Last week a phase ended when the top execs at Enron were found guilty of crimes related to the downfall of Enron. The are likely to spend the rest of their lives in prison for "white collar crimes." Unfortunately, those crimes cost investors, employees and suppliers billions of dollars. No longer is "white collar crime" considered something easily forgotten.
It was a year ago that I blogged about the fall of Bernie Ebbers at Worldcom (see Dieing for Results). At that time I mentioned that executives can easily find themselves committed to Defending & Extending old Success Formulas – leading them to be sure they’ve done nothing wrong despite the havoc they’ve visited upon so many. The downfall of executives Lay and Skilling give an exclamation point to that blog. They maintain their innocence because they continue to believe that their Success Formulas cannot be wrong.
More troubling than Enron last week was the $400million fining of Fannie Mae. An organization created by congress in the 1930s to help supply mortgages for all Americans was found guilty of acting "arrogantly and unethically" by creating an environment "where the ends justified the means." Top management "manipulated financial reports to win ill-gotten bonuses in the hundreds of millions of dollars." (see report and full text in the Chicago Tribune.)
Have business leaders all turned unethical? Since 1990, the number of classes on business ethics has skyrocketed, and the number of articles on the same topic has grown geometrically. It’s doubtful that any of these leaders think of themselves as unethical – especially as they spend millions defending themselves. And they go on television proclaiming their innocence.
Rather, its an issue of personal Lock-In to old ideas of executive Success Formulas. Executives see themselves as working hard to do what will increase the value of their companies, and themselves. They all protest "I’ve broken no laws" as investigators, prosecutors and reporters tell of how their poor decisions cost billions while sometimes personally enriching themselves. It is their Lock-in to the old notions of what an executive can do that makes them convinced they are not responsible for the damage they’ve wrought.
We all have personal Success Formulas and personal Lock-ins. As leaders, these personal views often spill out into the organizations we manage. If we are unable to see Challenges to our personal views, we are unable to Disrupt ourselves and use White Space to develop new Success Formulas. For leaders, especially in large organizations, this can be very expensive Lock-in to the thousands of investors, employees and suppliers who depend on the company’s future ability to succeed.