The Galacticos Fallacy
Managers are often obsessed with hiring “A-players”. However, the data suggests this is an ineffective strategy. Introduction Linear logic often dominates in the corporate world, i.e., if one star performer is good, ten is surely better. Consequently, firms find themselves paying premiums to assemble dream teams and fighting wars for talent. Yet, research suggests that this highly sought-after talent is not additive; instead, it is curvilinear. A 2014 study by Swaab et al. reveals this through the “too-much-talent effect”. Initially, adding more talent increases performance, but a saturation point is reached relatively quickly. Once the peak is reached, more star team members do not just yield diminishing returns but cause performance to suffer. The Interdependence Caveat The extent to which such a talent saturation is a danger depends entirely on a team's underlying mechanics. To prove this, Swaab et al. compared two different sports: baseball and football. In baseba...