Tyler Cowen holds the Holbert C. Harris chair in economics at George Mason University. He is the bestselling author of numerous books, and has written regularly for the New York Times. Daniel Gross is an entrepreneur and investor who founded search engines Cue and Pioneer.
Below, Tyler shares 5 key insights from their new book, The Power of Crisis: How Three Threats—and Our Response—Will Change the World. Listen to the audio version—read by Tyler himself—in the Next Big Idea App.
1. Talent is the critical asset in modern economies.
According to one recent estimate, the total value of talent or human capital in the world is about $552 trillion. How we mobilize, identify, and induce talent to reach for greater ambition and greater aspirations is fundamental in determining the success of our societies. If you look at the American economy since 1960, it is estimated that at a bare minimum, 20 to 40 percent of the growth in the US economy has come from the better allocation of talent—in this case, women and minorities.
We see many regions throughout the world that, today, are much greater sources of talent than before. Look, for instance, at India, and how many individuals born there have become top-tier CEOs in Silicon Valley. Decades ago, that was not happening. These individuals are now creating more value, and are also giving some of that value back to India. That is a sign that we are not sufficiently optimistic, not sufficiently aspirational, about how much better identification and mobilization of talent can do for us.
2. To find the best talent, you have to be connected to the world in the right way.
If you are sitting in a chair and issuing proclamations about who are the smartest or most hard-working people, you will have only limited success. The way you truly succeed with talent identification is by getting the talented people to want to find you.
This is what economists call a “decentralized mechanism,” as outlined in the works of Nobel laureate Friedrich Hayek. On any given day, your outreach to the rest of the world may not seem urgent, but what image are you projecting? What kind of Bat Signal are you sending? Who wants to meet you? Who is recommending you to their friends? Those are all instances of “soft networks” for talent identification. And if you invest preemptively in those soft networks—make them strong, convincing, persuasive, and appealing—that is the first key to doing well at talent.
“The way you truly succeed with talent identification is by getting the talented people to want to find you.”
A related idea for success and talent identification is using scouts. They could be explicit scouts whom you pay directly, or they could just be people who are aligned with your mission and want you to do well. Or maybe they want to help out their friends by recommending them to your institution. Successful institutions at talent search and identification are very good at mobilizing scouts. Again, you want to have decentralization on your side, not working against you.
3. When conducting an interview, get into conversational mode as quickly as possible.
Many interviews are bureaucratic processes done only to satisfy the requirements of human resources departments. So you can ask a candidate, “What was a mistake you made in your previous job?” They’ll have a prepared answer that indicates they’re capable of some self-awareness, but they’re not going to let on about some truly vital mistake that could make you decide not to hire them. So if you ask that question, you’re mainly testing for preparation—but you’re not going to learn much.
The key is to get the person talking about something they did not come prepared to discuss. It could be an interest of theirs, it could be their understanding of how they approach some part of their lives, it could be about their favorite sports team—but when the person is in conversational mode, you will get a better sense of that individual’s personality, intellect, ability to relate to other people, and ability to explain things. How do they approach novel situations? How do they think on their feet? Conversation is what people do most of the time in most jobs, so the interview itself should be about conversation.
It will depend on context, but here are a few questions we like to ask in interviews: which of your beliefs are you most likely wrong about? What’s the most courageous thing you’ve ever done? If you joined us, and then in three to six months you were no longer here, why would that be? What did you like to do as a child? Did you feel appreciated at your last job? What was the biggest way in which you did not feel appreciated? (That’s a way to see if the person simply gets upset in almost any environment they would be placed in.) How did you prepare for this interview? What is something esoteric that you do?
“The key is to get the person talking about something they did not come prepared to discuss.”
4. When you’re talking with a candidate, focus on what that candidate actually does.
One question we like to ask candidates is: what are the open tabs in your browser right now? That gets at how a person spends his or her time. It gets at their true interests. It’s not so important what those open tabs are, but rather how the person talks about them and thinks about them. Does the person show a lot of enthusiasm for what they’re reading online? Do they show a good command of detail? You also might find out what kind of mind they have, or how they make decisions. Some people will have 300 open tabs and their life is an informational chaos, but they’ll be attuned to many online developments. Other people are super neat, and they have zero unread emails and close out all their browser tabs each evening. That will be good for some kinds of jobs, and less advantageous for others.
Another question we like to ask candidates is to see how well they are aiming for continual self-improvement: what is it you do to improve your career that is similar to a classical pianist practicing scales every day? Again, the specific answer might matter, but you want to know, is the person thinking about self-improvement at all? Do they have any answer to that question? If the person simply hasn’t thought about self-improvement, you’ll get a lot of hemming and hawing and a long silence.
But some might give you an enthusiastic answer. A writer might say, “Well, I write every day. I run what I’m doing by an editor, and I show my writing to all my friends.” That is the beginning of an answer indicating there will be self-improvement and compounding returns over time. Daniel Gross and I have a favorite saying: personality is revealed on weekends. In a person’s spare time, what does he or she actually do? You want some sense of that for job candidates, what they do to improve themselves.
“Personality is revealed on weekends.”
5. Intelligence is overrated, especially by smart people.
To be sure, for many jobs you may need a certain level of intelligence, but beyond that, intelligence and success in the endeavor are remarkably weakly correlated. So don’t focus too much on smarts alone.
You might wonder then, “Well, what other categories would I look for in a job candidate?” One would be energy—what’s the person’s energy level? Are they going to bring energy to the task all the time they’re working on it? Another would be durability—does this person stick with projects? To repeat an earlier idea, focus on compounding, continuous returns to self-improvement. Does the person work well with others? This is critical in virtually all workplace endeavors, and is often much more important than intelligence. Another way of putting this is, how good is the person at using or relying on the intelligence of others? How good is the person at knowing when he or she does not have the right answer, and ought to go ask someone else? How well does a person understand the hierarchies in various social institutions? A lot of people can be smart or hard-working, but they’re maximizing along the wrong hierarchies. I have in mind, say, people who become champion gamers, or maybe what they do with their lives is play chess. That can work great if you’re at the very top of that distribution, but for a lot of people, those endeavors are maybe something they should give up for something more practical.
So smarts and hard work aren’t enough. You need candidates who take the smarts, the hard work, the conscientiousness, the high energy level, and the ability to work well with others, and direct it toward the appropriate level of social organization—to get ahead for themselves and to add more value to your project.
If you’re interviewing someone who is potentially a team leader or a CEO or founding a startup, there’s a question I’m especially fond of: how ambitious are you? You want someone who is truly ambitious, but also understands where social value lies. It sounds like a silly question, but when you are asking people to spell out the details and enthusiasm of their ambition, you will learn something essential about them.
To listen to the audio version read by co-author Tyler Cowen, download the Next Big Idea App today: