followed their advice. Several advisers also suggested that we would need a whole different approach with our employees in the power plant than we had with the M.B.A.’s, engineers, and other college graduates who filled the home office at the time. “These people are different,” one board member said. “They want to be paid weekly, preferably in cash. They don’t care about your soft-headed stuff like values. Fun will be a totally foreign concept that is just not applicable to industrial operations.”
“These people are different” was the statement that troubled me the most. I remembered hearing the same kind of language used to belittle African-Americans in the ’60s. It turned out to be dead wrong. Would it be true of people hired to work at our new cogeneration facility in Houston? I wasn’t sure, and it took me over two years to confirm my original misgivings.
Once I did, I set in motion a revolution in that plant that dramatically changed the AES workplace and the way we operated our facilities. The shared values of the home office eventually would be used to guide every aspect of life at the plants—from hiring and compensation to organization and decision making. It was the beginning of an audacious effort to create the most fun workplace ever.
At another strategy conference in the late 1980s, an AES vice president asked the 30 people in attendance to close their eyes and make a “movie” of their lives. A number of people then shared the outlines of their movies with the group. The plots differed widely, of course, but the same theme cropped up again and again. In almost all the movies, people used their talents and skills to make a positive contribution in the world. Although it was hardly a scientific sampling of working Americans, the consistency of their goals was striking. We used the result of this exercise to start the process of defining the purpose of our company. If the goal of our individual lives was to make a positive difference in the world, shouldn’t we try to do the same thing as a corporation? During that conference we wrote the first draft of our company’s purpose—to meet the electricity needs of people and organizations. Over time this statement of purpose would be refined and become an important part of the shared values and principles of the company.
During the 1980s and early 1990s, my wife, Eileen, and I met weekly with five or six other couples for Bible study, prayer, and a discussion of our joys and problems. One of the key areas of learning from my time with this group was a deeper understanding of “stewardship”—the idea that we have a larger purpose than simply satisfying our own needs. I came to realize that what I had learned as a 5-year-old was incomplete at best. Stewardship was more than giving money to the church or contributing to other good causes. I learned that it was more about what I did with the money I kept and spent than the money I gave away. It was more about how I lived my daily life. It was about how I used my abilities and skills to make a positive contribution to society and to serve others.
About this time, I read a book by Peter Block (an author unknown to me at the time) entitled Stewardship-Choosing Service Over Self-Interest. It had an enormous influence on me. It showed me how my biblical understanding of stewardship could be applied to a major business. Stewardship is a concept that assumes the resources we are using belong to someone else. We are protecting them, taking care of them, making them useful—all for the rightful owner. For those operating within an organization, Block wrote, it is “the willingness to be accountable for the well-being of the larger organization by operating in service, rather than in control, of those around us. Stated simply, it is accountability without control or compliance.” My response was to make serving the needs of society the cornerstone of our corporate purpose.
Early in 1990, we began exploring the possibility of going public. Our privately held shareholder base was rapidly approaching 500 stockholders. Unless we took extraordinary measures to reduce the number of people who owned AES stock, we would be deemed a public company by law. One of our major concerns about going public was that serving shareholders might be incompatible with serving society. Could we maintain our values while striving to meet ambitious economic goals?
We consulted investment banking firms about our concerns.
There are four major shared values (at AES): to act with integrity, to be fair, to have fun, and to be socially responsible.
They were quite positive about our ability to live in the “public” world in a way that was consistent with our principles. I realized later that like many of us trained in sales, the bankers emphasized the positive aspects of our “strange” set of values and minimized the problems. One particularly persuasive banker even suggested that I owed it to the world to go public so that I could better spread the ideas of the company’s radical approach to organizational life.
Our board members were supportive of going public. I should have been more skeptical of their advice. I was already aware that some of them were very excited about the business prospects of the company but were less committed to our values than I was, or simply viewed them as a way to improve economic performance. I was convinced, however, that in spite of all the red flags, we could become a public company without losing our special qualities.
But a number of shareholders, many of them AES employees, were concerned that going public would change the company for the worse. Roger and I addressed some of their concerns with a letter to AES employees and shareholders in March 1991:
We have contemplated the pros and cons of being public since the beginning of AES. We have until now concluded that staying private made the most sense. However, we now believe that registration as a public company may ultimately be inevitable. … We continue to be committed to the purpose and values of AES. … To that end, we have established ‘Going Public Principles’ for ourselves. … These principles are: Make the process fun; if it stops being fun, we should change the way we are doing it or quit. … If we find ourselves tempted to change any significant elements of the way we do business, we must consider the change to be a major red flag and we should make the change only if our current rationale for acting as we do doesn’t make sense—independent of the public offering process. … We will do our best to uphold these principles [emphasis added].
True to our promise, we prepared the draft of our public-offering memo with a forthright paragraph under the “Business of the Company” section. It read as follows:
Adherence to AES’s Values—Possible Impact on Results of Operations. An important element of AES is its commitment to four major ‘shared’ values: to act with integrity, to be fair, to have fun, and to be socially responsible. See ‘Business—Values and Practices.’ AES believes that earning a fair profit is an important result of providing a quality product to its customers. However, if the Company perceives a conflict between these values and profits, the Company will try to adhere to its values—even though doing so might result in diminished profits or forgone opportunities. Moreover, the Company seeks to adhere to these values not as a means to achieve economic success, but because adherence is a worthwhile goal in and of itself. The Company intends to continue these policies after this offering.
When the draft document was reviewed by staffers at the Securities and Exchange Commission, they offered a number of helpful suggestions. The most intriguing was advising us to move the above paragraph to the first section of the document called “Special Risk Factors” with the additional title “Possible Impact on Results of Operations.” This is the equivalent of a warning label on a medicine bottle. Investors might be told that a company has very little existing business, that it is essentially controlled by two principals who might die tomorrow, that there’s no guarantee it will be able to attract any new business. In our case, the SEC officials thought our values were a hazard.
We should attempt to live according to a set of unchanging shared ethical principles, because it is the right way to live.
Some of our people were upset by the SEC’s reaction. I loved it. I could now say that the U.S. government thought
