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Facing Up to Enron, Facing Up to Risk

A letter from the founding editors.

There are certainly plenty of lessons to be learned from the Enron scandal — lessons about arrogance, lessons about greed, lessons about criminality. But there’s one important lesson not to be learned: that Enron’s disgraceful performance is evidence that ambitious business innovation — whether in strategy, finance, or technology — is by itself a suspect idea.

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Criminality, we trust, will be investigated and punished — at Enron, Andersen, Global Crossing — wherever executives are suspected of flouting the law while enriching themselves. But let’s not punish innovation, creativity, and well-considered risk taking. Risk is not a four-letter word. Playing it safe isn’t always playing it smart — and it’s certainly not playing to win.

These messages have been at the heart of Fast Company since our first issue — and now seems like an important time to bring them to the forefront again. Let’s take a close look at well-prepared, purposeful risk taking: the work that landed Lockheed Martin’s Tom Burbage the largest single contract in Pentagon history. Bill Breen’s deeply reported story, High Stakes, Big Bets, makes explicit what we all know: When you’re competing for the future, you won’t win unless you take calculated risks. Burbage took a bet-the-company risk: not crazy, not out of control, but smart, clear-eyed, and tough-minded.

Or read Keith Hammonds’s rule book for risk takers, No Risk, No Reward. This collection of vignettes, reflections, and case studies is your complete guide to understanding risk, from the biggest bet of them all — does God exist or not? — to IBM’s decades-old bet-the-company gamble on the IBM System/360 and General Motors’ current bid to redesign Buick. If you’re perplexed by the current environment, unsure of how to make sense of the “It’s too risky” post-Enron mind-set, you need to consult Keith’s advice.

And then there’s Cheryl Stearns and her Leap of Faith. What kind of a woman wants to jump out of an airplane at 130,000 feet? What kind of a woman willingly risks incineration if her fall is slightly off plan? The answer: a very careful woman. Because her risk is so extreme, Stearns’s preparation offers classic lessons in the art of managing acceptable risks. As with a business risk, the point of the exercise is to plan meticulously to eliminate hazards and to train assiduously to be in the best possible shape to play the game and win.

So here’s the question that we all need to be asking in this highly difficult, nerve-wracking, post-Enron economy: Are you playing it safe? Or are you playing to win?

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