From 1995 to 2000, Fortune magazine called Enron the most innovative company in America. Former Enron CEO's Kenneth Lay and Jeffrey Skilling were regarded as some of the world's top businessmen. This past week they were found guilty of conspiracy, fraud, insider trading, and making false statements.
Shift gears to government for a moment. Before being elected to Congress eight times, William J. Jefferson was a State Senator in Louisiana. His website says he was “twice named ‘Legislator of the Year’ by the prestigious Alliance for Good Government.” This past week, FBI agents executed a search warrant on the congressman's office in Washington, D.C. Although some congressional leaders squawked about separation of power, law enforcement officials believe that Jefferson will face indictment on bribery-related charges based on evidence collected before the raid.
What happened to these people and scores of others like them? What makes a good apple go bad? It may be something as simple as an addiction to power.
In 1928, Eduard Spranger wrote a book entitled Types of Men. He identified six attitudes, or world-views, one of which was "individualistic." According to Spranger, people with this attitude seek power. They have a drive to achieve authoritative positions and use those positions to influence others; most often for the betterment of an organization.
But in some personalities, the acquisition of power is like a drug, in that it provides a high. And when the high eventually wears off, the person needs a fresh infusion of power—or a higher position of power—to regain the high.
It should be emphasized that not all of those with Spranger's Individualistic profile are addicted to power. Their passion for positions of authority is often well intended, as most just want to make a difference in the world.
Unfortunately, the seductive nature of power can corrupt individuals susceptible to addictions. Then, when they let their quest for the high get in the way of their good intentions, they’ll break established rules and laws just to get their fix.
Writing in the Washington Times in March of this year, Richard A. Viguerie, author of America’s Right Turn, says “Power is addictive, and it corrupts. And those who have power fear losing it.”
This explains why we heard all the squawking this past week by congressional leaders about offices being searched: They don’t want to lose their power. But ever since the Magna Carta in 1215, progressive societies have endeavored to maintain a system of checks and balances. With regard to the search of Congressman Jefferson’s office, the FBI acted with valid search warrants issued by a judge. As government policies go, that's a good use of checks and balances.
Just like political leaders, many business leaders also fear losing their power. When that fear is coupled with an addiction to power it's only a short step to begin manipulating the checks and balances that are meant to keep things above board.
For example, some jury members in the Enron trial have said they don't believe that Lay and Skilling set out to damage Enron. Still, it's relatively easy to see that their meteoric rise to power seduced them into thinking they could do no wrong. Unfortunately, such choices devastated thousands of Americans when billions of dollars earmarked for retirement savings evaporated into thin air.
The lesson to learn is that people in authority can become blind to their own weaknesses. In his book Why Smart Executives Fail, Sydney Finkelstein says that fallen leaders “are almost always remarkably intelligent and usually have terrific track records.”
Bottom line, if you are in a position of power, you are not immune from the seductive dangers of addiction. Make sure you have a good set of checks and balances. Be accountable to more than one person. Make it one of your personal goals to be intellectually honest with yourself—and with a close group of others who will hold you accountable.
No person is so big that he or she can't fall. Ask Lay. Ask Skilling. Or ask the thousands of families who lost their retirement when Enron fell.
If it can happen to the respected leaders of America's most innovative corporation, it can happen to just about anyone. Protect yourself so it doesn't happen to you.