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Date: Sun, 13 Jan 2002 17:00:34 -0800 (PST)
From: Shalesh Ganjoo <sganjoo@yahoo.com<
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Biz School Blindness
Sank Enron

By JOHN LEBOUTILLIER

arvard Business School: It's called the West Point of
capitalism. In
fact,
the school's bottom-line-only philosophy has had a
poisonous effect on
American business practices. The Enron disaster is the
most recent -
and
spectacular - manifestation.

To illustrate my point, let me take you back to a
classroom at the
school in
the late winter of 1978. The course was productions
and operation
management, taught by Chip Bupp, a thoughtful and
serious man.

On this particular day, the case study involved a
company that
manufactured
a product that might be harmful, even fatal, to the
consumer. The
question
was, what should you do, if you were the company's
CEO, in such an
ambiguous
but potentially dangerous situation?

Several students offered suggestions, none of which
galvanized the
class.
Then a hand shot up, and Bupp said, "Jeff, what would
you do?"

Jeff, with his thinning blond hair, wire-rim
spectacles and slight
Southern
drawl, was one of the brightest members of the class
and a natural
leader.
When he talked, as the commercial used to say,
everyone listened.

"I'd keep making and selling the product," Jeff said.
"My job as a
businessman is to be a profit center and to maximize
return to the
shareholders. It's the government's job to step in if
a product is
dangerous." Several heads nodded.

Neither Jeff nor those who agreed with him seemed to
care about the
potential effects of their cavalier attitude. What if
the product
really did
harm consumers? How about the company's employees?
Were they in danger
during the manufacture of the product? What would
happen to the company
if
the CEO's decision was wrong?

Few in the classroom that day dared to raise these
questions. At
Harvard
Business School - and business schools nationwide -
you're considered
soft,
a wuss, if you dwell on morality or scruples.

As the years went by, Jeff had a meteoric career. He
became a partner
in the
McKinsey consulting firm. From there he joined Enron
and was soon
promoted
to president and chief executive officer.

Jeff is Jeffrey Skilling, who resigned under
unexplained circumstances
in
August after only six months on the job.

In two stock sales before and after his departure, he
cashed out $30.6
million worth of Enron stock.

Skilling and other senior managers encouraged
employees to buy and keep
Enron stock, even when things started to sour, while
they were
hurriedly
selling huge blocks of their own stock. And now Enron
has collapsed,
"the
largest bankruptcy case in American history,"
according to Sen. John
McCain
(R-Ariz.).

One analyst told CNBC, "It's the biggest insider
trading scandal ever."
Another observer said, "Enron was run to benefit the
top executives.
They
literally looted the company."

Yet Skilling proclaims total ignorance of any
problems. "I had no idea
the
company was in anything but excellent shape," he has
said.

Articles about Skilling written since the demise of
his company cite
his
arrogance and cold-heartedness. But as I witnessed
sitting in that
Harvard
Business School classroom nearly 24 years ago, the
seeds of his
destruction
grew out of a gross misunderstanding about the role of
a business
leader in
our society. In his view, it is to be "a profit
center" and to
"maximize
return for the shareholder," no matter the peril to
consumers or
employees.

Harvard and other business schools must pay more than
lip service to
the
gross ethical blind spots that the Enron case has
exposed. Starting
with an
admissions policy that selects potential students for
ethics and
character
as well as brains, these institutions need to return
to the goal of
teaching
their students to be good citizens first and
moneymakers second.

America can't afford many more Enrons - or Jeffrey
Skilling-like CEOs.

LeBoutillier graduated from Harvard Business School in
1979.
He is the author of "Harvard Hates America."
Wednesday, January 09, 2002

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