Friday, July 11, 2008

Hubris and Complexity

Martha Lagace, in HBS Working Knowledge, interviews Malcolm S. Salter about his new book, Innovation Corrupted: The Origins and Legacy of Enron's Collapse. An excerpt:

Q: As you note in your book, there is much that we still do not know—and may never know—about Enron's failure. Having studied the company intensively for years, what would you most like to know?

A: There is still much that we do not know about the perceptions, intentions, thought processes, and apparent failings of Enron's leaders and its board of directors. For example, why didn't Skilling and Lay see more clearly the risks and increasingly adverse effects of the extreme, performance-oriented management system that they had created? How could Skilling—a very public proponent of earning more money with less assets (the so-called asset light strategy)—rationalize Enron spending so heavily, and so beyond established capital budgets, on capital projects with highly speculative returns?

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