November 10, 2011

Intellectual Capital

In an intellectual capital world, talent is what matters, and we are told that the companies that will win in the competitive arena are those that are the best at locating, assessing, recruiting and keeping the most talented people. As John Chambers, CEO of Cisco Systems, has noted, great teams our perform collections of individuals - even when the individuals are more talented.

Even in professional sports, the teams with the best talent, often nicely proxied by the highest salaries, don't always (or even usually) have the best records or invariably win championships. In business and nonprofit organizations, characterized by interdependence among individuals so that productivity is affected not only by one individual's skills and abilities but also by the capabilities and actions of others, individual talent matters even less in determining organizational success.
As W. Edwards Deming and the quality movement pointed out a long time ago - a lesson that we clearly need to relearn - what is important is not so much individual motivation or ability but the attributes of the system in which the person works.

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