Leadership at Enron

I place the lion’s share of the blame for Enron’s monumental collapse on Kenneth Lay, Jeffrey Skilling, and Andrew Fastow, the primary engineers of Enron’s corporate fraud. In order to prevent these kinds of disasters from happening in the future, we must closely examine the kind of leaders these men were.

The different kinds of bad leadership – toxic, incompetent, and intemperate leadership – are not as coarse-grained concepts as their distinct definitions would suggest. Indeed, the actions of the Kenneth Lay and associates serve at once as instructive examples for all three types of bad leadership.

In one sense, the Enron executives can be thought of as toxic leaders. They fostered a culture where “talent” replaced the organizational necessity of a reciprocal relationship between leaders and followers, creating benign followers who did not question the specious methods of their leaders. This, however, was not the only problem for the Enron executives.

Lay and associates also qualify as incompetent leaders. The end result of their tenure would suggest this – surely only incompetent leaders could bring about such a magnitude of failure. Yet, if accolades and past successes are any indication, the Enron executives’ failures did not stem solely from incompetence.

What’s left, then, is the category of intemperate leaders. While the lack of self-control in these leaders is typically associated with their private lives, I would posit that it was Lay and associates’ professional intemperance that was their undoing. Their greed and vision of Enron becoming the world’s greatest company drove them beyond responsible leadership practices. They let the perfect be the enemy of the good. As such, intemperance was the primary (but not the only) culprit in the case of Enron’s collapse.