What the Dog Saw and Other Adventures

by Malcolm Gladwell

  The true hero of the case wasn’t Brussel; it was a woman named Alice Kelly, who had been assigned to go through Con Edison’s personnel files. In January 1957, she ran across an employee complaint from the early 1930s: a generator wiper at the Hell Gate plant had been knocked down by a backdraft of hot gases. The worker said that he was injured. The company said that he wasn’t. And in the flood of angry letters from the ex-employee Kelly spotted a threat — to “take justice in my own hands” — that had appeared in one of the Mad Bomber’s letters. The name on the file was George Metesky.

  Brussel did not really understand the mind of the Mad Bomber. He seems to have understood only that, if you make a great number of predictions, the ones that were wrong will soon be forgotten, and the ones that turn out to be true will make you famous. The hedunit is not a triumph of forensic analysis. It’s a party trick.

  6.

  “Here’s where I’m at with this guy,” Douglas said, kicking off the profiling session with which Inside the Mind of BTK begins. It was 1984. The killer was still at large. Douglas, Hazelwood, and Walker and the two detectives from Wichita were all seated around the oak table. Douglas took off his suit jacket and draped it over his chair. “Back when he started in 1974, he was in his mid to late twenties,” Douglas began. “It’s now ten years later, so that would put him in his mid to late thirties.”

  It was Walker’s turn: BTK had never engaged in any sexual penetration. That suggested to him someone with an “inadequate, immature sexual history.” He would have a “lone-wolf type of personality. But he’s not alone because he’s shunned by others — it’s because he chooses to be alone.…He can function in social settings, but only on the surface. He may have women friends he can talk to, but he’d feel very inadequate with a peer-group female.” Hazelwood was next. BTK would be “heavily into masturbation.” He went on, “Women who have had sex with this guy would describe him as aloof, uninvolved, the type who is more interested in her servicing him than the other way around.”

  Douglas followed his lead. “The women he’s been with are either many years younger, very naive, or much older and depend on him as their meal ticket,” he ventured. What’s more, the profilers determined, BTK would drive a “decent” automobile, but it would be “nondescript.”

  At this point, the insights began piling on. Douglas said he’d been thinking that BTK was married. But now maybe he was thinking he was divorced. He speculated that BTK was lower middle class, probably living in a rental. Walker felt BTK was in a “lower-paying white-collar job, as opposed to blue-collar.” Hazelwood saw him as “middle class” and “articulate.” The consensus was that his IQ was somewhere between 105 and 145. Douglas wondered whether he was connected with the military. Hazelwood called him a “now” person, who needed “instant gratification.”

  Walker said that those who knew him “might say they remember him, but didn’t really know much about him.” Douglas then had a flash — “It was a sense, almost a knowing” — and said, “I wouldn’t be surprised if, in the job he’s in today, that he’s wearing some sort of uniform.…This guy isn’t mental. But he is crazy like a fox.”

  They had been at it for almost six hours. The best minds in the FBI had given the Wichita detectives a blueprint for their investigation. Look for an American male with a possible connection to the military. His IQ will be above 105. He will like to masturbate and will be aloof and selfish in bed. He will drive a decent car. He will be a “now” person. He won’t be comfortable with women. But he may have women friends. He will be a lone wolf. But he will be able to function in social settings. He won’t be unmemorable. But he will be unknowable. He will be either never married, divorced, or married, and if he was or is married, his wife will be younger or older. He may or may not live in a rental, and might be lower class, upper lower class, lower middle class, or middle class. And he will be crazy like a fox as opposed to being mental. If you’re keeping score, that’s a Jacques Statement, two Barnum Statements, four Rainbow Ruses, a Good Chance Guess, two predictions that aren’t really predictions because they could never be verified — and nothing even close to the salient fact that BTK was a pillar of his community, the president of his church, and the married father of two.

  “This thing is solvable,” Douglas told the detectives as he stood up and put on his jacket. “Feel free to pick up the phone and call us if we can be of any further assistance.” You can imagine him taking the time for an encouraging smile and a slap on the back. “You’re gonna nail this guy.”*

  November 12, 2007

  The Talent Myth

  ARE SMART PEOPLE OVERRATED?

  1.

  At the height of the dot-com boom of the 1990s, several executives at McKinsey & Company, America’s largest and most prestigious management-consulting firm, launched what they called the War for Talent. Thousands of questionnaires were sent to managers across the country. Eighteen companies were singled out for special attention, and the consultants spent up to three days at each firm, interviewing everyone from the CEO down to the human-resources staff. McKinsey wanted to document how the top-performing companies in America differed from other firms in the way they handled matters like hiring and promotion. But, as the consultants sifted through the piles of reports and questionnaires and interview transcripts, they grew convinced that the difference between winners and losers was more profound than they had realized. “We looked at one another and suddenly the lightbulb blinked on,” the three consultants who headed the project — Ed Michaels, Helen Handfield-Jones, and Beth Axelrod — write in their book, also called The War for Talent. The very best companies, they concluded, had leaders who were obsessed with the talent issue. They recruited ceaselessly, finding and hiring as many top performers as possible. They singled out and segregated their stars, rewarding them disproportionately, and pushing them into ever more senior positions. “Bet on the natural athletes, the ones with the strongest intrinsic skills,” the authors approvingly quote one senior General Electric executive as saying. “Don’t be afraid to promote stars without specifically relevant experience, seemingly over their heads.” Success in the modern economy, according to Michaels, Handfield-Jones, and Axelrod, requires “the talent mind-set”: the “deep-seated belief that having better talent at all levels is how you outperform your competitors.”

  This “talent mind-set” is the new orthodoxy of American management. It is the intellectual justification for why such a high premium is placed on degrees from first-tier business schools, and why the compensation packages for top executives have become so lavish. In the modern corporation, the system is considered only as strong as its stars, and in the past few years, this message has been preached by consultants and management gurus all over the world. None, however, have spread the word quite so ardently as McKinsey, and, of all its clients, one firm took the talent mind-set closest to heart. It was a company where McKinsey conducted twenty separate projects, where McKinsey’s billings topped $10 million a year, where a McKinsey director regularly attended board meetings, and where the CEO himself was a former McKinsey partner. The company, of course, was Enron.

  The Enron scandal is now almost a year old. The reputations of Jeffrey Skilling and Kenneth Lay, the company’s two top executives, have been destroyed. Arthur Andersen, Enron’s auditor, has been all but driven out of business, and now investigators have turned their attention to Enron’s investment bankers. The one Enron partner that has escaped largely unscathed is McKinsey, which is odd, given that it essentially created the blueprint for the Enron culture. Enron was the ultimate “talent” company. When Skilling started the corporate division known as Enron Capital and Trade, in 1990, he “decided to bring in a steady stream of the very best college and MBA graduates he could find to stock the company with talent,” Michaels, Handfield-Jones, and Axelrod tell us. During the nineties, Enron was bringing in 250 newly minted MBAs a year. “We had these things called Super Saturdays,” one former Enron manager recalls. “I’d in
terview some of these guys who were fresh out of Harvard, and these kids could blow me out of the water. They knew things I’d never heard of.” Once at Enron, the top performers were rewarded inordinately, and promoted without regard for seniority or experience. Enron was a star system. “The only thing that differentiates Enron from our competitors is our people, our talent,” Lay, Enron’s former chairman and CEO, told the McKinsey consultants when they came to the company’s headquarters, in Houston. Or, as another senior Enron executive put it to Richard Foster, a McKinsey partner who celebrated Enron in his 2001 book, Creative Destruction, “We hire very smart people and we pay them more than they think they are worth.”

  The management of Enron, in other words, did exactly what the consultants at McKinsey said that companies ought to do in order to succeed in the modern economy. It hired and rewarded the very best and the very brightest — and it is now in bankruptcy. The reasons for its collapse are complex, needless to say. But what if Enron failed not in spite of its talent mind-set but because of it? What if smart people are overrated?

  2.

  At the heart of the McKinsey vision is a process that the War for Talent advocates refer to as differentiation and affirmation. Employers, they argue, need to sit down once or twice a year and hold a “candid, probing, no-holds-barred debate about each individual,” sorting employees into A, B, and C groups. The A’s must be challenged and disproportionately rewarded. The B’s need to be encouraged and affirmed. The C’s need to shape up or be shipped out. Enron followed this advice almost to the letter, setting up internal Performance Review Committees. The members got together twice a year, and graded each person in their section on ten separate criteria, using a scale of 1 to 5. The process was called rank and yank. Those graded at the top of their unit received bonuses two-thirds higher than those in the next 30 percent; those who ranked at the bottom received no bonuses and no extra stock options — and in some cases were pushed out.

  How should that ranking be done? Unfortunately, the McKinsey consultants spend very little time discussing the matter. One possibility is simply to hire and reward the smartest people. But the link between, say, IQ and job performance is distinctly underwhelming. On a scale where 0.1 or below means virtually no correlation and 0.7 or above implies a strong correlation (your height, for example, has a 0.7 correlation with your parents’ height), the correlation between IQ and occupational success is between 0.2 and 0.3. “What IQ doesn’t pick up is effectiveness at common-sense sorts of things, especially working with people,” Richard Wagner, a psychologist at Florida State University, says. “In terms of how we evaluate schooling, everything is about working by yourself. If you work with someone else, it’s called cheating. Once you get out in the real world, everything you do involves working with other people.”

  Wagner and Robert Sternberg, a psychologist at Yale University, have developed tests of this practical component, which they call tacit knowledge. Tacit knowledge involves things like knowing how to manage yourself and others and how to navigate complicated social situations. Here is a question from one of their tests:

  You have just been promoted to head of an important department in your organization. The previous head has been transferred to an equivalent position in a less important department. Your understanding of the reason for the move is that the performance of the department as a whole has been mediocre. There have not been any glaring deficiencies, just a perception of the department as so-so rather than very good. Your charge is to shape up the department. Results are expected quickly. Rate the quality of the following strategies for succeeding at your new position.

  a)Always delegate to the most junior person who can be trusted with the task.

  b)Give your superiors frequent progress reports.

  c)Announce a major reorganization of the department that includes getting rid of whomever you believe to be “dead wood.”

  d)Concentrate more on your people than on the tasks to be done.

  e)Make people feel completely responsible for their work.

  Wagner finds that how well people do on a test like this predicts how well they will do in the workplace: good managers pick (b) and (e); bad managers tend to pick (c). Yet there’s no clear connection between such tacit knowledge and other forms of knowledge and experience. The process of assessing ability in the workplace is a lot messier than it appears.

  An employer really wants to assess not potential but performance. Yet that’s just as tricky. In The War for Talent, the authors talk about how the Royal Air Force used the A, B, and C ranking system for its pilots during the Battle of Britain. But ranking fighter pilots — for whom there are limited and relatively objective performance criteria (enemy kills, for example, and the ability to get their formations safely home) — is a lot easier than assessing how the manager of a new unit is doing at, say, marketing or business development. And whom do you ask to rate the manager’s performance? Studies show that there is very little correlation between how someone’s peers rate him and how his boss rates him. The only rigorous way to assess performance, according to human-resources specialists, is to use criteria that are as specific as possible. Managers are supposed to take detailed notes on their employees throughout the year, in order to remove subjective personal reactions from the process of assessment. You can grade someone’s performance only if you know their performance. And, in the freewheeling culture of Enron, this was all but impossible. People deemed talented were constantly being pushed into new jobs and given new challenges. Annual turnover from promotions was close to 20 percent. Lynda Clemmons, the so-called weather babe who started Enron’s weather derivatives business, jumped, in seven quick years, from trader to associate to manager to director and, finally, to head of her own business unit. How do you evaluate someone’s performance in a system where no one is in a job long enough to allow such evaluation?

  The answer is that you end up doing performance evaluations that aren’t based on performance. Among the many glowing books about Enron written before its fall was the bestseller Leading the Revolution, by the management consultant Gary Hamel, which tells the story of Lou Pai, who launched Enron’s power-trading business. Pai’s group began with a disaster: it lost tens of millions of dollars trying to sell electricity to residential consumers in newly deregulated markets. The problem, Hamel explains, is that the markets weren’t truly deregulated: “The states that were opening their markets to competition were still setting rules designed to give their traditional utilities big advantages.” It doesn’t seem to have occurred to anyone that Pai ought to have looked into those rules more carefully before risking millions of dollars. He was promptly given the chance to build the commercial electricity-outsourcing business, where he ran up several more years of heavy losses before cashing out of Enron with $270 million. Because Pai had “talent,” he was given new opportunities, and when he failed at those new opportunities he was given still more opportunities… because he had “talent.” “At Enron, failure — even of the type that ends up on the front page of the Wall Street Journal — doesn’t necessarily sink a career,” Hamel writes, as if that were a good thing. Presumably, companies that want to encourage risk-taking must be willing to tolerate mistakes. Yet if talent is defined as something separate from an employee’s actual performance, what use is it exactly?

  3.

  What the War for Talent amounts to is an argument for indulging A employees, for fawning over them. “You need to do everything you can to keep them engaged and satisfied — even delighted,” Michaels, Handfield-Jones, and Axelrod write. “Find out what they would most like to be doing, and shape their career and responsibilities in that direction. Solve any issues that might be pushing them out the door, such as a boss that frustrates them or travel demands that burden them.” No company was better at this than Enron. In one oft-told story, Louise Kitchin, a twenty-nine-year-old gas trader in Europe, became convinced that the company ought to develop an online-trading business. She told her boss, a
nd she began working in her spare time on the project, until she had 250 people throughout Enron helping her. After six months, Skilling was finally informed. “I was never asked for any capital,” Skilling said later. “I was never asked for any people. They had already purchased the servers. They had already started ripping apart the building. They had started legal reviews in twenty-two countries by the time I heard about it.” It was, Skilling went on approvingly, “exactly the kind of behavior that will continue to drive this company forward.”

  Kitchin’s qualification for running EnronOnline, it should be pointed out, was not that she was good at it. It was that she wanted to do it, and Enron was a place where stars did whatever they wanted. “Fluid movement is absolutely necessary in our company. And the type of people we hire enforces that,” Skilling told the team from McKinsey. “Not only does this system help the excitement level for each manager, it shapes Enron’s business in the direction that its managers find most exciting.” Here is Skilling again: “If lots of [employees] are flocking to a new business unit, that’s a good sign that the opportunity is a good one.…If a business unit can’t attract people very easily, that’s a good sign that it’s a business Enron shouldn’t be in.” You might expect a CEO to say that if a business unit can’t attract customers very easily, that’s a good sign it’s a business the company shouldn’t be in. A company’s business is supposed to be shaped in the direction that its managers find most profitable. But at Enron the needs of the customers and the shareholders were secondary to the needs of its stars.