Talent Is Overrated (19 page)

The army has found another benefit of the after-action review: that when people really understand what happened, they're eager to try to do it better. This reinforces the principles of great performance. As the army training circular says, when an after-action review is done right, “not only will everyone understand what did and did not occur and why, but most importantly will have a strong desire to seek the opportunity to practice the task again.”

The after-action review “is a very powerful process,” Kolditz says. Its potential value to companies and other organizations is obvious. A number of firms have tried using it, usually with mixed results, and the problems are cultural. But cultures can be changed over time, and the best organizations will do the work necessary to change them in order to get the benefits of truly deep and broad feedback.

 
Identify promising performers early.

We've seen hints already, and will see in detail later, that an early start at development creates huge advantages. John Rice, the GE vice chairman whose career took off after Welch gave him a battlefield promotion, says, “Leadership capability can be evaluated on day one of employment.” That's because day one isn't really day one for many employees, who have interned at GE for at least one previous summer, enabling the company to observe their performance. A telling indicator is how interns get others to work with them when they have absolutely no authority. Another signal that GE looks at, separate from internships, is whether someone played a team sport in college and what his or her role was.

Working on people's development early is a big change at most companies, where development programs were long reserved for an elite group several years into their careers. Many of the best-performing companies are trying to move past that. They believe that developing future leaders earlier than other companies creates a competitive advantage that lasts for decades, as their pipelines of high achievers become bigger, better, and more reliable.

 
Deliberate practice activities are so demanding that no one can sustain them for long without strong motivation. How can an enterprise contribute to that motivation? The traditional answer was that it made people do what it wanted by firing, demoting, or otherwise punishing those who didn't. That never worked very well, and it works even worse in today's information-based economy, where most employees aren't turning wrenches but instead are using knowledge and relationships with results that may not be easily observed day-to-day. Try making them do what you say, or even telling them exactly what to do. A. G. Lafley of Procter & Gamble says, “The command and control model of leadership just won't work 99 percent of the time.”

That is why a favorite word at many of today's best-performing companies is
inspire.
P&G runs a development program called Inspirational Leadership, which focuses explicitly on teaching leaders how to inspire colleagues. At American Express, everyone at or above the vice-president level attends a program called Leadership Inspiring Employee Engagement. These companies realize that they motivate best through a sense of mission. For some top performers, such as Medtronic or Eli Lilly, the mission is rooted deep in their history of saving lives or treating illnesses. For others, identifying or even creating a sense of mission requires a journey deep into the corporate soul. That trip is not for the faint-hearted. But it is mandatory for any organization that wants to motivate employees sufficiently to become world-class performers.

 
Invest significant time, money, and energy in developing people.

 
You don't develop people on the cheap, and you don't just bolt a development program onto existing HR procedures. The CEOs of top-performing companies agree that people development is at the center of their jobs. Indeed, the biggest investment involved may be the time of the CEO and other executives. At McDonald's, for example, CEO Jim Skinner personally reviews the development of the company's top two hundred managers. At GE, Immelt reviews the top six hundred. Bill Hawkins, CEO of Medtronic, says he spends 50 percent of his time on people issues, and many other top CEOs report similar percentages—making this the largest time commitment they have. Lots of companies claim they're interested in developing leaders, but the University of Michigan's Noel Tichy, a top authority on the subject, says testing their commitment is easy: “Just show me the CEO's calendar.”

The CEO's time is only the beginning. Many of these chiefs note the “cascading” effect of what they do: As their direct reports see what the boss is focusing on, they also become devoted to developing people, as do their subordinates, and so on. Not that these companies rely solely on the power of example. Virtually all of them evaluate executives partly on how well they're developing people, including themselves. In American Express's highly rigorous system, for example, 25 percent of an executive's variable pay depends on people development.

Further expenses can be big, but no CEO seems to doubt their value. GE's Crotonville, a beautiful fifty-two-acre campus just north of New York City, obviously costs a bundle, and running thousands of managers through it every year costs even more. But “we fund it through good times and bad,” says Immelt. “I learned that from Jack [Welch], and I still do it.” Whirlpool decided a few years ago to upgrade its off-the-shelf development curriculum by developing its own. The program is now bigger than ever, and worth every cent. CEO Jeff Fettig says, “This is the single best investment we make in our company.”

 
Make leadership development part of the culture.

 
Though executives at the best companies talk about their leadership development programs, they generally realize the term isn't quite right. Developing leaders isn't a program, it's a way of living. For example, honest feedback has to be culturally okay; at many companies it isn't. Devoting significant time to mentoring has to be accepted. Working for nonprofits has to be encouraged, not just tolerated. Such cultural norms can't be dictated on short notice; they have to grow over time. That's a major reason why GE is so widely regarded as the best at people development. Charles Coffin (CEO from 1892 to 1912) realized that GE's real products weren't lightbulbs or electric motors but business leaders; developing them has been the company's focus ever since.

Any organization that does all these things will build tremendous competitive advantages in its industry because its people will be developed to such an unusually high level. Every enterprise wants to be filled with A players, and rightly so. But that isn't enough.

After all, most people in an organization don't work alone. They work in teams, strictly or loosely defined. And a team's performance is emphatically not determined solely by the abilities of its members individually. Maybe you remember something called the World Baseball Classic, a tournament played by a group of national teams in the spring of 2006. You might suppose that no one could beat America at America's game, especially since the U.S. team was filled with undeniably great players—Roger Clemens, Derek Jeter, Alex Rodriguez, and Johnny Damon, among others. Yet the team didn't win the tournament and lost games to Mexico, South Korea, and—wait for it—Canada. Similarly, the 2004 U.S. Olympic basketball team, consisting entirely of NBA millionaires, finished third and lost to Lithuania, among other previously unknown hoops powers.

Turning groups of great individuals into great teams is a discipline in itself, which also operates on the principles of great performance. That's why the best organizations follow one additional rule:

 
For example, Jeff Immelt recalls, “at the GE I grew up in, most of my training was individually based.” But that led to problems. He'd attend a three-week program at Crotonville, but back at work “I could use only 60 percent of what I'd learned because I needed others—my boss, my IT guy—to help with the rest.” And maybe they weren't on board. Now GE takes whole teams and puts them through Crotonville together, making real decisions about their business. Result: “There's no excuse for not doing it.”

Applying the principles of great performance to team development is not conceptually difficult. The same basic elements that work for individuals—well-designed practice activities, coaching, repetition, feedback, self-regulation, building knowledge, and mental models—all work for teams as well. The problems are practical. They center on forces within the team that prevent it from realizing the benefits of the great-performance approach. Organizations that are the most successful at building team performance are especially skilled at avoiding or addressing potential problems that are particularly toxic to the elements of deliberate practice, such as the following:

 
Picking the wrong team members.
Every team wants great individual performers, but combining them is a skill all its own, in business or any other domain. “Some of the worst teams I've ever seen have been those where everybody was a potential CEO,” says David Nadler, a senior partner at the Oliver Wyman consulting firm, who has worked with executive teams at top global companies for more than thirty years. “If there's a zero-sum game called succession going on, it's very difficult to have an effective team.”

Chemistry and culture are key. Henry Ford II successfully brought in the Whiz Kids, a preassembled team of U.S. Army managerial stars that included Tex Thornton, later founder of Litton Industries, and Robert McNamara, later president of Ford and then U.S. secretary of defense, when he sensed that Ford needed a revolution after World War II. The Whiz Kids had a record of working together effectively from their army days. But fifty years later, when Ford CEO Jacques Nasser correctly decided that the company needed another revolution, he stuck with the old-guard team already in place. Like most old guards, they weren't ready for a real revolution, and when push came to shove, Nasser got ejected. More seriously for Ford, the revolution didn't happen.

For a notably successful method of choosing team members, look at Worthington Industries, the Ohio-based steel processor. When an employee is hired to join a plant-floor team, he works for a ninety-day probationary period, after which the team determines his fate by vote. It works because much of the team's pay is at risk, based on performance, so team members are clear-eyed and unsparing in evaluating a new candidate's contribution. CEO John McConnell could be talking about teams at any level when he says, “Give us people who are dedicated to making the team work, as opposed to a bunch of talented people with big egos, and we'll win every time.”

The most inspiring U.S. Olympic team ever, the 1980 hockey team that beat the Soviets at Lake Placid, was built explicitly on similar principles. Professional players weren't eligible back then. More fundamentally, coach Herb Brooks wanted to build a team on personal chemistry combined with extremely intensive practice. In the movie version of the story, called
Miracle,
Brooks's assistant looks at the coach's roster and objects that he has left out many of the country's greatest college players. To which Brooks responds with the essential mix-is-critical philosophy: “I'm not lookin' for the best players, Craig. I'm lookin' for the right players.”

Low trust.
Read the extensive literature on team effectiveness, or talk to people on teams in sports, business, or elsewhere, and it always comes down to this: Trust is the most fundamental element of a winning team. If people think their teammates are lying, withholding information, or plotting to knife them, nothing valuable will get done. Similarly, team members may not trust one another's competence. Such teams don't create synergy. They create its opposite, dysergy—two plus two equals three, with luck.

So-called dream teams may be in trouble right from the start because team members often have particular reasons to be distrustful. In sports settings, all-star teams are brought together only briefly from teams that spend the rest of the year trying to beat one another. Even if team members can set aside that antagonistic mind-set, they rarely have time to develop confidence in one another's behavior and abilities. It's similar in business: Even if team members aren't battling for the next promotion, someone is always getting moved or stolen away. “A major problem is that people are transient,” says consultant Ram Charan. Especially on an all-star team, “there's all the headhunting, and there's a constant tug to have people pulled out of the team. Instability is a major issue.” That's a big problem because trust by its nature is built slowly.

Many companies try to speed up the trust-building process. In the eighties there was a virtual epidemic of people falling backward off tables into the arms of coworkers as a way of learning trust. Maybe it even helped. Today consultants have developed many additional exercises that involve people sharing personal stories or revealing their personality type, based on the valid insight that reciprocal vulnerability is the beginning of trust. But the process can be rushed only so much.

In fact, trust is so fragile and so laboriously created that it may never extend very far in a top-level team. “Building a really high-performing executive team at the highest level is a mirage,” says a famous management consultant who doesn't want his name used because this particular message is such a downer. “When such teams do exist, they'll consist mostly of two people, maybe three.” It's just too hard to build trust more extensively at the top level, where everyone is supposedly a star.

And sure enough, the legendary top executive teams are almost always pairs. Think of Roberto Goizueta and Donald Keough at Coca-Cola in the eighties and nineties, or Tom Murphy and Dan Burke at Capital Cities/ABC from the sixties to the nineties, or Reuben Mark and Bill Shanahan at Colgate-Palmolive for two decades until 2005, or Warren Buffett and Charlie Munger at Berkshire Hathaway from the sixties to today. No one would have called those pairs dream teams back when they got together; at the time, most people had never heard of them. They all developed deep trust over many years and produced outstanding results.