Are smart people overrated?
gladwell.com
gladwell.com
Kitchin's 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.
EnronOnline was one of the most successful units of Enron. In fact, UBS picked up the platform and now many of the techniques developed at EnronOnline was picked up by the electronic energy trading platforms.
Kitchin is still considered one of the foremost authorities in the world of energy trading and finance. I believe she is a MD at Deutsche Bank in the field of energy structuring and got her development of the business turned into a Harvard Business School case study.
Clearly not only was she good at organizing the business, she succeeded at it. This is exactly what I really dislike about reading Gladwell's stuff. His job is to find a previously successful story-line that has hit snags, in order to act as an armchair quarterback. He is just like most other journalist and historian - seemingly wise because of post-hoc analysis but incapable of actual prediction.
And for the record, I think that Enron goes well beyond having "hit snags".
Gladwell tries to come off from a moral high ground where he preaches about certain concepts (in this example the benefits of talent) by self-selecting evidence.
I really find it funny how the entire employee grading process has become a huge area of contention amongst arm chair quarterbacks. Recently, there was another article where it talked about Wall Street's excessive competitiveness as having caused the crisis. Gladwell and similar authors forget the one company (and the one manager) credited with popularizing this entire concept: General Electric and Jack Welch. I like the off-handed way Gladwell mentions a specific quote from a G.E. exec without talking about the success G.E. had with this approach I can use Welch and G.E. in order to argue against this entire article. In fact, Welch's biographies do the job. Not only did he grade employees into three tiers, he graded entire businesses into tiers. If a business wasn't #1 or #2, its shuttered. I will bet I can actually construct a better argument for supporting the quest for talent.
Enron blew up because upper management was a bunch of liars. What does talent have to do with it? In fact, Enron failed at following the "promote talent" concept. If they did take this philosophy to heart, they would have fired the international heads that bled billions of dollars from Enron's bottom line. In fact, Skilling and the top protected those sub-par managers and execs leading to the shady accounting to hide the carnage. The talent they picked up in their energy trading department was (and is) great. Go into any of the nation's energy trading floors and Enron alumni enjoy great reputations.
As for the record, I think Gladwell goes well beyond being "a bit contrarian". ;)
> He is just like most other journalist and historian - seemingly wise because of post-hoc analysis but incapable of actual prediction.
No, but he tells an interesting story very well. Point, counterpoint, point. I wouldn't take Gladwell's words (or anyone's) as gospel, but I found this genuinely fascinating. I'll be damned that if isn't a tantalizing portrait of Enron, even more so because you know what happened to them at the end. It sounds like someplace I would want to work.
And I learned a few things from this, so what's the harm?
Besides, the fact that Kitchin has moved on to bigger and better things does not really discredit Gladwell's critique. Could be another disaster unfolding as we speak. Just saying.
You probably are:
http://www.berkshirehathaway.com/2009ar/2009ar.pdf
In the end I don't think that it's either mostly about intelligence or mostly about the system but a balance, where good system will multiply the effectiveness of intelligent people.
We can find examples of few intelligent people in the right place creating astonishing breakthroughs (see Xerox Parc). I would think that if they were not above-average smart, they wouldn't have done what they did, so we shouldn't under-rate being smart.
On the other hand there are also examples of undoubtedly smart people creating over-complex, broken designs (e.g. SOAP) so pure intelligence is not all there is.
Wise people are also, of course, impressive.
Perhaps I missed this in the scandal, but I thought the most damming facts about Enron were wholesale accounting & auditing fraud with participation from Anderson. How does 'hiring smart people' explain the fact that their auditors conspired to commit fraud? If Anderson also heavily engaged in this HR practice Gladwell may have a point. But it's still heavily anecdotal. Like most business analysis it's backward looking instead of making predictions based on the theory and reporting the results.
Also, the article seems to conflate having an MBA with being smart. I wonder if Gladwell has ever thought that the reason Southwest has a vastly more efficient organization than its competitors is because it has a bunch of smart people who figure out how to do things more efficiently. People so smart in fact that they realize people on the ground can make much more informed decisions than people in a boardroom. An MBA is not a proxy for being smart, an MBA is a proxy for doing well in school. Unfortunately, school has almost nothing to do with the real world.
When I think about 'smart' people, I don't think about IQ or degrees. I think about people I've seen do the 'impossible'. A 'smart' person for customer service might be someone who is very friendly and personable. A 'smart' person for engineering may not be very personable at all but can come up with a working design in days instead of months.
At amazon, everyone was obsessed with how "smart" amazon employees were, and yet the place was a showcase of terrible engineering -- rife with accidental complexity and tight coupling that spanned not just systems within a group, but across entire divisions -- and some what I read in this article I saw there first-hand. The management complained constantly about how bad our tools were, yet the people that they promoted and took care of were the ones that designed and implemented those same tools.
A great many managers haven't the faintest idea as to how to determine what constitutes a "smart" employee, so they zero in on things like degrees and number of hours worked because they don't have any rational standard for identifying the good ones from the bad, so the guy with the degree who's working 80 hours a week is obviously the best guy on the team! Look how hard he's working! He must be REALLY smart!
"Also, the article seems to conflate having an MBA with being smart. I wonder if Gladwell has ever thought that the reason Southwest has a vastly more efficient organization than its competitors is because it has a bunch of smart people who figure out how to do things more efficiently. People so smart in fact that they realize people on the ground can make much more informed decisions than people in a boardroom."
I think that was precisely his point. Enron used MBAs as a proxy for "smartness" and turned out to be a spectacular disaster. Southwest doesn't, and is one of the few US-based airlines that isn't relying on the US government to keep it alive.
Look I understand degrees and IQ really don't mean much by themselves. Most of my friends attend "elite" colleges (as society deems it). Some are brilliant. Some aren't. However, the numbers show that "smartness" and particularly an "obsession" with smartness matters. Amazon is really successful. Google is really successful. D.E. Shaw is notoriously successful. Facebook is successful. Teach for America is super successful. The defining theme to all of these organizations is a focus on hiring the best talent possible. And often times the best talent happens to be at those top schools.
Think of the timeline of hiring. These companies often target people in the 22-27 age bracket. That is just 4 to 9 years away from their high school when college decisions were made. Work ethic, ambition, and a determination to get things done is pretty damn autocorrelating in its nature. Someone mentioned how PG noted in an essay that he was underwhelmed by MIT, Harvard, Stanford kids. But look at the YC startups. The number of startups funded by YC by alumni from MIT, CMU, Stanford is far more than what it would be if there was no correlation-causation.
I think drawing broad conclusion from a criminal enterprise like Enron is a poor way of doing things. Just because Enron touted their smartness and failed doesn't mean that is the norm. On a large enough sample set, I will still bet you that the McKinsey conclusion is right in that "talent" and the drive to get the top talent is still a big part of the most successful organizations.
I would tend to agree with that, although I've seen startups run by bad managers install a pointlessly complex hierarchy for no reason other than that companies have hierarchies.
"The reason why Amazon might have "terrible engineering" while the sleekest app startup doesn't is because Amazon is really, really big."
No. Their abysmal engineering is by far the worst I've ever seen... well, not by far, what I ran into at Disney gave Amazon a run for its idiocy. The reason for the terrible engineering is that amazon is a Gen-Y shop. The company is notorious for abusing employees, and very clearly shows preferential treatment to interns rather than seniors. They have a lot of trouble hiring experienced engineers, and since everything they do is an emergency, they put however they can on the job... in other words, most of Amazon's mission critical software was designed and implemented by people who either just graduated from college, or hadn't yet (interns).
And then they hire seniors to "fix" it... the culture is such that they think "smart" is the ticket, and don't value the wisdom and knowledge that come with experience.
Now count the number of successful companies to the number that aren't. And take into account the number of unsuccessful projects compared to the number of successful ones, even at successful companies. What I suspect that you'll find is that in most companies, even successful ones, the primary reason that projects "succeed" is that the management changes its definition of "success" in order to avoid taking blame for mis-managing a project to its demise.
Happy people and being happy in general are totally underrated.
Some quotes:
"Success is decided by the market: you only succeed if users like what you've built. And users don't care where you went to college."
"Y Combinator has been an unprecedented opportunity for learning how to pick winners. One of the most surprising things we've learned is how little it matters where people went to college."
"There's nothing like going to grad school at Harvard to cure you of any illusions you might have about the average Harvard undergrad. And yet Y Combinator showed us we were still overestimating people who'd been to elite colleges. We'd interview people from MIT or Harvard or Stanford and sometimes find ourselves thinking: they must be smarter than they seem. It took us a few iterations to learn to trust our senses."
"We're talking about a decision made by admissions officers—basically, HR people—based on a cursory examination of a huge pile of depressingly similar applications submitted by seventeen year olds. And what do they have to go on? An easily gamed standardized test; a short essay telling you what the kid thinks you want to hear; an interview with a random alum; a high school record that's largely an index of obedience. Who would rely on such a test?"
- from "News from the Front" http://www.paulgraham.com/colleges.html
EDIT: grammar
In America, I can't think of something more insulting to say to someone than to call their heritage intellectually stupid.
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This is in fact he opposite of the methodology he advocates in 'outliers' - where he suggests that you should look for things in common between successful organisations.
I had a co-worker who had memorized a raftload of facts without actually understanding many of them. She frequently mis-diagnosed problems with customer computers because although she had a huge list of facts in her head, she couldn't think her way through them to make sense of what was really going on.
Due to her ability to spew facts on demand however, the management thought she was exceptionally smart, even though she couldn't actually figure anything out for herself.
The company's hierarchy reinforced this sort of thing, because the "engineering" team was a bunch of college dropouts who didn't have the faintest idea as to how things like UNIX networking worked. They said that total memory = physical + virtual, so my attempts to explain that UNIX doesn't work like that went unheard, and customer machines continued to suffer because they didn't have enough memory to serve their buyers' needs.
The last I heard the company had something like a 4% customer satisfaction rate.