The Ultimate Corporation

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Leslie Philipp/OttOpix
The Strathcona Refinery, owned by Exxon subsidiary Imperial Oil, on the outskirts of Edmonton, Alberta, December 2008

Exxon’s executives, as anecdote after anecdote in Steve Coll’s book makes clear, enjoy easy access to every president. Its confident CEO is “a peer of the White House’s rotating occupants” who can usually count on the administration to see things as he does. In fact, the president is often more pliable than the CEO, who often goes his own way,

aligned…with America, but…not always in sync; he was more akin to the president of France, or the chancellor of Germany…. His was a private empire.

Coll makes clear in his magisterial account that Exxon is mighty almost beyond imagining, producing more profit than any American company in the history of profit, the ultimate corporation in “an era of corporate ascendancy.” This history of its last two decades is therefore a revealing history of our time, a chronicle of the intersection between energy and politics that explains much about our present and more about our (dismal) future.

And one of the key points that comes through in every chapter is that Exxon mostly earned its power the old-fashioned way: not by political influence, but by prowess, hard work, and discipline. Coll opens by describing the 1989 wreck of the Exxon Valdez and the fouling of Prince William Sound, the nadir of the company’s recent history—soon-to-be CEO Lee Raymond described himself as “chagrined…horrified and to an extent devastated.” He and the company responded to the tragedy by fighting every attempt to make it pay punitive damages—but also by embarking on a rigorous effort to change Exxon’s culture, unveiling to “its employees and executives a universal new management regime, the Operations Integrity Management System,” or OIMS, which one executive described as “more vinyl binders than you can possibly imagine,” covering every possible aspect of the company’s systems.

Exxon, far more than its competitors, did things “by the book,” and this was the book; its employees, if they wanted to remain, did not deviate. In fact, writes Coll, “those who stayed did not find OIMS ironic or extreme; they liked the culture of discipline and accountability.” And the results were inarguable: Exxon didn’t just make huge profits because of its huge size; its “return on capital employed” outstripped that of its peers year after year:

Its exceptional ability to complete massive, complex drilling and construction projects on time and under budget meant that, in comparison to industry peers, it remained exceptionally profitable in recessions and boom times alike, when oil prices were high and when prices were low.

Lee Raymond, CEO from 1993 to 2005, was intimidating, “Iron Ass” to his troops. He calculated, writes Coll, that given the size and sprawl of his global empire,

the only way a chief executive could hope to extract disciplined results was to overdo it—that is, unless Raymond used his bully pulpit…to pound …

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