Chapter 1 - Understanding Clever People

While many clever people are highly intelligent and have great academic credentials, not all people who meet those qualifications are clever. Some such people are exceptionally good at following the beaten path. Other people show a great deal of cleverness in spite of failing to achieve traditional distinctions.

The authors' definition is that "Clever people are highly talented individuals with the potential to create disproportionate amounts of value from the resources that the organization makes available to them."

The second bit is significant - as there are many talented individuals who are capable of producing results on their own, and who do not need organizations to do so. Maverick geniuses have achieved great things in the solitude of their studios and workshops, and their work is admirable - but because they work in isolation they are of little interest to organizational managers.

This book is concerned with the clever people who need the resources of an organization to achieve their full potential.

Profile: Will Wright

The author mentions Will Wright, who is "the man behind the original SimCity," which spawned an entire series of simulation games. The original SimCity was a god-game that enabled players to plan a city, and the Sims series gave them more granular control of individuals in a neighborhood. The concept of a game with no clear goal, merely a simulation with which players could interact, was a novel concept and a sweeping success. The author mentions "Spore," another game that offered players the ability to influence the evolution of creatures.

Of note, SimCity was a sort of accidental offshoot of the tools Wright developed to build city environments for other games - in which the city was more the setting than the object of play, but the developers wanted realism. He enjoyed building cities with the tool he created and figured others will as well.

When he decided to pursue Spore, Wright picked his team carefully. "The very best programmers are worth ten really good programmers," he's said. They are the ones who can see the elegant and simple solutions to problems that others will attach with reams of conventional code. They just seem to have a way of seeing an unconventional but effective way to get to the heart of a problem.

Wright is an example of a clever person who created enormous value for his company (nearly $3 billion in 2004 alone) by discovering and pursuing an idea that wasn't in the company's game plan. Admittedly, the video game industry is much more flexible and open to new ideas than many industries, but also tends to be an environment of heads-down grinding on a single plan and resists the filigree of on-the-fly ideas in attempting to make a ship date for a new game.

Wright seems uncomfortable at being called a leader, but says "I tend to see myself as one of the soft leaders" in which he is not directing the day-to-day affairs of his people, but providing guidance and keeping track of progress, but not really driving in the traditional way.

It's also suggested that the presence of a clever person also attracts other clever people, who want to work with someone who "gets" them and will support them appropriately and let them do what they do best. The key to managing clever people is to give them latitude rather than yoking them into mindless hands-on drudgery, even though they may seem to be efficient at dealing with it.

It's also mentioned that firms must have the patience to continue to support clever people even if their ideas do not pan out - the next one may be brilliant. Ironically, the author suggests that it is "unlikely but not impossible" that Wright's "spore project will be a flop (EN: which is exactly what happened) but he expects his company will continue to support and feed the efforts of Wright and his team of clever people even if it is.

Symbiotic Men and Women

The organization is a source of resources and protection to people with creative minds - they have the brains to do things, and they're well aware of it. They are also well aware that they cannot accomplish what they need without the support and security of an organization.

No single individual has the resources to construct an airplane, build a robust computer operating system, or film an Oscar-winning movie without the support and assistance of other people - and few individuals have the financial resources to personally create a company that is capable of doing so. In that sense, the corporation is the patron to inventors and innovators.

(EN: This may bear some reflection, because many of the innovations of the industrial era were done in a private workshop and many software companies were founded in garages. My sense is that in the very early stages of evolution, innovation can be done privately on small scale - but some efforts are large-scale to begin with, and others evolve that way after everything that can be done on a small scale has been done.)

Even when the inventor can create a model or prototype, he needs a company to develop, manufacture, and distribute his idea to those who have need of its benefits or can make use of it.

(EN: This is also a good point, and well remembered in instances where the person or firm who came up with an idea was not the one to bring it to market. This also happens with companies. For example, Xerox PARC developed the idea of the graphical user interface but was reluctant to pursue the idea commercially, so Apple stepped in and made a go of it.)

The challenge for leaders in organization is to create a magnet to draw such people to them, preferably before your competition does . Once you have them, can you provide the kind of support that is needed to retain them.

Perhaps most importantly, can your organization's culture tolerate them, given the peculiarities of clever people. The best and most talented person may well be "a complete pain in the ass" and you organization may have to accommodate infantile behavior.

(EN: Accommodation likely is not the right solution in all cases - the main issue with many firms is that they hire a number of clever people and it is plainly impossible to accommodate them all. And if there is a battle of prima donna employees, how do you sort it out without alienating many for the sake of the few? Perhaps the authors will consider this later, but here it seems neglected.)

The Rise of the Clever Economy

In the nineteenth and twentieth centuries, the struggle for power among people, companies, and even nations was over control over productive assets - land, timber, minerals, and such. In the present day, the struggle for power has shifted to control over innovative people, because without the ideas the assets are not productive.

(EN: I would argue that this began much sooner, and that what gave America a huge leap forward in the mid-twentieth century is its ability to draw the clever people out of other nations. Many German and Russian scientist fled to America to avoid hostile regimes, and even today clever people from overseas come to the US to profit from their abilities in a free economy. This considered, America likely always has been fueled by the clever and hardworking people of other nations.)

Even in the throes of an economic recession, various firms are declaring that they have "half the talent we need" to capitalize on opportunities. That is to say that they are hungry for talent, not just "people." Untalented people are overabundant, and talented ones are rare.

(EN: Entirely separate argument about companies abdicating the responsibility of developing talent, and all are seeking to hire it off of someone else, and then they are scared to develop people because they will be hired off by other firms. Vicious circle in which everyone suffers, and few have devoted the resources to invest in developing their people and then paying enough to keep them.)

Back to the need for people: intellectuals drive productivity, value creation, and growth. The ability to produce goods efficiently was once important to competition and the most efficient firm could undercut prices to seize the market. Nowadays, efficient manufacturing is a common strength to many firms - and competition isn't to be the cheapest but the best or most innovative. That requires clever people.

The authors provide a few examples of firms that have experienced dramatic growth due to "economies of knowledge" and demonstrate how firms that are innovative profit more and withstand financial downturns better than those who merely try to be efficient in their operations.

It's also mentioned that it's not simply a matter of mathematics. The firm with the highest number of creative people does not win, and very often there are "diseconomies of scale" because clever people conflict with one another and this stifles rather than fosters creativity. One bright idea can make billions of dollars, but ten bright ideas compete and conflict, and often the best idea is ignored for the sake of one that seems better because of the way it is presented. One bright person may have better ideas than a committee of ten bright people, as groupthink and politics set in and stifle innovation.

All of this makes it difficult to calculate the right amount of investment in research and innovation - the relationship isn't linear. If you invest nothing, you are certain to get nothing. If you invest $200 million, you will get something. If you increase that to $400 million you will not get double, and might get half. OR if you cut it to $100 million, you might not lose half and might find that you gain. It's entirely confounding from an accounting perspective.

Fast Times

Consider the pace of progress throughout history: dramatic changes in the way people lived and worked occurred periodically, with major breakthroughs and revolutionary changes happening every few centuries or so. Today, change occurs much more rapidly and the "thirst" for new ideas is constant.

Clever people are famous fast, as their impact and their reputation spreads more quickly than ever before. Where innovators were once persecuted by society (particularly the religious institutions) they are now lauded, at least for a time. Innovators have not take over "celebrity culture" entirely (we celebrate trashy and lowbrow people, now more than ever) but they are at least recognized.

Ideas travel the world with unparalleled speed and ease. Electronic copies can be made faster than paper copies, can be transmitted around the globe in seconds, and cannot be as easily intercepted or controlled. Essays, books, and entire libraries are open an accessible.

There is also the thirst for clever people, who are the wellspring of good ideas. The old world rewarded obedience and expected life-long attachment, but the present age rewards innovation and expects employees will change jobs readily should a better opportunity present itself.


Another change the author notes is the mobility of the knowledge-worker. It is not uncommon to meet someone who was born in Bangladesh, educated in Canada, who has lived and worked in New York, Tokyo, London, and Sydney. A generation ago this was virtually unheard of: careers for clever people are not a "predictable and long climb through a single corporate hierarchy."

Companies struggle to retain good people. The various tricks of the trade (noncompetition clauses, rewards thet vest over time, elaborate tax plans, etc.) are failing, and labor is not even susceptible to the highest bidder: what people want is a great place in which the express their cleverness and work with other clever people.

Clever people are smart enough to know their worth and they expect to be rewarded accordingly - that is taken as a "given." But more than that, clever people want a sense of fulfillment and achievement from the work that they do and the firms for which they do it.

The Downside to Clever

While the authors have been going on about the positive impact that clever people can have, they concede that there is also enormous destructive potential. People with innovative ideas expect companies to implement them, as quickly and as broadly as possible, and to implement them exactly as they are. They complain about how much time it takes to turn a ship, not realizing that it cannot be turned any faster without capsizing.

Clever people can also be too clever for their own good, in love with ideas and blinded to the downside. Clever people can significantly damage brands and destroy huge amounts of shareholder value when they get it wrong. That's bad for companies and shareholders, and the careers of leaders who supported them.

Consider the financial crisis caused by clever bankers, or the scandals created by clever accountants, and the like. In arrears it is easy to see what was done wrong, but before catastrophe struck their ideas seemed very innovative and highly profitable. Enron was very clever ... until it wasn't.

Characteristics of Clever People

The next chapter will take a more detailed look at how to lead clever people effectively, but for now the authors mean to discuss some of their key characteristics.