Jonathon Delacour the heart of things

The talent myth

I couldn’t help being reminded of the steady deterioration in corporate and political leadership over the last twenty years while reading The Talent Myth, Malcolm Gladwell’s latest New Yorker article:

This “talent mind-set” is the new orthodoxy of American management. It is the intellectual justification for why such a high premium is placed on degrees from first-tier business schools, and why the compensation packages for top executives have become so lavish. In the modern corporation, the system is considered only as strong as its stars, and, in the past few years, this message has been preached by consultants and management gurus all over the world. None, however, have spread the word quite so ardently as McKinsey, and, of all its clients, one firm took the talent mind-set closest to heart. It was a company where McKinsey conducted twenty separate projects, where McKinsey’s billings topped ten million dollars a year, where a McKinsey director regularly attended board meetings, and where the C.E.O. himself was a former McKinsey partner. The company, of course, was Enron.

The picture Gladwell paints of Enron is of a company that scrupulously followed McKinsey’s recommendations, grading employees into A, B, and C groups: “The A’s must be challenged and disproportionately rewarded. The B’s need to be encouraged and affirmed. The C’s need to shape up or be shipped out.” The A’s were then allowed to do pretty much whatever they liked. At Enron, Gladwell writes, ” the needs of the customers and the shareholders were secondary to the needs of its stars.”

The broader failing of McKinsey and its acolytes at Enron is their assumption that an organization’s intelligence is simply a function of the intelligence of its employees. They believe in stars, because they don’t believe in systems. In a way, that’s understandable, because our lives are so obviously enriched by individual brilliance. Groups don’t write great novels, and a committee didn’t come up with the theory of relativity. But companies work by different rules. They don’t just create; they execute and compete and coördinate the efforts of many different people, and the organizations that are most successful at that task are the ones where the system is the star.

One organization, above all others, believes that the system is the star: the military. And to illustrate his theory of why Enron’s exclusive focus on talent resulted in catastrophe, Gladwell focuses on the inability of the US Navy in World War II to successfully counter the German U-boat threat, a problem that was eventually solved by introducing a different kind of organization to harness the efforts of the same talented individuals who had previously failed.

Then, as examples of companies whose values (and ongoing success) are diametrically opposed to Enron’s, Gladwell points to Southwest Airlines, Wal-Mart, and Procter & Gamble, each owing its success to highly effective operational systems, two having CEOs with military backgrounds.

Although Gladwell’s focus is on systems, his article makes it quite clear that Enron was a company without any real leadership. He also suggests, obliquely, that in a society of individuals with a culture that glorifies talent and worships stars, there are real insights to be gleaned from organizations like the army and navy, which place the highest value on systems, teamwork, and effective leadership.

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