Examine how specific decisions made at Enron show the intelligence or lack of it on the part of its executives.

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Ashley Kannan | Middle School Teacher | (Level 3) Distinguished Educator

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This is a tough question because of the "intelligence" element.  On one hand, if one is going to consider the vast amount of money that Enron executives made as representing intelligence, there are some specific tactics that can be cited as embodying an innovative measure of cunning.  For example, Enron Executive Jeffrey Skilling's use of "mark to market" accounting was one of the most important, and thus smartest, decisions Enron executives made in order to ensure that money could be generated quickly and easily.  Skilling was able to use the lure and promise of future earnings as a way to generate and manipulate a high stock price.  This practice "allowed Enron to count as current earnings the profits they expected from future contracts."  It was intelligent in so far as Enron was able to generate more money based on what they did not have.  "The illusion of profit in the absence of proof" is an act of intelligence.  Another example of sheer cunning- like intelligence was the manufacturing of blackouts as a way to drive the price of Enron stock up and to do so without any intimation of questioning represents some level of intelligence.

Yet, in a larger sense, the problem with embracing such an approach was that it did not secure the future of the company.  It also presupposes that greed and intelligence can go together.  In the final analysis, Enron's challenge was that it could not overcome the voice of dissent.  When Enron was called on to substantiate its present earnings in light of its future ones, it simply could not generate any credible answer.  Skilling was only able to curse at a reporter and denigrate her when she asked questions about the earning process at Enron.  Enron had banked so much of its reputation without substantiation that such a move could not be seen as intelligent.  Solid business acumen has to include some level of sustainability.  Enron did not account for this, outside of pure romantic hope.  There was nothing that Enron did which established for a stable foundation of profit generating motives over a sustained period of time.  It was all predicated upon "mark to market" accounting practices, which operate entirely in the condition and out of conjecture.  In this, one could see the absence of a foundation as an example of lack of intelligence.  Given the monumental fall of teh corporation, this could be seen as representing some level of validity.

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