Page 238 - Executive Warfare

EXECUTIVE W ARF ARE

Enron under Jeff Skilling, the former president and CEO, is a terrific
example. Skilling was a Harvard MBA, a McKinsey alum, famously smart
and impatient,and Enron clearly remade
itself in his image. It became a culture
A FRAUD AS BIG AS that was arrogant about its own brains,
ENRON’S DOES NOT easily bored, restlessly moving from deal
OCCUR WITHOUT to deal, rewarding aggressiveness while
HUNDREDS OF never pausing to demand results,uncon-
PEOPLE KNOWING cerned about expenses, with an over-
DEEP DOWN THAT whelming sense of entitlement.
SOMETHING IS Since these were the qualities that
WRONG. were rewarded, it was difficult to work
at Enron and not buy into the culture.
In their book The Smartest Guys in the
Room: The Amazing Rise and Scandalous Fall of Enron, authors Bethany
McLean and Peter Elkind quote one long-time Enron executive:

I used to walk off the company plane after being picked up and
dropped off by a limousine, and I’d have to remind myself I was
a real human being.You start living that life long enough, if you
don’t have very strong morals, you lose it fast. Enron was the
kind of company that could spoil you pretty well.

Enron clearly did spoil a lot of people. A fraud as big as Enron’s does
not occur without hundreds of people knowing deep down that some-
thing is wrong. It’s a cultural problem, not just a problem of a few bad
apples.
Organizations like Enron are awash in MBAs from Harvard and Stan-
ford. They have auditing teams and risk management departments that
know the fundamental rules. They are full of basically honest people. But
even smart, honest people can lose perspective when they spend 12 hours
a day in these vertical villages, when they have too much faith in the local

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