Enron's Management Philosophy -- Firing Up an Idea Machine

Article excerpt

HOUSTON -- Two words sum up the management philosophy of the Enron Corp., according to its president, Jeffrey K. Skilling: loose, and tight.

"We are loose on everything related to creativity," said Skilling, who came here in 1990 to help transform Enron from a regulated natural gas pipeline company into the energy industry's most freewheeling cowboy.

"We like to have smart people try new things," said Skilling, 45. While other energy companies collect engineers, Enron has hired hundreds of MBAs in recent years from top universities -- about 150 this year alone -- and even the occasional liberal-arts major just out of college. "We stick them in the organization and tell them to figure something out," he said. So where does "tight" figure in? With intense controls, imposed whenever Enron signs a long-term contract to deliver a commodity, like gas -- a $600 million computer system tracks the company's financial exposures -- or when it comes time to evaluate those smart people's performance. "Risk-taking, anytime, is managed centrally," Skilling explained. In less than a decade, lassoing loose and tight into a single strategy, Enron has emerged from its unlikely perch in the utility industry as a model for the new American workplace -- every bit as much as the Silicon Valley start-ups that usually come to mind when the subject is entrepreneurship or innovation. In the process, the company has opened huge new profit centers: by building power plants and pipelines in Asia, Europe, Latin America and the United States; trading natural gas and electricity in wholesale markets at home and overseas, and applying its financial expertise to create hedging instruments for the energy industry and other commodity businesses. Its stock, meanwhile, has sharply outperformed the Standard & Poor's 500 through the `90s -- a time when its old peers in the gas business have badly lagged behind the market. New management approaches abound: Walls have fallen within its 57- story headquarters tower, the better to promote cross-pollinating conversations. Through internships and mentor programs, seasoned executives help even the lowest-ranking new employees find an interest -- and then challenge them to start a new business for the company. Skilling says he does not care how people dress when they come to work, or whether expense accounts are filed on time. Or even if, after an all-out effort, a venture fails -- like Enron's heavily publicized push two years ago to become the nation's leading retail marketer of electricity, as states like California opened the power business to competition. The executive who led that effort is now in charge of spending perhaps eight times as much to sell long-term power contracts to big companies. "If you try new things," Skilling said, "some will work, some won't." What is it like to work in such an environment? To hear Enron employees tell their stories, it's a tightrope walk -- exhilarating, if sometimes scary. Two hours with David W. Cox is as exhausting as a full day with someone else. Nearly 6 feet tall, Cox, 36, is a blur of motion on a 45th-story trading floor, where he oversees a staff of 30 as a vice president. Their business is one that Cox invented: writing swaps contracts that allow big consumers like newspaper publishers to hedge against fluctuations in the price of paper. …


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