Friday, May 20, 2005

The Most Dishonorable Guys in the Room

It’s nearly midnight here in California. I just got back home from seeing the film “Enron: The Smartest Guys in the Room” and I’m still wired. Go see it. Even better, read the book “The Smartest Guys in the Room” by Bethany McLean and Peter Elkind. In some hazy way, I can comprehend the sleazy web of lies, deceit, cruelty, and fraud that both the book and film expose. What I can’t comprehend is the utter lack of honor among the ex-executives at Enron now that the house of cards they built has collapsed.

During the Enron heyday, the leaders of Enron were more than happy to enjoy the perks and privileges of their positions. CEO and former President Jeff Skilling liberated himself from his prior geek persona and posed for magazine covers as a three-day stubble stud. Chairman and former CEO Ken Lay was the toast of Houston society and the very public benefactor of many unctuous charities. Both men earned mucho millions of dollars. And yes indeed, all that time they bravely took responsibility for all the apparent success of Enron!

But after the crash, both men quickly slithered away from any sort of acknowledgement of responsibility. Skilling—well-known for his brilliant analytical mind and financial acumen—blithely says that right up until the end, he believed that Enron was in great shape, even as many employees and a growing number of outside analysts saw that the foundation of the company was rotten. While Skilling plays us for idiots, Ken Lay presents himself as an idiot. His defense—a la the “I’m a numbskull” strategy of WorldCom’s Bernie Ebbers during his trial—is that he didn’t understand what was going on, he was kept in the dark, others betrayed him, so it wasn’t his fault.

One of the most important things that attracts people to leadership positions is the chance to exercise power in order to influence others and to carve both a strategic direction and a corporate culture for the units they lead. Great leaders take both joy and responsibility for that kind of leadership. That is why they accept the rewards for their unit’s good performance, and they accept the consequences for their unit’s bad performance—because by definition: they led. Let me emphasize this once again. In my research, I have found that one of the most important components of great leadership is the willingness to not only accept, but also seek final responsibility for unit performance, fully and unequivocally. Great leaders truly operate by the old adage that “the buck stops here.”

As I look at the sad spectacle of too many ex-CEO’s like Richard Scrushy (HealthSouth), Dennis Kozlowski (Tyco), and of course “the smartest guys” at Enron—all under indictment, all pleading “see no evil” and pointing blame at everyone but themselves—I can only hope that in choosing CEO’s from now on, companies will tell their executive recruiters not to even consider anyone who doesn’t have a superb track record of honesty, character, and integrity.

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