Enron Failure

Examining a Business Failure

Enron Leadership

LDR/531

August 23, 2010

Enron Leadership

This paper examines the leadership and management failures of Enron Corporation. Why and how did Enron transform itself from one of America’s paragons to one of its chief pariahs? How can it be that Enron could literally overnight declare bankruptcy and disillusionment? How can it be that the sixth largest energy corporation in the world wind’s up being vilified in the press as running a “Ponzi-watts” scheme on its customers and stockholders? (Gini, A. 2004)

When an organization, or even nations suffer the shock of a major predictable surprise, it speaks directly to the quality of leadership. On December 2nd 2001, Enron stood out as one of the most spectacular failures in business history. Most attention has been focused on its accountancy practices, but its internal culture and the leadership practices of the company’s top management were the great contributors of the Enron collapse. A predictable surprise is an event that takes an individual or organization by surprise despite the prior awareness of all the information necessary to anticipate the event and its consequences.

In the case of Enron Corporation, the failure is more than the result of a simple lack of ethical rules and legal guidelines and requirements. Arthur Levitt, former Chairman of Securities and Exchange Commission, has argued that “rules, regulations, requirements, and guidelines exist in abundance,” and should be able to do the job. He further stressed that accounting and financial industries may be the most regulated business in American commerce. This never happened because of a “web of dysfunctional relationships among analysts, brokers, and corporations: who are out to beat the system. Top management involved in the Enron scandal such the former CFO, Andre Fastow, who was accused and indicted for mismanaging, misappropriating, and embezzling an estimated $390million. He pleaded guilty on...