The world already knows the basics of the Tale of Enron: how two years ago, this gigantic and glorious company – the darling of Wall Street, on its way to control the world's energy markets - almost literally vanished in a puff of smoke. From being revered as the epitome of the New Economy of the 1990's, it instantly became a synonym for corporate criminality and executive greed. There were articles in the newspapers almost daily. The Carnegie Library's databases contain over 13,000 articles on the company, and major publishers have released 6 books and counting.
So why read this book? Because the devil is in the details: it is one thing to know that there was corporate malfeasance, but another to follow, day by day and deal by deal, precisely how people responsible for a huge chunk of the U.S. corporate economy played fast and loose with billions. And the authors, veteran writers for Fortune magazine, are exceptionally able to unravel a mystifyingly complex tangle of accounting maneuvers, while giving a riveting account of the frantic, euphoric and desperate activities that propelled this gigantic enterprise for a decade.
You certainly get is a deeper knowledge of a cast of characters. Once among the rich and famous, they are now potential residents of a correctional facility. Ken Lay, an indecisive and genial glad-hander who unbelievably saw himself as the keeper of Enron's high-minded "vision and values" as he was jockeying for a position in the Bush cabinet, and whose multi-million-dollar income still left him fretting over personal debt. Andy Fastow, Enron's Wizard of Oz, "creating a giant illusion" and raising billions through sleight of hand while raking off millions for himself; but also an insecure young man with an explosive temper who started at the company at the tender age of 28. Jeff Skilling, brilliant, arrogant, reckless and literally power-hungry; and also a nerd with a weight problem, who never really learned how to use a computer, and who wept openly when he presented his resignation to the board. Scores of those now on the docket come alive.
You also get a feel for the corporate culture: a more "over the top" environment would be hard to imagine. Early on it was "magical and intoxicating" place where anything could happen, but shortly became a jungle where everything did: backbiting, deceit, betrayal, extravagance, suicide, you name it. Executives went on daredevil expeditions apparently designed to be events "where someone could actually get killed." Only smarts mattered; experience was thought to be irrelevant, and employees were constantly being transferred around departments in nightly "churns." In relentless attempts to meet earnings and keep the stock price rising, executives were encouraged to simply make deals and move on, and engage in the most convoluted accounting tricks. It was the ultimate macho environment, where your colleagues "would cut you off at the knees and make you bleed."
At the center, the "beating heart of Enron," was its trading operation, the only piece of the company to actually make money, making speculation the secret but true core of Enron's business. It began simply with natural gas contracts, but shortly became a drive to control all forms of power, and then almost anything the traders could get their hands on: pulp and paper, metals, weather derivatives, freight, financial contracts, hog futures, etc. Their cutthroat cowboy ethos shows in the names they gave their trading schemes: Death Star, Fat Boy, Ricochet, and Get Shorty were the ones that gleefully exploited the California power crisis of 2000, diverting a fortune into Enron's coffers.
According to many reports, the collapse of Enron - once on Fortune's list of the Most Admired Companies in the World - has almost single-handedly destroyed the confidence of American investors. Indeed, it would be hard to accept any company's financial statement at face value again, after learning precisely how "to a staggering degree, Enron's 'profits' and 'cash flow' were the result of its own complex dealings with itself." The drumbeat you can hear throughout this mesmerizing book asks the question: who is next?HD69.B7 H345 2003
In today's consumer economy, people often make buying decisions based on their perception of the brand's image rather than the reality of the product. This poses a tremendous challenge for companies seeking to expand their market share or re-invent themselves to keep up with changing tastes. Brand Failures, by Matt Haig, a marketing and branding consultant, offers a lively examination and analysis of 100 major brand blunders and how they could have been avoided.
Many companies, even the giants in their category, made mistakes that have cost them dearly. Most of us remember New Coke, which, surprisingly, didn't fail because of taste, but because it implied that the original Coke, introduced in the 1880s, was no longer the 'real thing'. It didn't take long before New Coke was history and old Coke was reintroduced, with its original formula, as Classic Coke. Sony's Betamax, though technically superior to VHS, lost out because it refused to license its format to other firms. Even the mighty McDonald's took a beating with its short- lived Arch Deluxe, geared to grown-up tastes.
Some products were doomed from the beginning because consumers didn't want them. Pepsi learned this from its venture into clear cola with Crystal Pepsi, and the caffeine-laden Pepsi AM. Corfam, a synthetic leather developed by DuPont, didn't catch on because the man-made material was too uncomfortable for conventional footwear. Premier, the smokeless cigarettes introduced by R.J. Reynolds, were designed to appeal to non-smokers who were not interested in buying cigarettes in the first place.
Other brands were damaged because they failed to handle crisis situations effectively. Perrier was once the premier brand of bottled water. It never recovered its former market share after its indifference to reports that high levels of benzene were found in this product renowned for its purity. A slow initial response to the Exxon Valdez oil spill was a PR disaster for Exxon. After the Ford Explorer debacle, Firestone Tires became a "highly challenged brand" because the company had withheld potentially damaging information until after the fact.
Companies have to do cultural homework before introducing products that have been successful in the U.S. into foreign countries. Kellogg's ran into problems in India when it tried to sell Corn Flakes to people who commonly have hot vegetables for breakfast. Translation problems have caused embarrassment for auto manufacturers such as Toyota's 'ugly old woman' Fiera, and Rolls Royce's 'silver animal droppings' luxury sedan.
Many of the 100 examples selected by Mr. Haig are very funny, falling into the 'what were they thinking?' category, such as disposable pantyhose from Bic, or the Electrolux slogan: "Nothing sucks like an Electrolux." But the lessons offered are instructive and should be taken seriously. Brand Failures is a fascinating and witty compendium of 'how not to' advice that can help businesses of all sizes learn from the mistakes of others.
q KF6369.6.J18 2004
J.K. Lasser's Your Income Tax 2004
by the J.K. Lasser Institute. John Wiley & Sons, 2003.
Gambling and the Public Interest
by Peter Collins. Praeger, 2003.
Contact the business librarians, who also answer questions about business, money, and work, at (412) 281-7141 or at www.carnegielibrary.org/locations/downtown/contact.cfm.