Let’s consider a few case studies:
Corinne, a 26-year-old MBA graduate from Carnegie Mellon’s Tepper School of Business, received a starting job offer of $180,000 at one of New York’s leading consulting firms. This is about three times what her roommates who did not go to graduate school are making. Who in their right mind would pay a 26-year-old $180K?
MCA Records invested over $2.2 million promoting 16-year-old Carla Hennessy’s music career, including a $100,000 advance and $120,000 in living expenses. Why would they make such a big bet on an unheard of and untested teenager from Dublin, Ireland, who had yet to pay her dues in the music world?
Professor Lola Callen left a $120,000/year law school faculty position after 25 years to start an investment management company from scratch with her next-door neighbor, an ex-mechanical engineer. Neither had any previous experience in the field, though they had dabbled in both investing their own money and in developing a buy/sell algorithm that had done well for them. Why would this award-winning professor give up tenure and a good income for this unknown venture?
Rupert Murdoch, the multi-billion-dollar media mogul, offered $5 billion for the Wall Street Journal, whose market value prior to the offer was roughly $3 billion. Almost 10 years earlier, he offered $1 billion for the Manchester United Soccer team, a 50% premium over its market price. Similarly, he paid almost double what the Los Angeles Dodgers franchise was valued at by Financial World magazine. Why would such an astute business dealer leave so much extra cash on the table?
What do these examples have in common? Are they demonstrations of corporate excess that throws common sense out the window in pursuit of bragging rights? Is it a sign that companies have to pony up for “talent?” Is the lure of sky-high returns trumping business sense? Or do these businesses know something that you and I do not?
What these examples have in common is the concept of “leverage.” We have looked at the concept earlier, when considering reward structures, but let’s view the matter through the lens of individual performance as it relates to a company’s critical path.
In today’s world, if you participate in the work economy, then you either leverage yourself—your talents, skills, and work experiences — or someone else will do it for you. Most people are simply content to let others decide how best to use their talents. They hire on to a company and the company puts them to work, telling them what to do. Most people spend their entire work lives this way. Sure, at some point they might signal that they would like to try something new or to get some additional training. But, on the whole, the company calls the shots.
Relatively speaking, a much smaller number try their hand at being on the opposite end of this interaction. Like Zyla the COO of the global company in the introduction to this part of the book, these individuals rise within their companies and leverage the majority of other workers. Or they start their own companies and then leverage the workers they hire. They look for opportunities to apply someone else’s talents at a profit for themselves or the company.
As Billy Bob Thornton’s character says in the 2007 movie The Astronaut Farmer, “You better know what you want to do before somebody knows it for you.”
Critical Path Action Items
How do you think about leverage in the workplace?