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Sunday, January 07, 2007

Gladwell and the Talent Myth

Malcolm Gladwell has written a "semi-defense" of Enron, arguing that the Enron folks never really lied, they just shrouded their questionable activities in an avalanche of information.  This isn't really true -- at least, it's not what the jury believed.  There are clear examples of deception by Enron's officers, including Skilling, that were offered up at trial.  Any contention otherwise is merely relitigating the Skilling-Lay trial.  (Joseph Nocera has some nice examples of this, such as the disclosures about the Enron broadband and energy-services businesses.)

But I'd like to talk less about the truthiness of Gladwell's contentions and more about his overall approach.  I think Gladwell has wandered into the same territory here that was best captured by his first article about Enron.

In 2002, Gladwell wrote "The Talent Myth" with the subheading, "Are smart people overrated?"  In that article, Gladwell argued that Enron failed in part because it trusted too much that intelligent management would lead inexorably to business sucess.  As an example, he cites to Lou Pai, the head of Enron's power-trading business, who launched a business without doing the homework necessary for success.  Despite this failure, Pai was given more chances to succeed based on an initial evaluation that he had talent.  Gladwell asks: "Yet if talent is defined as something separate from an employee's actual performance, what use is it, exactly?"

I wonder if Gladwell has bought into the talent myth himself.  Gladwell's M.O. is to parachute into a particular topic, do some investigating, and then apply his gift for clever observation to come up with a new insight.  His articles do not depend on his deep well of knowledge on the particular issue, or his months of dogged investigation or reporting, but rather on his ability to apply certain insights or paradigms to areas that have been covered by more conventional types.  His articles are thus all based on his "talent" -- his intelligence in providing new perspectives.  Like the folks at Enron, Gladwell seems to think his talent can give him the answers without the need for traditional investigation or a career of experience in the area.

Gladwell sat down with the information on Enron and was not immediately able to figure it out.  He did not, as the jury did, sit through days of testimony and exhibits.  He did not, as Eichenwald or McLean or Elkind did, spend hundreds of hours talking to the principals and reviewing documents.  Instead, he did what most of us have done: absorbed the general media accounts, read some law review articles, and talked to some law professors.  Then, he sat down and thought real hard about it.  Come up with an interesting paradigm -- the puzzle vs. mystery idea -- and voila!  You have a counter-conventional-wisdom take on the Enron scandal.

I am being a bit unfair, of course; I have no idea what research Gladwell actually did.  But his modus operandi is evident.  And frankly, his approach mirrors some of what is happening in academia.  Instead of gathering lots and lots of research about particular problems, we are taught that certain methodologies can be applied to resolve almost any puzzle of law, economics, or human behavior.  The Freakonomics approach is all about looking for an interesting data set and then applying statistical analysis in an insightful way.  And it can be applied to almost any problem.  Of course, sometimes you'll come up with the answer that dog poop should be subjected to DNA testing.  But hey -- it makes you think, doesn't it?

Gladwell seems to acknowledge this.  In a recent blog post, Gladwell praised the work of reporters at the Wall Street Journal in ferreting out the Enron scandal.  He notes that others with a much higher economic incentive failed to do so.  He writes:

Maybe, in other words, we have underestimated the value of impartial, professionally-motivated, under-paid and overworked generalists in tackling the kind of information-rich, analysis-dependent “mysteries” that the modern world throws at us.

In other words, perhaps "intelligence" -- as opposed to hard work -- is overrated in the media, too.  But then again, Gladwell also posted this:  "Can anyone explain—in plain language—what it is Jeff Skilling and Co. did wrong? . . . . For the sake of argument, let’s stipulate that summaries must be three sentences or less."  In other words, if it's really complicated, it's not really true.

You may have seen the recent articles discussing the decrease in breast cancer due to a reduction in the use of hormone therapy.  In a 1997 article, Gladwell pooh-poohed the work of Dr. Susan Love, a fierce critic of hormone therapy.  Gladwell argued that Love ignored and misstated statistics and was dangerously misleading her audience through emotional appeals.  Even reading the article today, Gladwell persuades me.  But that's because Gladwell himself uses an emotional appeal: the notion that intelligent people are right to trust the experts and the statistics they rely on.  In this case,  however, those statistics -- and Gladwell -- were proven wrong.  In the words of Mickey Kaus: "Moral: don't get your medical advice from the New Yorker."

Posted by Matt Bodie on January 7, 2007 at 07:17 PM in Corporate | Permalink


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Here's a non times-select version of the Nocera article for any fellow non times-select people.


Posted by: anon | Jan 7, 2007 11:08:06 PM

I think Gladwell gets in to trouble by conflating the broader disclosure issues (using the Macey article) with the quite different question of whether or not Skilling broke the law. Prof. Bodie's point - that just because it's complicated doesn't make it legal - is apt.

Posted by: anon | Jan 7, 2007 10:50:54 PM

I'm in general agreement with Professor Lipshaw (with one caveat...see below) and would offer something else in defense of Gladwell. Sitting down with reams of "evidence" doesn't necessarily make one more able to judge guilt or innocence. It just gives one more information. While I would agree that more data *might* be an aid in pronouncing judgment, whether the jury in the Skilling trial found guilt based on greater quantities of "information" than was at Gladwell's command is not at all certain. They may have found guilt for any number of reasons. Lipshaw says that Gladwell isn't "passing himself off as a scholar," and neither was the jury. Scholars, to be sure, are very taken with their reservoir of information and how much "hard work" they do to get it (as well as, need it be said, of their breathtaking intelligence). But they shouldn't be too proud.

Posted by: md | Jan 7, 2007 8:46:25 PM

I wouldn't hammer Gladwell too hard for a couple reasons. First, for a participant in the popular media he's pretty substantive and thought-provoking. He's not passing himself off as a scholar. I remember seeing one of the cultural literacy types taking off on Harry Potter in the Wall Street Journal or the New York Times. C'mon. If it gets a kid to read a 700 page book? Instead of doing video games?

Second, in Blink and The Tipping Point, he's addressing something the philosophers have never solved - the mystery of judgment. When you are facing something entirely new, is it experience or fresh insight on which you should rely? When a board of directors listens to a new business proposal, in essence it is being asked to project forward some inductively derived rule: this business will succeed because the general rule we have derived from past successes is Y (which requires inputs A, B, and C), and we expect to see inputs A, B, and C in the future. Or because we expect inputs D, E, and F, we should apply rule Y prime, because that will work to account for the differences from the earlier inputs. It's just not clear that more research equals a better result.

Posted by: Jeff Lipshaw | Jan 7, 2007 7:32:58 PM

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