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Enron’s crimes, Darden’s profit
Virginia Business
September 2004
The
Enron scandal may have been devastating to the company’s
employees and stockholders — not to mention its
jail-bound executives — but it’s been a
boon to Darden Business Publishing, a unit of the University
of Virginia’s graduate business school. A profile
of Enron, first written by Darden professors Samuel
E. Bodily and Robert F. Bruner in 2000 but since updated,
has become the hottest seller in the school’s
history.
The reason? Enron’s quick rise and equally sudden
fall provides a wealth of lessons. School officials
didn’t provide sales totals but CFO Magazine reported
last year that nearly 7,000 copies had been sold at
$7.50 each. “You have to be able to learn from
failure and this was a monumental failure,” says
Bodily. “If we only talked about the good stories,
what kind of an education would we be providing?”
The initial case study was written after Enron CEO Jeffrey
Skilling spoke at Darden. His speech about the company’s
culture of urgency, innovation and high expectation
intrigued both Bodily and Bruner, who decided to travel
to Texas for interviews with now infamous players Skilling,
Ken Lay and Andrew Fastow about how they transformed
Enron from a stodgy gas pipeline company into a leading
global energy conglomerate. “It’s an intriguing
story and, in fact, there’s a lot of value in
some of their ideas,” Bodily says.
But then in late 2001, Enron imploded amid sordid revelations
of financial deception, self-dealing, conflicts of interest,
bankruptcy and hubris. The two professors quickly scrambled
to update their work in time for the upcoming semester,
adding two sections, one about Enron’s downfall
and the other on reflections and lessons.
Bodily notes that whenever he first introduces the case
in class, “students often respond with a jaded
view of, ‘Oh, I know what this is about: These
people were crooks from the beginning.’”
But the Enron story is not that simple, he says. For
those willing to take a closer look, it provides plenty
of cautionary instruction about innovation, risk, control,
strategy, management and, of course, ethics. “After
we study Enron, students come away realizing that there
are a lot of aspects of this that are issues for every
company.”
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