If markets have a limited supply but high demand then prices will be high. Disney vacations are one example. Human capital is another. Computer science majors earn the highest salary out of college and humanities majors earn the least. Employers distinguish students (supply) by their degrees.
But how do you distinguish among the computer science majors? The answer is included in Todd Rose’s 2017 book, The End of Average.
Rose’s big idea is economic – society overpays for talent!
Throughout the 1800s and 1900s, modernization has been an experience of measurement. At first, the outcomes were crude because the measures were crude. Take the twenty years of Moneyball progress and stretch that through two centuries. In the same way that baseball teams overpaid for home runs, society overpays for talent.
Rose offers three explanations for our mistake.
1/ Jaggedness. What makes a good first baseman? That depends. What makes a good leader? That depends too. Unfortunately, nuance is neglected in our day-to-day functions. We tend to use loss-aversion-based heuristics. When you evolve from mammals focused on danger, food, and sex there’s only so much digging our default allows.
Winston Churchill is an example of a jagged leader. He excelled in oration and “stature” but less in collaboration. During the war, certain skills were more important than others. This brings us to…
2/ Context. Brent Beshore’s people are messy comment summarizes Rose’s idea. Instead, think of people as complicated creatures who act using If/Then statements. Someone may be honest or careful or diligent based on the situation.
We miss this, Rose writes, because our samples of other people aren’t wide enough. Jessica from the office may act snooty or kind at work – the only place we see her. But does that encompass her at church, at home, and with her family?
3/ Paths. There are not a million ways to do something, Rose writes, but there’s also not one. Think of a situation like being lost in the forest. The goal is to get out. One option is to find the path and follow it. But one could forge their own as well. Too often the focus is on the path and not forging a way out.
If a group undervalues these explanations then it restricts the possible outcomes. Imagine a rule that in order to start a business someone had to give up listening to podcasts. There are a lot of great business podcasts and the budding entrepreneur would be worse off – and so would we, missing out on the upside of their creation.
The End of Average is a Bob Moesta book suggestion and reading it from his point of view offers additional information.
Moesta is a product designer, researcher, and marketer. Put on that POV and we can see how products fit within Rose’s explanations as well. Our hunger is jagged, hence the difference between Snickers and Milky Way. Our purchases are context-based, Moesta comments that hot dogs and steaks are both the right meal for the right context. Lastly, consumers end up at a product in a variety of ways, there’s not a single sequence of “I need a new car”, but there’s not an infinite either.
My first impression of The End of Average was that I kinda already understood these topics and didn’t need to spend time on the macro-educational angle. Both impressions were true but there were deeper ideas too and giving names to jaggedness, context, and paths is and will be helpful.