Enron Browning Case Study Essay

Case Study

Born from the merger of companies Houston Natural Gas and InterNorth, Enron became one of the top leaders in the natural gas industry. After the deregulation of natural gas pipeline regulations by the US Government, Enron had to develop a new business strategy. The CEO, Kenneth Lay hired a consulting firm in order to help Enron develop a new business strategy that complies with the new government regulations. The management company, McKinsey & Co., assigned one of their younger consultants, Jeffrey Skilling, to their new client, Enron’s, consulting account. Impressed by the work that Jeffrey Skilling was doing on Enron’s new business strategy, Kenneth Lay decided to create a new division of his company named Enron Finance Corporation. Kenneth Lay decided to pursue Jeffrey Skilling and hire him to lead the company as a top executive. Jeffrey Skilling appeared ideal for the job to Kenneth Lay because Jeffrey Skilling had backgrounds in banking, asset, and liability management. (Thomas, 2002)

Under the leadership of Jeffrey Skilling, Enron Finance Corporation gained enormous market power, resulting in the ability to predict future prices of natural gas within the market. By having the ability to predict these future prices, Enron was able to guarantee substantial profits to investors and employees. Enron became the company where every fresh graduate sent their resumes and applications. Enron Finance Corporation had a reputation for only accepting graduates from the top rated Masters of Business Administration programs in the country. The standards for their employees remained high, as did their demand for respecting the company’s core values. Enron based their core values around Respect, Integrity, Communication, an...

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...zed that their employees might not respond well to the pressures put upon them to produce larger profits. An effective leader should be able to know the capabilities of their employees while also knowing the levels to which the employees can be pushed for success. Instead, these executives kept pushing a transactional leadership approach with one focus in mind, higher profits.

Since the downfall of Enron, there are many lessons that future leaders can learn in order to prevent something like this from happening with other companies. Moving forward, it is important that we, as future leaders, keep reflecting on the past to see the mistakes made by our predecessors. By learning from these mistakes and striving to prevent them from happening again, we may avoid the same downfall and rise to our full potentials, all while leading our constituents to their success.