1. Doing more with less

The theme of this troubling economy has been to do more with less. This theme has run across companies, both large and small, in the post-recession era. After sacking thousands of employees in order to cuts costs, pummeling employee morale in the process, managers focusing on the bottom line remain hesitant to hire more bodies in order to explore more avenues of business, even when profits begin to pick up. Despite layoffs and hiring freezes, work still needs to get done. Companies are not going to cut back on how much work must be performed to turn a bigger profit. Instead, they simply turn to their existing employees, put a cool hand on their shoulders, smile, and ask them to take on increased duties. Those who fear for their own job will not say no. When companies see that the work still gets done, they no longer feel the need to hire and thus begin a cycle that continues today and will continue tomorrow.

2. Held back by housing

According to the National Association of Realtors, existing homes sold at an annualized rate of 4.9 million units in September. This number is only slightly ahead of the 4.77 million rate in June, which marked a 14-year low. With the U.S. housing industry still sluggish, homeowners who want to sell are forced to stay right where they are. What does that mean? Well, for those who are unemployed and struggling to pay their mortgage, it means a lot. If they can’t move, they are forced to limit their options when it comes to the job search. Those job seekers are stuck looking in the immediate vicinity for work and their options to relocate become seriously limited - not unless you want to add on the extra expense of paying rent while you wait for your home to sell.

3. Choose your education carefully

It's a truth universally acknowledged that applications to schools surge during a recession. There are no jobs, so why not get more training and make yourself a better candidate when there are jobs? Makes sense, right? But there are some disturbing figures to consider when the highly held belief is that the economy won’t be improving to acceptable levels for some time. First, graduates are not finding work. The unemployment rate for young college graduates reached an all-time high in 2009 and according to government figures 33% of people ages 20 to 29 were unemployed last year. Higher education is not helping students get ahead in this economy with many graduates having to make ends meet in jobs they are overqualified for, such as waitresses or bartenders. Not finding work is no excuse to not pay your loans. The Federal Reserve Bank of New York reported that the amount of loans taken out by students last year hit the $100 billion mark for the first time. To make matters even worse, the total amount of outstanding student debt is expected to pass $1 trillion for the first time ever this year. That debt won’t go away and will become an albatross around the necks of students, even if they end up finding the jobs of their dreams. There is nothing like being successful and still being unable to make ends meet. Choosing education has become a much more difficult decision to make.

4. Age diversity

An aging workforce is going to continue to be a big challenge for employers, who increasingly prefer to cut costs on training for new positions. Compounding this is the fact that people are delaying retirement because of the recession. While gender and racial diversity will remain critical concerns, age diversity presents a new challenge for the corporate world.

5. More short term jobs

The recession might be over, but unemployment figures have remained the same at 9.1%. This has forced Americans to look at jobs differently, with many accepting temporary and part-time positions rather than holding out for full-time permanent work. That's helped the underemployment rate remain sky-high—climbing from 16.2% to 16.5%—and there are no signs of it changing anytime soon: retailers are expected to hire around the same or even lower than the 627,600 seasonal holiday employees that were hired last year.

Those hiring this holiday season include Macy’s, which plans to add 78,000 temporary workers; Fedex, which will add 20,000 temporary employees to its workforce; Kohl’s, which will hire 40,000 seasonal workers; and Toys R’ Us, which is expected to hire 40,000 new workers to deal with the holiday rush. While some temporary workers might find full-time work, more than likely, when those temporary positions end, the unemployment rate will go right back to where it was before they were created.

6. The importance of internships and volunteering

Because there is still a shortage of jobs, landing an internship is going to be more important than ever. Despite increased competition, if you're a college student or looking to break into a new field, they're an integral part of your next career move.

Starting in high school, students need to cultivate paid or unpaid work experiences that build skills, character, work ethic and resume. Employers use internships to prescreen and hire talent. Your career currency comes down to the following equation: internship experience + skills. This is how you get your foot in the door and demonstrate your passion for your field of interest.

Because competition for internships is so high, another possible avenue for job seekers is to volunteer your services. Unpaid labor is hard to pass up, especially in the non-profit industry, which, at times, struggles to pay for a full-time work force and can use the help. The skills you pick up at these companies is transferable to other jobs within your chosen industry.

7. Negotiate a package, not a salary

While the recession has affected the number of jobs and the kind of compensation on offer, it hasn't changed how you should approach salary negotiations. However, what you negotiate for might change. While salary increases, stock options and signing bonuses might be in shorter supply, there might be opportunities to for other types of compensation such as at-risk pay based on milestones achieved, paid time-off and a flexible work schedule.

You should value the entire package and quantify everything. How you do that is up to you. Your compensation number should factor in what is essential to you and what is non-essential. You could even give weights to the essential and the non-essential in determining the value of your offer. As an example signing bonus, relocation, 401k match, day care and base salary could get an 80 percent weight while the other 20 percent would fall under extra vacation, nicer title etc. At the end of the day, each person will be different on what they value and what they consider essential.

Source -- Jon Minners, Phil Stott, Alex Tuttle, Vault.com

How Will You Measure Your Life?

by Clayton M. Christensen

Editor’s Note: When the members of the class of 2010 entered business school, the economy was strong and their post-graduation ambitions could be limitless. Just a few weeks later, the economy went into a tailspin. They’ve spent the past two years recalibrating their worldview and their definition of success.

The students seem highly aware of how the world has changed (as the sampling of views in this article shows). In the spring, Harvard Business School’s graduating class asked HBS professor Clay Christensen to address them—but not on how to apply his principles and thinking to their post-HBS careers. The students wanted to know how to apply them to their personal lives. He shared with them a set of guidelines that have helped him find meaning in his own life. Though Christensen’s thinking comes from his deep religious faith, we believe that these are strategies anyone can use. And so we asked him to share them with the readers of HBR. To learn more about Christensen’s work, visit his HBR Author Page.

Before I published The Innovator’s Dilemma, I got a call from Andrew Grove, then the chairman of Intel. He had read one of my early papers about disruptive technology, and he asked if I could talk to his direct reports and explain my research and what it implied for Intel. Excited, I flew to Silicon Valley and showed up at the appointed time, only to have Grove say, “Look, stuff has happened. We have only 10 minutes for you. Tell us what your model of disruption means for Intel.” I said that I couldn’t—that I needed a full 30 minutes to explain the model, because only with it as context would any comments about Intel make sense. Ten minutes into my explanation, Grove interrupted: “Look, I’ve got your model. Just tell us what it means for Intel.”

I insisted that I needed 10 more minutes to describe how the process of disruption had worked its way through a very different industry, steel, so that he and his team could understand how disruption worked. I told the story of how Nucor and other steel minimills had begun by attacking the lowest end of the market—steel reinforcing bars, or rebar—and later moved up toward the high end, undercutting the traditional steel mills.

When I finished the minimill story, Grove said, “OK, I get it. What it means for Intel is...,” and then went on to articulate what would become the company’s strategy for going to the bottom of the market to launch the Celeron processor.

I’ve thought about that a million times since. If I had been suckered into telling Andy Grove what he should think about the microprocessor business, I’d have been killed. But instead of telling him what to think, I taught him how to think—and then he reached what I felt was the correct decision on his own.

That experience had a profound influence on me. When people ask what I think they should do, I rarely answer their question directly. Instead, I run the question aloud through one of my models. I’ll describe how the process in the model worked its way through an industry quite different from their own. And then, more often than not, they’ll say, “OK, I get it.” And they’ll answer their own question more insightfully than I could have.

My class at HBS is structured to help my students understand what good management theory is and how it is built. To that backbone I attach different models or theories that help students think about the various dimensions of a general manager’s job in stimulating innovation and growth. In each session we look at one company through the lenses of those theories—using them to explain how the company got into its situation and to examine what managerial actions will yield the needed results.

On the last day of class, I ask my students to turn those theoretical lenses on themselves, to find cogent answers to three questions: First, how can I be sure that I’ll be happy in my career? Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness? Third, how can I be sure I’ll stay out of jail? Though the last question sounds lighthearted, it’s not. Two of the 32 people in my Rhodes scholar class spent time in jail. Jeff Skilling of Enron fame was a classmate of mine at HBS. These were good guys—but something in their lives sent them off in the wrong direction.

The Age of Customer Capitalism

by Roger Martin

Modern capitalism can be broken down into two major eras. The first, managerial capitalism, began in 1932 and was defined by the then radical notion that firms ought to have professional management. The second, shareholder value capitalism, began in 1976. Its governing premise is that the purpose of every corporation should be to maximize shareholders’ wealth. If firms pursue this goal, the thinking goes, both shareholders and society will benefit. This is a tragically flawed premise, and it is time we abandoned it and made the shift to a third era: customer-driven capitalism.

Two Milestones in Management

The first two eras were both heralded by an influential academic work. In 1932, Adolf A. Berle and Gardiner C. Means published their legendary treatise, The Modern Corporation and Private Property, which asserted that management should be divorced from ownership. After that, the business world would no longer be dominated by CEO owners like the Rockefellers, Mellons, Carnegies, and Morgans. Firms would be run by the hired help, a new class of professional CEO. This movement, said Berle and Means, was not to be feared; it was part of a brave new era of economic expansion (which would actually take a few years to get going, as it turned out, owing to the Great Depression).

While there certainly continued to be owner-CEOs, professional managers came to dominate the corner office. Entrepreneurs were welcome to start up new firms but would be wise to hand them over to professional managers, who were more dependable and less volatile, once the business reached a significant size.

Then in 1976 managerial capitalism received a stinging rebuke: Michael C. Jensen and William H. Meckling’s “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure,” published in the Journal of Financial Economics. The paper, which has gone on to become the most-cited academic business article of all time, argued that owners were getting short shrift from professional managers, who enhanced their own financial well-being rather than that of the shareholders. This was bad for shareholders and wasteful for the economy, Jensen and Meckling argued; the managers were squandering corporate and societal resources to feather their own nests.

Their critique ushered in the current era of capitalism, as CEOs quickly saw the need to swear allegiance to “maximizing shareholder value.” Boards of directors soon came to view their job as aligning the interests of senior management with those of shareholders through the use of stock-based compensation. No longer would the shareholder be abused—the shareholder would be king.

The two most critical figures of the shareholder movement were perhaps Roberto Goizueta, the CEO of Coca-Cola from 1981 until his death in 1997, and Jack Welch, the CEO of General Electric from 1981 to 2001. A speech that Welch gave at the Pierre Hotel in New York several months after his appointment is seen by many as the true dawn of the era of shareholder value. Though he didn’t use that term explicitly, the speech marked a clear shift to a profits-first focus. Both men were outspoken advocates of focusing companies on shareholder value, and both received unprecedented amounts of stock-based compensation. Goizueta was the first American manager to become a billionaire on the basis of stock holdings in a company that he’d neither founded nor taken public. And it was estimated that Welch owned as much as $900 million worth of GE stock at the time he left the company.

A Flawed Logic

Have shareholders actually been better off since they displaced managers as the center of the business universe? The simple answer is no. From 1933 to the end of 1976, when they were allegedly playing second fiddle to professional managers, shareholders of the S&P 500 earned compound annual real returns of 7.6%. From 1977 to the end of 2008, they did considerably worse—earning real returns of 5.9% a year. If you modify the start and end dates of the two periods, you can produce performance numbers that are at parity, but there’s no sign that shareholders benefited more when their interests were put first and foremost. On this basis, it’s hard to argue that Jensen and Meckling did shareholders a huge favor.

That counterintuitive answer begs a provocative follow-up question: If the shareholders were all you cared about, would focusing on increasing shareholder value be the best way to make sure they benefited?

Bill George is a Professor of Management Practice, Henry B. Arthur Fellow of Ethics, at Harvard Business School.

Executive Summary:

Dominique Strauss-Kahn is just the latest in a string of high-profile leaders making the perp walk. What went wrong, and how can we learn from it? Professor Bill George discusses how powerful people lose their moral bearings. To stay grounded executives must prepare themselves to confront enormous complexities and pressures. Key concepts include:

• Leaders who move up have greater freedom to control their destinies, but also experience increased pressure and seduction.
• Leaders can avoid these pitfalls by devoting themselves to personal development that cultivates their inner compass, or True North. This requires reframing their leadership from being heroes to being servants of the people they lead.

In recent months several high-level leaders have mysteriously lost their way. Dominique Strauss-Kahn, former head of the International Monetary Fund and a leading French politician, was arraigned on charges of sexual assault. Before that David Sokol, rumored to be Warren Buffett's successor, was forced to resign for trading in Lubrizol stock prior to recommending that Berkshire Hathaway purchase the company. Examples abound of other recent failures:

· Hewlett-Packard CEO Mark Hurd resigned for submitting false expense reports concerning his relationship with a contractor.

• US Senator John Ensign (R-NV) resigned after covering up an extramarital affair with monetary payoffs.
• Lee B. Farkas, former chairman of giant mortgage lender Taylor, Bean & Whitaker, in April was found guilty for his role in one of the largest bank fraud schemes in American history.

These talented leaders were highly successful in their respective fields and at the peak of their careers. This makes their behavior especially perplexing, raising questions about what caused them to lose their way:

• Why do leaders known for integrity and leadership engage in unethical activities?
• Why do they risk great careers and unblemished reputations for such ephemeral gains?
• Do they think they won't get caught or believe their elevated status puts them above the law?
• Was this the first time they did something inappropriate, or have they been on the slippery slope for years?

In these ongoing revelations, the media, politicians, and the general public frequently characterize these leaders as bad people, even calling them evil. Simplistic notions of good and bad only cloud our understanding of why good leaders lose their way, and how this could happen to any of us.

Leaders who lose their way are not necessarily bad people; rather, they lose their moral bearings, often yielding to seductions in their paths. Very few people go into leadership roles to cheat or do evil, yet we all have the capacity for actions we deeply regret unless we stay grounded.

Self-reflection: a path to leadership development

Before anyone takes on a leadership role, they should ask themselves, "Why do I want to lead?" and "What's the purpose of my leadership?" These questions are simple to ask, but finding the real answers may take decades. If the honest answers are power, prestige, and money, leaders are at risk of relying on external gratification for fulfillment. There is nothing wrong with desiring these outward symbols as long as they are combined with a deeper desire to serve something greater than oneself.

Leaders whose goal is the quest for power over others, unlimited wealth, or the fame that comes with success tend to look to others to gain satisfaction, and often appear self-centered and egotistical. They start to believe their own press. As leaders of institutions, they eventually believe the institution cannot succeed without them.

The leadership trap

While most people value fair compensation for their accomplishments, few leaders start out seeking only money, power, and prestige. Along the way, the rewards—bonus checks, newspaper articles, perks, and stock appreciation—fuel increasing desires for more.

This creates a deep desire to keep it going, often driven by desires to overcome narcissistic wounds from childhood. Many times, this desire is so strong that leaders breach the ethical standards that previously governed their conduct, which can be bizarre and even illegal.

Very few people go into leadership to cheat or do evil.

As Novartis chairman Daniel Vasella (HBS PMD 57) told Fortune magazine, "for many of us the idea of being a successful manager—leading the company from peak to peak, delivering the goods quarter by quarter—is an intoxicating one. It is a pattern of celebration leading to belief, leading to distortion. When you achieve good results… you are typically celebrated, and you begin to believe that the figure at the center of all that champagne-toasting is yourself."

When leaders focus on external gratification instead of inner satisfaction, they lose their grounding. Often they reject the honest critic who speaks truth to power. Instead, they surround themselves with sycophants who tell them what they want to hear. Over time, they are unable to engage in honest dialogue; others learn not to confront them with reality.

The dark side of leadership

Many leaders get to the top by imposing their will on others, even destroying people standing in their way. When they reach the top, they may be paranoid that others are trying to knock them off their pedestal. Sometimes they develop an impostor complex, caused by deep insecurities that they aren't good enough and may be unmasked.

To prove they aren't impostors, they drive so hard for perfection that they are incapable of acknowledging their failures. When confronted by them, they convince themselves and others that these problems are neither their fault nor their responsibility. Or they look for scapegoats to blame for their problems. Using their power, charisma, and communications skills, they force people to accept these distortions, causing entire organizations to lose touch with reality.

At this stage leaders are vulnerable to making big mistakes, such as violating the law or putting their organizations' existence at risk. Their distortions convince them they are doing nothing wrong, or they rationalize that their deviations are acceptable to achieve a greater good.

During the financial crisis, Lehman CEO Richard Fuld refused to recognize that Lehman was undercapitalized. His denial turned balance sheet misjudgments into catastrophe for the entire financial system. Fuld persistently rejected advice to seek added capital, deluding himself into thinking the federal government would bail him out. When the crisis hit, he had run out of options other than bankruptcy.

It's lonely at the top, because leaders know they are ultimately responsible for the lives and fortunes of people. If they fail, many get deeply hurt. They often deny the burdens and loneliness, becoming incapable of facing reality. They shut down their inner voice, because it is too painful to confront or even acknowledge; it may, however, appear in their dreams as they try to resolve conflicts rustling around inside their heads.

Meanwhile, their work lives and personal lives get out of balance. They lose touch with those closest to them̬their spouses, children, and best friends—or co-opt them with their points of view. Eventually, they lose their capacity to think logically about important issues.

Values-centered leadership

Leading is high stress work. There is no way to avoid the constant challenges of being responsible for people, organizations, outcomes, and uncertainties in the environment. Leaders who move up have greater freedom to control their destinies, but also experience increased pressure and seduction.

Leaders can avoid these pitfalls by devoting themselves to personal development that cultivates their inner compass, or True North. This requires reframing their leadership from being heroes to beingservants of the people they lead. This process requires thought and introspection because many people get into leadership roles in response to their ego needs. It enables them to transition from seeking external gratification to finding internal satisfaction by making meaningful contributions through their leadership.

Maintaining their equilibrium amid this stress requires discipline. Some people practice meditation or yoga to relieve stress, while others find solace in prayer or taking long runs or walks. Still others find relief through laughter, music, television, sporting events, and reading. Their choices don't matter, as long as they relieve stress and enable them to think clearly about work and personal issues.

A system to support values-centered leadership

The reality is that people cannot stay grounded by themselves. Leaders depend on people closest to them to stay centered. They should seek out people who influence them in profound ways and stay connected to them. Often their spouse or partner knows them best. They aren't impressed by titles, prestige, or wealth accumulation; instead, they worry that these outward symbols may be causing the loss of authenticity.

Spouses and partners can't carry this entire burden though. We need mentors to advise us when facing difficult decisions. Reliable mentors are entirely honest and straight with us, defining reality and developing action plans.

In addition, intimate support groups like the True North Groups, with whom people can share their life experiences, hopes, fears, and challenges, are invaluable. Members of our True North Group aren't impressed by external success, but care enough about us as human beings and as leaders to confront us when we aren't being honest with ourselves.

As Senator Ensign told his fellow senators in a farewell speech in May, "When one takes a position of leadership, there is a very real danger of getting caught up in the hype surrounding that status … Surround yourselves with people who will be honest with you about how you really are and what you are becoming, and then make them promise to not hold back… from telling you the truth."

Bill Taylor

William C. Taylor is cofounder of Fast Company magazine and author of Practically Radical: Not-So-Crazy Ways to Transform Your Company, Shake Up Your Industry, and Challenge Yourself, published January 4, 2011. Follow him at twitter.com/practicallyrad.

2:42 PM Monday June 20, 2011

Last month, in an article in the New York Times on the ever-escalating "war for talent" in Silicon Valley, Facebook CEO Mark Zuckerberg made a passing comment that has become the entrepreneurial equivalent of a verbal tick — something that's said all the time, almost without thinking.

"Someone who is exceptional in their role is not just a little better than someone who is pretty good," he argued when asked why he was willing to pay $47 million to acquire FriendFeed, a price that translated to about $4 million per employee. "They are 100 times better."

Zuckerberg's casual calculation reminded me of a conversation with Marc Andreessen, the legendary cofounder of Netscape, and now one of Silicon Valley's most high-profile venture capitalists. "The gap between what a highly productive person can do and what an average person can do is getting bigger and bigger," he told Polly LaBarre and me for our book,

Mavericks at Work. "Five great programmers can completely outperform 1,000 mediocre programmers."

Now, I admire what Mark Zuckerberg has built, and I consider Marc Andreessen without peer as an entrepreneur and a thinker, but do we take seriously what these two Silicon Valley giants claim about talent?

If you are building a company, would you prefer one standout person over one hundred pretty good people?

If you were launching a technology or developing a product, would you rather have five great engineers rather than 1,000 average engineers?

Have we become so culturally invested in the allure of the Free Agent, the lone wolf, the techno-rebel with a cause, that we are prepared to shower millions of dollars (maybe tens of millions) on a small number of superstars rather than a well-assembled team that may not dazzle with individual brilliance, but overwhelms with collective capability?

Isn't that what we see time and again with athletic competition, perhaps the closest thing we have these days to the frenzied competition in Silicon Valley? I spent Father's Day at Fenway Park, as the Red Sox hosted the Stanley Cup champion Boston Bruins to celebrate their victory. Nobody would suggest the Bruins had the best individual players in the NHL — throughout the year, the stars of the Vancouver Canucks shone much more brightly. But it was the Bruins' work as a team, a collective show of commitment and determination, that won the day. And what won on the ice won on the hardwood as well — LeBron James vs. the Dallas Mavericks, anyone?

Or think about the soccer pitch. Recently, The Economist published a brilliant little essay on the "management secrets" of FC Barcelona, universally considered the best soccer team in the world, perhaps of all time. "How has a club that is based in one of Europe's unemployment blackspots turned itself into the ruling power in the world's most popular sports?" the magazine asked. "An obvious answer is that Barca plays as a team in a sport that has far too many prima donnas...Barca has provided a distinctive solution to some of the most contentious problems in management theory. What is the right balance between stars and the rest of mankind?"

I'm with The Economist — and the Boston Bruins and the Dallas Mavericks. Yes, a big part of the transformation of business over the last 20 years has been a pendulum swing in the logic of success. The strong no longer take from the weak; the smart take from the strong. From an organizational and competitive standpoint, raw power, brand incumbency, and sheer size, have lost their luster as sources of success.

But it's possible for the pendulum to swing too far in the other direction. The latest trend in Silicon Valley, and the subject of the New York Times article in which Mark Zuckerberg explained his talent calculus, is called "acqhiring" — shelling out big bucks to acquire a company, not to buy a product or a piece of technology, but to hire a few (or even one) software programmer or engineer who will arrive at the acquiring company and make a huge impact. Facebook, according to the Times, is the pioneer of this new phenomenon, acquiring a slew of companies, killing their products, but keeping their developers.

Star-gazing entrepreneurs who are reluctant to look to sports for lessons in the limits of individual talent might instead look to Wall Street, and the research of Harvard Business School professor Boris Groysberg, captured in Chasing Stars.

Here's how Groysberg's publisher distills his insights: "After examining the careers of more than 1,000 star analysts at Wall Street investment banks, and conducting more than two hundred frank interviews, Groysberg comes to a striking conclusion: star analysts who change firms suffer an immediate and lasting decline in performance. Their earlier excellence appears to have depended heavily on their former firms' general and proprietary resources, organizational cultures, networks, and colleagues. There are a few exceptions, such as stars that move with their teams and stars that switch to better firms. Female stars also perform better after changing jobs than their male counterparts do. But most stars who switch firms turn out to be meteors, quickly losing luster in their new settings."

I'm certainly not suggesting that leaders who are growing companies or building teams should settle for mediocrity. But I am suggesting that there is more to long-term performance than the excellence of your individual players. Great teams, great companies, great organizations of all kinds are as much about character as credentials, about what makes people tick as much as what they know. Most of business life isn't really a choice between one great person and 100 pretty good people, but if that is the choice, I'm not sure I'd make the same choice as Mark Zuckerberg — especially if those 100 pretty good people work great as a team.

Part II

I'm pleased, although not surprised, by the incredible wave of reactions to and comments about my post, "Great People Are Overrated." (I'm also not surprised by the vitriol and personal nature of some of the barbs aimed at me. That seems to go with the territory whenever you question an article of faith among the web startup crowd.)

My guess is that the post touched a nerve because it touched on one of the great dividing lines in our business culture today. As members of an economy, a society, and a collection of companies, all of us are engaged in a conversation (sometimes explicit, mainly implicit) about what makes the world go 'round — individual brilliance or group genius, self-possessed superstars or well-rounded teams.

This is not a strictly either-or choice, of course. Even the best groups have stars, and not all stars find it hard to work well with others. But there remains the question of balance, priorities, even business mythology. If we're building a company, what sorts of people do we want to recruit? If we're paying our people, what sorts of contributions and behaviors do we wish to reward? If we're thinking about our country and society, what kind of outcomes are we comfortable with, in terms of wealth and income distribution? Ultimately, are we fielding a team, or assembling a collection of individuals?

As I said in my original post, the great sweep of business and innovation has increased the power of the individual and the small team over the lumbering herd. The "smart" do, in fact, take from the "strong." But like so much of what we do in America's startup culture, I worry that we are taking this basic insight to crazy excess, making the claim that one superstar engineer is literally more valuable more than one hundred good engineers (Facebook CEO Mark Zuckerberg) or worth more than 200 good engineers (Netscape cofounder Marc Andreessen). Or, as one of the commenters on my post suggested, one Shakespeare is worth more than 100 Bill Taylors.

On that last point I would certainly not disagree. But on the broader point, I think we're in for a major correction. It's worth noting that the debate over this post takes place during IBM's centennial celebration. Now, I'm excited by the rise of Facebook, the IPO of LinkedIn, and all the latest successes from the startup world. It's great stuff. But for IBM to celebrate its 100th anniversary as a company, to remain, despite wave after wave of disruptive technological change, as a world-shaping force for solving big problems and making a big difference — that's truly something to admire. I wonder where Groupon and LinkedIn will be a hundred years from now.

IBM has stayed in the game for a century because it understands that groups are as important as individuals, that character counts along with credentials. In Mavericks at Work, Polly LaBarre and I wrote about Extreme Blue, an IBM initiative to make the company more attractive to young hotshots that might otherwise gravitate to companies like Facebook and Google. But from the moment Extreme Bluers report for duty, they get immersed in a system that emphasizes group cohesion over me-first individual achievement.

IBM even produced a manual of sorts, called Staying Extreme, that describes the way talented young people do their best work. "To be clear," it warns, "when you leave Extreme Blue and join another group at IBM (or any other company for that matter), we will be watching. And if we find out that you are making the program look like we are producing a bunch of arrogant wannabes, we will forget we ever knew you. Be ambitious. Be a leader. But do not belittle others in pursuit of your ambition."

Several years ago, at the height of the last War for Talent, Malcolm Gladwell offered his version of this same corrective. In an essay called "The Talent Myth," the New Yorker writer looked at business's obsession with hiring the best and the brightest, and raised a bright red flag. The problem with this star-studded approach, he said, is the "assumption that an organization's intelligence is simply a function of the intelligence of its employees. [Some companies] believe in stars, because they don't believe in systems. In a way, that's understandable, because our lives are so obviously enriched by individual brilliance. Groups don't write great novels, and a committee didn't come up with the theory of relativity. But companies work by different rules. They don't just create; they execute and compete and coordinate the efforts of many different people, and the organizations that are most successful at that task are the ones where the system is the star."

The star of Gladwell's assault on the star system was Enron, a company that famously populated itself with the brightest lights of the most elite institutions, and then went down in flames. "The reasons for [Enron's] collapse are complex, needless to say," Gladwell concluded. "But what if Enron failed not in spite of its talent mind-set but because of it? What if smart people are overrated?"

It was the last question by Gladwell that inspired the title of my original post. The question he raised several years ago has come back with such a vengeance today. There is more to long-term performance than the excellence of your individual players. Great companies, great organizations of all kinds, are as much about character as credentials, about how everyone works together as well as how each person does his or her work. Winning teams are more than just a collection of talented individuals.

As I said in my original essay, this is not an argument for settling for mediocrity. But it is a plea for some sense of proportion. And in a world of endless booms and busts, bubbles and popped bubbles, Wars for Talent and extended periods of unemployment, proportion is not such a bad thing.

Oh, and to those of you (and there are many) who responded to my original post with such rancor and derision: if you conduct yourself at work the same way you conduct yourself in these online comments, you're kind of making my point. Maybe you should embrace a sense of proportion as well.