Enron: the Smartest Guys in the Room

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 possessed intelligence, ingenuity and a charisma that inspired those around them. Unfortunately, those same characteristics instilled them an exaggerated sense of pride, arrogance and greed.
While it was widely know that Ken Lay was a prime example of the American Dream, he proved to be an ethical nightmare for those around him. Despite what one would imagine as an ethical upbringing as the son of a Baptist minister, Ken Lay showed none of those characteristics as an executive and leader of Enron. One of his first and possibly most telling unethical actions was that of his handling of the traders of the Valhalla, NY trading scandal.
The Valhalla trading scandal erupted because of the discovery that rogue traders were diverting funds into their personal accounts. When this was discovered by Enron’s internal audit committee and suggested to Ken Lay that they be fired, the idea was quickly dispatched. Ken Lay stated that “the traders made too much money to let them go”. This simple statement was evidence of what Ken Lay valued most, money. By ignoring suggestions that the rogue traders be fired, he further instilled this type of unethical behavior. It seems evident that Ken Lay used Gellermans rationalization that because