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talisman comments on Great Books of Failure - Less Wrong
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The Smartest Guys in the Room by McLean and Elkind.
Subject: Enron.
Lessons: Hiding from reality becomes an ever-downward-spiraling habit as you have to hide the results of failures from last time. Incentive structures are everything. Selecting for verbal smartness and sparkle can just get you spectacularly complicated, charming failure. Complexity is used to hide the truth from both outsiders and yourself.
I don't buy this account of Enron, which has become the standard fable. There was a lot there that was more like straight-up fraud than smart people overcomplicating things and missing the down-home common sense.
Edit: I agree with the "hiding from reality = downward spiral" part strongly.
The book does represent that in the endgame it was spectacularly complicated, charming fraud. But they do seem to have slid into fraud more than having started with that directly in mind - at least so the book alleges. Complication eases the path into fraud, and other downward spirals.
Also see Eliezer's earlier post.
I thought that the standard fable focused on the straight-up fraud of the endgame.
I focus on the incentives to the sales staff. As I understand it, their exit was well-timed, so the situation wasn't that hard to unravel. But this leaves the question of whether the guys at the top understood what was going on, let alone intended it.