If you, as a leader, can learn anything from the Enron scandal, perhaps it’s what behavior to look for in a corrupthierarchy. The main sign to watch for is the acceptance of fantasy as irrefutable fact. Enron examples:
- The underlying assumption rooted in all the complex and questionable side deals was that Enron stock would never fall.
- When Enron launched a broadband division, it housed dozens of new employees in corporate apartments at $3,500 a month each. “No expense was spared,” one of them recalled. “It was just the Enron culture.”
- Jeff Skilling, one of the main architects of the company’s downfall, stressed the importance of transparency and disclosure in accounting, even as he blessed side businesses handling Enron’s “nuclear waste.”
- The attitude that Enron people were simply better than everybody else permeated the upper ranks. At conferences, Skilling openly derided competitors, calling them dinosaurs and morons.
- At best, the company took a “compliance” approach to rules and regulations, barely adhering to the letter of the law, if that. And ethics? Forget about it. The only antidote to the “compliance” mentality is honest leadership.
— Adapted from The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, Bethany McLean and Peter Elkind, Penguin.