Tag Archive: The Smartest Guys in the Room


“Can’t decide whether you are a Democrat or a Republican …”

Bless these two students, who on separate occasions, refreshingly relayed their puzzlement to your author.

Almost DailyBrett does not believe that classrooms should ever be the venue for the indoctrination, let along the formation of young warriors in the fight between noble socialism and evil capitalism.

Gee … maybe … just maybe these students are smart enough to make up their own minds on these issues?

Even though long-time Almost DailyBrett readers and contemporaries know or at least suspect your author’s political predilection, it was rewarding to know at least some of my students weren’t so sure … and that is how it should be for all professors or instructors.

There seems to be a contagious disease among tenure-track or tenured academic types (e.g., professors and instructors) that university students are there to endure for hours on end their personal political pontifications and bloviations.

Is that why students are taking out loans averaging $30,000 each, waiting tables or asking mom and dad to dig deep … real deep … for their college education?

Don’t think so.

Buy Low, Sell High

As Almost DailyBrett fondly looks back to more than five years teaching public relations, integrated marketing, corporate communications and investor relations, one particular moment always brings back tears to the eyes.

More than 30 of my Central Washington University PR students chanted in unison … “Buy Low, Sell High!” … at my retirement party.

Upon receiving the Central Washington University Department of Communication Faculty Spotlight Award, they gathered around me for a group picture. Your author will always remember this moment.

Isn’t Buy Low and Sell High the essence of capitalism, particularly publicly traded corporate capitalism?

The answer is “yes.” Keep in mind that buying low and selling high is easier said than done. More importantly this phrase is the backbone to the practice of fiduciary responsibility on behalf of the 54 percent of Americans investing in stocks and stock-based mutual funds.

America’s investor class — planning for retirements, funding higher education for their children, opening up a new businesses — require accurate and complete communication about a company’s business plan, financials and simply … how does a corporation make money.

The highest expected communications professional compensation levels … usually in six figures … are directed to students adept at financial communications, who are studying at today’s schools of journalism and mass communication.

Almost DailyBrett believes wholeheartedly the purpose of universities/colleges is to prepare students to attain and sustain salaried professional positions with full benefits … and maybe even employee stock purchase plans (ESPP) and/or stock options.

Universities and colleges should be professional schools, providing students with lifelong learning skills and tools to succeed in our increasingly complex digital world … including beating artificial intelligence (AI).

If students wish to Occupy Wall Street that should be their choice, not their command.

By the way, how did that movement work out?

Students should always be fully aware of the imperfections of Capitalism. For example, watching The Smartest Men In The Room (Fortune’s Bethany McLean’s tome on the Enron bankruptcy) was required for each of your author’s Corporate Communications/Investor Relations classes.

In addition to the aforementioned Fiduciary Responsibility, a publicly traded company needs to complement this requirement with Corporate Social Responsibility (CSR). Besides doing well, a company should be mindful of doing good … including giving back to communities, protecting the environment … that make success, possible.

Certainly, students can be taught to live in tents, recite cumbersome theory or rail at the world back in their own bedrooms at mom and dad’s house.

They also can learn how to decipher an income statement, a balance sheet, a cash-flow statement and to understand the significance and formulas associated with market capitalization, earnings per share (EPS), and price/earnings (P/E) ratios and related multiples.

Looking back at your author’s professorship, there is no doubt about political disposition. There was also a comprehension that students are to be prepared for the professional world, and many of these graduates have done well, real well.

And if a couple of students or more, can’t tell whether Almost DailyBrett or any other professor/instructor, drifts left or right that’s the way … it should be.

 

 

 

“Fear of criminal prosecution trumps any fear of public humiliation.” – Mark Palmer, former Enron managing director of Corporate Communications

“The longer you indulge in the practice of maintaining a cosmetic shell, the harder it is to recover when the shell eventually cracks.” — Len Brooks, University of Toronto

“Thanks to the Enron implosion and the subsequent rash of accounting and corporate-governance scandals, the credibility of any corporation is no longer assumed. It must be earned.” – Matthew Boyle, Fortune Magazine

palmer

Growing up, I repeatedly followed the mantra that winners never quit, and quitters never win.

But mumsy always said: “If you are in a bad situation get out of it.”

These two adages seem to be in direct conflict with each other, which brings me to the question that I posed to my students this week: If you were Mark Palmer, the former Enron managing director of Corporate Communications, what would you have done?

Would you quit?

Would you try to stop the sinning?

Would you become a whistle-blower?

Would you continue to drink your own bath water?

The answers to these questions and many more are not easy, considering that the staggering tales of criminal intent of the Smartest Guys in the Room story did not become clear until it was too late…way too late

Securing Palmer’s six-figure job as the head of PR for Fortune’s Magazine’s Most Innovative Company — the darling of Wall Street’s financiers, analysts and investors — would have been universally seen as a coup.

Chairman Kenneth Lay, President Jeffrey Skilling and CFO Andrew Fastow were regarded as business rock stars. The company could do no wrong as the stock price continued to rise even after the Internet bubble burst.

Business Week, Fortune, Forbes, Wall Street Journal and other influential business pubs couldn’t say enough good things about the Holy Trinity, and Enron. Life was presumably good for Palmer and his team…until the nightmare unfolded.

As we all know a decade later, it was all a lie. For the longest time, the Enron PR team didn’t know it was telling a lie.

In the documentary, The Smartest Guys in the Room (a.k.a. Lay, Skilling, Fastow), Enron Energy Services public relations director Mark Eberts recalled repeatedly hearing internal rumbles that the company was not doing well. And then…magically every quarter just like clockwork the company always exceeded its quarterly projections…and the stock continued to rise.

When something is too good to be true, isn’t that usually the case?

The first shot across the bow came in the form of a call from Fortune reporter Bethany McLean in 2001, who merely asked how the company made its money. Sounds like a softball question, but it wasn’t for Enron. Skilling told McLean that he wasn’t an accountant. Why does one need an advanced accounting degree to answer the most simple of business strategy questions?

OLYMPUS DIGITAL CAMERA

The subsequent story wondering whether Enron (NYSE: ENE) was overvalued started the downward pressure on the stock. That would not be enough to cause an experienced PR team to panic.

Enron

However, when Skilling suddenly resigned on August 14, 2001 for “personal reasons” the alarm bells started going off. Did he want to spend more time with his neglected family?

These warning signals intensified when the following evening the PR team was waiting unusually long, until 2 am for management to produce the income statement, the balance sheet and the cash-flow statement that normally accompanies a SEC-required quarterly earnings release.

Enron’s Karen Denne remembered the scene all-too-well: “I remember at the time there were sections in the press release that didn’t make sense, that I had questions about,” she said.

When she asked the executives to provide more information, she was told that everything was fine and there was nothing to worry about. Ultimately, though, the sections that concerned her were “the very quotes and phrases” that drew the attention of the reporters at the Wall Street Journal, she said.

It all came to an end on Dec. 2, 2001, when the nation’s seventh largest corporation filed for Chapter 11 bankruptcy protection with $63.4 billion of assets on its balance sheet.

Lay was sentenced to 45 years in the slam (he died of a heart attack); Skilling, 24 years (currently serving his term in Colorado) and Fastow, 10 years (He served five years).

lay

For the public relations team, their shares in Enron were worthless. Thousands of Enron employees loaded up on the stock for their retirement, and for far too many ENE was their nest egg. The team members also carry the Enron imprimatur on their resumes.

For Palmer, he appears to be doing well according to LinkedIn as he is a Brunswick Group Partner in Dallas.  For Enron PR expert Karen Denne, she is the chief communications officer for the Broad Foundation in Los Angeles.

For each and every member of the Enron public relations team, Almost DailyBrett wishes them the best in their respective careers. One must wonder if they still wake up in the middle of the night thinking about the Smartest Guys in the Room.

http://www.savvypr.com/iabcethicscolumn3.html

http://www.bizjournals.com/houston/stories/2003/06/30/newscolumn5.html?page=all

http://annenberg.usc.edu/News%20and%20Events/News/111110Enron.aspx

%d bloggers like this: