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Creating an Ethical Culture as a Strategic Advantage for Global Growth: A Conversation with Archie Dunham, Former Chairman of ConocoPhillips

2005; Volume: 10; Issue: 4 Linguagem: Inglês

2326-3709

Vanessa Hill, J. Brooke Hamilton, Mark Caleb Smith,

Oil, Gas, and Environmental Issues

Executive Summary Archie Dunham retired last year as chairman of ConocoPhillips, the seventh largest corporation in the United States. After earning his B.S. in geological engineering and MBA from the University of Oklahoma, he began his career as an engineer with Conoco in 1966. He rose through the ranks and was elected president & CEO in 1996 and added the title of chairman of the board in 1999. In addition to his duties at Conoco, Dunham served as chairman of the National Petroleum Council, The Energy Institute of America, the U.S. Energy Association and the National Association of Manufacturers. In 1998, he was honored as Houston's Father of the Year. He is currently a member of the board of directors for Louisiana-Pacific Corporation, Phelps Dodge Corporation, Union Pacific Corporation and Pride International. The petroleum industry faces multiple threats as demand for energy increases, traditional fuel sources deplete, and expectations for socially responsible behavior are enforced by governments and non-governmental organizations. Tracing its origins to the 1875 incorporation of the Continental Oil and Transportation Company, Conoco's history was not without challenges. During the oil shocks of the early 1980s, the company lost its independence when it was acquired by DuPont to insure adequate feed stocks for DuPont's chemical business. When Dunham became president of Conoco, he rationalized Conoco's portfolio and developed sources of supply while adding new core values honoring people and ethics to the company's culture. The company was successfully spun off from DuPont in a complex public offering and stock swap in 1998. In 1999, the Schroder survey ranked the firm number one in exploration efficiency among the major oil companies. Dunham guided Conoco through its merger with Phillips Petroleum in 2003. With Dunham at its helm, Conoco emerged as a pioneer in corporate sustainability reporting, aimed at making transparent the company's economic, environmental, and social performance. Internally, the company emphasized a culture based on Conoco's core values of safety, environmental stewardship, valuing all people, and business ethics. Dunham initiated the President's Awards Program to reinforce the core values by rewarding exemplary performance of these values. He believed that upholding the core values was a powerful advantage for a company intent on global growth. He promoted the core values as the key reasons Conoco was welcomed around the world by customers, joint venture partners, governments and communities. We interviewed Archie Dunham during the last week of his tenure at ConocoPhillips in September 2004. This interview explores Dunham's approach to creating an ethical culture for his company as well as his belief that ethics leads to profits. His remarks provide insights applicable across many industries. Authors: How did the idea that ethics really made a difference to company profits develop and what sort of processes were critical to making that happen at Conoco? Dunham: Historically, Conoco had a legacy of two values. You could go back 75 years and find a focus on safety. Historically, the energy industry has been a hazardous place to work; not as hazardous as the chemical industry, but refining is a tough business and exploration and production are also challenging businesses. Being offshore in deep water and in the North Sea is dangerous. So our predecessors knew that we had to create a culture focused on safety. Then, as the twentieth century progressed, concerns for the environment and sustainability evolved as companies realized that their ability to operate in the future would depend upon their commitment to safety and environmental excellence. The environment was becoming increasingly an area of concern for the average citizen of the world. When I became CEO in January 1996,1 added two new core values. One was to value all people. I felt that you really had to focus on people if you were going to have a successful company. …