Essay about Enron: the Smartest Guys in the Room

Words: 1843
Pages: 8

The purpose of this paper is consider three possible rationales for why Enron collapsed—that key individuals were flawed, that the organization was flawed, and that some factors larger than the organization (e.g., a trend toward deregulation) led to Enron’s collapse. In viewing “Enron: The Smartest Guys in the Room” it was clear that all three of these flaws contributed to the demise of Enron, but it was the synergy of their combination that truly let Enron to its ultimate path of destruction.
As in any organization, the executives ultimately drive company policy, practices and accepted behavior. The three key executives that led Enron down its fatal path were, Ken Lay, Jeff Skilling and Andy Fastow. Like most successful leaders they
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Even if this justification was not enough, Fastow, much like Ken Lay, could have used another rationalization from Gellerman. He most likely believed that since it was signed of on by the board and their accounting firm that the activity was within reasonable ethical and legal limits and that it was not “really” illegal or immoral.
With their own improprieties being internally justified, Lay, Skilling and Fastow paved the way for immoral behavior to run rampant throughout Enron. This resulted in associates at all levels approving of, and even modeling the behavior of their so called leaders. This created a flaw in the organization which contributed to furthering already great problems at Enron.
As with any company large or small, culture and ethics are shaped from the top down. Their adventuresome excursions hammered home the point that Jeff Skilling and Andy Fastow were risk takers. This risk taking behavior seeped into the very soul of Enron. It was no more evident than with the traders. Specifically, the company showed its employees that risk taking behavior was valued and would be rewarded. The traders took this idea and ran with it. Whether it was trading beyond their approved thresholds or creating artificial circumstances so they could have “arbitrage opportunities”, the traders did whatever was needed to make sure Enron’s stock price and their own wallets continued to