10% GREENHOUSE GAS EMISSIONSREDUCTION ACROSS THE ENTIRECOMPANY [BASED ON 1990LEVELS] BY 2010
  3. 3. GOAL ACHIEVED 7 YEARS AHEADOF SCHEDULE GENERATING $650MIN SHAREHOLDER VALUE
  4. 4. HOW...TECHNOLOGY– INTERNAL EMISSIONS TRADING SYSTEMCULTURE CHANGE– PEER GROUPS
  5. 5. BRITISHPETROLEUMCIRCA 1990“OVER TIME OUR PEER PROCESSESHAVE BECOME MORE ABOUTHUDDLING TOGETHER FORWARMTH THAN MAKING A REALBUSINESS IMPACT”- BP MANAGER, INTERVIEW BY MICHAEL GOOLD
  6. 6. (DE)CENTRALIZATIONCENTRALIZE STRATEGIC CHOICESBUT DECENTRALIZE CONTROLOVER DEPLOYMENT
  7. 7. STAGING1 PILOT W 12 LARGE BUSINESS UNITS2 ASSIGN BUSINESS UNITS TO PEER GROUPS WITH COMMON CHALLENGES
  8. 8. MEASUREMENT1 CREATE A UNIFORM STANDARD ACROSS THE ORGANIZATION2 PERFORMANCE CONTRACT INCENTIVES TIED TO BUSINESS UNITS + PEER PERFORMANCE (HIGHER THAN AGGREGATE)3 PEER GROUPS MET WITH EXECUTIVE COMMITTEE 4T/YR
  9. 9. “PEER ASSISTS”1 BEST PERFORMERS HELP WEAKER ONES2 MOST BUs CONTRIBUTING RECEIVING ASSISTANCE
  10. 10. FUNDING1 $50M CAPITAL FUND2 PEERS ENDORSEMENT FOR CAP- EX PROJECTS3 A BILITY TO REALLOCATE CAPITAL AMONGST GROUP MEMBERS
  11. 11. SUCCESS FACTORS1 FORMAL ORG DESIGN RATHER THAN INFORMAL NETWORKS2 BUSINESS UNIT LEADERS: LINE MANAGERS (PL) NOT FUNCTIONAL MANAGERS3 CLEAR DELIVERABLES4 DECISION-MAKING AUTHORITY
  12. 12. BRITISHPETROLEUMCIRCA 2002PEER GROUPS DISBANDED,REVERSING CULTURECHANGE INITIATIVES OFTHE PAST 12 YEARS
  13. 13. BRITISHPETROLEUMCIRCA 2010DEEPWATER HORIZONPHOTO: “DEEPWATER HORIZON FLARING OPERATION” © 2010 PATRICK KELLEY (DVIDSHUB), USED UNDER A CREATIVECOMMONS ATTRIBUTION 2.0 GENERIC

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