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By their readings ye shall know them (Enron)

By Arthur Goldstuck

How to spot an Enron in the making and other stories

The truth about the Enron bankruptcy – the biggest in history – is that it didn’t occur overnight. It was a long time coming. Clearly, the financial gamesmanship that was employed to hide the oil giant’s losses had long become more important at Enron than the oil business that was its ostensible raison d’etre.

This is all obvious in hindsight.

But how do you tell, before the whistleblowers work up the courage to blow the whistle, before the accountants are “outed”, and before the government commissions unravel the mess?

One way is to find out what the employees are reading. If everyone in a banking organisation is reading books on day-trading or high-risk investments, its time to take the microscope to unauthorised transactions.

In most cases, of course, this information is hard to come by, assuming you’re not rummaging through employees’ desks. But for large companies, internal reading habits are exposed to the world, thanks to the Internet’s largest bookseller.

Amazon.com’s strategy of encouraging purchases by showing visitors what other customers have bought has produced a bizarre peephole into the corporate world: automated listings of the most popular books being bought by workers at specific organisations or from specific areas.

Amazon’s software is able to identify the postal codes and domains – e.g. “@enron.com” – from which customers are making their purchases, and pulls together the titles of all books associated with specific domains or regions. This data is then aggregated into company-specific or region-specific top ten lists of books bought from that domain or region. The listings are called “Purchase Circles”, and are intended to give visitors added insights into making their choice of reading matter.

As Amazon.com puts it, “Purchase Circles are highly specialized bestseller lists. They let you know what people are buying around the world and in your hometown, at your workplace and at your alma mater.”

Numerous major corporations boast such purchase circles – usually without even knowing about it. The only qualifying criterion is that 200 or more books are purchased from that domain or region in a given period – weekly for large purchase circles, monthly for small ones.

Companies can request that their purchase circles be removed from public view, but few do so. One that neglected to make this request was Enron. Consequently, its purchase circle at Amazon offers a startling insight into its corporate culture. Oil and gas sourcing and distribution, it would appear, are not at the forefront of employee interest.

The list of books that are uniquely popular at Enron Corp, as compared with the rest of the country, start with “Trading Natural Gas : Cash Futures Options and Swaps” at number one, “Options, Futures, and Other Derivatives” at number two, and “Option Volatility & Pricing: Advanced Trading Strategies and Techniques” at number three.

Only the does “Petroleum Refining in Nontechnical Language” feature, but is immediately followed by “Volatility and Correlation : In the Pricing of Equity, Fx and Interest-Rate Options” from the Wiley Series in Financial Engineering. Even more revealing are the next three books in the list: “Dynamic Hedging : Managing Vanilla and Exotic Options”, “Solutions Manual: Options, Futures and Other Derivatives”, and “Value at Risk: The New Benchmark for Managing Financial Risk”.
The Enron-specific list is completed by “Fundamentals of Trading Energy Futures & Options”, and “Risk Management”. And what a story that last one unintentionally tells.

Incidentally, general best-sellers that also sold well at Enron include a couple of Harry Potter books, Gary Hamel’s “Leading the Revolution” and “When Genius Failed : The Rise and Fall of Long-Term Capital Management” by Roger Lowenstein.

The one positive comment that can be made of the Enron debacle is that management clearly enthused its staff with that hidden corporate culture.

A random selection shows that this is not true of all organisations. At DaimlerChrysler AG, the book ranked highest in sales overall is no other than “Taken for a Ride : How Daimler-Benz Drove off with Chrysler”, by Bill Vlasic.

At Oracle Corporation, in contrast, the most popular book is “ebusiness or Out of Business: Oracle’s Roadmap for Profiting in the New Economy”,
by Mark Barrenechea and big boss Larry Ellison. Number two is “The Oracle Edge : How Oracle Corporation’s Take No Prisoners Strategy Has Made an $8 Billion Software Powerhouse” by Stuart Read. Sounds like someone at Oracle is doing something right, although a warning signal lurks at number five (after two Oracle technical guides), namely Mike Wilson’s book called “The Difference Between God and Larry Ellison : Inside Oracle Corporation : God Doesn’t Think He’s Larry Ellison”.

It is not only corporate culture, but national obsessions, that can be uncovered in this way. Purchase circles also offer insights into what was most often ordered through Amazon from specific countries.

So, in Egypt, for instance, books on Islam and the Middle East dominate. At number one is “No God but God : Egypt and the Triumph of Islam”, while other titles include “End of the Peace Process : Oslo and After” and “Cairo : The City Victorious”.

In South Africa, you may find, Amazon customers are obsessed with health and medical matters. The truth, probably, is that medical practitioners and specialists are a proportionately dominant section of those South Africans who are still prepared to brave the exchange rate to buy books in dollars.

With titles like “Teachings in the Science of Osteopathy”, “Comprehensive Pharmacy Review” and “Craniosacral Therapy” all making the list, we are probably being sent a hidden message that ordinary South Africans have stopped buying their books from Amazon. As a result, just a few orders for an obscure title will push it up the list of our national purchase circle.

No prizes for guessing how “Living and Working in Canada : A Survival Handbook” made it into this particular list. On the other hand, I’d give anything to know what the appearance of “Go-Kart Racing Chassis Setup” in the list says about us.

Arthur Goldstuck is editor of The Big Change and author of more than a dozen books on the Internet and urban legends. He runs the independent research and strategy consultancy, World Wide Worx

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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