Enron, Energy and Global Entrepreneurship

Article excerpt

Enron Corporation was created in 1985 as a result of a merger of four natural gas pipelines and one exploration and production (E&P) company. Enron today has five key businesses-- wholesale trading, pipelines, new ventures, retail energy sales, and communications.

In 1988 wholesale energy sales represented 25% of $94 million in earnings, the pipelines 70%, and exploration and production 5%. By 1998, E&P still represented 5% of earnings, while wholesale energy sales grew to 60% of $783 million in earnings from 25% back in 1988. Enron is divesting its U.S. exploration and production operations.

Over the 1985 to 1998 period, natural gas demand grew while natural gas deregulation continued opening markets for new products and services. The non-regulated side of the U.S. gas business in the early 1990s and non-regulated electricity sales in the late 1990s spurred Enron's growth.

Enron, with a 46% market volume lead over its second-ranked competitor, markets and trades 23.7 trillion BTUs daily of energy, about 10% of all U.S. energy use. Enron's spending on IT systems to manage 23.7 trillion BTUs of contracts daily is over $100 million annually. These IT systems connect the most extensive U.S. and European energy networks in existence today. Sales and Marketing magazine in July 1998 ranked Enron in the top 10 of best U.S. sales forces based on three criteria: superior sales performance, reputation for customer service, and reputation for employee satisfaction.

A key success factor for Enron's ability to develop and maintain its complex energy contracts and backroom portfolio supply position is diversity of its employee pool. Over 35 nationalities and 33 languages help put Enron's global profile into action.

Of its global team, 80% of employees have advanced degrees and 70% are multi-lingual. With its employee pool numbering over 18,000, Enron has about 8,000 employees, or 45%, in new unregulated businesses. Enron is an all-employee bonus, all-employee stock option company from the mailroom to the boardroom. Employees are highly motivated to meet and exceed their personal goals. As the monopoly model falls away in gas and power and as new counterparties are available as dealmakers, Enron's employees are actively creating new products and services to offer more choices to customers. In 1991, Enron offered six types of natural gas contracts and products; today it offers over 210. …