Talent Is Overrated (2 page)

This explanation has the additional advantage of helping most of us come to somewhat melancholy terms with our own performance. A god-given gift is a one-in-a-million thing. You have it or you don't. If you don't—and of course most of us don't—then it follows that you should just forget now about ever coming close to greatness.

Thus it's clear why most of us don't dwell on the mystery of great performance. We don't think it's a mystery. We've got a couple of explanations in our head, and if it ever occurs to us that the first one is clearly wrong, well, the second one is what we really believe anyway. And the nicest thing about the second explanation is that it takes the matter of great performance out of our hands. If we were really a natural at anything, we'd know it by now. Since we're not, we can worry about other things.

The trouble with this explanation—except it isn't trouble, it's excellent news—is that it's wrong. Great performance is in our hands far more than most of us ever suspected.

It turns out that our knowledge of great performance, like our knowledge of everything else, has actually advanced quite a bit in the past couple of millennia. It's just that most of the findings haven't made their way into people's heads. Scientists began turning their attention to it in a big way about 150 years ago, but what's most important is the growing mountain of research that has accumulated in just the past 30 years. Conducted by scientists around the world, who have looked into top-level performance in a wide array of fields, including management, chess, swimming, surgery, jet piloting, violin playing, sales, novel writing, and many others, these hundreds of research studies have converged on some major conclusions that directly contradict most of what we all think we know about great performance. Specifically:

 
The new understanding of great performance is especially powerful because it seems widely generalizable. Researchers continue to test it in an increasingly broad range of fields, and it keeps holding up. So the opportunity to apply it in all types of domains seems irresistible, and indeed doing so looks increasingly like an urgent task.

You might say that this new understanding has come along just in the nick of time, because the need for it in every field is greater than ever. The reasons are many. Most apparent is the trend of rapidly rising standards in virtually every domain. To overstate only slightly, people everywhere are doing and making pretty much everything better. We see examples wherever we turn, starting in our own households. You're well aware that computers offer more power for fewer dollars every year, but the same phenomenon is happening across industries. How long did your parents' car last? Maybe 50,000 miles? If you put 200,000 miles on your new Toyota, no one will think anything of it. It's a similar story with the car's tires. A Whirlpool washer (or any other major brand) has more functions, uses less water, requires less electricity, and costs far less in inflation-adjusted dollars than it did five years ago. In every industry worldwide, businesses have to perform at the highest standard, and then get continually better, just to be competitive. Great performance is becoming more valuable.

The trend is the same in virtually every field of individual human performance. Consider sports, which not only are interesting in themselves but also, as we shall see, have much to teach us about great performance in business and other realms—and not in the old-fashioned winning-is-the-only-thing sense. We all know that sports records keep getting broken, but we generally don't appreciate just how dramatic the progress has been, or the reasons for it. For example, the Olympic records of a hundred years ago—representing the best performance of any human being on the planet—today in many cases equal ho-hum performance by high schoolers. The winner of the men's 200-meter race in the 1908 Olympics ran it in 22.6 seconds; today's high school record is faster by more than 2 seconds, a huge margin. Today's best high school time in the marathon beats the 1908 Olympic gold medalist by more than twenty minutes. And if you're thinking it's because kids today are bigger, that's not it. Recent research by Dr. Niels H. Secher of the University of Copenhagen and others shows that size is no advantage in running, since each stride requires you to lift yourself up. “The smaller you are, the better you are,” he says.

In any case, events in which size and power are irrelevant show the same pattern of constantly rising standards. In diving, for example, the double somersault was almost prohibited as recently as the 1924 Olympics because it was considered too dangerous. Today, it's boring.

This matters because of why it's happening: Contemporary athletes are superior not because they're somehow different but because they train themselves more effectively. That's an important concept for us to remember.

Standards in intellectual disciplines are rising at least as fast as in sports. Roger Bacon, the great English scholar and teacher of the thirteenth century, wrote that a person would need thirty to forty years of study to master mathematics as then understood. Today the math he was talking about—calculus hadn't been invented—is taught routinely to millions of high school students. No one thinks anything of it, but consider what this means. The intellectual content of the material is the same, and people's brains aren't any different; seven hundred and some years isn't nearly enough time for a broad upgrade in human brainpower. Instead, just as in sports, the standard of what we do with what we've got has simply risen tremendously.

When Tchaikovsky finished writing his Violin Concerto in 1878, he asked the famous violinist Leopold Auer to give the premier performance. Auer studied the score and said no—he thought the work was unplayable. Today every young violinist graduating from Juilliard can play it. The music is the same, the violins are the same, and human beings haven't changed. But people have learned how to perform much, much better.

New research shows that the trend is continuing, even in realms where the standard already seems impressively high. For example, a cleverly designed study of world championship games in chess found recently that the game is being played at a far higher level today than it was in the nineteenth century, when the world championship was first contested. Using powerful chess software, the researchers found that former champions made many more tactical errors than today's players do. In fact, champions of yore would about match today's players just below the master level, not even approaching the grand master or champion levels. The researchers concluded, “these results imply dramatic improvements at the highest level of intellectual achievement in the game of chess over the last two centuries.” Again, the game hasn't changed, and not enough time has passed for human brains to have changed. What has changed is that people are doing much more with what they've got.

In business it's overwhelmingly clear that standards of performance will continue to rise more relentlessly than they have in the past, thus increasing the value of great performance. The most important reason is that infotech has given customers unprecedented power, and with that power they're demanding more. We all understand this because we've all bought stuff online. As buyers, we receive more information than we could ever see before. We know what the car dealer paid for the car. We know what prescription drugs cost in Canada. We know that a college textbook costing $135 in the campus bookstore can be ordered for $70 from England. And what we know and save as consumers is nothing compared with what corporate buyers know about their suppliers, and the cost savings it has suddenly become possible to squeeze out of them. As the strategy consultant Gary Hamel likes to say, if customer ignorance is a profit center for you, you're in trouble.

It isn't just companies that have to keep kicking up their performance more than they ever did before. It's each of us individually. The pressure on us to keep getting better is greater than it used to be because of a historic change in the economy.

To understand what's going on, we need to take a step back. How many offers of credit cards do you get in the mail every day? Do your kids get them? How about your pet? (It has happened.) Maybe you also receive unsolicited checks with your name and address printed in the corner, and a letter urging you to write out those checks to pay some bills. It's happening because the world's financial institutions are awash in money. They literally have more than they know what to do with, and they're saying: Take some, please!

Those financial institutions aren't alone. Companies of all kinds have far more money than they need. The cash held by U.S. companies is hitting all-time records. Companies are using some of this money to buy back their own stock at record rates. When a company does this, it's saying to its investors: We don't have any good ideas for what to do with this, so here—maybe you do.

These are all manifestations of a much larger phenomenon. For roughly five hundred years—from the explosion of commerce and wealth that accompanied the Renaissance until the late twentieth century—the scarce resource in business was financial capital. If you had it, you had the means to create more wealth, and if you didn't, you didn't. That world is now gone. Today, in a change that is historically quite sudden, financial capital is abundant. The scarce resource is no longer money. It's human ability.

Such assertions run the danger of sounding like up-with-people fluff, so it's important to demonstrate that they're true. Fortunately, the evidence is easy to spot. It has become possible in recent years to create staggering amounts of shareholder wealth with business models that use very little financial capital but tons of human capital. For example, Microsoft has used about $30 billion of financial capital from all sources over its corporate lifetime, and it has created about $221 billion of shareholder wealth. By contrast, Procter & Gamble, one of the best managed and most admired companies in the world, has used far more capital than Microsoft, about $83 billion, yet has created much less shareholder wealth—about $126 billion.

Even more dramatically, Google has used only about $5 billion of capital but has created about $124 billion of shareholder wealth. Contrast that with, say, PepsiCo, another superbly managed company built on a business model from an earlier age; using much more financial capital than Google, about $34 billion, it has created much less shareholder wealth, about $73 billion.