The Broken Hill Proprietary Company (BHP) is one of the largest and oldest Australian corporations. As a 112-year-old institution, the company has the capability to affect the Australian economy. In the 1990’s, BHP incurred record losses resulting in a stock price at its lowest point in history. Broken Hill Proprietary fell victim of its insular corporate culture that handicapped its ability to make informed decisions and act as a major player in the new economy. The culture was one of authoritarian management, very little accountability, a tortuous decision-making process, and a top down management philosophy.

The resulting dissatisfaction on the part of the shareholders caused CEO John Prescott to resign and an American, Paul Anderson, was named CEO and Managing Director. A new team of senior management positions were filled with Americans and other non-Australians to meet the BHP’s challenges with a different mindset. The immediate challenge of the new team was return the focus of the company to shareholder value and change the debilitating corporate culture. One of the first changes was to add informality to a culture steeped in the formal. According to CEO Paul Anderson, “I think that the informality is energizing a lot of people, they don’t feel constrained any more. So my bias is that if the organization stays informal we’ll be much more effective, efficient and flexible, which I think is really critical.” Anderson also created an open door policy, by encouraging managers of all levels to walk in to his office. He set the standard for the new corporate culture that enabled employees at all levels to share information and improve the decision making process.

As BHP undergoes a major transformation in their culture to enable them to react and remain competitive in the new economy, Paul Anderson was faced with yet another challenge. After a discussion with Bill Gates, Anderson realized that BHP was in the “e-commerce dark ages.” Anderson did not think e-commerce or Internet technology had much to do with a resources company like BHP, but as Gates pointed out to him, if a company has a lot of information flowing within it, customer interaction, databases and purchasing systems, e-commerce was needed.

“It was frightening because it was the blind leading the blind. We all thought we were on top of the stuff and we realized that we were in the dark ages. We also realized it could not be avoided. If you look at the value chain, you start with the source of production. There are intermediaries and then finally there are customers. What the Internet and e-commerce allow is to redefine the middle. The customers can reach backwards or the producer can reach forwards, or a whole new intermediary comes in that offers some value-added service.” [Paul Anderson]

Several large e-commerce initiatives have arisen out of this new commitment to technology. 14 large Australian companies including BHP have linked together to establish an online procurement marketplace and portal – corProcure. BHP has also launched a global mineral portal that allows customers to track contract details, shipping information and payment status – Aurias. E-Steel, another online marketplace was recently launched to provide customers with improved services and reductions in transactions costs related to steel purchases. In attempt to educate their employees on the benefits of the Internet, BHP launched a portal called “BHP Village”.

BHP has invested heavily in e-commerce and Internet technologies over the last year, but it remains to be seen if these investments will pay off. By creating a series of portals, it appears as though BHP is trying to become a specialty provider, that aggregates capacity of supply among a series of similar providers. Will this prove to be a viable strategy as the world’s major metal consumers transform their value chains? Or will it prove to be more of a dead end as the owners of brand and design take control of their value chains (i.e. Covisint, a vertical exchange created by three major automobile companies). Will these horizontal exchanges thrive only in dispersed markets, or can they succeed against concentrated brand and design ownership?