Tuesday, September 09, 2003

What about us "C" players?: The New Yorker put out a great article nearly a year ago on how companies were going about recruiting the A-players from B-school. The article was called "The Talent Myth". There was this management-consluting group that put together this dogma on how it should be done (they, naturally, wrote a book about the concept, called "The War for Talent"). Basically the theory was to only go for the shooting stars, the A-1 talent, then overpay for that talent, and encourage these stars, once employed, to do whatever they want. The premise is their talent will open up doors previously unrecognized, and that they will drag upward those at the B or C level. In their own words:
"Bet on the natural athletes, the ones with the strongest intrinsic skills," the authors approvingly quote one senior General Electric executive as saying. "Don't be afraid to promote stars without specifically relevant experience, seemingly over their heads." Success in the modern economy, according to Michaels, Handfield-Jones, and Axelrod [the three consultant-authors], requires "the talent mind-set": the "deep-seated belief that having better talent at all levels is how you outperform your competitors."
Makes sense, no? Well maybe on paper. The prime exemplar of this philosophy (a company guided by this management consultant) was none other than Enron. Oh, and Enron paid tens of millions a year for this fine strategy. Of course, before the fall, no one was daring to question this strategy. In fact, books were being written to praise it. To wit:
Among the many glowing books about Enron written before its fall was the best-seller "Leading the Revolution," by the management consultant Gary Hamel, which tells the story of Lou Pai, who launched Enron's power-trading business. Pai's group began with a disaster: it lost tens of millions of dollars trying to sell electricity to residential consumers in newly deregulated markets. The problem, Hamel explains, is that the markets weren't truly deregulated: "The states that were opening their markets to competition were still setting rules designed to give their traditional utilities big advantages." It doesn't seem to have occurred to anyone that Pai ought to have looked into those rules more carefully before risking millions of dollars. He was promptly given the chance to build the commercial electricity-outsourcing business, where he ran up several more years of heavy losses before cashing out of Enron last year with two hundred and seventy million dollars. Because Pai had "talent," he was given new opportunities, and when he failed at those new opportunities he was given still more opportunities . . . because he had "talent." "At Enron, failure—even of the type that ends up on the front page of the Wall Street Journal—doesn't necessarily sink a career," Hamel writes, as if that were a good thing. Presumably, companies that want to encourage risk-taking must be willing to tolerate mistakes.
As the article then pointedly puts it: "[I]f talent is defined as something separate from an employee's actual performance, what use is it, exactly?" This was a metaphor for Enron as a whole. It was a company that, it turns out, really didn't produce or service anything. Its profits were all on paper, and then, not even there. All the Board desired was an inflated stock price so articles got written and bonuses/loans got okayed. In then end, this massive ball of talent imploded upon its hollow, vacuous core. Let's hear it for the mediocre and lazy!


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