Archive for the ‘Talent’ Category

Organizations: focus on creating a great system, not finding great talent

November 28, 2007

People’s performance (in an organization) depends on the resources they have to work with, including help they get from colleagues, and the infrastructure that supports their work.

It is impossible for even the most talented people to do competent, let alone brilliant, work in a flawed system.

A well-designed system filled with ordinary — but well-trained — people can consistently achieve stunning performance levels.

Consider investment analysts: they are treated like stars, hired away at enormous salaries, and many achieve great media notoriety. Boris Groysberg found that after a company hires a star, bad things happen all around: “The star’s performance plunges, there is a sharp decline in the functioning of the group or team the person works with, and the company’s market value falls.” In particular, “46% of the research analysts did poorly in the year after they left one company for another … their performance plummeted by an average of about 20% and had not climbed back to the old levels even five years later.”

Why do so many companies still place so much emphasis on getting and keeping great people and so little on building and sustaining great systems? A big part of the answer is that Western countries glorify rugged individualism so much that we make cognitive errors. We give too much credit to individual heroes when organizations do things right and place too much blame on individual scapegoats when things do wrong.

Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

A related blog: Myth: talent is completely fixed and predetermined at birth

Myth: talent is completely fixed and predetermined at birth

November 18, 2007

Despite all the myths, talent is not completely fixed or predetermined at birth or at a young age. Talent depends on:

  • a person’s motivation
  • a person’s experience
  • how a person is managed or led

Assessment of talent depends on:

  • how it is defined by a culture
  • how it is defined by an era

Talent depends more on effort and having access to the right information and techniques than on natural ability.

Talent, in other words, is far more malleable than many people want us to believe.

Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

What economic incentive is there to form decentralized organizations?

August 20, 2007

Adam Smith wrote a seminal book in 1776 called The Wealth of Nations. It is a classic, laying the foundations for most of today’s economic ideas. Smith’s ideas are deeply ingrained into western societies.

Division of labor is central to Smith’s thesis. Division of labor leads to high productivity. By focusing one’s efforts on a single task, one develops a talent for that task and become very productive. The greater the productivity, the greater one’s wealth.

Division of labor is consistent with one’s self-interest.

Conversely, when a person attempts to perform many tasks he masters none, is inefficient, has low productivity, and is unable to attain wealth. This is not consistent with one’s self-interest.

Division of labor results in a society that does lots of trading (if a person produces only one thing, he must trade for the other things he desires or needs). This creates a highly interconnected, interdependent society.

Today there is much excitement about decentralization. In a decentralized organization there is no one in charge, everyone is independent.

“Units of a decentralized organization are by definition completely autonomous … In decentralized organizations, anyone can do anything … Any and every activity is within anyone’s job description.” [1]

In a decentralized organization each person is not focused on a single task; rather, each person is a jack-of-all-trades. Smith would argue that this leads to low productivity, which leads to low wealth, which is not consistent with one’s self-interest.

So I wonder: what economic incentive is there to form decentralized organizations?

[1] The Starfish and the Spider by Ori Brafman and Rod A. Beckstrom