Power to the People

Lots of companies talk about grassroots teams. Few companies give teams more power than AES does. A few years ago, CFO Barry Sharp estimated that the company had raised $3.5 billion to finance 10 new power plants. But, he added, he'd secured only $300 million of that sum on his own. The rest was brought in by decentralized teams. When AES raised $200 million (about $350 million) to finance a joint venture in Northern Ireland, two control-room operators led the team that raised the funds.

It sounds crazy - but it works. In 1990, the year before AES went public, the company had annual revenues of less than $200 million and profits of less than $16 million. In 1996, it had revenues of $835 million and profits of $125 million. The company opened its first plant in 1986. Today it owns or has an interest in 82 power plants, which generate nearly 22,000 megawatts of power for consumers in the United States, Argentina, China, Hungary, and other countries.

Not surprisingly, AES is a darling of Wall Street. Its 1991 public offering valued the company at $750 million. Today it has a market value of around $6 billion. Together, Bakke and Sant own about 25% of AES's shares - which translate into personal fortunes of roughly $750 million and $900 million, respectively.

But even more remarkable than the economic value that AES has created are the social values that it embraces - the ideas around which the company is built.

If It's Not Fun, Don't Do It

The AES mission statement declares that work should be "fun, fulfilling and exciting." But that doesn't mean Friday-afternoon beer busts. It means growth, freedom, and achievement. At AES, having fun means being challenged.

"Fun happens when you're intellectually excited," argues Sant. "It's people interacting with each other - with one idea leading to another - and getting frustrated if there isn't an answer. It's the struggle, and even the failures that go with the struggle, that make work fun."

Bakke and Sant couldn't have picked a tougher business in which to have fun. Power-plant work is hard, dangerous, and often boring. Most employees get trained in mundane, highly specialized tasks: Materials handlers move fuel to the boilers; technicians regulate fuel and temperature levels; electricians monitor and help maintain generators and other equipment.

"Specialization is the root of a lot of boredom," says Bakke. Even worse, he argues, talented specialists tend to dumb down the rest of the organization: "As soon as you have a specialist who's very good, everyone else quits thinking. The better that person is, the worse it is for the organization. Now the information goes through the specialist, so all the education flows to the person who already knows the most."

The Front Line Drives the Bottom Line

Bakke and Sant are idealists. They are also clear-eyed realists. They abandoned long ago an illusion to which most executives cling - that only the people at the top have the wherewithal to run the show. The best way to exercise power, the AES founders argue, is to give it up.

"The modern manager is supposed to ask his people for advice and then make a decision," says Bakke. "But at AES, each decision is made by a person and a team. Their job is to get advice from me and from anybody else they think it's necessary to get advice from. And then they make the decision."

What happens when leaders renounce their authority? Their companies become faster and more nimble. In Brazil, AES's bid for CEMIG bogged down when a joint-venture partner couldn't make up its mind. "We made our decision within days," says Alessandra Marinheiro, the AES project manager who helped fashion the bid. "But our partner had to ask its board for approval, and that board had to ask another board. We delayed the bid - only to have the company pull out because it couldn't get final approval."

That didn't delay Marinheiro, 24, an entry-level financial analyst who became a project manager with responsibility for more than $2 billion in acquisitions - after less than a year at AES. On the day before the CEMIG auction, she lined up a new partner and reworked the bid. "We called Tom Tribone and made a decision," she recalls. "Other companies can't do that."

Every Person a Businessperson

There's another reason why AES disperses power so widely. "If all information about finance goes to the finance department, and all information about legal matters goes to the legal department, it's impossible to get well-rounded people who can think about the whole world," Bakke says. And it's well-rounded people, he argues, who deliver extraordinary performance.