January 20, 2014

Managing for Society

Manila Times

A new year is usually a time for new beginnings. For business leaders, this would be a good time to take stock of their past actions and to commit to do further what they do well and to do better in areas where they have been remiss. Traditionally, of course, business leaders measured how well they did through the simplest of means: how much money they had made and how much wealth they had accumulated for their companies and for themselves. Business publications, such as Forbes Magazine, announce the running score annually in their listing of the wealthiest—men and women who many view as having reached the top of the world.

What can we learn from an executive who has reached the pinnacle of fame and financial success but has since fallen from the heights and decided to change his errant ways? We found out last November, when we invited Andrew Fastow, former chief finance officer (CFO) of Enron Corp., to speak to our students at De La Salle University. In 1998, Fastow was only 36 years old when he became CFO of the hundred-billion dollar energy company recognized by Fortune Magazine as among the most innovative companies for six years in a row. CFO Magazine recognized Fastow for his capital structure management practices. Enron eventually collapsed into bankruptcy in 2001 and Fastow was convicted for fraud and sentenced to six years in jail in 2006. After his release in 2011, I learned that he was giving talks pro bono to business students about why what he did at Enron was wrong. This was a message I was sure students needed to hear.

During his talk, Fastow drove home the point that he had misled investors about the true state of the company, and that he took advantage of loopholes in the rules to do this—thus losing sight of the principles behind these rules. Ironically, he explained that he was jailed for the same practices that got him awarded as a CFO. He also emphasized the huge personal cost to him of what he did in terms of integrity and family life. He narrated how his 8-year-old son told him: “Dad, you’re not famous. You’re infamous.” When asked about what it was like in jail, he said that the worst part was being separated from his family.

What does the Fastow experience tell us about success? For one thing, we might be using the wrong metrics after all. Clayton Christensen, Harvard professor and the world’s leading expert on business innovation, recently co-authored a book with James Allworth and Karen Dillon with some workable ideas on how business leaders can reflect on true success. (I thank my colleague Leah Macatangay for bringing this book to my attention.) In How Will You Measure Your Life?, the authors explained how too much emphasis on short-term gain, cost-benefit thinking, and material incentives can mislead business people to take the wrong path in life.

They suggest a set of questions to reflect on to avoid getting lost: “How can I be sure that: [1] I will be successful and happy in my career?; [2] My relationships with my spouse, my children, and my extended family and close friends become an enduring source of happiness?; [3] I live a life of integrity—and stay out of jail?”. These are excellent questions for business leaders thinking about their plans for 2014. I’m sure Fastow could have used them to his advantage at the start of his career at Enron.

I certainly wish I did. It’s not too late. Let this year be about true success. Resolutions, anyone?

Dr. Ben Teehankee is chairman of the Management and Organization Development of De La Salle University. He may be emailed at