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Just the man for BP: a boss with no oil in his bones

The Times
June 26, 2009

BP’s newly appointed Swedish chairman Carl-Henric Svanberg, center, with their current chairman Peter Sutherland, left, and CEO Tony Hayward

Carl Mortished

Out with the Irish politician, in with the Swedish engineer. A furore has erupted among oil-drenched City scribblers over BP’s choice of Carl-Henric Svanberg, who currently runs Ericsson, the telecoms equipment maker, to chair the board of Britain’s largest company.

You can almost hear the disappointment, the sneer and the chauvinism: how could an obscure Nordic businessman get such a plum post — the top job at UK plc’s top table — and he doesn’t even know anything about oil? Sir Peter Sutherland, the incumbent, is Irish but he was also politics writ large, a European Commissioner and then director-general of Gatt, the precursor to the World Trade Organisation. Mr Svanberg’s old jobs included running Assa Abloy, a business that makes locks (“the global leader in door-opening solutions”), and then Ericsson, a business that makes phones.

BP has enough people who know about oil. What it needs in a chairman is someone with acute commercial, analytical and political skills. Running the board of a global company is not about running the company; it is about ensuring that it is well-run. And if Mr Sutherland boasted some of those skills, it might be argued that he did not wield them all effectively, all of the time. BP came a cropper in spectacular fashion in missing targets and then in a fatal disaster at a refinery in Texas, because it became sloppy, undisciplined and self-absorbed.

Part of Mr Svanberg’s job will be to ensure that in future BP operates a bit more like a well-oiled “door-opening solution” and less like a finely carved oak portal protected by a rusty latch.

An industry outsider, a foreigner and an oil novice with a critical eye may be a good thing. Royal Dutch Shell thought as much when it hired Jorma Ollila, the former Nokia boss, to run its boardroom, while Unilever looked outside the food industry for Michael Treschow, another Swede who is also chairman of Ericsson and is Mr Svanberg’s current boss.

Indeed, the real question concerns why so few (less than a quarter) of Britain’s top companies have foreign chairmen or chief executives. According to Sean Arnold, a headhunter at the Zygos Partnership, the bias in boardroom non-executive searches at big companies is now in favour of the non-UK candidate.

The British talent pool is too small, Mr Arnold says, but the London Stock Exchange lists contain a large number of very big companies, all desperate to develop their credentials in foreign and emerging markets.

The Swedish engineer has the latter skills, selling Ericsson products in Asia, but he will need to prove his worth at a high level, not just in keeping BP’s wheels well oiled but in lubricating relationships among the many unpleasant nations where BP does its business.

When he is not shaking hands with despots, Mr Svanberg needs to lead the boardroom and the executives, including Tony Hayward, chief executive. Mr Svanberg is a keen scout leader and in an interview with a Swedish newspaper suggested that scouting inspired his leadership skills: “It takes only a few seconds to spoil a relationship with another person.”

Such high empathy will endear him to many at BP, but Mr Svanberg may also have learnt a few leadership lessons from his current chairman, Mr Treschow. In a recent interview with The Times, the Ericsson and Unilever chairman made clear that, for him, chief executives proposed and chairmen disposed: “We can ask why you [the CEO] didn’t deliver . . . if we are not happy about either the direction or the result, then we have to find another you.”

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