Friday, November 05, 2004

talent, intelligence, success, and management

malcolm gladwell -- who is quickly becoming the darling of the blogosphere -- has an interesting article on the cult surrounding talent in the sixth volume of changethis.

[...]
One possibility is simply to hire and reward the smartest people. But the link between, say, I.Q. and job performance is distinctly underwhelming. On a scale where 0.1 or below means virtually no correlation and 0.7 or above implies a strong correlation (your height, for example, has a 0.7 correlation with your parents' height), the correlation between I.Q. and occupational success is between 0.2 and 0.3. "What I.Q. doesnt pick up is effectiveness at common-sense sorts of things, especially working with people," Richard Wagner, a psychologist at Florida State University, says. "In terms of how we evaluate schooling, everything is about working by yourself. If you work with someone else, it's called cheating. Once you get out in the real world, everything you do involves working with other people."
[...]
Kitchinʼs qualification for running EnronOnline, it should be pointed out, was not that she was good at it. It was that she wanted to do it, and Enron was a place where stars did whatever they wanted. “Fluid movement is absolutely necessary in our company. And the type of people we hire enforces that,” Skilling told the team from McKinsey. “Not only does this system help the excitement level for each manager, it shapes Enronʼs business in the direction that its managers find most exciting.” Here is Skilling again: “If lots of [employees] are flocking to a new business unit, thatʼs a good sign that the opportunity is a good one…If a business unit canʼt attract people very easily, thatʼs a good sign that itʼs a business Enron shouldnʼt be in.” You might expect a C.E.O. to say that if a business unit canʼt attract customers very easily thatʼs a good sign itʼs a business the company shouldnʼt be in. A companyʼs business is supposed to be shaped in the direction that its managers find most profitable. But at Enron the needs of the customers and the shareholders were secondary to the needs of its stars.
[...]
The distinction between the Greedy Corporation and the Narcissistic Corporation matters, because the way we conceive our attainments helps determine how we behave. Carol Dweck, a psychologist at Columbia University, has found that people generally hold one of two fairly firm beliefs about their intelligence: they consider it either a fixed trait or something that is malleable and can be developed over time. Five years ago, Dweck did a study at the University of Hong Kong, where all classes are conducted in English. She and her colleagues approached a large group of social-sciences students, told them their English-proficiency scores, and asked them if they wanted to take a course to improve their language skills. One would expect all those who scored poorly to sign up for the remedial course. The University of Hong Kong is a demanding institution, and it is hard to do well in the social sciences without strong English skills.

Curiously, however, only the ones who believed in malleable intelligence expressed interest in the class. The students who believed that their intelligence was a fixed trait were so concerned about appearing to be deficient that they preferred to stay home. “Students who hold a fixed view of their intelligence care so much about looking smart that they act dumb,” Dweck writes, “for what could be dumber than giving up a chance to learn something that is essential for your own success?”

In a similar experiment, Dweck gave a class of preadolescent students a test filled with challenging problems. After they were finished, one group was praised for its effort and another group was praised for its intelligence. Those praised for their intelligence were reluctant to tackle difficult tasks, and their performance on subsequent tests soon began to suffer. Then Dweck asked the children to write a letter to students at another school, describing their experience in the study. She discovered something remarkable: forty per cent of those students who were praised for their intelligence lied about how they had scored on the test, adjusting their grade upward. They werenʼt naturally deceptive people, and they werenʼt any less intelligent or self-confident than anyone else. They simply did what people do when they are immersed in an environment that celebrates them solely for their innate “talent.” They begin to define themselves by that description, and when times get tough and that self-image is threatened they have difficulty with the consequences. They will not take the remedial course. They will not stand up to investors and the public and admit that they were wrong. Theyʼd sooner lie.
[...]
...The talent myth assumes that people make organizations smart. More often than not, itʼs the other way around.

There is ample evidence of this principle among Americaʼs most successful companies. Southwest Airlines hires very few M.B.A.s, pays its managers modestly, and gives raises according to seniority, not “rank and yank.” Yet it is by far the most successful of all United States airlines, because it has created a vastly more efficient organization than its competitors have. ...

In the case of the giant retailer Wal-Mart, one of the most critical periods in its history came in 1976, when Sam Walton “unretired,” pushing out his handpicked successor, Ron Mayer. Mayer was just over forty. He was ambitious. He was charismatic. He was, in the words of one Walton biographer, “the boy-genius financial officer.” But Walton was convinced that Mayer was, as people at McKinsey would say, “differentiating and affirming” in the corporate suite, in defiance of Wal-Martʼs inclusive culture. Mayer left, and Wal-Mart survived. After all, Wal-Mart is an organization, not an all-star team.

Procter & Gamble doesnʼt have a star system, either. How could it? Would the top M.B.A. graduates of Harvard and Stanford move to Cincinnati to work on detergent when they could make three times as much reinventing the world in Houston? ... But Procter & Gamble has dominated the consumer-products field for close to a century, because it has a carefully conceived managerial system, and a rigorous marketing methodology that has allowed it to win battles for brands like Crest and Tide decade after decade.


interesting stuff, especially the data on motivational difference between students, but ultimately, i think he paints too stark of a picture. did the enron management style reward the wrong things? yeah, probably, but i don't think that you can import an old-school management style into a dynamically innovative business entity and expect things to work out. (but, you know, not all businesses are dynamically innovative -- there are only so many ways to make and sell soap.)

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