President of Enron discusses the New Business Model
Bryan Gitomer, WH '03
Issue date: 11/6/00 Section: Undergraduate
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Jeff Skilling, the President and COO of Enron Corporation, drew a large crowd of Wharton students last Thursday in Steinberg-Deitrich Hall. Undergrads and MBA students attended this year’s second Musser-Schoemaker Leadership Lecture Series to hear Skilling speak about his role as a manager and innovator at Enron and the changing business model of the company.
Skilling discussed Enron and the approach that it has taken towards business. Over 85% of Enron’s current income is generated by businesses that did not exist ten years ago. This has occurred because Enron is no longer an “old, rigid, vertical organization.” Instead, Enron has adopted a more creative and entrepreneurial approach towards business.
Enron was once a traditional energy model: asset intensive, vertically integrated, hierarchical, slow moving and rigid. Skilling helped Enron move to the new energy model, a “fundamentally better strategy, which is brain power intensive, networked, fast moving, and entrepreneurial.” Enron creates synergies in the marketplace by moving skilled and technologically savvy people into another one of its businesses.
The new model is better than the vertical organization because it finds the lowest cost components in every category. In addition, it is less expensive to run operations and more efficient. With the importance of communication and information technology, Skilling believes that the new model will be unleashed on all industries. This will “fundamentally reorder the structure of markets around the world.”
In the last decade, Skilling has found many new opportunities for Enron. He sensed that the market was changing and that Enron could play a crucial “…role for reducing interaction costs” by using the Internet. Particularly, he has created marketplaces to buy and sell commodities, including energy and bandwidth. With EnronOnline, the company can “put it (a new product) out and see if they like it.”
Skilling discussed Enron and the approach that it has taken towards business. Over 85% of Enron’s current income is generated by businesses that did not exist ten years ago. This has occurred because Enron is no longer an “old, rigid, vertical organization.” Instead, Enron has adopted a more creative and entrepreneurial approach towards business.
Enron was once a traditional energy model: asset intensive, vertically integrated, hierarchical, slow moving and rigid. Skilling helped Enron move to the new energy model, a “fundamentally better strategy, which is brain power intensive, networked, fast moving, and entrepreneurial.” Enron creates synergies in the marketplace by moving skilled and technologically savvy people into another one of its businesses.
The new model is better than the vertical organization because it finds the lowest cost components in every category. In addition, it is less expensive to run operations and more efficient. With the importance of communication and information technology, Skilling believes that the new model will be unleashed on all industries. This will “fundamentally reorder the structure of markets around the world.”
In the last decade, Skilling has found many new opportunities for Enron. He sensed that the market was changing and that Enron could play a crucial “…role for reducing interaction costs” by using the Internet. Particularly, he has created marketplaces to buy and sell commodities, including energy and bandwidth. With EnronOnline, the company can “put it (a new product) out and see if they like it.”