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 baseball, an independent model can be observed; players act largely in isolation, i.e., a batter at the plate does not need a pitcher’s help to perform. As a result, more talent always equals better results.

Conversely, football exemplifies an interdependent model; players need to coordinate among themselves to maximise results. Teamwork is of the utmost importance. Hence, the too-much-talent effect was severe.

Ultimately, Swaab et al. illustrated that once a team exceeds a certain threshold of top talent, conflict occurs. Competition for dominance between high-aptitude team members hinders coordination efforts, and teamwork breaks down. Therefore, if a business relies on collaboration rather than individual sales, too many top performers are a liability.

The Portability Myth

Even in the rare cases where status conflict can be avoided, “buying” talent often fails because performance is seldom portable.

 A 2010 evaluation of Wall Street analysts by Groysberg demonstrated that when star performers switch firms, their performance often drops suddenly and takes years to recover.

Just as in football, the success of a given team member is not just about their innate ability but about the company’s infrastructure, culture, networks and their colleagues. Groysberg confirmed that highly talented individuals are not independent assets; they are system-dependent artefacts. Thus, when a firm poaches a star, they are paying for past performance without the accompanying ecosystem.

The Antidote

Google’s Project Aristotle has analysed 180 teams to answer the question of what the silver bullet is if not talent. They found that the composition of the team matters far less than the norms of the team.

In fact, the most important predictor of success was not aggregate experience or total IQ, but psychological safety. This is the belief that one will not be punished for making a mistake.

Specifically, high-performing teams are those where members speak in roughly equal proportion and possess high social sensitivity.

Conclusion

Building a high-performance team is more of a chemistry problem than a procurement problem. When creating a team, leaders must be wary of the talent tipping point. Instead of pursuing a Galáctico, it is crucial to develop psychological safety that enables talent to cooperate without conflict. However, if your business runs on an independent model, by all means, chase the sales equivalent of Zidane.

Sources 

Google re:Work. (n.d.). Guides: Understand team effectiveness.

Groysberg, B. (2010). Chasing Stars: The Myth of Talent and the Portability of Performance. Princeton University Press.

Swaab, R. I., Schaerer, M., Anicich, E. M., Ronay, R., & Galinsky, A. D. (2014). The Too-Much-Talent Effect: Team Interdependence Determines When More Talent Is Too Much or Not Enough. Psychological Science, 25(8), 1581–1591.