Too Dominant?

I read this article from the New York Times in June, 2000 out of curiosity. We are currently reading the account of what happened at Enron. But what as Enron like when it was in operation?

I read it and I’m still confused as to what exactly Skilling and Enron were trying to do with Broadband. “We’re the long-haul component of the network; we’re really agnostic about the last-mile solution. We’re the Interstate; once you get off, there are all sorts of local routes, like cable, that you can take. I see a very yin-and-yang relationship between cable and D.S.L. It’s a nice fit.” Huh? How do you trade broadband? Isn’t there no physical commodity to back it up? And why did everyone go along for the ride?

I’ll admit that Skilling at least gives the impression he knows what he’s talking about: “In addition, we’re also installing very sophisticated switching stations into other fiber networks. We will be able to distribute across any fiber to anywhere in the world.” Sounds cool. Such broad, ambitious statements are impressive. Enron, as Skilling would say, got it. But what about everyone else? The chapter, “Everyone Loves Enron”, outlines the essentially unbounded love so many in the business world had for Enron: stock analysts, journalists, investment bankers, the rating agencies. Did they all get it?

No–perhaps there was nothing to “get” in the first place–but I think they wanted to believe that they “got it”. Skilling, Lay, and Fastow were so dominate that the other groups in the ‘dominate coalition’ responsible for directing and overseeing Enron—groups such as the board of directors, the media, and Wall Street—could not do their job. Unlike what Scott and Davis describe, in Enron’s case a single group was powerful enough to determine completely the organization’s goals. The goals of the organization were the goals of the group. When Skilling would elaborate on wild concepts like broadband, someone who didn’t “get it” would be too afraid to say so. The thinking went: these seem like smart people. Other smart people think that they are smart people. They have to be smart and know what they’re doing!

My question is there an inherent danger in getting the goals of an organization and the goals of an individual meshed together? If the dominate coalition structure breaks down, and one group or individual dominates alone, is that necessarily a bad thing? Is it only a bad thing in a corporate setting, or elsewhere also? It sure didn’t work out for Enron…

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