Setting an oil giant back on its feet is not a job for the average Arsenal fan. But then, says Andrew Davidson, there's nothing average about BP's chief executive, however much he may pretend otherwise.
On the morning we meet, David Simon, chief executive of BP, has other things on his mind. 'Oh, I couldn't even bring myself to buy a paper, I didn't want to read about it. The only thing I could bear to look at was the Financial Times,' he moans, pacing his fourth-floor City office between his desk and the meeting table while I fiddle with my tape-recorder.
Simon, the arch-Arsenal fan, is still acting out his disbelief at the result of the previous evening's European Cup-Winners' Cup final. The match had been won by Real Zaragoza with a flukey long-range lob - or moment of pure genius, depending on your persuasion - in the last minute of extra time. Simon, having committed himself to give a lecture in Hull, hadn't even been able to watch it. A colleague had taped the match for him and left the video on his desk with a note, 'You won't want to see this'. Indeed he doesn't, but he is obviously intrigued.
'Did you see the goal? What did you think?' he asks, pulling out a chair. Thankfully, he adds, the FT has stopped correlating BP's performance with Arsenal's results. I look at him. For a moment I think he is serious. Then he gives a grin and a little chuckle. I have a feeling he is not going to let this one rest.
For establishing a rapport is one of the many things Simon is very good at. A slim, bald, hawkish man, 'Dags', as he is known in BP (David Alec Gwyn Simon), has bided his time to get to the top of his company, but since he took over as chief executive in 1992, he has put in a quietly impressive performance, restoring profitability and reviving BP's flagging reputation in the City after a period of some turbulence. All the more intriguing, then, that at 56 he should have chosen to move 'upstairs' so quickly. This summer he succeeds Lord Ashburton as chairman of BP. He will still be leading the team, though, and teams and teamwork are obviously very important to the sports fanatic Simon.
Anyway, Arsenal's unfortunate performance aside, Simon had lots to be happy about on the day we met. After lifting profits 32% in 1994, BP had just put in another strong set of figures for its first quarter of 1995, pushing replacement cost profits (as the oil trade likes to term them) up 51% to £461 million, paying off another chunk of its £6 billion debt, and hoisting its dividend - famously slashed three years ago - above what it paid out on its first quarter last year.
This last achievement is not one to be underestimated, for BP, a leviathan in British terms with its 60,000 employees and £33 billion turnover but only a middleweight in the international oil business, has a peculiar place in the City's affections. You only have to look at its list of investors - 423,000 individuals, 1,500 companies, 1,700 trust companies, 18,000 banks and nominees, 900 insurance and assurance companies and one UK government (1.8% of share capital) - to realise that running BP is no ordinary job.
No surprise, then, that Simon rates instilling more of a 'performance culture' into BP as one of his main achievements. Oil companies, he explains, have always been an investment culture, ploughing huge sums into hideously complex projects (drilling through permafrost, setting up deep-sea rigs, building 800-mile pipelines) which may not pay a return for decades. 'What we have had to change,' he says, 'is to put a more pointed focus on the performance of the existing asset base. You can't sort of sail on like a supertanker assuming that if you lay down the right investment strategy for a 10-15 year period you are also going to cut the mustard in the next 18 months.' t is akin, he laughs, to the old football adage of taking every game as it comes: you can't just argue you are going to win the League, regardless of next week's result. At this point I should add that Simon is regularly teased by colleagues for his sporting aphorisms. John Browne, chief executive of BP Exploration, who takes over as group chief executive this month, says he has had to start reading the sports pages just to understand what Simon is on about.
It is this kind of folksy amiability underscored by a tough concentration on results which has endeared Simon to managers and shareholders alike. For a start, it makes running a large and complicated multi-national operating in 70 markets worldwide with a great variety of partners and customers seem a fairly straightforward task. 'You cannot control it,' says Simon bluntly. 'Our job at head office is simply framework, focus and targets. Where we are going, how we are going to get there, and what targets we need to achieve to continuously improve the business.' To that end each month he has a brief document set out for senior management, clearly showing how the business is doing: capital expenditure, disposal proceeds, main assumptions and variances. 'Here,' he says, springing to his desk, 'It's easier if you take a look at one, just don't look at the figures.' The document, 10 or so pages, is marked SECRET, and is a web of graphs and league tables covering BP's three divisions: exploration, oil and chemicals. Shareholder returns and performance against competitors seem to be the most prominent factors, fitting tributes to the priorities of the Simon regime.
This concentration on detail can seem rather at odds with his fondness for trite sloganising - Simon is renowned for endlessly introducing corporate maxims like 'Performance, Reputation and Teamwork', 'Purpose, Process and People', and, believe it or not, '1-2-5' (the company targets of $1 billion debt repayment per annum, $2 billion profit and $5 billion capital spend) - but there is obviously method here. Geeing up employees, providing a sense of purpose, and communicating clearly are qualities not to be underestimated in big companies. Simon is the first boss of BP to come from a marketing background and he has, above all, 'people skills'. 'Unless you understand what networking and teamwork is all about,' he says later, trying to explain how his background informs decision-making at the new BP, 'I don't think you can make big companies work very well.' The new BP? My words, not his, as he is careful to stress the continuity of control and direction since he took over from his unpopular predecessor, Bob Horton, ousted by the BP board in 1992. That, certainly, is the reason for his seamless succession to chairman, but no-one doubts the company has changed. It has been through many guises since its birth as Anglo-Persian in 1908 (it became British Petroleum in 1954) but when Simon took over, it was close to hitting the rocks. After rapid expansion in the '80s, when the Government had sold most of its 33% stake and BP had gone on to swallow its US partner Standard Oil and Britoil, the group had pinned its flag to maintaining dividends with the hope of higher oil prices to come.
hey never materialised, debt was huge, cash flow was falling away, too much was being spent looking for oil in the wrong places, and the £900 million or so of dividend payments could not be met. In the end the dividend was halved and boardroom blood shed, with Simon stepping up and Lord Ashburton moving in as chairman, but insisting he would only do it for three years (he is now 67). BP needed a completely fresh approach, particularly in the reduction of capital expenditure and debt. Between them, Ashburton and Simon provided it, and even the company's fiercest critics have been surprised at how quickly they have put the company back on its feet.
'BP needed to rethink its entire business strategy to reverse the decline and get the group back into the mainstream,' says John Toalster, oil analyst at Societe Generale Strauss Turnbull and, in the past, a noted BP bear. 'They had simply been swamped by events.' And it is quite remarkable, he adds, how fast they have done it, given BP's natural disadvantages, such as its weak position in the major growth markets of Asia and the Far East. Costs have been cut, peripheral businesses sold off and the workforce is 12,000 lighter. Now the group just concentrates on petroleum - 'finding it, extracting it, shipping it, refining it, converting it and selling it', as Simon puts it - through its three main divisions (respective 1994 profits: exploration £1.9 billion, oil £706 million and chemicals £252 million). And the concentration has worked wonders. Already BP has delighted the City by overtaking its deadly rival Shell on return on capital.
And there is no denying that BP's senior executives are happier too, and not just because the results are better. The whole climate at the company has altered. 'It has been a big change in terms of the style and role of the leader,' says Rodney Chase, who has worked with Simon for over 20 years and in the current bout of musical chairs succeeds John Browne as chief executive of BP Exploration. 'David's style is to encourage people to fill the space that he leaves around him. He has a very sophisticated and quite unique talent for guiding people without them really knowing he is doing it.' Simon himself describes the senior management group as being like 'a rolling maul' in rugby. 'You've got to keep moving the ball forward, keep trying to understand what the group purpose is.' ndeed, it is fair to say that - apart from the usual press carping about his £763,000 pay packet, which is actually small by oil industry standards - it is virtually impossible to find anyone with a bad word to say about Simon. The irony, according to some observers, is that he was originally passed over for the top job because it was felt he lacked Horton's natural leadership qualities. Simon could be forgiven a chuckle at that one now, although he is scrupulous not to criticise his predecessor, for good reason. Horton may have mis-read the market but he was not alone in orchestrating the old 'spend, spend, spend' culture at BP.
Simon squirms slightly when I ask him about his own role. 'We all had extremely passionate debates about how fast to continue the capital spend through the recession,' he says, choosing his words carefully. 'I was one of those who was on the side of trying to keep it going as long as possible, but, um, perhaps I was earlier than some to see that it wasn't possible.' Does he think the image of BP has changed? He ponders that one for a bit then says: 'I think the City's perception is that BP is beginning to regain its status from being an out-performer in terms of shareholders' return over long cycles to being more balanced in short-to-medium term performance, and I suspect what investors want out of us is consistent financial performance.' Not an easy matter when you are, on a day-to-day basis, dealing with stroppy governments who could turn off your taps at any moment, belligerent consumers who couldn't really care if they buy petrol from you or your rivals, and an ever-growing legion of environmentalists monitoring your every move. But it can be done, as Simon has shown.
The difficulty is always getting the balance right. Long-term versus short-term, technology versus marketing, stretch versus squeeze. Crucially, oil companies have to spot where the opportunities are going to be and make sure they are geared up for them. BP, for instance, has always been renowned as one of the best 'finders' of oil in the business, though not the best marketer (the old joke - about 30 years old, in fact - was that it could never sell its oil even though it was gushing out of its ears, whereas its rival Shell could never find it even if it stumbled over it).
Now the worry is that geographically it is in the wrong place. BP may be the biggest oil producer in America, a legacy of its discoveries in Alaska and its 1987 purchase of Cleveland-based Standard Oil, and it may have high hopes for South America, where it is developing a number of fields in Columbia, but that is not enough. Everyone knows the real action lies in Asia and the Far East, where energy demands are expected to soar, and BP has to get in there. In the oil business, there is no future in being complacent. The next task, now the group has been trimmed and turned round, is to expand it again, and in the right places.
Will it become less British in the process? Almost certainly, says Simon, but that has always been in the nature of the company. While Simon describes it as 'Anglo-Saxon' in culture, with large investment interests in the old British trading areas of South Africa, the Gulf and Australasia, there has also been a growing Continental European emphasis since its post-war expansion, especially on the marketing side.
Certainly Simon, who read modern languages at Cambridge University and speaks excellent French and German, is seen as BP's most Eurocentric boss yet. At home he may sit on the boards of Grand Metropolitan and the Sports Council (of course), and be a member of the Court of the Bank of England. But abroad he sits on the advisory board of Deutsche Bank, the international advisory council of Allianz, the international council of INSEAD, the European Round Table of Industrialists and the European Commission's newly formed Competitiveness Advisory Group, which makes you wonder how he could ever have time to run humble old BP.
And indeed you could even argue that Simon is fairly European in looks and manner, especially in that lack of fusty British reserve. He explains he had a Welsh father and a French stepfather (whose name he carries) and lived in Lille between the ages of six and eight, after his step-father, a Free French pilot, took him and his mother to France after the war. They all came back after the French ousted de Gaulle in 1947. He went to primary school in south London before winning a scholarship to Christ's Hospital, where he found he could speak French better than anyone, including the teachers.
e says he loved school, because the sport was so good. Likewise university. 'I went to lectures and wrote my essays but I think I was classified as a hearty and was always going to get a second. What interested me were the folks I met and the games I played. I still haven't got out of the idea that half of life is playing soccer, rugger, tennis, that sort of thing, you know.' The formative moment was when the science teacher at Christ's Hospital took him to one side and said it would be a good idea if he went into industry. 'What he meant was that I was clearly not bright enough to teach, I was not going to be an academic soul, I spent all my time on the rugby pitch, it had to be industry. He suggested BP. That was how the network ran in those days.' So at 18, scrubbed and suited, he arrived at the same Finsbury Circus marble halls that he now strides through as boss for his first, and only, job interview. 'They asked what sort of things I was interested in. I talked about my languages and travel and my leadership of rugby teams. We had been told how to do interviews at school. They said, "Yes, we'll have you, become a university apprentice, we'll pay you and all we ask is you work for us every long vacation." I couldn't have been happier.' Simon is constantly dismissive of himself as just another bubbly optimist, yet there is obviously more of an edge to him than that. Occasionally it seeps through in an aside or an anecdote. He tells a long story about his time at INSEAD early on in his BP career, about how he felt he needed to understand more of how business worked, knowledge which he could not get simply from hands-on experience. Then he adds: 'There was another thing. Not getting a good degree at Cambridge annoyed me intensely as I thought I was relatively smart. In fact, it really pissed me off, so when it came to the MBA I was absolutely determined academically to do it properly. I knew what I wanted to get out of it. I was really focused and knew if I worked hard I could get an academic result which would satisfy me.' nd did he? 'Oh yes, well, I wouldn't have told you the story if I hadn't, would I?' he laughs, slapping the table. The point, he says, is that if he goofs up, he always has another go, and 'tries not to make the same goof'. You imagine that dealing with Simon in business must be liking hitting one of those punch-balls on a stand. Every time you knock it over, it bounces back with a bigger grin on its face.
He spent most of his early career in marketing, trotting round filling stations in Europe, picking up ideas which he would later be given the chance to put into practice. His first boss, in Switzerland, was years ahead of his time, he says, wanting to redesign filling stations to sell things that would enhance drivers' quality of life. 'It filtered through in normal oil company fashion', jokes Simon, 'about 15 years later.' By which time, of course, Simon was European marketing co-ordinator for BP and on his way to the top. He says he really hasn't had any bad times in the company, except perhaps the four weeks he was put into a new diversifications division. He hated it and asked to be transferred, and was punished with a move to 'government affairs', which he loved. He wasn't too upset at missing out on the boss's job when Horton won, he says, because he didn't expect to get it anyway.
But success must have taken its toll. He split up from his Norwegian wife in 1987 because, he tells people, he was too married to the job. They have two sons, mad Arsenal fans, of course. He remarried three years ago and now lives in Islington, a short hop from both Highbury and head office. He spends his famously large pay packet on houses (he has them in Norfolk and Portugal, too) and watercolours. The rest he saves.
His leisure pursuits are books and golf (he plays at Highgate and Hunstanton) and he lists his clubs in Who's Who as Brooks's and Groucho. The Groucho Club in London's Soho, as frequented by loud admen and tired actors? 'Yes, it's rather good,' says Simon who was a founding shareholder. 'It tickles me to take people to dinner there. Civil servants especially ...' Even so, it is not the sort of place you would expect to find your average millionaire (for surely he must be) oil boss, but then there is probably nothing average about Simon, however much he pretends otherwise. No doubt he will continue to take each game as it comes, even in the chairman's role.
1939: Born 24 July
Educated Christ's Hospital, Surrey; Gonville & Caius, Cambridge
1961: Joins BP
1965-66: MBA, INSEAD
1972: Marketing director, BP Holland
1975: Regional co-ordinator, BP Europe
1980: Marketing director, BP Oil UK
1982: Chief executive, BP Oil International
1986: Managing director, BP Group
1990: Chief operating officer, BP Group
1992: Group chief executive, BP Group
David Simon is also a non-executive director of GrandMet, a member of the Court of the Bank of England, the Sports Council, the President's Committee of the CBI, the advisory board of Deutsche Bank, the international council of INSEAD, the European Round Table of Industrialists and the EC's Competitiveness Advisory Group
What people say
'What he has done so well is pull the company together in a very calming way, setting clear targets and telling people how they can achieve them.'
John Browne, Simon's successor as BP Group chief executive
'He has a very clear idea of leadership. He manages through a nice mixture of being very normal and friendly, and very reinforcing of others' success.'
Rodney Chase, chief executive, BP Exploration
'I think you have to put an awful lot of BP's recovery down to him. A complete cultural change has been put into place.'
John Toalster, oil analyst, SGST
'He's always been an extremely balanced individual, and never someone who has been particularly interested in having a public persona.'
Sir Ronald Hampel, chairman, ICI, an old friend and golfing partner.