At Joel Stein's prompting and w/ Monica Goebel's editing - thanks to you both. Lance and Enron: The World’s Most Innovative
Recently it struck me that there are a large number of odd similarities between the stories of Lance Armstrong and Enron Corp. In one way they were both admirable: they were innovators who created new ways to win in highly competitive industries. In hindsight there is dark side of this innovation mindset they shared that led to cataclysm.
As a world-class cyclist, I grew up racing with the same coaches and cyclists whose names appeared on USADA’s report as witnesses against Lance. Interactions with Lance were once a highlight of my experience. I watched in awe as Lance destroyed peletons to win the Tour de France seven times, and then in fury as he destroyed lives and careers of friends and teammates and brought shame to the sport.
As a business strategist at Enron, I helped design and build the systems and processes for trading gas, power, electricity, bandwidth and freight that led to many of their successes. High fiving Jeff Skilling, Ken Lay and Joe Sutton at an annual investors conference was once a highlight of my career. I watched in awe the stock’s climb to $90+/share, and in despair just over a year later when the stock dipped below $0.30/share and the announcement came to “please stop trading” while I was standing on the trading floor. This announcement and subsequent bankruptcy effectively ended the existence of the company Fortune had rated as “Most Innovative” six times in a row. Over twenty thousand people lost their jobs and billions in savings and pensions.
Watching the Lance story unravel was a déjà vu of my time at Enron. I felt the same genuine admiration for the breakthrough ways he found to compete, the same uneasy reserve for the intensity of his approach and the aggressive way he dealt with critics, and the same abject disgust for his disregard of laws, ethics, and people as he satisfied his voracious need to win.
My current role as a leader of an innovation agency has brought this all into focus. Lance and Enron shared key aspects of the innovator’s mindset: the willingness and ability to challenge every possible norm, rule, law, or standard operating procedure. These conventions are the “box” outside of which we help our clients think. Illegal, unsupportable, and unethical ideas are all part of a good brainstorm, with the simple caveat that they must be evaluated against success criteria that include good ethics.
Lance re-framed the entire approach to cycling. He focused all his energy on winning one race by racing and training the smartest. Wind tunnel testing, faster cadence, more time “in the saddle” during tough climbs, measuring his food to exactly replace calories burned, peaking perfectly for the 23 day Tour – all these approaches to racing were legitimate and borrowed from adjacent “industries”. Raising red blood cell counts and hemocrit levels through altitude training were fair game as well. But this wasn’t enough, so Lance made an innovative leap into institutionalizing a blood doping program that ultimately defined him as the sport’s hero and then demon for the lack of one simple criteria, “yes, but is it ethical?” Ethics and fairness became additional pawns in the game to win.
Enron re-framed the approach to trading commodities by innovating tools like Enron Online, and creating new adjacent hedges and commodities like bandwidth, freight, and even “weather” derivatives. These brought the potentially noble outcomes of increasing liquidity and velocity in the market and stabilizing pricing for essential consumer commodities. But this success was not enough, so Enron’s key leaders at separated their designers from their operators. I felt a huge disappointment when Enron replaced my design team with an operating group to run trading on the system we had built. We were literally locked out of that trading floor while they proceeded to use legitimate systems and processes we had built to make innovative but unethical “white-wash” trades, booking fake revenue. Incredible innovative advances in analytics, technology and modeling were all corrupted by the failure to ask one simple question, “yes, we can do it, but is it ethical?” Again hubris allowed for ethical constraints to be viewed as tools for advantage vs. the one lever you shouldn’t pull.
Innovation is lauded as the panacea for industrial and societal problems facing America and celebrated as something Americans do best. I believe this hope is founded in truth: as a country and society, we are no longer the best educated, nor the happiest, nor the wealthiest society on the globe. But we are the clear leaders when it comes to innovation. So how can we pursue the fantastic promise of our innovation capacity while containing its evil potential? How do we pursue success without becoming Armstrong and Skilling? The answer is simple. Even under the pressure of winning the race, our leaders and teams, from the boardrooms to the locker rooms, must explicitly find the right answer to this question, “yes, we can do it, but is it right?”