Intelligence vs. Experience

Over my career I have had the great fortune to work with some extraordinarily smart people.  Make no mistake about it that every organization should go after getting the smartest people they can however, intelligence is not a complete substitute for experience.  I have seen many new companies run by exceptionally bright people get into all kinds of trouble because the leadership lacked experience.

I saw a company that was introducing a brand new product into the market with all new equipment and brand new production facilities that was staffed with brand new hires.  Delays in the arrival of key equipment and materials delayed the production start and the CEO was driving for unachievable recovery plans.  Each week the factory worked hard and did its best but the gremlins in the new equipment and our ever present friend Murphy were working over time.  The end result were a host of quality and production delays that were driving the cost out of control.  The CEO compounded the situation by throwing money at capital equipment and people to pull in the delay.  During this period the company was consumed with trying to force a difficult and short lived product through an expedited and relatively limited production run.  This diverted resources away from completing the next generation product and designing a more producable product as well as solving the production equipment problems.  We spent a fortune and we might as well have taken all that money and burned it in the parking lot.  We burned through most of our operating capital and were left with a very difficult financial situation to clean up.

How did this happen?  The CEO was one of the brightest, hardest working guys you will ever meet, he had an experienced operations team and yet the outcome was not what anyone would call a success.  The issue was that the CEO despite having been successful in other ventures lacked any operational experience and had no experience with building hardware.  His experience told him that he needed to drive to scale as fast as possible.  Spending money to save time was always the right answer.  He rejected any thought of reducing the ramp rate to give the factories and the supply chain time to deal with the normal host of production problems.  The problem was that he lacked the experience with operations and had no basis for weighing the risks of rushing headlong into an unrealistic production plan.  He had no idea of the size and odds of the bet he was making.  After it was over he lamented "I had no idea it could ever cost that much to fix all this stuff".  He learned a very painful and expensive lesson.

The hard truth is that there is no substitute for experience.  The real world has a way of teaching us all the same old lessons.  Thinks that look good on spreadsheet often fall apart on the production floor.  Textbook teachings sometimes don't hold up in cruel world of customers and competition.  Theoretically sound designs fall apart when exposed to real world people and processes.  Understanding the real world constraints is essential to being able to make sound decisions and to avoid relearning some old and painful lessons.  When building your team look for a diversity of thought, brilliance but don't overlook the need for experience.