Emergic: Rajesh Jain's Blog

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Microsoft, Goldman Sachs and IQ

July 29th, 2004 · 1 Comment

A fascinating story by Rich Karlgaard about a talk he had on aflight with Bill Gates 11 years ago:

Halfway through the flight, Mr. Gates closed the book, shut his computer off and we talked. Out of nowhere, he told me that he had recently figured out who his competition was. It was not Apple, Lotus or IBM. He waited a couple of beats. “It’s Goldman Sachs.”

“Is this a scoop? Is Microsoft getting into investment banking?”

“No,” he said. “I mean the competition for talent. It’s all about IQ. You win with IQ. Our only competition for IQ is the top investment banks.” During that trip, I must have heard Mr. Gates mention “IQ” a hundred times.

The obsession with smarts is embedded deep in Mr. Gates’s thinking and long ago was institutionalized at Microsoft. Apply for a job and you’ll face an oral grilling that probes for IQ. It is oral and informal because of Griggs v. Duke Power, the 1971 Supreme Court ruling that banished written IQ tests and “tests of an abstract nature” from job applications. But Microsoft knows what it wants. It wants IQ. And Microsoft always has been savvy at getting what it wants.

Or at least it used to be. Today Microsoft is struggling to figure out what attracts and motivates the most talented employees within capitalism’s free-agent system.

Guess where all the smarts are going today.

Tags: Management

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