Leading Clever Perople

HBR Spotlight How to Manage the just ab lift out Talented How do you mold plenty who entert take to be led and whitethorn be smarter than you? CLEVER PEOPLE by Rob Goffee and Gargonth J mavens LEADING F ranz Humer, the CEO and chairman of the Swiss pharma- ceutical giant Roche, knows how dif? cult it is to ? nd safe ideas. In my rail line of search, economies of scale dont exist, he down the stairsstands. glob e truly last(predicate)y today we spend $4 billion on R&D either year. In research there bent economies of scale, there atomic bite 18 economies of ideas. For a growing number of companies, according to Humer, competitive advantage lies in the ability to create an economy driven non by hail ef? ciencies scarce by ideas and intellectual know-how. In institutionalise this heart that drawing cards relieve singleself to create an environs in which what we call crafty mass mint thrive. These masses atomic number 18 the handful of employees whose ideas, kn owledge, and skills give them the voltage to modernize disproportionate value from the resources their faces make available to them. Think, for fashion model, of the softw be package Stephen Webster 72 Harvard line of products Review litigate 2007 hbr. orgHBR Spotlight How to Manage the Most Talented software engineer who creates a innovative piece of code or the pharmaceutical researcher who formulates a new drug. Their whiz innovations whitethorn assertroll an entire association for a decade. Top exe orientives today nearly all endorse the enormousness of having extremely smart and racyly creative deal on staff. still attracting them is solitary(prenominal) half the battle. As Martin Sorrell, the chief executive of WPP, one of the orbits queen-sizest communications service companies, told us recently, unitary of the biggest contests is that there are diseconomies of scale in creative industries.If you double the number of creative people, it doesnt mean yo u go out be twice as creative. You must non only attract talent moreover in any case foster an environ handst in which your happy people are inspired to achieve their fullest potential in a air that produces wealth and value for all your stakeholders. Thats tough. If cagy people delve out one de? ning characteristic, it is that they do not want to be led. This clearly creates a problem for you as a leader. The challenge has only be screw grander with globalization. able people are more rambling than ever before they are as likely to be ground in Bangalore or Beijing as in Boston. That means they squander more opportunities Theyre not waiting around for their pensions they know their value, and they stick out you to know it too. We give up dog-tired the past 20 eld poring over the break through of leadershiphiphipin particular, what followers want from their leaders. Our manners are sociological, and our data come from case studies rather than anonymous rand om surveys. Our predominant method consists of loosely structured interviews, lever people is very contrary from the one they rescue with tralatitious followers. tricksy people want a high degree of placemental nurseion and recognition that their ideas are important. They as well admit the freedom to explore and fail. They bear their leaders to be intellectually on their planebut they do not want a leaders talent and skills to outshine their own. Thats not to say that all given(p) people are alike, or that they follow a single path. They do, however, share a number of de? ning characteristics. Lets take a look at al well-nigh of those now.Understanding Clever masses Contrary to what we comport been led to believe in recent years, CEOs are not absolutely at the mercy of their exceedingly creative and extremely smart people. Of course, some very talented individuals artists, musicians, and former(a) free agents passel produce unparalleled results on their own. In closely cases, however, intellectual people contend the cheek as much as it needs them. They cannot function effectively without the resources it provides. The sheer musician needs an orchestra the research scientist needs funding and the facilities of a ? st-class laboratory. They need more than just resources, however as the head of development for a global accounting ? rm put it, your guileful people can be sources of corking ideas, but unless they have systems and discipline they may deliver very little. Thats the good news. The bad news is that all the resources and systems in the cosmos are useless unless you have bright If quick people have one de? ning characteristic, it is that they do not want to be led. This clearly creates a problem for you as a leader. and our micturate draws primarily from ? e contexts sciencebased businesses, merchandise services, professional services, the media, and ? nancial services. For this article, we spoke with more than 100 leader s and their cute people at leading governances such as PricewaterhouseCoopers, Electronic Arts, Cisco Systems, reference build Suisse, Novartis, KPMG, the British Broadcasting Corporation (BBC), WPP, and Roche.The more we talked to these people, the clearer it became that the psychological relationship leaders have with their people to make the most of them. Worse, they know very swell that you must mploy them to hold back their knowledge and skills. If an plaque could capture the knowledge enter in adroit peoples minds and networks, all it would need is a better knowledge-management system. The misfortune of such systems to capture tacit knowledge is one of the great disappointments of knowledge-management initiatives to date. The attitudes that clever people display toward their organizations re? ect their moxie of self-worth. Weve found most Rob Goffee (email protect edu) is a professor of organizational way at London commercial enterprise School in England. Gareth J ones (emailprotected london. du) is a tour professor at Insead in Fontainebleau, France, and a fellow of the Centre for anxiety Development at London commerce School. Goffee and Jones are overly the establishment partners of Creative Management Associates, an organizational consulting ? rm in London. Their HBR article Managing Authenticity was published in December 2005. 74 Harvard stock Review March 2007 hbr. org lede Clever muckle of them to be scornful of the language of hierarchy. Although they are aggressively aware of the salaries and bonuses attached to their work, they very much treat promotions with stolidity or steady contempt.So dont expect to lure or retain them with in for sure commercial enterprise titles and new responsibilities. They exit want to stay c dope off to the sure work, often to the detriment of relationships with the people they are supposed to be managing. This doesnt mean they dont rush conterminously statusthey do, often passionate ly. The same researcher who affects not to know his job title may insist on being called doctoror professor. The point is that clever people feel they are part of an external professional confederation that renders the organizational chart meaningless. Not only do they gain life story bene? s from networking, but they construct their sense of self from the feedback generated by these extra-organizational connections. This indifference to hierarchy and bureaucracy does not make clever people politically naive or disconnected. The chairman of a study news organization told us about a globally famous journalist an standard of the very clever and skeptical people driving the news businesswho in the newsroom appears deeply suspicious of everything the suits are doing. notwithstanding in naive realism he is astute about how the troupe is being led and what strategical direction it is taking.While publicly expressing disdain for the business view, he privately asks get in questi ons about the organizations growth prospects and relationships with important customers. He is also an outspoken champion of the organization in its dealings with politicians, media colleagues, and customers. You wouldnt tempt him to a strategy meeting with a 60-slide PowerPoint presentation, but you would be sweet to keep him informed of key developments in the business. Like the famous journalist, most clever people are quick to name insincerity and execute badly to it.David Gardner, the COO of worldwide studios for Electronic Arts (EA), knows this because he over captivates a lot of clever people. EA has 7,200 employees worldwide developing interactive entertainment software derived from FIFA Soccer, The Sims, The Lord of the Rings, and Harry Potter, among others. If I look back at our failures, Gardner told us,they have been when there were too galore(postnominal) rah-rahs and not copious content in our dealings with our people. People are not fooled. So when there are is sues or things that need to be worked out, straightforward dialogue is important, out of attentiveness for their intellectual capabilities. Seven Things You Need to Know About Clever People leadership should be aware of the characteristics most clever people share, which together with make them a dif? cult crew to manage. 1. They know their worth. The tacit skills of clever people are closer to those of medieval guilds than to the standardized, codi? able, and communicable skills that characterized the Industrial Revolution. This means you cant transfer the knowledge without the people. 2. They are organizationally savvy. Clever people go out ? nd the company context in which their interests get out be most generously funded. If the funding dries up, they have a play off of optionsThey can move on to a place where resources are plentiful, or they can dig in and engage in elaborate governance to fire their pet projects. 3. They ignore corporate hierarchy. If you seek to motiv ate clever people with titles or promotions, you willing probably be met with cold disdain. only if dont assume this means they dont care about status they can be very particular about it, and may insist on being called doctor or professor. 4. They expect instant annoy. If clever people dont get access to the CEO, they may think the organization does not take their work seriously. 5. They are well connected.Clever people are usually slutged into highly true knowledge networks who they know is often as important as what they know. These networks twain increase their value to the organization and make them more of a ? ight risk. 6. They have a low boredom threshold. In an era of employee mobility, if you dont engage your clever people intellectually and inspire them with organizational purpose, they will walk out the door. 7. They wont thank you. Even when youre leading them well, clever people will be unwilling to recognize your leadership. Remember, these creative individuals feel that they dont need to be led.Measure your winner by your ability to remain on the fringes of their radar. Managing Organizational Rain condition their mind-set, clever people see an organizations administrative machinery as a distraction from their key valueadding activities. So they need to be protected from what we call organizational rain the rules and politics associated with any big-budget activity. When leaders get this right, they hbr. org March 2007 Harvard Business Review 75 HBR Spotlight How to Manage the Most Talented can establish exactly the productive relationship with clever people that they want.In an academic environment, this is the dean freeing her admirer professor from the issue of departmental administration at a newspaper, it is the editor allowing the investigative reporter to skip editorial meetings in a fast-moving multinational consumer goods company, it is the leader ? ltering requests for information from the head of? ce so the consumer pro? ler is free to experiment with a new marketing plan. Organizational rain is a big issue in the pharmaceutical business. Drug development is hugely expensive painswide, the sightly cost of bringing a drug to market is about $800 meg and not every drug can go the distance.As a result, the politics surrounding a decision can be ferocious. Unless the CEO provides cover, smart projects may be permanently derailed, and the people involved may lose con? dence in the organizations ability to support them. The protective(p) role is one that Arthur D. Levinson, Genentechs CEO and a talented scientist in his own right, knows how to play. When the drug Avastin failed in Phase III clinical trials in 2002, Genentechs share price dropped by 10% 76 Harvard Business Review overnight. Faced with that kind of pressure, some leaders would have pulled the plug on Avastin.Not Levinson He believes in letting his clever people make up ones mind. once or twice a year, research scientists have to d efend their work to Genentechs Research Review Committee, a group of 13 PhDs who decide how to allocate the research budget and whether to terminate projects. This gives rise to a slopped debate among the clever people over the science and the direction of research. It also insulates Levinson from accusations of favoritism or short-termism. And if the RRC should kill a project, the researchers are not only not ? red, they are asked what they want to work on ext. Roche owns 56% of Genentech, and Franz Humer stands straightforwardly behind Levinson. Leading clever people, Humer told us, is especially dif? cult in strong times. You can look at Genentech now and say what a great company, he said,but for ten years Genentech had no new products and spent between $500 million and $800 million on research every year. The pressure on me to close it down or budge the goal was enormous. Avastin was eventually approved in February 2004 in 2005 it had sales of $1. 13 billion. March 2007 hb r. org Leading Clever PeopleHaving a leader whos prepared to protect his clever people from organizational rain is necessary but not suf? cient. Its also important to minimize the rain by creating an ambience in which rules and norms are simple and universally accepted. These are often called exemplification rules, from the classic Patterns of Industrial Bureaucracy, by the sociologist Alvin Gouldner, who distinguished among environments where rules are ignored by all (mock bureaucracy), environments where rules are imposed by one group on some other (punishment-centered bureaucracy), and environments where rules are accepted by all (representative bureaucracy).Representative rules, including risk rules in banks, sabbatical rules in academic institutions, and integrity rules in professional services ? rms, are precisely the ones that clever people respond to best. Savvy leaders take steps to streamline rules and to promote a culture that determine simplicity. A well-known example is Herb Kelleher, the CEO of Southwest Airlines, who threw the companys rule book out the window. Another is Greg Dyke, who when he was the music director general of the BBC discovered a mass of bureaucratic rules, often contradictory, which produced an pesky organizational immobilisme.Nothing could be better calculated to discourage the clever people on whom the reputation and future success of the BBC depended. Dyke launched an irreverent cut the crap program, liberating creative energy while exposing those who had been blaming the rules for their own inadequacies. He creatively engaged employees in the campaignfor example, suggesting that they pull out a discolor card (used to caution players in soccer games) whenever they encountered a dysfunctional rule. Recruiting People with the Right Stuff Clever people require a compeer group of like-minded individuals. Universities have farsighted understood this.Hire a star professor and you can be sure the aspiring young PhDs in th at discipline will ? ock to your institution. This happens in business as well. In the enthronisation banking world, everyone watches where the cleverest choose to work. Goldman Sachs, for example, cherishes its reputation as the home of the brightest and best a bank that seeks to overtake it must be positioned as a place where alacrity thrives. For this reason, the CEOs of companies that rely on clever people keep a close watch on the recruiting of stars. Bill Gates always sought out the cleverest software programmers for Microsoft.From the start, Gates insisted that his company required the very best minds he understood that they act as a magnet for other clever people. Sometimes he intervened in-personly in the recruitment process A particularly talented programmer who needed a little supernumerary persuasion to join the company capability receive a personal call from Gates. Very ? attering and very effective. Although you need to recruit clever stars, you must also make su re that your culture celebrates clever ideas. In an enterprise to create stars, some media organizations divide their employees into creatives and administrative support staff.Thats a big mistake. It makes about as much sense as recruiting men only you automatically cut your talent pool in half. The ad agency Bartle Bogle Hegarty doesnt make this mistake. Many of its most successful executives started as assistants but were given the length to grow and express their inventiveness. Not surprisingly, BBH has long been regarded as one of the most creative ad agencies in the world. At the heart of its corporate culture is the maxim Respect ideas, wherever they come from. Letting a Million Flowers Bloom Companies whose success depends on clever people dont place all their bets n a single horse. For a large company like Roche, that simple persuasion drives big decisions about corporate control and M&A. Thats why Humer decided to sell off a large stake in Genentech. I insisted on sell ing 40% on the stock market, he told us. Why? Because I treasured to preserve the companys different culture. I believe in salmagundi diversity of culture, diversity of origin, diversity of behavior, and diversity of view. For similar reasons, Roche limits its ownership of the Japanese pharmaceutical company Chugai to 51%.By keeping the clever people in all three companies at arms length, Humer can be con? ent that they will advance different goals My people in the Roche research organization decide on what they think is right and malign. I hear debates where the Genentech researchers say,This program youre track will never lead to a product. You are on the wrong target. This is the wrong chemical structureit will prove to be toxic. And my guys say, No, we dont think so. And the two views never meet. So I say to Genentech, You do what you want, and we will do what we want at Roche, and in ? ve years time we will know. Sometimes you will be right and sometimes we will be right. Maintaining that diversity is Humers most challenging line of work there is always pressure within a large organization to unify and to direct from above. Companies that value diversity are not acrophobic of failure. Like venture capitalists, they know that for every successful hbr. org March 2007 Harvard Business Review 77 HBR Spotlight How to Manage the Most Talented The traitorous Eight Ineffective leadership of clever people can be costly. Consider the cautionary tale of William Shockley, a London-born research scientist who worked at bell shape Labs after World War II.In 1947 Shockley was recognized as a coinventor of the transistor, and in 1956 he was awarded a Nobel Prize. He left Bell Labs in 1955 and founded Shockley semiconducting material Laboratory, in Mountain View, California. His academic reputation attracted some of the cleverest people in electronics, including Robert Noyce and Gordon Moore (of Moores Law fame). Shockley was blessed with a promising mind. Noyce described him as a marvelous intuitive problem solver, and Moore said he had a phenomenal physical intuition. But his leadership skills fell far short of his intellectual brilliance.On one occasion Shockley asked some of his younger employees how he might stoke their enthusiasm. Several expressed a wish to publish research papers. So Shockley went home, wrote a paper, and the next day offered to let them publish it under their own names. He meant well but led poorly. On another occasion, Shockley instituted a secret project within a project. Although only 50 or so peo ple were employed in his laboratory, the group assigned to work on his new idea (which, according to Shockley, had the potential to rival the transistor) was not allowed to discuss the project with other colleagues.It wasnt long before rumblings of discontentedness at Shockleys leadership style turned mutinous. The situation deteriorated and a disenchanted group the Traitorous Eight left to found Fairchild semiconducting material in 1957 Fairchild revolutionized computing . through its work on the silicon transistor. It also threw off a slew of clever people who went on to start up or develop some of the best-known companies in the industry Bob Noyce and Gordon Moore (Intel), Jerry Sanders (Advanced Micro Devices), and Charlie Sporck (National Semiconductor) were all former employees of Fairchild.Through his poor leadership, Shockley inadvertently set(p) the cornerstone of Silicon Valley. He brought together some of the best scientists in the ? eld of electronics, many a(prenominal) of whom might otherwise not have remained in the region. And he created conditions that provoked his brilliant employees to strike out on their own. new pharmaceutical product, dozens have failed for every hit record, hundreds are duds. The assumption, obviously, is that the successes will more than recover the costs of the failures. Take the case of the drinks giant Diageo.Detailed analytic thinking of customer data indicated an opening in the market for an alcoholic drinking with particular appeal to younger consumers. Diageo experimented with many potential productsbeginning with inevitable combinations like rum and coke, rum and blackcurrant juice, gin and tonic, vodka and fruit juice. None of them seemed to work. afterwards almost a dozen tries, Diageos clever people tried and true something riskier citrus-? avored vodka. Smirnoff Ice was born a product that has contributed to a fundamental change in its market sector.Its easy to accept the necessity of failure in theory, but each failure represents a setback for the clever people who gambled on it. Smart leaders will help their clever people to live with their failures. Some years ago, when three of Glaxos hi-tech antibiotics all failed in the ? nal stages of clinical trial, Richard Sykes who went on to become chairman of Glaxo Wellcome and ulterior of GlaxoSmithKline sent letters of congratulation to the team leaders , thanking them for their hard work but also for killing the drugs, and encouraging them to move on to the next challenge.EAs David Gardner, too, recognizes that his business is hit driven, but he realizes that not even his most gifted game developers will always produce winners. He sees his job as supporting his successful people providing them with space and helping them move on from failed projects to new and better work. Smart leaders also recognize that the best ideas dont always come from company projects. They change their clever people to chase private efforts because they know there will be payoffs for the company, some direct (new business opportunities) and some indirect (ideas that can be applied in the workplace).This tradition originated in organizations like 3M and Lockheed, which allowed employees to pursue pet projects on company time. Google is the most recent example Re? ecting the entrepreneurial spirit of its founders, Sergey Brin and Larry Page, employees ma y spend one day a week on their own start-up ideas, called Googlettes. This is known as the 20% time. (Genentech has a similar policy. ) The result is innovation at a speed that puts large bureaucratic organizations to shame. The Google-af? liated social-networking Web site Orkut is just one project that began as a Googlette.Establishing Credibility Although its important to make your clever people feel independent and special, its equally important to make sure they recognize their interdependence You and other people in the organization can do things that they cant. Laura Tyson, who served in the Clinton administration and has been the dean of London Business School since 2002, says, 78 Harvard Business Review March 2007 hbr. org Leading Clever People You must help clever people realize that their cleverness doesnt mean they can do other things.They may overvalue their cleverness in other areas, so you must show that you are competent to help them. To do this you must clearly d emonstrate that you are an proficient in your own right. Depending on what industry you are in, your expertness will be either supplementary (in the same ? eld) or complementary color (in a different ? eld) to your clever peoples expertise. At a law ? rm, the emphasis is on certi? cation as a prerequisite for blueprint at an advertising agency, its originality of ideas. It would be hard to lead a law ? rm without credentials.You can lead an advertising agency with complementary skills manipulation commercial relationships with clients, for instance, while your clever people write great copy. A man well call Tom Nelson, who was the marketing director of a major British brewer, is a good example of a leader Beckham, to practice a particular maneuver. When Beckham couldnt do it, Hoddle once a brilliant international player himself said, Here, Ill show you how. He performed the maneuver ? awlessly, but in the process he lost the support of his team The other players saw his move as a public humiliation of Beckham, and they wanted no part of that.The same dynamic has played out many times in business the experience of William Shockley is perhaps the most dramatic, and tragic, example (see the sidebar The Traitorous Eight). How do you avoid this kind of situation? One highly effective way is to identify and relate to an informed insider among your clever people someone willing to serve as a screen of anthropologist, interpreting the culture and sympathizing with those who seek to understand it. This is especially important for saucily recruited leaders. Parachuting in at the top and accurately reading an organization is hard work. One leader weIf you try to pressure your clever people, you will end up driving them away. As many leaders of highly creative people have learned, you need to be a likeable guardian rather than a traditional boss. with complementary skills. Nelson was no expert on traditional brewing techniques or real ales. But he was known thr oughout the organization as Numbers Nelson for his grasp of the ? rms sales and marketing performance, and was widely respected. Nelson had an almost uncanny ability to quote, say, how many barrels of the companys beer had been sold the previous day in a given part of the country.His clear mastery of the business side gave him both authority and credibility, so the brewers took his opinions about product development seriously. For example, Nelsons reading of market tastes led to the companys development of low-alcohol beers. Leaders with supplementary expertise are perhaps more commonplace Microsofts Bill Gates emphasizes his abilities as a programmer. Michael Critelli, the CEO of Pitney Bowes, holds a number of patents in his own name. Richard Sykes insisted on being called Dr. Sykes.The title gave him respect within the professional community to which his clever people belonged in a way that being the chairman of a multinational pharmaceutical company did not. But credentialsespe cially if they are supplementaryare not enough to win acceptance from clever people. Leaders must exercise great care in displaying them so as not to demotivate their clever employees. A former national soccer coach for England, Glenn Hoddle, asked his star player, David spoke to admitted that he initially found the winks, nudges, and silences of his new employees completely baf? ng. It took an interpreter someone who had worked among the clever people for years to explain the subtle nuances. Martin Sorrell likes to claim that he uses antonym psychology to lead his creatives at WPP If you want them to turn right, tell them to turn left. His comment reveals an important truth about managing clever people. If you try to push them, you will end up driving them away. As many leaders of extremely smart and highly creative people have learned, you need to be a benevolent guardian rather than a traditional boss.You need to create a safe environment for your clever employees uphold th em to experiment and play and even fail and quietly demonstrate your expertise and authority all the while. You may sometimes begrudge the time you have to devote to managing them, but if you learn how to protect them while giving them the space they need to be productive, the reward of watching your clever people ? ourish and your organization accomplish its mission will make the effort worthwhile. Reprint R0703D To order, see page 145. hbr. org March 2007 Harvard Business Review 79