When Stephen Kaufman, former CEO of Arrow Electronics, talked to author Justin Menkes about the need to weave talent throughout organizations, he identified an issue that resonates with small business owners as well as corporate leaders.
"The central difficulty that comes from organizations' growth is that, by and large, as they get bigger they tend to slide into mediocrity," Kaufman said. "This is because it is extremely hard to find and keep talented people. They are just too rare."
Small business owners and entrepreneurs say that recruiting and retaining the right employees is one of their most pressing internal challenges. Turnover comes at a painful price, but the cost of having the wrong people in key positions can be even higher. It's important when hiring that first employee, and continues to be an issue as the enterprise matures and eventually expands. Hire too many "B" players in managerial positions in your company and they are likely to fill the ranks with "C" players, Kaufman warns. Soon your company is faltering.
But although everyone realizes that finding the right people is critical, a definition of "right" has been vague, Menkes writes.
Menkes, managing director of a consulting firm that provides executive assessment services, sets out the component parts of business "smarts" in his book, "Executive Intelligence: What All Great Leaders Have." Built on eight years of research into intelligence testing and cognitive skills as well as hundreds of interviews, Menkes' analysis outlines the qualities that set successful business people apart.
"Executive Intelligence" briefs readers on recent academic research in the field, and traces the roots of management science as far back as Max Weber and the history of intelligence testing back to Alfred Binet. Some of the most high-achieving CEOs of recent years walk through the pages of the book, telling their stories and sharing observations on what makes some leaders effective while others fail. Most are tales from the inner sanctums of corporate power, but the insights apply to managers at all levels, and to the captains of small enterprises.
It's not what you know, but how you think
Menkes opens his book with a story. A truck was jammed under a bridge, and as the fire department and a tow truck labored to pull it free, traffic came to a standstill. When a motorist asked what the problem was, the fire chief snapped: "The bridge is not high enough." The motorist then suggested another way to look at the problem. In fact, he said, the truck is not low enough to pass through. After letting some air out of the tires the truck was soon free and traffic was flowing again.
Menkes offers the story as an example of "Executive Intelligence" -- the set of characteristics shared by the stars of business. Executive intelligence is a "blend of critical aptitudes" that guides decision-making, enabling the leader to see more than one way to extract a truck trapped under a low overpass.
"In its simplest form," Menkes writes, "Executive Intelligence is a distinct set of aptitudes that an individual must be able to demonstrate in three central contexts of work: the accomplishment of tasks, working with and through other people, and judging oneself and adapting one's behavior accordingly."
Although critical thinking is at the root, executive intelligence is not the same as the mental acuity needed to solve a math problem, he says. Instead, it is the ability to collect and sift different kinds of information, asking questions and disregarding tangents -- even the attractive or entertaining ones -- in order to make decisions on the fly.
The right answers emerge from this process, Menkes writes; however, this is not the way a vast majority of executives make decisions. Most executives are action oriented, finding the solution by the often costly process of trial and error.
Managers who possess executive intelligence are also deeply perceptive about people. They can detect hidden agendas, understand individual perspectives and anticipate emotional reactions. And, these leaders are able to recognize and take responsibility for their own mistakes, accept criticism, and initiate corrective action.
Missing from the list? Interestingly, it is knowledge. Menkes says that executives who excel in these three functional areas have the ability to assemble the knowledge they need to make good decisions, even if they are new to the industry.
Identifying "Executive Intelligence"
People who possess these abilities would be powerful assets at every level of any organization. In fact, Menkes argues that companies which do not deploy this kind of talent throughout their ranks will struggle.
All companies these days deal with rapidly changing conditions. They need leaders who are not blinded by what they think they know from experience, but who can see and assess what's actually happening and respond accordingly. With so many people working from remote locations or without daily supervision, organizations are depending on employees to make good decisions on their own. But how do you find this kind of thinker?
The standard job interview won't do the trick, Menkes says. The Past Behavioral Interview (PBI), where job applicants are questioned about how they handled business situations in their previous positions, is actually a test of knowledge, he writes. Behavioral questions ask applicants to recall how they dealt with an experience or problem. Their answers might indicate that they responded effectively, but all the interviewer has gained is a sense for what the job applicant has learned -- not how he or she makes decisions. If Menkes' research is correct, most likely the applicant came by his successful resolution by trial and error rather than by clear thinking.
Instead of the PBI, Menkes proposes an executive intelligence evaluation technique that measures how well a manager would perform doing the job itself: thinking on his feet to process data, relating to people and evaluating himself. Menkes offers sample questions that present scenarios which require the applicant to describe what he would do in a new situation. This mimics the decision-making that is the daily agenda of a manager. Facts are presented in conversation. The manager must determine whether he has enough information and what the unintended consequences of a course of action might be. Skillfully constructed questions can reveal how well an applicant processes information, manages others and critiques himself. This process, Menkes says, identifies clear thinkers better than asking applicants to tell war stories.
Nature or nurture?
Executive intelligence occurs naturally only rarely in the population, Menkes writes. He suggests this may be because of evolution; the instinct to strike or run that served well when the environment was full of predators makes most of us too impulsive in business situations. Although the stars are born with the ability to think clearly before acting, Menkes says that discussion-style training, where participants work through scenarios similar to those used in the job interview, might help develop executive intelligence aptitude in managers.
But spending a few evenings with the book has a training effect of its own. It opens your eyes to the way you organize the information you need for a project, the way you react to colleagues at meetings, and to what extent you are willing to listen to criticism, acknowledge errors and change your own behavior.
Menkes writes that management science spins out a new theory -- usually known by an acronym -- about every 18 months. These theories fill the books that populate the business best-seller lists, and high-priced consultants are always ready to preach the gospel du jour to your company.
Menkes says "Executive Intelligence" is not just another false testament. Maybe he's right. If not, at the very least he's provided a helpful look at the way we think and conduct business.