Ex-AES CEO now puts his energy in education
Dennis Bakke was one of the most powerful men in America five years ago. He was chief executive officer and co-founder of AES, the global energy giant, which ran power plants in more than 30 countries. Company stock was riding high at $70 a share, and Bakke owned about $2 billion worth of AES stock.
At the end of 2000, the state-of-the-art, 720-megawatt Granite Ridge plant in Londonderry was well under construction. AES had just won state and federal approval for the project, after an acrimonious regulatory fight with a grassroots group that fought against the project. Better yet, the new rules of electric deregulation favored big, efficient, clean producers like AES over the aging, smoky, oil- and coal-fired competition. New pipelines would soon bring cheap natural gas here from the Gulf Coast and Canada.
At the ground-breaking ceremony for Granite Ridge, Bakke told 200 New Hampshire lawyers, business leaders, environmentalists and politicians that AES would do something wonderful to serve the world: “We ask your forgiveness in advance when we fail to do that. We will make mistakes, but we will serve this town and this state with passion, with humility and with love.”
Eighteen months later, Bakke resigned as CEO and took full blame for a crisis so deep the company’s share price had plunged to a dollar amid the collapse of Enron, the World Trade Center, the entire energy sector and the dot-coms. Bakke’s net worth imploded to about $35 million.
But Bakke is arguably keeping his vow to New Hampshire. His new book, “Joy of Work,” explains how.
It’s a call to arms for workers and managers who want fun, values-rich, honest, empowering jobs that make the world better. His philosophy demands humble servant leaders who let their subordinates make the key choices. The concept requires cross-disciplinary teams of employees who grasp the big picture, rigorously research those big decisions, and answer for them.
Last year Bakke and his wife started a new company, Imagine Schools, built on the same core values as AES. It already owns 70 charter public schools in such places as the District of Columbia and Philadelphia. The Bakkes’ goal in the next year is to start 25 or 30 more schools.
The company’s mission statement may surprise teachers used to doing all the teaching. Imagine Schools helps parents teach their kids.
The first employee Bakke hired was Steve Hase, his former project director at Granite Ridge. The two men are slowly turning around a chain of traditional charter schools the company took over in a merger. It’ll be at least three years until everyone absorbs the culture of joy at work.
“This whole idea is new to the field of education,” Hase said. “It doesn’t work with all teachers. But I’m having as much fun as I’ve ever had in my life. I’m working with people I love. Dennis kept that promise he made in Londonderry when he stepped down as CEO. He could have won a proxy fight to stay on, but he took a higher road.”
Teachers at this novel teaching company often work 12-hour days, and they hire their own colleagues. They visit kids and parents in their homes – a practice Bakke calls “radical.”
Parents sign a contract to do a lot of classroom volunteering and make their children do their homework before watching TV. They also pledge to send their youngsters to school properly fed, well rested and ready to learn. Parents and teachers can easily hold a dozen informal conferences with each other in a month. It’s supposed to be a team.
How does Bakke know if a school is doing its job? That’s simple, he says. Either the kids come back for the next academic year or they don’t. In that case the school goes out of business. The company has to take every kid who applies, unless all the desks are full. But nobody has to apply. Nobody has tenure under those rules.
Hard on himself
Teachers test the children at the start of the year and at the end to see what progress they make. According to Bakke, the pupils at one of his schools in Missouri received half a year of education in a precious year of classes. In contrast, a few Imagine schools are teaching two years in a single year. He replaced the Missouri principal and most of the faculty.
If that sounds draconian, Bakke is just as hard on himself.
A decade ago nine employees at an AES plant in Oklahoma falsified a water quality report to the U.S. Environmental Protection Agency. Bakke gave himself a 30 percent pay cut. Other top managers took smaller cuts. He let the guilty workers keep their jobs in return for telling the whole truth about what went wrong. He needed to plumb the bottom of a major breach of bedrock values.
His letter to all employees worldwide said it was tough to comprehend how anyone could trade “our integrity to make our environmental performance look better. We hope that the steps we have taken today address the problem, but we are embarrassed and disappointed and angry that this could have happened at AES.”
At Imagine Schools, the teachers get paid as well as their public school counterparts do, but the class sizes are smaller at the charter school. According to Bakke, the company gets these results with half to 80 percent of what the regular public schools spend.
How does this happen? Easy, says Bakke: There’s almost zero bureaucracy. A school for 300 kids has a maybe a principal, a secretary and a finance person who might double as assistant principal. That’s the whole administration. The corporate office has 10 people. The several regional offices employ two or three people each.
“We have so little overhead because of the joy of work,” Bakke said. “I have one lawyer for the whole company. We have three people to keep the books for a $110 million business.”
The reduced operating revenue has to pay off all the finance costs too. With its government money, each school provides for its facility. The trick most of the time is to restore existing buildings into schools.
“We’ve made a lot of progress in our first year,” Bakke said. “We’ve had a lot of turnover because not everyone buys into the philosophy. Some teachers think their whole job is taking care of their classes. It’s a lot more.”
Meanwhile, Bakke has begun lobbying Congress to change the No Child Left Behind law so it measures student progress from grade to grade. His schools are full of impoverished kids who score below grade level because they’re growing up on some tough streets. But now they’re advancing at a healthy pace, he said.
Granite Ridge update
So what’s happening to Granite Ridge? The local taxpayers are doing fine. A year ago, AES’ creditors, led by ABN AMRO bank in Holland, got state approval to take over the ailing facility, which had been losing an estimated tens of millions a year. In a nutshell, the plant was selling cheap electricity into the spot market and buying natural gas that tripled in price in five years.
A dozen other gas plants started up in New England when Granite Ridge did. They all expected the same illusory opportunity at the same time. Most are in receivership now, thanks to an 8,000-megawatt oversupply of power. AES wrote off its own $200 million investment in Londonderry and negotiated an amicable foreclosure.
But town officials say the banks are current on their Londonderry taxes of more than $4 million per year. The assessed value has dropped by tens of millions in the last couple of years due to market conditions, but the plant is still operating.
“We gave them a beautifully clean operation, and we kept all our commitments as best we could,” Bakke said. “The Bible talks about the great commandment to love your neighbor as yourself. That’s what I meant by love.”
So is it Bakke for president in 2012? You heard it here first.