The Purpose of Business

05/02/2006 12:00 PM WongLord John Browne, Group Chief Executive, BP p.l.c.; The Lord Browne of MadingleyDescription: One common view of business makes a sharp distinction between making money and doing good in society. This is a "limited and distorted" perspective, according to John Browne. Business that focuses just on money doesn't invest in the future -- in its employees, new ideas, markets or products -- and won't be around for long. Any successful business is part of society, says Browne, "and exists to meet society's needs."

As the leader of one of the world's largest and most enduring energy corporations, Browne well understands the importance of marrying commercial concerns --"the need to make money to reward those who've trusted us with investment" -- with a socially creditable mission. A good business fulfills its purpose "by supplying goods and services at a price people can afford in a manner which makes the activity sustainable."

BP's just completed 16-year project--the 1,767km Baku-Tbilisi-Ceyhan (BTC) pipeline--developing the energy resources of the former Soviet republic of Azerbaijan makes Browne's case. An investment of $15 billion is about to culminate in oil flowing from an 1,100-mile-long pipeline winding its way through Georgia to the Turkish coast, close to environmentally sensitive areas and across countries "where land ownership and borders are not quite certain," as Browne puts it. BP has had to contend with countless complexities and hazards: an invasion of Azerbaijan by Armenia at the project's start; building up a local work force and security along the entire pipeline; cooperation among financial institutions on the route to ensure revenue would flow not just to governments but to small communities; avoidance of negative environmental impact.

The world's thirst for oil and gas continues unabated, says Browne, with "no real alternatives to hydrocarbons." At the same time, anxiety is climbing around both the security of energy supplies and changes in the climate. "To restore security," Browne concludes, business and government must invest in improvements in oil and gas exploration and recovery, and in mechanisms that can soothe markets when disruptions --whether hurricanes or terrorism -- strike energy supplies.

About the Speaker(s): John Browne joined BP in 1966 as a university apprentice. Between 1969 and 1983, he held a variety of exploration and production posts in Anchorage, New York, San Francisco, London and Canada. In 1984 he became group treasurer and chief executive of BP Finance International. In April 1986, he took up the position of executive vice president and chief financial officer of The Standard Oil Company in Cleveland, Ohio.

In 1987, following the BP/Standard merger, in addition to his position as executive vice president and chief financial officer of BP America, he was appointed chief executive officer of Standard Oil Production Company. In 1989, he became managing director and chief executive officer of BP Exploration based in London.

In September 1991, he joined the board of BP as a managing director. He was appointed group chief executive on June 10, 1995. Following the merger of BP and Amoco, he became group chief executive of BP Amoco on December 31, 1998.

In 1999, the Royal Academy of Engineering awarded Browne the Prince Philip Medal for his outstanding contribution to the field of Engineering. He was knighted in the 1998 Queen's Birthday Honours and made a life peer in 2001. Host(s): Sloan School of Management, MIT Sloan School of Management

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