Dennis Bakke is the president and CEO of Imagine Schools, an education service provider that operates K—12 public charter and independent schools nationwide. Prior to starting Imagine Schools, Bakke was co-founder, president and CEO of the AES Corporation (AES). He was president and CEO of the company from 1994 to 2002. Formed in 1981 to generate and sell electricity, AES has grown into a leading global power company with businesses in over 30 countries, $40 billion in assets, revenue of over $10 billion per year, and 30,000 employees. Corporate headquarters are in Arlington, Virginia.
Prior to 1981, Bakke was deputy director of the Energy Productivity Center, Carnegie-Mellon University, served in the U.S. government as an energy conservation executive in the Federal Energy Administration (FEA), and held positions in the federal government’s Office of Management and Budget and the Department of Health, Education, and Welfare in the Management Planning Group. In addition, he served for 18 months as chairman of the International Energy Agency Conservation Group in Paris, France, from 1970 to 1973.
Bakke graduated with honors from the University of Puget Sound, Tacoma, Washington, in 1968. He received an MBA from Harvard University, 1970, graduated with distinction in 1977 from the National War College, received an honorary doctorate in humane letters from Eastern University, 1998, and an honorary doctorate in humanitarian service from University of Puget Sound, 2000. He was born and raised in rural northwest Washington state.
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Ethix: As co-founder of the global energy company AES Corporation, you developed four principles for your business. They were key to how your company operated and what you held as important. What were they?
Dennis Bakke: The first one is Integrity, which of course comes from the Latin word “integra,” where we get “integer” and “integration.” For us it meant “wholeness” or “how things fit together.” We wanted consistency and wholeness in all that we did.
The second is Fairness or Justice. Our meaning is probably the opposite of what most people think. Fairness in most organizations means everybody gets treated the same. Because every person is unique, our job is to think about giving “to each person what they deserve” or “to each person what is appropriate.” Thus, fairness calls for you to treat each person differently! To do this, you essentially have to throw out almost all the systems that are geared to treat everybody the same, like pay scales and grades that are actually unfair to everyone.
The third one is Social Responsibility, or “love your neighbor.” Many people think of that as primarily the extra things you do, such as taking care of the environment, giving to charity, or things like that. I think we did too, when we started. These are all important things, but I realized over time that our primary responsibility to society was really embodied in our purpose. You don’t show social responsibility in the extra things you do, but in all the things you do. So it is not really one of the values but is the over-arching goal or mission of the organization: to steward the resources we had been given. This includes money and people, material, oil and gas, all the kinds of things we had responsibility for, in order to do something wonderful for the world. And so Social Responsibility is probably better left out of the values because it embodies the overall purpose of the company.
The one that I have spent the most time on is the last one, which is Fun. My goal and my passion was to try to create the most fun workplace in the history of the world. As I looked around it seemed to me that 85 to 90 percent of the people who work in organizations have a miserable job. And I tried to figure out why that was and then try to adopt an approach that would correct that and make it a joyful, exciting, wonderful, rewarding place to work.
Fun at Work
But when you talk about fun at work, you’re not talking about playing games: ping-pong tables, parties, and the like.
No, that’s a very big misconception. At the time we started, Apple Computer was getting lots of publicity for their 4:00 Friday afternoon beer party. And that was what some companies thought was the ultimate in “fun.” And we said, “We know that’s not what we mean by fun.”
And so over the years we started peeling back each of the layers of what people thought was fun, for example, good relationships. Well it certainly helps to have good relationships but we realized that we had been in jobs with real good friends and the jobs were still miserable. So that might not be the key. Then we looked at creating a pleasant, clean workplace, and concluded, “That doesn’t seem to be quite the key.” How about treating people nicely, taking care of them, letting them off for an hour or two, etc? But that wasn’t it either.
We concluded the only thing that really made a long-lasting difference was freedom, the ability to act, to make decisions, and to use their particular skills and gifts to further a cause. When people had a chance to make a difference, that was fun. We all need to have resources, and it’s fair that we get pay, but that’s not where we get our joy and excitement. And we found out over and over again, that people are turned on when they make decisions and take actions that make a difference in the world.
In most organizations, the more important the decision, the more senior the decision maker is. That is, the people who get paid a lot or have their big titles are the ones who make the big decisions. This is true whether it’s profit-making, a non-profit, or the government.
Because of this practice, most people don’t get to make important decisions. It doesn’t matter if it’s a 20,000-person operation or 100, even a 5-person group. The boss, the leader, thinks the important decisions are his or her right and responsibility. And we decided if that’s true, then the status quo of 85 to 90 percent of the people having miserable jobs would continue.
And so we decided the decision maker should be the person closest to the action, or the one who has had the most experience in that particular area. And yes, there are problems with that. How do you avoid having lone rangers simply making decisions on their own that would affect many people? We didn’t want that. We all know that we’re individuals first, but we’re also put in community. We needed to figure out how an organization can put these two things together.
Over history, organizations have tried lots of ways to try to deal with the conflict between the individual and the community, but we wanted to have the individual remain the decision maker. So we required the person leading the decision to get advice from others affected by the decision. In the case of a very large decision that would impact the company, the advice needed to include senior executives, and even the board of directors. A person could be fired for not getting advice. But the person did not have to be a senior officer, or have a long history with the company, in order to be able to make the decision, and having asked for advice, it was their decision to make. We didn’t always live up to this approach, but our idea was to maximize the number of people who could make significant decisions during their lifetime in the business. We wanted them to experience the joy of being a major decision maker and having something important happen on their watch.
Perhaps the most difficult part of this was with the management team, who loved making the decisions. And one way we solved this problem was by greatly reducing management at AES by flattening the organization. But it also meant I had to give up decision making as well.
Does it Always Work Out?
I read where somebody in your organization in England wanted to make a decision to buy a $3 billion thermal processing plant. In your decentralized decision-making structure, they had the final say after getting advice from you and the board. Is that a true description of what happened?
The person who was assigned to develop this potential project, and had put the whole thing together, asked for advice at many levels. He had only been with the company for a couple of years. Because it was a very significant thing in the couple billion dollar range, he needed to get advice from the very senior people in the company, including the board of directors. Having done this, when we completed the discussion, we honestly didn’t know what decision he would make. The point was, that person was in charge, and we were going to trust him to make the final decision. This was an extreme example, but that’s the process we put in place.
Did you buy that plant?
We did.
And was the decision good for the company?
It turned out not to be a good deal. We had done good analysis, though there was some missed forecasting about what the price of electricity was going to be, and that hurt very badly. There were many ways in which the decision could have turned out to be fantastic, but in this particular case it didn’t. The critics said this was a failure of our approach. But when you go back and look at the situation and ask whether the decision would have been different if I or other senior officers had made it, I don’t believe it would have.
If you go back and look at the record, the advice of every single person on the board, including me and other officers, was consistent. There were not more than one or two leaders in the entire company who had anything negative to say about the deal. The fact that this person made the decision had nothing to do with whether it was a good or bad decision. Sometime decisions don’t work out in business, that’s just the way it is. And while we have talked about this decision that didn’t work out, we had many, many decisions that worked out great and brought tremendous joy as well as great business results throughout the organization.
Implications for the Organization
We’ve talked about a different way of decision-making based on your values. What are implications of these principles for running an organization in areas such as pay structure, job descriptions, unions, and management?
Early on I was reading a book by Peter Block called Stewardship, congratulating myself on thinking of all the things that he had in this wonderful book. Then I came to the compensation chapter, and I was stunned. It wasn’t so much the fact that there are pay differentials between people. We had accepted that, wanting to make sure people get paid fairly according to their contribution. This means certain people, because of their expertise and responsibilities, should get more than others. Not the way CEOs get a hundred thousand times more than the entry-level person, but certainly a difference.
But, what we realized from Block’s book is that traditional pay practices come out of the Industrial Revolution. Big guys, like bosses, get paid salaries and have all the freedom that goes with a salary. Essentially you get paid whether you’re in the office or not. You are responsible for doing a job, and you can do it whenever and however you want to do it. Everybody else gets paid by the hour, and that’s more than 90 percent of the people. This is true all over the world, under capitalistic systems or any other system. The implication of this is the person on salary has the freedom to go watch their child in a ball game in the middle of the day, while the person who has to work a particular shift is paid exactly by the hour.
We decided this was not right. We needed to pay everyone by the hour, or put everyone on salary. And we decided on the goal of putting everyone on salary, so we started toward that goal. This is not without difficulty because of labor laws, unions, and the like. Because of the laws, we let people choose to go on salary, and we also let them choose to go back at a moment’s notice if they didn’t like the approach. When they went on salary, they would no longer get overtime, but they’d be eligible for bonuses and stock options. Everybody had the same kind of package, but not the same amount, so everyone was treated as a special person. People loved it. They still do. It was one of my most rewarding experiments in this organization.
It’s not without some legal difficulties to do this, because of laws that were set up in a different era, that are really quite antiquated. They were set up to try to protect people from being abused by management, to stop sweatshop operations. But these people now make considerably more money than ever before. We have found ways to deal with this all over the world, and that’s what we did.
What percentage chose to go salaried?
Before we started it was something like 90 percent of the people were paid hourly and the rest were paid on salary. By the time we had implemented the program over six to eight years, it went to something like 93 percent were all salary and 7 percent were hourly.
How many went back? Very few?
You know, we were hoping that somebody would go back early, so that we could prove that actually people had the freedom to do that. I knew of one person who went back in the first year or two. There probably were others but I never heard of them. Very few people were unhappy about it.
Before we made these changes, we had unions everywhere. My father had been a union member all his life and loved it, and thought that was very important. So I was sort of neutral about unions. This is the old system of management and labor, and I wasn’t really sure how to deal with the question of unions. My advisors told me to stay away from this issue—no union bashing—so I was quite careful.
I’ll never forget one visit to a plant, and the first major question was from a large man, who was about 6’5” and 260 pounds, right in the front row. He stood up and said, “Mr. Bakke, all this that you’ve said is all fine and good, but what do you think about unions?” I said, “You know sir, I really don’t think much about unions. My job is to eliminate management. And if I do that, I do not know what unions are for.” He said I sounded like a union man!
But that day was a wonderful watershed for me, because from then on, that is the approach we took. Some places just decertified. Some places the union stayed in place; it became kind of a social club. But in some cases the unions actually allowed and encouraged us to put an alternative pay package, which was this all-salary approach.
Should a Business “Take Care” of its People?
You clearly have demonstrated that you value people in business. But you make a big distinction between this and “taking care of people.”
I come from a background where family and friends were always concerned about employment. My dad was off work a lot, and so I understood this concern. Thinking about the company as a caretaker, responsible for taking care of its people is a very natural conclusion. But I have come to realize this is not a good role for a business.
We are all familiar with the company towns, where the boss is in a parent role. It seems good, even the heart may be good, and the motive of the person doing it could be good. But this approach is one of the most demeaning and problematic approaches to management there is. There was an old song by Tennessee Ernie Ford called Sixteen Tons that reminds us of this:
You load sixteen tons and what do you get?
Another day older and deeper in debt.
St. Peter don’t you call me ‘cause I can’t go,
I owe my soul to the company store.
They paid low wages and then they provided houses, schools, and they even had a store where you could get things on credit. They would take care of you. Even in the best situations, the person never grows up, never has to make hard decisions about economics. And in the worst situations, the company makes money on the houses and everything else as well, and there is a lot of abuse. The worker is under management’s control, treated as a child.
I was in Uganda, visiting a sugar cane factory and my host was very proud of the way they were taking care of hundreds and hundreds of workers. They provided free housing, free schools—they took care of everything. And he asked me afterwards, “What do you think?” I said, “This is the worst place I’ve ever seen.” The people never left; they had no ownership and no responsibility. The medical treatment was like the poor would get anyplace. It’s backward.
It’s how we treat our poor, in this country. Someone told me only 18 percent of the money we give to the poor is in a form where they get to make a decision, like a normal adult. We tell them where their kids have to go to school, where they have to work, where they have to send their kids to daycare. They have no choice in medical care. They don’t even get to choose their friends. They have a social worker who is assigned to them to tell them what to do.
You’re not even allowed to make mistakes if you’re poor, because you’re not given any resources to do so. You never grow up. Same thing with employees. They need to be given decisions and make decisions and take responsibility. So it’s a horrible, horrible system that says, “We take care of you.”
Downsize for Employee Growth
Many would extend “valuing people” to no layoffs and full employment. Yet you have made the rather radical comment that an organization should have not one person too many. Could you speak to this?
Now, what happens when you take care of people in that way, though you’re really trying to be nice, is you put more people in a workplace than are needed. Then no one has a full job. The more people you put in, the more you divide up the work responsibilities, and the less anyone gets to use their gifts and skills. It’s very boring and it is devastating for the people doing the work, and makes the organization a very inefficient operation. Therefore the organization itself, as a whole, now is defective and probably can’t survive economically. So it’s a miserable place to work and the business isn’t doing what it’s supposed to do. It’s like forming a little circle, and as more and more people are added, pretty soon you can’t move around, you can’t do anything, you can’t spread your arms, you can’t grow up.
Further, if you keep a person in an ineffective, inefficient place, you’re actually stealing them from the rest of society where they could make a difference using their skills, creativity, and gifts. And so what you’ve done is you’ve hurt the rest of society. The critics say, “Oh it’s horrible, the jobs are going to China, and to Indonesia, etc.” But this is the best thing in the world to happen for those people. It’s also best here. Because those people can do that job better, and now we have an opportunity to use our gifts, our skills, and resources to create something new and different, and that’s exactly what’s been happening in this country. We have created more jobs and new enterprises because we’ve gotten people out of businesses and organizations where they couldn’t be productive.
It’s a cold shower sometimes, and it’s hard so companies need to take much more responsibility for the transition. Don’t keep people in the job, but spend a lot more money (government should do this too) on the transition. No two weeks and “You’re outta here.” That is ridiculous. But don’t keep one person for one extra day, to mess up inside. And so we need to balance this with trying to make that transition.
You don’t want to keep the textile workers in New England. If some of the politicians had their way, we would still be making tennis shoes in New England. The people would be starving in Indonesia, and we wouldn’t have developed all the wonderful things that are happening to make the world a better place in thousands of companies in the Boston area. It’s not easy to do. It shouldn’t take a generation, but it might take a few years, and we need to have this transition for folks. We cannot stay focused on trying to protect people. Children, yes. Adults, no. Obviously I feel very strongly about this.
So that means that as a company you would look at taking people out of the workplace not just for cost reasons, but for growth and capability—for the company as well as the workers.
Absolutely. It is not primarily a cost issue though it obviously affects the cost. Cynics will say it’s only cost, but they are wrong.
When you talk about transfer costs, how should that burden be shared? What is the role of the corporation doing the downsizing?
Absolutely corporations have a responsibility. This is what we did every time we went into a business that we were acquiring. Often bosses like to have lots of people to control. In the Communist countries they had a planned economy, and so you had to have this many people—period. One time we found ten times too many people in a company we acquired. That’s extreme, but always there were at least 20 to 100 percent more people than were really needed to do the work based on productivity, the use of technology, and other factors.
When we went in and we couldn’t tell which people should leave and which ones shouldn’t, we created a voluntary program. We gave a very healthy severance package, allowing people to make the decision to stay or leave. They had to look at what we were going to do inside, because the work was going to be different. They would have to make decisions and take responsibility. Some decided they didn’t want to change the way they worked, and they could take the package and leave. I’d say 98 percent of the time it was the choice of the individual. Some people were so excited about working with freedom, they actually stayed on to work a couple of years, losing money over what they would have made by taking the package.
Purpose of Business
Going back a little bit, when you were talking about the founding principles of AES, you mentioned a purpose for your business. Can you elaborate on purpose?
The very important question is the whole area of “what’s your purpose?” You always start with “what am I here for?” If you ask that question, particularly recently, almost everybody says “to make money.” It begs the question: “Make money for whom?” Most people assume that means to make money for shareholders. I know some politicians think that business is there to fund their campaigns or to provide taxes.
I don’t think that’s the reason for a company to exist. It’s not the reason historically, and it’s not even the reason legally. In every application for incorporation there’s a line that asks for your purpose. I haven’t seen every application, but I’ve never seen one where it says, “to make lots of money.” Society has an agreement with corporations offering citizenship (incorporation), providing laws making it possible to carry out the business—in return for doing something useful for society. To make a product, or a service, that is needed or wanted in society, the business must be carried out in an economically sustainable and highly ethical way. But the core of the purpose is to serve others. To do this, you must meet the needs of your own organization and your own needs as an individual.
That was the philosophy that I espoused. I don’t know that every person and every board member adopted it completely, but that was certainly the public statement of purpose.
What are the implications of this way of thinking in how you deal with your various stakeholders?
We looked around the world and asked the question, “Where can we best make a difference?” It doesn’t do any good to go just to serve, because it’s got to be economically sustainable. So, you have to go in to the Republic of Georgia or to Uganda or to Brazil, with the goal of serving with the highest ethical principles in an economically sustainable way. And you need to think about all your stakeholders: the employees, the government and communities, the customers, the shareholders, and the suppliers.
So you’re always worried about how much you charge for the product, relative to how much you pay your people, relative to how much you pay investors. Every one of those, if you accept our model, is of equal importance. They get different rewards based on what they contribute, but they are all of equal importance. So you can’t put employees first, you can’t put customers first, and you can’t put shareholders first. Every one of them has to be treated with equal respect. It makes doing business extremely difficult. There’s no easy little formula. And so every day you have to think about balancing to create justice.
Every single one of these groups of people has to be thought through. What is fair and just, relative to the other? It is just not right to think peoples’ salaries are more important than shareholder wealth, or more important than taxes. It makes business much more difficult to operate in that way because you don’t have a single objective function. The bottom line is very complicated! That’s why a lot of people don’t do it. They don’t even want to measure it because it’s difficult to measure this stuff.
I heard Herb Kelleher [former Chairman and CEO of Southwest Airlines] say, “The customer is not always right.” The shareholder is not first either. Every dollar you pay here has to come out of one of these other folks. You could argue about whether you balanced it correctly or not, but it’s not better to pay your people more and shareholders less, or to pay shareholders more and people less, or to charge more to the customer so that you can give the employees or shareholders more.
How do you get a precise measure of how you are doing?
People love to get to numbers, but hopefully by now we know that numbers are no more objective than anything else. Accounting is not accounting; it’s not that perfect. Numbers are important, but don’t depend on them as a totally objective measure. You’ve got to keep your mind going and balance all these things, and when you push here, it’s going to have an effect everywhere else. Everyone needs to get a return for their investment. Wages are no different than profits. Exactly the same. They are the just reward for someone providing a service to help you make your goal. But everybody wants to reduce it to a number.
You used to try and present this story in your annual report. I remember your annual reports as different from any annual report I had ever read.
The most important insight I think I had, related to this stakeholder focus, is that the annual report started off with the salutation, “Dear Friends.” Now “Friends” is not important, but it is important it wasn’t to “Shareholders,” because the annual report went to all the stakeholders. I often organized the letter to talk about each one of these stakeholder groups, and share what we were doing for each of these groups. It was more than just bottom line numbers, but how we dealt with our people, our communities, our customers, and all the rest.
This was a part of thinking through the implications of a philosophy that we’d developed. I want to make sure you understand this was a journey: I was learning, other people were learning. We took two steps forward, one step back all the time, and we never arrived.
This sounds like this was a predecessor of what’s now being formalized as double- or triple-bottom-line reporting. Ford is now talking about the environment, people, and shareholder wealth, and without being so formal.
It’s not triple-, it’s about sixteen-levels. It’s not good for the consumer to get a lower price if it means you’re taking it from one of these other groups, including investors. Some people challenge a company to give a low price to poor people. But you haven’t done anything good unless you’ve figured out how to do it so well that you can afford to do it. Otherwise it won’t last because you don’t have enough capital. It may be good for a few years, maybe ten years, maybe twenty years, because somebody keeps pouring capital in, but it doesn’t work long term. The CEO’s job is to spend huge amounts of time figuring out how you can keep it in balance. And balance is extremely difficult to do, and nobody likes it because there’s no bottom line.
This isn’t just public relations. This is a challenge for the CEO who says, when they go to Wall Street, “Everything’s for you,” which almost every one of them do, because they think they have to. I refused to do that and made a lot of enemies. But they don’t operate that way. You can’t. Your employees say, “Wait a minute—so I’m supposed to just do everything for them? Well what about me?” And those employees are really important. Unfortunately, most CEOs end up going to the employees and saying, “You’re the most important.” Then they go on television and speak to the customer and say, “You know, everything we’re doing is for you.” And the integrity of this is just abominable. It looks like you’re just all over the place, which is true.
In reality every CEO knows that you can’t maximize anything. Any one of these things can’t be put first. The good CEOs know instinctively you have to balance these stakeholders. When profits go up, that money does not automatically get redistributed to the shareholders. There’s no legitimacy to the Chicago theory of economics that residuals go to shareholders. When residuals are higher, bonuses and salaries go higher for the people inside. Taxes are higher, so the government and community get more. The giving in the company to charitable causes goes up, so some of the residuals go there. There is no thought of, “This is how much the customer gets, this is how much the management and the people get, and then everything else falls to the shareholders.” That is not how it works, and it shouldn’t work that way either.
International Business
I read that in Uganda, you priced energy at a sustainable price, one that raised controversy because it was high for the people, but it was certainly less than you probably could have gotten, or less than maybe what shareholders would demand under a shareholder-maximization model.
In Uganda, they were getting all kinds of subsidies from the World Bank and the government, and of course this was not sustainable. So nobody had electricity no matter what the price was. The electricity they were making was costing 21 cents a kilowatt-hour, and we were going to produce it for something like 6 cents a kilowatt-hour. We took an approach that balanced all the players, including the financing groups. The shareholder was not involved because it was mostly World Bank moneys, but it cut the real cost of the electricity. In those countries they often price electricity low to the consumer, but that meant that they didn’t have any electricity. Only 5 percent of the people of Uganda actually had access to electricity, let alone used it. What we planned was to double that number quickly and quadruple it within ten or fifteen years. This economically sustainable approach would have done more good for the poor of Uganda than all the aid that’s been given by the U.S. and every other western country, and even all the aid and assistance given by non-profit organizations, including churches, in the last twenty years. I can’t prove that, but that’s the order of magnitude about business doing the work in an economically sustainable manner to serve in an unbelievably powerful and wonderful way for the people of a country like Uganda.
Working internationally raises the question of bribery. And I read somewhere where you called yourself a cultural imperialist, where you refuse to change your standards to operate in other countries. Is this true?
I use the term “cultural imperialist” just to bug the young do-gooders from the business schools who stand up and say, “Oh, you can’t do that because you’ll impose your beliefs on these other people.” But I think my worldview would say that every person—Chinese, or American, or anyone else—has some things in common. We all have a purpose; we want to make a difference in the world. It’s inborn that we want to do something useful with our lives and make a difference in the world. Corporations are the same.
I believe there are some human principles and values that are, in fact, transcendent. I believe that integrity and justice and loving your neighbor are some things that transcend society and culture and political systems. Because those things are so precious to the human race, I’m going to continue to live and fight for them wherever I go.
So that means not taking a bribe in spite of the fact that that’s the way they did things in a particular country.
Yes. But I’m not so sure that the temptations for wrongdoing are much different from one country to another. It takes a little different form sometimes. There is a difference in the rule of law in some places. In other words, if someone does something wrong in the United States there is some way to take care of it; for example, if they go back on a promise, or they cheat, or they give people bribes. Bribes are probably illegal everywhere, but these rules aren’t necessarily enforced all the time. And that makes it difficult to do business. This is true with a bribe, but it’s also true if you make an agreement with somebody and they break the agreement and the court says it doesn’t matter.
We need two things to operate business: peace, because it’s very hard to operate in war, and the rule of law. You have to have a legal system that enforces agreements and enforces these principles. In some places it’s difficult to do business. It’s hard to live there period, for anybody. And so, yes, we’ve tried to live without the bribe, and sometimes a competitor will not take this stand, and then we lose.
Did you ever lose a contract for this reason?
Often.
So you walked away from profitable opportunities on principle?
Profitable opportunities, I don’t know. Remember, that wasn’t our only reason for being in business. But we walked away from a chance to serve people, from a chance to give employment for people, and from a chance for investors to get a return. We walked away from a chance for the consumers to get a great deal in Uganda, for example.
Leaving AES
About eighteen months ago, you left AES. How do you reflect on that? Would you say your radical ideas to business didn’t work, or what do you conclude?
There might be some who would say that, but I certainly don’t believe it. I don’t think there’s any evidence at all that decentralization had anything to do with any of our bad decisions, and had a great deal to do with our good decisions. As I have said before, I can prove the decisions would have been the same in every failed case. I know the stock price went down and there were a lot of reasons why it went down—mostly because the whole market was going down, our industry was going down, everybody was going down.
And Enron …
Enron affected everybody, but us particularly, because we were a very similar type of business, though not from an ethical standpoint. We made a lot of mistakes as a company. I made mistakes, and others in the company made mistakes—business decision mistakes. We made some judgments about what we did and how much debt we took on and things like that. Those were all, by the way, decisions that were either made centrally (because they were made earlier), or they were consistent with the advice process. So there’s no question in my mind that the demise of the stock price had anything to do with the approach that we were using. If you have to blame someone, blame me and my fellow officers and board members for making bad business decisions.
Right now I reflect on it as a wonderful opportunity to start something, to change the world. I hope that we permanently changed the way things are going to be, regardless of what AES does, or whether it goes back to a more conventional approach. The seed of freedom in decision making and structure of organizations was planted in people’s minds. Because of what was happening there it was planted, and because of stories like you will write, and my book, and a whole lot of other things, this story is not going to die.
If my ideas are true, they will prevail. If they are faulty and don’t hold up under scrutiny over time, then of course the approach will dissipate and die. But if it holds truth, it won’t die, even if it died at AES. But I don’t think it will. There are a lot of people there who have experienced freedom. Once people have experienced freedom, it is difficult to quash it forever. We have political freedom in this country, where we can choose our leaders, freely. We have consumer freedom, in that we, unlike the old Soviet Union, can choose what we buy and what we sell.
What we don’t quite have yet, anywhere in the world, is workplace freedom. And that is what I’m working for.
The other evening I saw the film Power Trip, about the AES venture to provide power in the Republic of Georgia. How did this come about?
An independent film producer came into our area in Georgia, the former Soviet Union country, to create a documentary about our efforts to provide power there after the collapse of the Soviet economy. This project was done for public television. We thought they would create a story about the “bad American corporation” coming into this third world country. In fact, the story was very positive. They showed the truth.
I understand you are writing a book about joy at work.
I’m not an author, but yes, I’ve written a book. It’s now in the publishing stage, and is scheduled to be out in February 2005. The title is Joy at Work.
Next Steps
Do you see yourself starting another company?
Yes. I didn’t at first, but my wife said she didn’t want me being retired forever! So we have actually started a company to educate children. We want to run schools, hopefully nationwide. We want to operate charter schools and possibly independent schools. Imagine Schools is just beginning, and it will never grow to any massive, AES-size thing, but it’s a very exciting way to try to carry on this vision. We will try to operate it with principles identical to those we tried to develop over time at AES. We see educating children as a big need, not just here but worldwide, and we believe it needs to be done in an economically sustainable manner.