Enron, AIG, and the Air Force

“The fact that these guys are looking for bonuses having run down AIG begs the question of why were they making that much beforehand. When nobody was criticizing them, everybody thought they knew what they were doing. That kind of culture has to change.”

- President Obama during News Interview, CNN, 18 March 2009

Several weeks later the Secretary of Defense reminded the services of the importance of examining our cultures stating, "all of the services must examine their cultures critically, if we are to have the capabilities relevant and necessary to overcome the most likely threats America will face in years to come" (Gates, 2009). My master's thesis is an attempt to engage in such examination. I am studying the Enron culture and collapse, AIG, and the greater American corporate culture and attempting to determine if the cultural factors that led to the collapse of integrity and common sense with companies like Enron have infected the Air Force. My early research indicates there may be a common link in the practice of perception at the expense of reality.

Enron used "mark to market" techniques, loop holes, rule bending, and sometimes outright fraud to provide their stockholders with the perception that things were better than they really were. They had a culture that punished dissent and provided incentives that didn't inspire actions for the good of the company or the stockholder. Reality was shunned, perception was king. There were those who had the good of the company in mind but by the time their efforts were organized it was too late for the company. This perception at the expense of reality was also a key cultural trait in AIG it seems.

I don't mean to suggest the Air Force is like Enron or AIG. I do, however, think our service can benefit from a critical examination of some traits that may have taken hold to some degree in Air Force culture. One possible example of a perception at the expense of reality culture might be the physical fitness issue. Despite "fit to fight" slogans, many commanders were failing to provide AFI 10-248 mandated workout time for Airmen. This is according to the report issued by the Audit Agency. It is important to note, however, that Air Force leadership ordered the Air Force Audit Agency report to accurately diagnose this problem and acted upon the information. The system corrected the problem with perception at the expense of reality. A new improved PT program is being implemented. Another possible example of perception at the expense of reality is the perception of academic freedom in the ACSC/DL program compared to its reality. That problem may also need to be corrected. Other possible examples include inflated performance report writing. These are some of the links I will investigate in my research. More to follow.

Source Cited:

Gates, Robert Speech Given at Maxwell AFB, 21 April 2008.