Loose And Tight

By Author: Friendhdx
Total Articles: 47
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For most of the 1990s, CEOs at old economy companies struggled to turn slow-moving organizations into nimbler, more flexible outfits. Truth is, real transformations are the exception rather than the rule. Changing the core values, the attitudes, and the fundamental relationships of a vast organization is overwhelmingly difficult. That's why an army Thomas Sabo Charms of academics and consultants held it up as a paragon of management virtue in the late 1990s. Enron seemed to have transformed itself from a stodgy utility to a fast-moving enterprise.

If only that were true. Many of the same academics are now busy studying the cultural and leadership lessons from Enron. Their conclusion so far: Enron didn't fail just because of improper accounting or corruption at the top. It also failed because of its entrepreneurial culture--the very reason Enron attracted so much acclaim. The emphasis on earnings growth and individual initiative, together with an absence of the usual corporate balances, shifted the culture from one that rewarded aggressive strategy to one that ...
... increasingly relied on unethical cheating. This was a company that simply placed a lot of bad bets on businesses that weren't so promising to begin with.

Jeffrey K. Skilling assumed Enron CEO in early 2001. His recipe for changing the company was right out of the New Economy Playbook. Layers of management were canceled. Hundreds of outsiders were recruited and encouraged to bring new thinking to a tradition-bound business. The company abolished seniority-based salaries and offered huge cash bonuses and stock to top performers. Young people, many just out of undergraduate or MBA programs, were handed extraordinary authority, able to make $ 5 million decisions Thomas Sabo Bracelets without higher approval. In larger companies like IBM, even though there is a movement toward youth, there are still enough older people around to mentor them," says James O'Toole, professor at the Center for Effective Organizations at the University of Southern California. "At Enron, you had a bunch of kids running loose without adult supervision. "

In theory, of course, the kids were closely supervised. Skilling often described the new culture as "loose and tight". The idea is to combine tight controls with maximum individual authority to allow entrepreneurship o flourish without the culture edging into chaos. At Enron, however, the environment was ripe for abuse. Nobody at corporate was asking the right questions. It was completely hands-off management. A situation like hat requires tight controls. Instead, it was a runaway train.