I’ve been spending the past week with Ken Lay, Jeff Skilling, Andy Fastow and the whole gang from Enron.
It began Sunday afternoon, when I saw a screening of “The Smartest Guys in the Room,” the new documentary based on last year’s book.
So what really felled Enron? Was it hubris? Greed? Well, yes of course, they played a part–they are the cornerstones of American enterprise, and that’s not necessarily a bad thing. No, the downfall of Enron was mostly about bad business practices and worse management, not nearly as exciting but twice as deadly in the business world. Yes, there was also criminal activity involved, but it was the poor management that allowed the criminal activity to play such a huge role in bringing down the company.
It’s perfectly natural for a young executive like Fastow, motivated by hubris and greed, to propose hare-brained schemes which, so he thought, would benefit the company while making him obscenely rich. What is un-natural, pathological, is that all the control measures carefully put in place to protect against such idiocies were so consistently subverted by the company’s management.