Leading Clever Perople

HBR maculation How to Manage the closely-nigh dexterous How do you manage hoi polloi who fagt desireiness to be led and may be smarter than you? CLEVER PEOPLE by mulctgratulate Goffee and Gargonth Jones LEADING F ranz Humer, the CEO and chairman of the Swiss pharma- ceutical giant star Roche, knows how dif? cult it is to ? nd good ideas. In my business of search, economies of scale tire outt exist, he enunciates. Glob wholey today we spend $4 meg on R&D e precise year. In question on that point bent economies of scale, there ar economies of ideas. For a growing list of companies, according to Humer, competitive advantage lies in the ability to grow an miserliness driven non by price ef? ciencies solely by ideas and mental know-how. In institutionalize this opines that leaders oblige to create an purlieu in which what we claver c prise populate commode thrive. These quite a little ar the handful of employees whose ideas, fellowship, and skills g ive them the potential to produce disproportionate value from the resources their prefacencys collide with available to them. Think, for instance, of the softw ar system Stephen Webster 72 Harvard backup go over bound 2007 hbr. orgHBR Spotlight How to Manage the Most Talented programmer who creates a refreshed function of code or the pharmaceutical queryer who formulates a impertinent drug. Their whiz innovations may bankroll an entire company for a decade. Top executives today nearly all deal the importance of having extremely smart and extremely nonional throng on staff. moreover attracting them is solely half the battle. As Martin Sorrell, the chief executive of WPP, one of the worlds elephantinest communications run companies, told us recently, sensation of the vauntinglygest challenges is that there ar diseconomies of scale in imaginative industries.If you double the routine of creative plenty, it doesnt mean you pass on be twice as creative. You mu st non only attract genius provided in any case foster an environment in which your quick-witted lot are inspired to achieve their fullest potential in a focussing that produces wealth and value for all your s hold backholders. Thats tough. If disposed(p) state induct 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 become not bad(p) with globalization. gifted bulk are much mobile than ever before they are as likely to be based in Bangalore or capital of Red China as in Boston. That means they stand more opportunities Theyre not waiting around for their pensions they know their value, and they hold you to know it too. We go through dog-tired the past 20 historic period studying the issue of leadershipin particular, what followers want from their leaders. Our methods are sociological, and our data come from case studies instead than anonymous random surveys. Our pred ominant method consists of loosely structured interviews, lever heap is very distinct from the one they have with traditionalistic followers. sly concourse want a high degree of organisational security system and recognition that their ideas are important. They too demand the freedom to explore and fail. They expect their leaders to be estimablely on their plane hardly they do not want a leaders talent and skills to outshine their experience. Thats not to say that all sly people are alike, or that they follow a whizz path. They do, yet, share a list of de? ning characteristics. Lets take a look at whatever of those now.Understanding expert People Contrary to what we have been led to believe in recent years, CEOs are not utterly at the mercy of their exceedingly creative and extremely smart people. Of course, some very talented individuals artists, musicians, and former(a) free agents chamberpot produce remarkable results on their own. In to the highest degree cas es, however, hindquartersny people need the organisation as much as it needs them. They buttnot function effectively without the resources it provides. The guiltlessal 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 wit of development for a global accounting ? rm vest it, your pertinent people screw be sources of great ideas, but unless they have systems and field of force they may deliver very little. Thats the good news. The no-account news is that all the resources and systems in the world are useless unless you have dodgy If dexterous 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 cast draws primarily from ? e contexts sciencebased businesses, marketing services, professional services, the media, and ? nancial services. For this article, we spoke with more tha n 100 leaders and their clever people at lead cheeks such as PricewaterhouseCoopers, Electronic Arts, Cisco Systems, Credit Suisse, Novartis, KPMG, the British Broadcasting fellowship (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 lease the about of them. Worse, they know very well that you must mploy them to get their knowledge and skills. If an organization could capture the knowledge embedded in clever peoples minds and networks, all it would need is a better knowledge-management system. The hardship 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 sense of self-worth. Weve found most Rob Goffee (email&160protected edu) is a professor of organisational behavior at capital of the United Kingdom vexation School in E ngland. Gareth Jones (email&160protected lon dress. du) is a visiting professor at Insead in Fontainebleau, France, and a fellow of the Centre for Management suppuration at Lon don Business School. Goffee and Jones are also the founding partners of notional Management Associates, an organizational consulting ? rm in London. Their HBR article Managing Authenticity was published in December 2005. 74 Harvard Business Review March 2007 hbr. org lead Clever People of them to be scornful of the language of hierarchy. Although they are acutely informed of the salaries and bonuses attached to their work, they much treat promotions with indifference or even contempt.So dont expect to lure or retain them with fancy blood titles and new responsibilities. They testament want to stay close to the real work, often to the detriment of relationships with the people they are supposed to be managing. This doesnt mean they dont care nearly statusthey do, often passionately. The aforesaid(pr enominal) researcher who affects not to know his barter title may verify on being thinked doctoror professor. The point is that clever people feel they are part of an external professional community that renders the organizational chart meaningless. Not only do they gain career 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 ca-ca clever people politically uninstructed or disconnected. The chairman of a study news organization told us nearly a globally famous journalist an exemplar of the very clever and skeptical people driving the news businesswho in the newsroom appears deeply suspicious of everything the suits are doing. But in reality he is astute about how the company is being led and what strategic didactics it is taking.While publicly expressing disdain for the business side, he privately asks penetrating questions about the organizations growth prospects and relationships with important customers. He is also an plainspoken champion of the organization in its traffic with politicians, media colleagues, and customers. You wouldnt invite him to a strategy meeting with a 60-slide PowerPoint presentation, but you would be wise to throw him informed of key developments in the business. Like the famous journalist, most clever people are quick to recognize insincerity and respond poorly to it.David Gardner, the COO of worldwide studios for Electronic Arts (EA), knows this because he over gains a chance of clever people. EA has 7,200 employees worldwide developing interactive entertainment software derived from FIFA Soccer, The Sims, The ennoble of the Rings, and Harry Potter, among other(a)s. If I look back at our failures, Gardner told us,they have been when there were too numerous rah-rahs and not passable content in our dealings with our people. People are not fooled. So when there are issues or t hings that need to be worked out, straightforward dialogue is important, out of respect for their intellectual capabilities. Seven Things You Need to Know About Clever People leaders should be aware of the characteristics most clever people share, which collectively 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 hatfult transfer the knowledge without the people. 2. They are organizationally savvy. Clever people will ? nd the company context in which their interests will be most generously funded. If the funding dries up, they have a couple of optionsThey can hit on to a place where resources are plentiful, or they can dig in and busy in elaborate politics to recruit their pet projects. 3. They ignore corporate hierarchy. If you seek to motivate clever people with titles or promotions, you will probably be met with cold disdain. But 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 flashgun access. 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 plugged into highly developed knowledge networks who they know is often as important as what they know. These networks both amplification 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 head 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.Mea sealed your success by your ability to remain on the fringes of their radar. Managing Organizational Rain Given 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 monumental-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 star professor from the burden of departmental administration at a newspaper, it is the editor allowing the investigative reporter to write out 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 exp eriment with a new marketing plan. Organizational rain is a big issue in the pharmaceutical business. Drug development is hugely expensive constancywide, the average cost of bringing a drug to market is about $800 million and not every drug can go the distance.As a result, the politics meet a decision can be ferocious. Unless the CEO provides cover, promising projects may be permanently derailed, and the people involved may lose con? dence in the organizations ability to support them. The protective power 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 wring, some leaders would have pulled the plug on Avastin.Not Levinson He believes in letting his clever people decide. Once or twice a year, research scientists have to defend their work to Genentechs R esearch Review Committee, a pigeonholing of 13 PhDs who decide how to deal the research budget and whether to terminate projects. This gives rise to a rigorous fight among the clever people over the science and the direction of research. It also insulates Levinson from accusations of secernment or go around-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 foursquare nates Levinson. Leading clever people, Humer told us, is especially dif? cult in hard 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 amid $500 million and $800 million on research every year. The pressure on me to close it down or lurch the culture was enormous. Avastin was last approved in February 2004 in 2005 it had sales of $1. 13 billion. March 2007 hbr. org Leading Clever PeopleHaving a l eader 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 atmosphere in which rules and norms are simple and universally accepted. These are often called representative 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 other (punishment-centered bureaucracy), and environments where rules are accepted by all (representative bureaucracy).Representative rules, including risk rules in banks, sabbatic 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 values 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 director command of the BBC discovered a mass of bureaucratic rules, often contradictory, which produced an infuriating 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 stern program, liberating creative energy while exposing those who had been blaming the rules for their own inadequacies. He creatively engage employees in the campaignfor example, suggesting that they pull out a yellow invoice (used to caution players in soccer games) whenever they encountered a dysfunctional rule. Recruiting People with the dependable Stuff Clever people require a peer group of like-minded individuals. Universities have long netherstood this.Hire a star professor and you can be sure the aspiring young PhDs in that discipline will ? ock to your institution. Thi s happens in business as well. In the investment banking world, everyone befooles where the cleverest pick out to work. Goldman Sachs, for example, cherishes its reputation as the home of the brightest and best a bank that seeks to enamour it must be positioned as a place where brightness thrives. For this reason, the CEOs of companies that blaspheme on clever people keep a close watch on the recruiting of stars. Bill Gates al offices 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 personally in the recruitment process A peculiarly talented programmer who needed a little additional view to join the company top executive receive a personal call from Gates. Very ? attering and very effective. Although you need to recruit clever stars, you must also make sure that your culture celebrates clever ideas. In an effort 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 commission Bartle Bogle Hegarty doesnt make this mistake. Many of its most successful executives started as assistants but were given the infinite to grow and express their cleverness. Not surprisingly, BBH has long been regarded as one of the most creative ad agencies in the world. At the marrow of its corporate culture is the maxim Respect ideas, wherever they come from. allow 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 notion drives big decisions about corporate control and M&A. Thats wherefore Humer decided to sell off a large stake in Genentech. I insisted on selling 40% on the stock market, he told us. Why? Because I wanted to preserve the companys different culture. I believe in innovation 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 advancement different goals My people in the Roche research organization decide on what they think is right and molest. I hear debates where the Genentech researchers say,This program youre running 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 Hume rs most challenging assign there is always pressure inside a large organization to unify and to direct from above. Companies that value diversity are not afeard(predicate) 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 disloyal Eight Ineffective leadership of clever people can be costly. Consider the cautionary tale of William Shockley, a London-born research scientist who worked at cost 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 semiconductor unit 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 excellent mind. Noyce described him as a marvelous intuitive prob lem 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 other 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 discontent at Shockleys leadership style turned mutinous. The situation deteriorated and a disenchanted group the Traitorous Eight left to found Fairchild semiconductor unit in 1957 Fairchild revolutionized comput ing . 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 primed(p) the cornerstone of Silicon Valley. He brought together some of the best scientists in the ? eld of electronics, umpteen 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 psychoanalysis of customer data indicated an opening in the market for an alcoholic drunke nness 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. by and by almost a dozen tries, Diageos clever people move 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 high technology antibiotics all failed in the ? nal stages of clinical trial, Richard Sykes who went on to become chairman of Glaxo Wellcome and afterward 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 modify their clever people to dog 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 may spend one day a week on their own start-up ideas, called Googlettes. Th is 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 demonstrate that you are an expert in your own right. Depending on what in dustry 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 figure 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 discourse 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 separate of anthropologist, interpreting the culture and sympathizing with those who seek to understand it. This is especially important for impertinently recruited leaders. Parachuting in at the top and accurately reading an organization is hard work. One leader weIf you try to promote your clever people, you will end up driving them away. As many leaders of highly creative people have learned, you need to be a good-hearted guardian rather than a traditional boss. with complementary skills. Nelson was no expert on traditional brewing techniques or real ales. But he was known throughout the organization as Numbers Nelson for his grasp of the ? rms sa les 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. leading 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 credentialsespecially if they are supplementaryare not enough to win acceptance from c lever 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 turnaround time 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 come along them to experiment and play and even fail and quietly demonst rate 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