Mr. Lay is now setting out to remake Enron yet again, this time by forging into the digital economy. In a flurry of initiatives, he has propelled Enron into trading wholesale power on the Internet, into web sales of electricity to retail consumers, and even into Internet trading of bandwidth. As well as reaping first-mover advantage, his firm often brings impressive partners to such risky ventures. Its foray into retail electricity, for example, is with AOL and IBM, while Compaq and Sun Microsystems are helping to build the private infrastructure to trade bandwidth. . . .
Yet does nothing stand in the way of Mr Lay’s domination of all he surveys? Is Enron really so flawless?
Mr Lay’s response to these questions is revealing. Getting him to talk about the company’s strengths is easy; asking him to admit even the slightest mistake is tougher than pulling teeth. This is odd, for the blunderbuss approach to innovation that is intrinsic to such an opportunistic firm as Enron is bound to produce a few failures. Given all his successes, surely failures should be proudly displayed as red badges of courage? After ducking the question several times, Mr Lay eventually talks about such miscues as the firm’s botched entry into the Californian retail market for electricity and a costly blunder involving North Sea gas some years ago. But his grudging replies, which tend to blame regulators, leave one wondering if he ever learns from such mistakes.
A similar pointer comes when he is asked about Enron’s controversial power project in Maharashtra, India, where ithas been accused repeatedly of corruption, lack of transparency, insensitivity to local citizenry and complicity in human-rights abuses by police. The firm roundly denies all these charges as preposterous, and points out that Enron, unlike virtually every other foreign firm, has survived the Indian bureaucratic morass to complete a successful power station. Hats off—but what has Mr Lay learned from the experience? He responds with a blank stare. If he could do it again, might he do anything differently, if only to avoid the whiff of impropriety? Absolutely not, he roars.
Arrogance, even such big fans as Mr Eassey agree, is Enron’s great
failing. And how does Mr Lay respond to this charge? To illustrate that
it is baseless, he points to what he considers another great firm unfairly
maligned by its critics as arrogant: Drexel Burnham Lambert, a freewheeling
investment bank that shot from nowhere to market prominence in the junk-bond
boom of the 1980s. Mr Lay speaks glowingly of the heyday of Drexel and
of its star trader, Michael Milken, whom he counts as a friend: they were
accused of arrogance, he grouses, but they were just being “very
innovative and very aggressive”. The comparison is not especially
well chosen, for it is worth recalling what then happened: Mr Milken ended
up in jail for pushing the law too far, and the arrogant Drexel collapsed
in a heap of bad debts and ignominy. For all of its arrogance, Enron is
hardly likely to share that fate: but hubris can lead to nemesis, even
The Economist. June 1, 2000