Unfulfilled Potential & Capitalization Rates

Constanza

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Diversity: the capitalization of marginalized talent
Jessica Faye Carter, Workplace Diversity Examiner

I was recently watching Malcolm Gladwell's poptech! 2008 presentation, which centered on James Flynn's study of "capitalization," or the rate at which a community leverages (so to speak) the potential of its members. Simply put, capitalization is a metric of the rate at which members of the community with potential actually use it.

Gladwell then applied this capitalization to Canadian junior hockey leagues and found that such leagues operate at about a 50% capitalization, despite the major significance of hockey in Canadian life. More instructive is the reason why the leagues operate at a 50% rate, which is, at least in part, because they have a cutoff date (Jan. 1) that is more advantageous to hockey players born in the first half of the year. Players born earlier are larger, a significant advantage among younger children. What starts out as a speculative advantage in terms of size or strength then becomes concrete when the players enter more competitive leagues, receive better coaching, and other advantages.

Gladwell's point is that the children selected are not necessarily better at first, but that the cutoff date makes it appear so. And this ultimately results in a lower capitalization rate for hockey players in Canada. His remedy? Harness the talent of players born in the second half of the year by creating a second league with a cutoff date midway through the year. I’ll leave the merits of the parallel league idea for another column.

Think of it: organizations constantly try to predict those who they believe will be successful leaders: business executives, partners at law firms, or tenured professors--and often these organizations try to do it in the early stages of employees' careers. And aren't their reasons often arbitrary? "He just has 'it'," they say, or "she has executive presence," or "I just know that this person will be successful here." But such rationales are often quite vague (as one would expect in the early stages of an employee's career)—so much so that even those targeted to be successful cannot articulate the precise reasons they have been chosen.

Aren’t these scenarios likely to be instances in which a perceived advantage materializes into one that is more tangible? Does anyone doubt that an employee who receives increased mentoring, visibility and opportunities to hone their craft will probably be better at their job than another employee who has not had access to those advantages?

Now, how many of these early candidates for success, do you suppose, are people from marginalized groups? My guess: very few. David Thomas' research on people of color in the corporate world found that they were generally identified as organizational leaders significantly later than their white counterparts. It would also not be surprising to find that women were identified later than men, given the inherent biases in the workplace. For that matter, any aspect of identity that prevents a person from being considered “the norm” is probably some form of an impediment to the net capitalization of that group’s talent in any arena: business, professional services, education, government, or non-profits. Sort of like being born in December and wanting to play hockey—you can try.

It’s hard to be surprised that companies are missing out on so much talent, because they, like the Canadian junior hockey leagues, have created a self-fulfilling prophecy of success that contains inherent biases.

 

Constanza

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Gladwell also walked Bill Simmons through how capitalization could be applied to the NBA:

SIMMONS

I can't wait to see how this plays out in the NBA. When you consider the influx of foreigners, the extended shelf lives of quality careers, the medicine/health strides, the positive impact of the rookie salary scale, the successful drug policy and the equally successful one-year waiting period for high schoolers, for the first time since the early '90s, you can make a case that the NBA finally has enough talent to stock every one of its teams. Most NBA teams have enough talent to beat any other team on any given night.

So why is this? Well, an unusual number of stars from the 1995-99 drafts (Nash, Dirk, Duncan, Pierce, Kobe, etc.) extended their peaks past the typical drop-off point. An unusual number of under-24 potential stars (Durant, Howard, Paul, Rose, Roy, etc.) are coming through. And nearly every "franchise player" in the 25-29 age range (LeBron, Melo, Howard, Bosh, Wade, etc.) have seized their primes and almost-primes. And if you want to dig deeper, potential stars rarely get sidetracked by drugs, money or injury anymore. This decade, have you noticed how few Derrick Colemans or Ralph Sampsons we had? Gilbert Arenas and Amare Stoudemire never became superstars, but you wouldn't call them busts. Yao Ming's body broke down, but he wasn't exactly this generation's Bill Walton. T-Mac and Vince failed to fulfill their potential, but they weren't exactly disasters. Other than the usual slew of draft busts such as Darko and Morrison (who were improperly evaluated to begin with), there just aren't many talents about which we can say (as we did with Kenny Anderson once upon a time), "I'm still confused... why didn't that guy make it?"

And it goes back to those era-specific advantages. Athletes have a significantly better chance of succeeding now. And for longer. To a degree, this goes without saying. But it's something we always forget...

GLADWELL

What we're talking about is what are called capitalization rates, which refers to how efficiently any group makes use of its talent. So, for example, sub-Saharan Africa is radically undercapitalized when it comes to, say, physics: There are a large number of people who live there who have the ability to be physicists but never get the chance to develop that talent. Canada, by contrast, is highly capitalized when it comes to hockey players: If you can play hockey in Canada, trust me, we will find you. One of my favorite psychologists, James Flynn, has looked at capitalization rates in the U.S. for various occupations: For example, what percentage of American men who are intellectually capable of holding the top tier of managerial/professional jobs actually end up getting a job like that. The number is surprisingly low, like 60 percent or so. That suggests we have a lot of room for improvement.


What you're saying with the NBA is that over the past decade, it has become more and more highly capitalized: There isn't more talent than before, but there is -- for a variety of reasons -- a more efficient use of talent. But I suspect that in sports, as in the rest of society, there's still an awful lot of room for improvement.

Case in point: Everyone always says what an incredible advantage it has been for Peyton Manning to have had the same offensive coordinator and the same offensive system his entire career. Football offenses are so complex now that they take years to master properly, and having one system in place from the beginning has allowed Manning to capitalize on every inch of his talent. On the other hand, someone like Jason Campbell had a different offensive coordinator in virtually every season of his pro and college career. I'm not convinced that it's possible to say, with certainty, that Campbell has less ability than Manning. I'm only sure we can say that Campbell has not been in a situation that has allowed him to exploit his talent the way Manning has. We just don't know how good he is capable of being -- and we may never know.

SIMMONS

I like the capitalization concept. The best NBA example: From 1990 to 1996, the league's lack of a rookie salary cap combined with skyrocketing salaries led to absolute chaos. Younger stars were earning too much money too soon and had too much control of their own destiny; not just who coached them but where they played and who played with them. And the league removed any incentive they would have had to improve by making them filthy rich immediately. Nearly all of them handled it poorly: C-Webb, Coleman, Anderson, Marbury, Big Dog, LJ, Kemp, Baker... that's a lost generation, to some degree.

Flipping it around, Kobe is the best overcapitalization example other than Malone (who came along in the right era and had the perfect teammate and coach for his game). Kobe works harder off the court than anyone in the league; we have so many ways for him to improve in 2009 that he's like a kid in a candy store. We've all heard the story about how he worked out with Hakeem all summer to refine his post game, so here's one you might not have heard: When I visited Nike last month, we toured the development building (in which they customize sneakers for specific athletes), and the guy who ran it told us that Kobe was their favorite client. Why? Because he kept pushing them and pushing them to make the right shoes for him, even flying there for days at a time just to put himself through grueling workouts with sensors all over his body. This past summer, he pushed them to create a special low-top sneaker that also would prevent him from rolling his ankles -- which seems incongruous on paper -- yet they feel as if they pulled it off. And only because he kept pushing them. Forty years ago? He's wearing crummy Chuck Taylors like everyone else.

That's why it was so hard to measure players against one another in my book. Every era has some sort of monkey wrench, and going forward, I think the advances of the past 25 years are going to throw everything out of whack. We need a formula to prorate the longevity of pre-1990 careers. Kareem, Nolan Ryan, Gordie Howe... their careers were the equivalent of someone playing 30 years in today's era, right? How did they do it?

 

Constanza

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A classic real life example:



Malcolm X (then Malcolm Little) first met West Indian Archie in New York city prior to converting to Islam and dedicating his life to Civil Rights. West Indian Archie was one of the bigger players in the ‘Numbers’ game in Harlem who had done time up the Hudson River at Ossining State Prison best known as “Sing Sing”. He eventually took Malcolm under his wing and taught him the Numbers game, and used the novice in his illegal activities.


West Indian Archie had the amazing ability memorize long sequences of numbers such that he never had to write them down. He in fact warned Malcolm never to write his customer’s numbers down to minimize the potential for incriminating evidence should he get apprehended by the police. As with most street partnerships, theirs eventually crumbled due to greed and ego, and Malcolm X eventually fled Harlem to save his own life.

After Malcolm X converted to Islam, he later found West Indian Archie close to death and the two reconciled their differences. After educating himself in jail and gaining a new perspective on the world, Malcolm X came to the realization that someone like West Indian Archie with his ability to memorize numbers, could have used his talent to become any number things particular in the sciences; a physicist, an astronaut, a mathematician, etc. He realized that in blighted urban areas all over the United States there were similar minds with the abilities to practice science that were wasted and used in things like criminal activity by default – a challenge we still face today.
 
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