Substantial resources have been spent to motivate and engage employees. That strategy is wrong, write these co-authors, who argue that in the knowledge or “clever” economy the defining challenge for leaders is making their organisation attractive to clever people who already know how valuable they are. In this article, managers will learn how to attract and retain those “clevers.”

As we examine the possibilities of recovery for western economies, one thing becomes very clear. The future rests upon the creation of clever jobs – work inextricably linked to the growth of what has been called the knowledge economy. Leading the clever people who inhabit the organisations of the knowledge economy becomes a critical challenge. Yet, so often while researching our new book – Clever, leading your smartest, most creative people, we have observed talented individuals being turned off by bureaucratic process, internal politics and – above all – inadequate leadership.

In this article we will summarize what we have discovered about the leadership of clever individuals, clever teams and clever organisations. Our research has led us to question the conventional managerial wisdom of the last 100 years. This has asserted that the key managerial challenge was to extract value from recalcitrant workers, though of course, this was described rather differently as motivating, engaging, empowering, and so on. This sees its latest expression in the pursuit of “discretionary effort.” Our view runs counter to this prevailing wisdom. The task in the organisations of the clever economy is not how to motivate your employees but how to make your organisation attractive to clever people who already know how valuable they are.

So who are these clever people?

The first and most obvious point to make is that they are not simply those with the highest IQ or the most impressive academic qualifications (although many of them do score highly on these two measures). Our conversations and observations have led us to develop a simple definition:

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.

This second point is significant. There are many highly talented individuals who are capable of producing remarkable results on their own – that is to say outside of an organization. These stand-alone clever people include artists, solo musicians, and other free agents. But they are not the people we are talking about. We use the term “clever people” to refer specifically to talented individuals who need an organization to achieve their full potential.

Precisely what they do, of course, depends on the context. In pharmaceutical companies they carry out scientific research and produce ideas for new drugs; in professional services firms they solve complex client problems; in ad agencies they understand customers, brand values and craft highly innovative communications that connect the two. But whatever they do, they do it extraordinarily.

Cleverness must always be contextualized. Our research suggests that there are a number of important attributes of clever people. Though not exhaustive, we identified nine common characteristics:

1. Their cleverness is central to their identity.
What clever people “do” is not the result of a last-minute career choice. Rather, it is who they are, something rooted deep in their being. Listen to how people introduce themselves. Clever people will say that they’re physicists, geneticists, film producers, software designers and so on. They do not say, “I work for Clever Inc.” They are defined by their passion not their organization.

The close association between what they do and who they are also means that clever people often see themselves as not being dependent on others. The leader must, therefore, start by acknowledging their independence and difference. If leaders do not do this, they fail at first base. But, and it is an important caveat, the leader’s job is to make them understand their interdependence. Recognizing the symbiotic nature of the relationship is critical to both the individual and the organization.

2. Their skills are not easily replicated.
If they were, then they would not be the scarce resource that they are. Once upon a time, competitive advantage was established because your product was slightly better or produced more cheaply. Now it often comes through the collective efforts of the people in your organization. The good thing about people – and the teams they create – is that they are (as yet) impossible to copy.

The knowledge of clever people is tacit. It is embedded in them. If it was possible to capture their knowledge within the organizational fabric, then all that would be required would be better knowledge management systems. It isn’t.

3. They know their worth.
The fact is that they understand that their knowledge is hard to replicate and a function of the professional networks to which they belong. It is linked to the clear understanding that they have of their value.

Such sentiments represent an important power shift. Confident in their own worth and ability, clever people exert pressure on their leaders. Their scepticism about the relevance of leadership puts pressure on leaders to demonstrate their contribution.

4. They ask difficult questions.
“My clearest indication that I have somebody who is really talented is that they will come into my office and argue with me on some issue where they are convinced they’re right. The fact that they are passionate enough to sit and argue with me is a huge indicator,” says Will Wright, the brilliant designer who led the creation of the Sim City franchise and the ground breaking Spore game for Electronic Arts. Knowing your worth means that you are more willing to challenge and question. Clever people are often incessant interrogators of those who hope to lead them.

5. They are organizationally savvy.
It is easy to assume that clever people are organizational innocents, too focused on their own expertise to play political games. The reality is somewhat different. They are human – and clever with it. Clever people will find the organizational context where their interests will be most generously funded. When the funding dries up, they have several options. They can move on to somewhere where resources are plentiful; or they can dig in and engage in elaborate organizational politics to ensure that their pet projects are indulged. This is a pattern we have witnessed over and over in academic and research-based organizations. Clever people are expert gamers.

Will Wright observes “In my experience clever people understand organizational dynamics, politics etc. You do not want to entirely isolate them from the political pressures, the disciplinary dynamics going on around them.”

6. They are not impressed by corporate hierarchy (and they don’t want to be led).
The demands of the clever economy represent a conundrum for leaders. We describe it as a conundrum for a simple reason: if there is one defining characteristic of clever people, it is that they claim they do not want to be led – and they are absolutely certain that they don’t want to be managed.

As noted earlier, “clevers” are also more concerned with what their professional peers think of them than their boss. They have an undisguised disdain for organizational hierarchy as captured in the organizational chart.

Their indifference to organizational hierarchy has important implications for leading them. “You are only as good as your last idea,” summarizes Christina Kite of Cisco Systems. “It’s all about influencing through skill and knowledge, not through title, especially in engineering. They don’t give a hoot what title you have. You’ve got to influence them through your skill and your knowledge, and your brand, because they’ll ask around. At the end of the day, they’re a show-me-don’t-tell-me group.”

7. They expect instant access.
The ideas of clever people are so all-consuming to them that they cannot understand why they may not be so to their leaders as well. If they don’t get access to the chief executive they will assume that the organization does not take their work seriously.

“So perhaps it’s not surprising that many of WPP’s clever people perceive Martin Sorrell’s legendary speed of response to emails (within a few minutes most of the time) as one of the most distinctive and valued aspects of his leadership style. The challenge for leaders is to balance open access with what might be regarded as interference.

8. They want to be connected to other clever people.
We have already made the point that clever knowledge cannot easily be downloaded to the organization. Indeed, it is almost always inseparable from the clever people themselves. But here is that paradox again: Just as organizations need clever people to be effective, so too do clever people need other clever people – and organizations – to achieve their full potential.

This point was made clear when we talked to Werner Bauer, research leader at Nestlé. “You have to establish a prosperous network of knowledge,” he told us. “When I was head of research for Nestlé that was the first thing I established across functional boundaries. My argument was that what we know in one area could inspire new ideas in another.”

For clever people, networking is not a social nicety but a source of perpetual improvement and bright ideas. Networks enable clever people to question assumptions and to make previously unacknowledged links. Unacknowledged links are also the topic of the final clever characteristic we have observed.

9. They won’t thank you.
“There’s a part of me, a slightly dark part of me, that thinks these clever people wouldn’t recognize management or leadership if you hit them in the face with it,” one slightly forlorn leader confided.

Even when you’re leading them well, clever people may be unwilling to recognize your leadership. Measure your success by your ability to remain on the fringes of their radar. You know you’re a success when you hear them say you’re not getting in the way too much.

What can leaders do?

During our research we developed some rules which can guide the leaders of clever people.

Explain and persuade
Clever people do not like to be told what to do – and are likely to react badly if they are. Needing to be told seems to undermine their sense of self esteem– clever people shouldn’t need telling!

Use expertise
Hierarchy, of course, still exists. There are CEOs, CFOs, CIOs, department heads and so on. But using hierarchy to justify decisions or behaviour is dangerous and probably self-defeating. This applies throughout the leader’s behaviour. Clevers will respond far better to expert power than to hierarchical power.

Give space and resources
The issue of providing resources and space – and creating the right environment – came up time and time again in our interviews. The more astute leaders recognized that it is a fine balance between providing enough space to try out new things and creating a playground for clevers where they are not expected to deliver results.

Tell them what – but not how
While grand visions may be a distraction, a sense of direction which unifies efforts is helpful. But, going beyond what we are doing to how we are doing it is risky – if only because it deprives clever people of the fun of working things out for themselves.

Provide boundaries
Clevers need space. But they also need structure and discipline. Creating the right sort of space – sufficiently large to allow clevers to express themselves, but also with boundaries that help them focus their efforts – is vital. One without the other is dangerous and ultimately unproductive.

Give people time for questioning
An age-old instruction to children is, “If you don’t know, ask.” Sadly, this advice has often been ignored in businesses. As Rob Murray, CEO of the Australian brewing Company Lion Nathan remarks, “Some people in the business avoid dialog and engagement with the clevers, because they feel intellectually intimidated. So the number one rule is, even if you realize as a CEO you’re talking to people who are academically more astute than you are, you’ve got to be prepared to go in there and engage them.”

Give recognition and amplify achievements
What clever people do is central to their identity, so recognizing their achievements is vital. However, clever people tend to value recognition from prestigious peers and clients outside their organizations the most. What’s more – given their sensitivities to interference and the fact that many may be working on long, complex tasks with unknowable outcomes – although recognition is highly valued, it does not necessarily need to be delivered frequently. It’s quality, not quantity that’s important.

Encourage failure, maximize learning
Whereas many organizations need to train people intensively in order to reduce risks of failure, clever people often arrive highly trained in professional or technical terms. Paradoxically, they may get cleverer mainly by organizations maximizing opportunities for failure. This is because they tend to respond best to difficult, stretching tasks where their talents are tested to the limits. By contrast, their attitude towards “training events” (particularly management-inspired ones) can be scornful.

Protect clever people from the rain
Clever people see the administrative machinery of the organization as a distraction from their key value-adding activities. So they need to be protected from the organizational “rain.”

The leader sweeps aside the organizational detritus. Leading clevers is all about removing obstacles that prevent them doing what they do best. Sometimes, that means knocking down the barriers; other times it means cutting through the red tape.

Talk straight
In order to flourish, leaders must be confident about their own expertise. If they are not, the clevers will sense it. They have good antennae for detecting bullshit. To be an effective leader of clevers you have to know who you are – be confident in your own abilities and say what you mean.

Give real world challenges with constraints
It is sometimes suggested that individuals can be energized to achieve goals by leaders who tell them that everything is possible. But this kind of optimism is not always successful with clever people. They seem to prefer the reverse. Tell them that something is not possible and they will be highly motivated to prove you wrong. Clever people are at their most productive when faced with real and hard questions which they must solve within meaningful constraints.

Create a galaxy
While it is correct to attract stars to an organization, the real leadership task is to ensure that these stars are connected to each other in ways which influence the entire organization. The leader is building a social architecture of knowledge. It’s akin to using the best players in your soccer team to set the standards for everyone.

Conduct and connect
Just as clever people say they don’t want to be led, many say they do not wish to see themselves as “leaders.” The leader’s task then becomes one of knowing how to conduct and connect. This becomes even more evident as the clevers work together in teams and in organisations.

Clever teams

So let’s go back to basics. What is a team? It is a group of people who have shared objectives, interdependent tasks, and members who are aware of each others. It sounds simple doesn’t it? But we have regularly observed clever people struggling with these basics and so failing as a team.

A further wrinkle is that the shape, character and contexts of these teams vary. Compare and contrast for example, techies, creatives and professionals. These were amongst different types of teams we researched for our new book.

Techie teams tend to be overly specialised, disconnected from the mainstream organisation and although somewhat clichéd – populated by individuals with weak interpersonal skills.

Creative teams are different. Sometimes one brilliant creative dominates all others in the team. Another problem is that they are drawn to novelty at the expense of quality – at any cost. And finally, creative tensions can run high and lead to unproductive conflict.

Lastly, professional teams have a tendency to be wilfully mischievous – disciplined in professional terms but sometimes acting like children in interpersonal terms. They also tend to avoid feedback from their colleagues. This is often a result of their obsession with clients.

Despite these manifest differences, clever teams have things in common. They are normally engaged in tasks with the following characteristics. First, they are complex. There would be little point in bringing clever people together into teams in order to tackle simple tasks or tasks which could be routinized. The complexity involves many interfaces, high levels of uncertainty and value chains, which may extend not only beyond the team but beyond the organization.

Second, clever teams often function in dynamic environments – that is to say, many of the variables that they are dealing with are moving around rapidly and unpredictably. This requires highly cohesive teams able that are able to exploit different forms of cleverness and to work together over long periods of time. Without cohesiveness, the complexity and change could produce chaos and fragmentation.

So far, so good. Surely, having cohesive teams is a laudable outcome. But, the nature of the tasks that clever teams are engaged in requires almost the opposite of cohesion – even a degree of fragmentation. Here are some of the characteristics of their work:

• Diversity. Creativity increases with diversity and declines with homogeneity. This is not just diversity measured in conventional HR terms (though of course that’s important enough) but diversity of perspective. Only this type of diversity can generate the high levels of cognitive conflict that clever teams require. On many occasions we have witnessed the diversity of top teams in the City of London. They are made up of self-made entrepreneurial salesmen (“barrow boys” in the English vernacular) and supremely well-educated Oxbridge graduates, but who nevertheless often demonstrate high levels of creativity.
• Serendipity. Because the many variables clever teams deal with have rapidly changing coefficients, there is always the possibility of unintended consequences and surprises. Glaxo had a strategy for becoming the world’s leading cardiovascular drug company and then it discovered Zantac (the anti-ulcer drug). Indeed, it was this drug that transformed Glaxo into arguably the world’s greatest pharmaceutical company. The compact disc, which in the 1980s was the saviour of the recorded music industry, was developed as a computer storage device. Clever industries are full of such examples.
• The work inevitably involves multiple interfaces. The very nature of the complex problems clever teams deal with requires that they handle many relationships outside of their immediate team. No drug can be developed without managing such interfaces.

Understandably, given the characteristics above, clever teams are volatile. The requirement for the clash of ideas, the passion which they bring to their work and high levels of intrinsic uncertainty, are all conditions which generate volatility. Clever people really care and it shows in their teams.

Leading clever organisations

Just as teams vary, so do organisations. We have researched clevers in many settings, in the kinds of organisations that you immediately think of like Google, Apple, in well- established professional services firms like PwC, and hospital services. However, don’t forget that cleverness is to be found in a huge variety of places, in schools, in fast-moving consumer goods (FMCG), in breweries – and not just in the R&D departments.

There is no one template for the clever organisation. However, the most successful organizations in the clever economy exhibit high affinity and clear discipline. Examples include EA, McLaren, Cisco and Microsoft. In this quadrant, clever people – and their organizations – thrive. They have fun and they deliver results.

But, there are dangers. Prolonged success can lead organizations to start believing their own propaganda. This is always a dangerous sign. The board, itself a clever team, has a vital role to play in challenging comfortable assumptions about the organization and the reasons for its success. Good boards combine the roles of enthusiastic advocacy and disciplined critique.

Then there are those with high affinity and low discipline. They are characterized by high sociability – clever people wanting to self select, hanging out with each other and choosing work that interests them. In its classically self critical way, Arup, the engineering consultant firm, recognizes that it can sometimes face some of these issues. But it also recognizes that great things sometimes happen when the stars are “naturally” aligned. The problem is it may not happen enough! Indeed, the fashionable way to lead clever people in the 1950s and 1960s was to create an ivory tower. Organizations put up buildings overlooking lakes, oceans or mountains, populated them with their smartest people, provided money and resources, and retreated ten yards to await the creative explosion.

Highly disciplined organizations with low affinity for clever people aspire to predictable but complex outcomes. For example, the operations and IT functions of global investment banks are harangued daily to deliver their promises and, by the way, reduce the cost of trade at the same time. Inside these organizations, however, it often doesn’t feel that they have the time and space to think creatively. They complain that they are pressured to produce one quick fix after another. This fundamental tension may help explain why so many major IT projects disappoint.

So, to return to where we started, as organizations seek to increase levels of discipline –often under external pressure from the market and the analysts — they create places where clever people don’t want to be. They are trying to move from the top left to the bottom right. Here, life seems nasty, brutish and short. Does this explain the flight of clever people from organizations? And could this get worse as a result of the current turbulence? The future of all of us depends upon getting the balance between affinity and discipline correct.