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Skunk Works quietly created killer tech. And paved the way for Enron.
If you want to see technology roar in glorious flight, the rules are simple. Clarence L. "Kelly" Johnson, the legendary boss of Lockheed Skunk Works, boiled them down to a simple motto: "Be quick, be quiet, and be on time." These three principles guided Johnson's operation to a spectacular aeronautical breakthrough. The Skunk Works' U-2 spy plane outdistanced the best Russian MiGs in the '50s; the D-21 surveillance drone hit Mach 3 in the mid-1960s; and the '70s-vintage SR-71 Blackbird set air speed records still unbroken. Indeed, speed, secrecy, and split-second timing can make for spectacular success well beyond the military-industrial complex - they're a tempting recipe for any company. But they can be powerfully dangerous when mixed with greed and shortsightedness. Handled badly, they can make a corporation crash and burn, spewing shrapnel through the business pages.
The Skunk Works fulfilled Johnson's motto to the letter. To meet the need for speed, reports longer than 20 pages weren't allowed. Interminable meetings were unknown. Skunk Workers were crammed into a secret, windowless blockhouse in Burbank, California, single-minded and without distraction. The number of employees was restricted, as Johnson put it, in "an almost vicious manner." There was no organizational overhead, no waffling, no ass-covering, and no opinion-polling. Johnson was a tyrant, a profanity-barking, tough-as-nails-berboss.
Lockheed's innovators kept quiet by the simple tactic of never telling the press what they were up to. Nobody boasted or took credit. There were no leaks or tattletales. Skunk Workers never had to worry about the pressures of fame, skyrocketing market hype, or, in fact, any of the larger consequences of their actions. There were no protesters, whistle-blowers, Nimby groups, or federal overseers, and very few accountants. Skunk Workers didn't tell the shareholders or the bosses what they were doing. They didn't tell their spouses. When Johnson lost his first wife (his former secretary), he married another top-secret assistant. The client never breathed a word either, because the Skunk Works' star customer was the CIA.
On time meant living ahead of the tech curve. Johnson's machines were so fast, sleek, macho, and just plain futuristic that they overwhelmed critics. The sight of an SR-71 in flight dissolved all doubt. Skeptics dropped their checkbooks in awe. Hard-bitten Richard Helms of the CIA called the Blackbird's mighty engines the "Hammers of Hell."
The Skunk Works created great technology, but it was only barely a business. It chewed through federal money, and it didn't make fortunes. Nonetheless, if you apply Johnson's principles to generating profit, you get a ferocious, sleek, model enterprise - like Enron.
As chief of Enron's Western energy trading wing, Timothy N. Belden is the guy who turned out the lights in Silicon Valley during summer 2001's bogus energy crisis. He described his depredations as "experiments," and in some profound sense that was true: They were so far ahead of the curve that a lot of them probably weren't even illegal. Nonetheless, he recently pleaded guilty to conspiracy to commit wire fraud, coughing up $2.1 million and promising to sing in federal court. His cadre of 100 or so energy traders, crammed onto a tight little floor together under his supervision, was just like Johnson's Skunk Works - an elite division of wonks who were quick, quiet, and right on time.
They were so quick they made a business of selling lightning. Electric power doesn't sit still long enough to be stored.
They were so quiet that, despite endless press coverage, nobody realized Enron was gaming California's power system. No one imagined that a Texas-sponsored cabal of traders hidden in deepest Oregon could accomplish such marvels. But every time Belden's crew pushed the F1 key, California magically "congested" and "decongested," and Enron made money - more than $800 million amid the crisis of 2001.
And their timing was perfect to the nanosecond. They'd rush in to rescue troubled markets from sudden shortages they themselves had created. Harsh consequences seemed unlikely. Though Enron wasn't the Skunk Works, it enjoyed deep political cover.
Kelly Johnson's tactics propelled both outfits to the heavens. The distinction is that airplanes must follow the laws of physics, while Enron flew on Icarus wings, treating a market made up of human beings as if it was a videogame. When Johnson lost a test pilot to a cracked-up plane, he grieved and made amends. When Belden pillaged the grid, the consequences were hidden behind a glowing CRT screen. Yet the impact rivaled that of a stealth bombing - a company disgraced, an industry in tatters, a state near bankruptcy, and the cause of free energy markets set back a generation.
People used to mistake the Lockheed SR-71 for a UFO. And Californians still don't get exactly why the lights went out in the summer of 2001. They don't call it a Skunk Works for nothing.
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