I have always been fascinated by what we can learn from looking at what I call “edge cases” — what Malcolm Gladwell called “Outliers” in his book. These cases occur at the edges of a statistical distribution and are by definition rare compared with the rest of the distribution of whatever capability is being measured. They are interesting because, in almost every area of human endeavor, the best performers do orders of magnitude (not just two or three times but 10 times or even 100 times) better than the average.
Over the past 30 years I’ve occasionally been able to build teams using only the best people and advised (usually small) businesses who have taken the same approach to building a product or service. There’s no question it works, assuming you can find the right people and manage them the right way, but is it a sustainable strategy for the long haul? Can you build a successful growing business, operating dynamically and at global scale, on the model of hiring “simply the best?”
For most of my advisory career I have suggested to most (generally larger) clients that you can’t. Certainly (although this is not obvious from the strategies many people espouse) not everyone can – there simply isn’t enough “outlier”-level talent to go around (they’re rare, remember). But can any company beyond the early stages in its life make this strategy work?
You’d have to overcome some pretty steep obstacles, most of which are rooted either in the personalities and behavioral traits that come with truly high performers or the extent to which much of businesses’ operating processes are too mundane to be interesting to the very talented. And you’d have key man (or woman) risks all over the place.
Still the idea remains intriguing, and lately I have been giving some thought to what would be needed to make this strategy work.
Here’s a guide to the issues that I think you’d need to solve:
Understand what you need the talent for and let the talent work on nothing but these things. You should be able to divide everything you need to do to run your business into “core” and “non-core” activities. Activities are “core” if they’re directly coupled with how you make money or how you’re differentiated in the mind of customers. You’ll need your best people working on what you decide is core. Make sure they agree that these activities really are core, and don’t ever make them do anything non-core. This is increasingly tough as regulation and compliance eats into the time of every employee, but think about how to somehow make what you can’t avoid interesting.
Get someone else to do the non-core activities. Just because something isn’t core to your business doesn’t mean you can choose not to do it. All kinds of regulation and reporting requirements encumber your core activities, especially if you’re a public company and operate globally. So wherever possible, get someone else to do these things for you, preferably at arm’s length, so that your talent pool doesn’t get distracted by the sight and sound of mundane work. Better still, get everything possible that’s non-core but necessary automated so that it happens automatically with minimal people time needed.
Make one of your core capabilities the identification, nurturing and growth of highly talented people. This is another tough one, because no matter how talented your core group is, you’re going to see some attrition, and finding new people who can fit in quickly and non-disruptively is never easy.
Highly talented people aren’t always very good at actually applying their talent when they’re young (and inexperienced) and by the time they’re good they may be embedded somewhere else. That means you’re going to have to recruit from the places that turn out the top talent, even if you’re not sure you have the need right this minute — and you’d better figure out how to get an inside track on just who really is the top talent. Sponsoring competitions and offering prizes is one way to go about this. And once you’ve hired someone, pay attention to them. Challenge and stretch them. Track how well they’re working out.
Cull your mistakes quickly. No matter how good your recruiting process (and talent evaluation people) get, they’ll make some hiring mistakes. Some highly talented people can’t (or don’t want to) keep up the pace, or don’t fit in well, no matter how promising they seem initially. Move them out quickly — at the level of operational capability you want to achieve and maintain, dysfunction has a huge price.
Avoid the trap of averaging down. This is also tough. There will be two big temptations: hiring someone less talented than you really want because you just have to have the capacity, never mind the capability; and allowing hiring managers to hire people who are less rather than more talented than they are. To be sure, avoiding these traps may actually cap how fast you can grow and how big your talent pool can be, which “the market” might not like. But adhering to this discipline is essential. Sooner or later your next hire will make you worse, not better, and that’s the beginning of the end for your strategy.
Actively manage collaboration among the talent pool. In my experience, highly talented people are only occasionally natural collaborators, and it takes work (and encouragement and incentives) to make them into an effective team.
If you allow your most talented people free rein to innovate, don’t stigmatize failure. That’s a guaranteed culture killer. The model that gives everyone some time to work on whatever they want is certainly interesting, although its effectiveness as a generator of innovation remains unproven in the long term. Getting the balance right between “interesting” and “important” will always be challenging.
Not many organizations have made this “Simply the Best” approach work successfully. Some parts of the military — especially special forces groups — have. Bell Labs for a while. IBM Research. Google today, maybe. There are, of course, other success models available (GE, Microsoft, Cisco, Amazon, Apple), and it’s often easier to figure one of these out than to implement the outliers approach at scale.
But the lure of working with the most talented people and seeing what they can do remains. Ready for some game changing, anyone?
John Parkinson is an affiliate partner at Waterstone Management Group in Chicago. He has been a global business and technology executive and a strategist for more than 35 years.