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With the Enron trial now underway, the question arises how so many experts were fooled about the worthless company's purported financial success before it went belly-up. Management guru Gary Hamel, who is no slouch when it comes to analysing and recognising innovation, famously lavished praise on Enron as a great example of a company that mixed bold entrepreneurship with the scale and ability to get things done.

Still he wasn't Robinson Crusoe.

McKinsey heralded Enron's success, as exemplified in this McKinsey Quarterly piece The Winner-Takes-All-Economy and Fortune Magazine named Enron "most innovative company" for six years in a row.

So how were so many experts seduced? University of Houston business historian Joseph Pratt spent years poring through Enron's records. He was a true believer in Enron and explains how the seduction took place in this radio interview.

In Motley Fool, there's a warning that Sarbanes-Oxley won't protect investors if they keep making the same mistakes they made with Enron: investing in companies they don't understand and believing in managements that hype their own stock and who claim they have the product of the future.

But here's the problem. Successful companies like Google have introduced innovations that have changed everything. The NPR piece puts it beautifully: you have to be open to the fantastic possibilities but at the same not get yourself sucked in by the fantastical.


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