High-Performance Paradox: How To Thrive In The Superstar Economy?
Superstar economy is a term developed in the early 80s by Sherwin Rosen, an economist at the University of Chicago.
Rosen started observing a trend in the U.S. economy, arguing that technological change would allow the best to reap a much greater market share than ever before.
“The relative fall in the incomes to be earned by moderate ability… is accentuated by the rise in those that are obtained by many men of extraordinary ability. There never was a time at which moderately good oil paintings sold more cheaply than now, and… at which first-rate paintings sold so dearly.” —Sherwin Rosen, The Economics of Superstars, 1981
He explains, “the causes of this change are two; firstly, the general growth of wealth, and secondly, the development of new facilities for communication.”
Sherwin’s prediction was confirmed to be correct, beyond what many had thought possible.
As Emmanuel Saez, an economist at the University of California, claims, “in the U.S., the share of the total income that goes to the top one per cent has increased from 8% to something like 20% over the last 20 years“.
Superstar Economy vs Pareto Principle
Wealth distribution inequality is not a new phenomenon.
In 1906, an economist named Vilfredo Pareto discovered what became known as the "Pareto Principle," or the 80/20 rule.
While studying the distribution of wealth, he noticed that 20% of the people owned 80% of the land in Italy.
Since then, numerous studies have confirmed the application of the 80/20 rule in many different areas of business and our professional lives.
However, “Superstar Economy” is a new concept.
The phenomenon is more in line with “Price’s law”, which claims only a fraction of the workforce produces the most output.
For example, in a workforce of 100 people, only 10 produce 50% of the output.
In a workforce of 10,000 people, only 100 are needed to produce 50% of the output.
If we extrapolate to the size of a country with 25,000,000 workers, only 5,000 produce 50% of the output!
You may want to dispute this reasoning, and you should.
But one cannot deny that — in a world with increasing network effects — Price’s Law has magnified the skew distribution of remunerations among workers.
The dark side is that either you are at the very top of the pyramid or working in meaningless jobs with little impact and nothing in between.
In the Superstar Economy, being ‘good’ is no longer good enough.
We need to excel in what we do.
Or find a gap in the market.
Here are 3 counter-intuitive ways to thrive in the Superstar Economy:
Let’s dive into each one of them!
Excellence vs Inefficiencies
Have you heard the story of the two guys camping in the savanna when a ferocious tiger caught them by surprise?
When they saw the tiger, it was already too close to run away.
The only solution would be to defend themselves.
However… one of the guys started to put on his shoes.
His friend was baffled by such silly action, asking him:
“Why are you putting on your shoes? We have no chance to outrun the tiger!”
To which the other one replies:
“Yes, but it is enough that I outrun you!”
The argument that you don’t need to be excellent to beat the Superstar economy follows the same logic.
You don’t necessarily need to be excellent in what you do, but only better than others in what you do.
As mentioned by Marko Tervi?, an economist at the University of California, there are inefficiencies in the market that can be explored.
"To be ‘discovered,’ one must first ‘audition." —Marko Tervi?
For example, nothing guarantees that your work is recognised if you don’t make yourself visible to the world — regardless of the quality and effort you put into it.
Think of Van Gogh, the excellent and yet “starving artist”.
He got famous with his paintings worth millions only after his death.
Becoming a “starving artist” or “outrun the tiger” can be a moral paradox to some.
But in that tension, you will find an answer — by using your “and-both” paradoxical thinking.
Competition vs Niche
The Superstar economy does not benefit solely the few famous ones who directly benefit from global network effects.
It does spill over to other niche jobs.
As Morten Olsen, an economist at the University of Copenhagen, says:
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“Take the example of Beyonce's personal trainer. He makes something like $15,000 per session. He's managed to establish himself as the absolute best. People who make more money in other industries all want to hire him, so he can correspondingly increase his salary as well.” —Morten Olsen
In the old economic model, the path to success would be landing a top job in a well-known firm and climbing the ladder relentless against all competition.
But in a Superstar economy, there are many other paths to success and prosperity.
The trap is when people get too focused on the psychology of competition, blinding them from identifying their niche.
“So much of people's identities get wrapped up in winning that they somehow lose sight of what is important and valuable” —Peter Thiel.
The competition trap prevents high-achievers from using their creativity to build their own demand.
Instead, they work hard on the (wrong) assumption that the law of offer-demand is fixed.
“Don't always go through the tiny little door that everyone's trying to rush through maybe go around the corner and go through the vast gate that no one's taking” —Peter Thiel.
Being competitive may well be your primary driver.
Competition does help you improve your skills and the need to excel.
But it is in the tension of being competitive and finding a niche that lies the answer — using your “and-both” paradoxical thinking.
Skills vs Meta-Skills
We see career advisers and coaches advising people to find a job that best fits their strongest skills.
The idea comes from Peter Drucker, the management guru of the late 60s, who claimed: “focusing on strengths is development, whereas focusing on weakness is damage control.”
The same guru who claimed, “If you can't measure it, you can't manage it.”
But if you think about it, taking career decisions based on the skills that “you-are-already-comfortable-with” reflects a fixed mindset — as opposed to a growth mindset.
While skills and measures are important to your performance, people often neglect the learning of meta-skills.
Meta skills are aligned to a growth mindset instead of a fixed mindset.
What are metaskils, and why they are essential?
The prefix meta comes from the Greek term μετ?, meaning “beyond.”
Meta-skills are not the same as soft skills.
Soft skills tend to be interpersonal skills that you can adapt to different people.
Meta skills are:
Jeff Bezos once said:
“I very frequently get the question: "what's going to change in the next 10 years?" I almost never get the question:?"what's not going to change in the next 10 years?"?I submit to you that the second question is actually the more important of the two.” —Jeff Bezos.
As in business, people rarely ask the right questions when planning their careers toward success and prosperity.
The question we should be asking is, “what skills are not going to be disrupted by technology and uncertainty in the next 10 years?”
Meta-skills are your guardians in a Superstar economy.
They survive the test of time.
To summarise, meta-skills are essential because:
...and a lot more!
Examples of meta-skills are:
…and many others
Remember: in a Superstar economy, you have to learn constantly.
Otherwise, you will be pushed down the curve.
It’s your call to revert the process!
Ready For The Next Step?
Those who study the Science of High-Performance know that a gazelle doesn’t run faster because it has longer legs.
At some point, having longer legs is counterproductive to all other elements in the body.
And yet, most people approach their careers with such linear thinking.
Believing that working harder and harder, they will eventually lead to success and prosperity.
However, in a Superstar economy, we must apply a paradoxical approach to high performance.
The question is: what paradoxical approach are you applying to your career?
Nuno Reis
I am a Performance Coach. I support Finance practitioners to thrive in a world of uncertainty by developing ingenious perspectives that will boost their decision-making & performance.
Disclaimer: This newsletter does not represent the views of the author’s employer and is not financial or investment advice. It intends to be a psychological, philosophical, and systemic approach to elevate the consciousness levels in the finance & tech industries. The writing of this article intends to be gender-neutral.