I had the fortune to get to know this guy about five or six years older than me because we started a job on the same day, when I was straight out of school, who was willing to tell or at least hint to me some realities about the corporate world. I never worked directly with him, but we would chat during lunch and at various events. Most memorable was when he said to me, “like you’re more competent than most CEOs of corporations.” I was like, “wait really?” You see, at that time, I was still a clueless kid. Amused by my naiveté, he went on to tell me, “haha, being a CEO is not about competence, it’s about being in the club, once you’re in, it’s basically impossible to fail. It’s about having obtained certain credentials and networks, like a name school MBA and an executive position at a company. Once you’re in that group and the people there accept you, you’re a perpetual CEO.” Interestingly, I vaguely remember that he also mentioned Meg Whitman, in a tone that made it seem as if he actually had a high opinion of her.
Having seen more over the years, I can better appreciate what he was saying. And I feel much more at ease with what actually goes on in corporate hierarchies, including the militantly non-meritocratic aspects, accepting it as more or less an inevitable product of human nature, not that I really approve of it. As a nerd who had been fairly high up on the whole academic merit hierarchy, I certainly felt uncomfortable, or even indignant, with respect to all that at first. In fact, I still prefer and respect most people who manage to excel in what is actually more or less strictly ability-based, even if they’re not officially very high up based on the position they hold and rarely rich. Math contests and coding contests and sports are basically 100% skill based. Sure, people have good days and bad days but the variance is relatively small, an indicator that most of the variance is natural measurement error, as opposed to owing to external circumstances. As a concrete example, the p-value of Kobe Bryant’s suddenly becoming an average player (barring an injury) would be exceedingly small. STEM work is also pretty skill-based, though there, especially when working with a team and with many decisions made above under the influence of globally influenced circumstances outside one’s control (such as funding and political support), there is far more of a luck component. Entrepreneurship has a skill component but it is extremely luck-loaded. Much of it is due to access via connections derived from social class and being at the right place at the right time. Of course, in hindsight, it is easy to frame a major success as mostly a function of skill and of “vision,” a grossly overused and meaningless word, as opposed to luck. This goes back to what CEOs are generally good at: presenting a facade of vision and leadership.
I wonder what percentage of people are actually aware of what that guy told me about corporate CEOs (as opposed to entrepreneur turned CEOs, who tend to have more actual skill from what I see). I would guess less than 5% of the population, maybe even less than 1%. Certainly, many if not most in that CEO class are aware and don’t care, so long as they are winning, or maybe many of them, accounting for a sufficiently high percentage, are actually delusional, believing that their success has been mostly due to objective skill. In any case, what one can draw from this, more generally, is that the efficient market hypothesis and rational agents stuff from economics, a field I sort of disdain without having actually studied, is bullshit, or at least highly imperfect, because in reality, people act along imperfect, and often grossly incorrect, information.
I’ll conclude with the following note. Michael O Church will often say that it’s often hard to tell a great software engineer from a mediocre one who is an excellent salesman, even for technical people. This has, of course, much to do with software engineering being very specialized, with everyone having their own distinct style, niche, and combination of skills. For a non-technical person, it is almost impossible. As a technical person myself, I have also from my personal experience come to the conclusion that it is very hard, if not impossible, to judge people working in a field vastly different from yours at an advanced level. This is why people resort to prestige of institution, citations, impact factor, job title, salary, and references, often blindly, all of which, while surely possessing much genuine signal, are also very prone to noise and artificial manipulation. One has to realize an individual, no matter how smart, can only know so much, and that our collective knowledge functions as a distributed system. From this one can only infer that in non-technical, it’s even harder, which means it’s all about perception, your sociological position, and how well you play the game of peddling connections and favor on a very opaque but surely extant market.
I’ll go as far as to say that IQ, g, and technical talent are real. Academic performance depends largely on these. A guy with a genuine 145+ IQ will almost certainly find schoolwork not terribly difficult and perhaps uninspiring and will very likely excel in elite academic contests. As an example, I know for a fact that Michael O Church has quite a track record of that, having been 5th in National MathCounts, made it to the Math Olympiad Summer Program, which takes only the top 30 or so in the nation-wide high school math contest, and received an honorable mention (about top 75, with some elite international students in contention this time) on the college Putnam contest (which is difficult enough that there is astronomical score variance). This profile, which is highly replicated, is also more evidence for the stability of IQ and technical/mathematical ability/aptitude, and thereby proxies of it. He will find advanced math and science not all that hard when most of his peers (or-not) find it impossibly difficult, meaning that the grad school route will become somewhat of a default. Then, he will realize that academia and research are grossly competitive for a mediocre salary, much owing to the scarcity of jobs from stagnant or even declining funding vis-a-vis an increasing population of highly smart people, wherein probably half of the genuine 145+s in America are immigrants, often from places with GDP per capita a fraction of America’s. He will find that in a corporate job, even a technical one, his far tail smarts are not anywhere near as much an asset as they were in school, and that there are many intellectual mediocrities commanding high salaries and positions of power out of connections and political ability. He will realize that he is no longer considered terribly high up on the hierarchy, unlike in the school setting that hinges much on academic performance. He will realize that he is way more competent than most CEOs, but that doesn’t matter because he’ll still be answering to them, unless corporate America is overthrown in a way that the actual smart people end up in positions of power.