My boss quit early in the year. It was a foregone conclusion, I suppose, because he had this one particularly terrible project (that he still talks about a couple years later) that went particularly badly under his direction, and thereafter seemed ever more disenchanted.

When that happened I wondered why. Here’s the thing about my boss (and my department in general): we were all hired roughly at the same time, and the people who were not entry-level had great track records. For example, my boss had spent years climbing the ranks at his previous company until he was an allegedly quite decent director; enthusiastic, well-loved, technically competent, and so on. I wondered what it was that made track record such a weak predictor of future success when it came to people hired to manage new teams.

Because when you read executive headhunters, or HBR, or general management-book doctrine, it is quite apparent that track record is the holy grail. Results, they say (they yell). And of course, managers (and non-managers) with better track records are more confident, and more likely to expect that success to continue, and to attribute failure to external factors – or, like my boss, to the organization.

Are they right?

If (and to the extent that) track record matters, how does it matter? You read between the lines that there are different points of view on the subject.

There is the “elect” stance, where a subset of people (call them A players or high potentials or whatever) are inherently and before any external influence better than others, and the “track record” metric merely identifies them. The cream rises to the top. Under this view challenges are but the tools of the great to distinguish themselves from the merely good.

There is the “growth mindset”, where instead all people are created mostly blank slates and challenges mold them (through experience, grit, and good old American pluck) into heroes and leaders of men; under this stance better track records distinguish the more intrepid adventurers, challenges are but a set of mountains for the truly motivated to climb, and then they become the heroes who climbed that mountain once.

These are the principal two mindsets to be found in the New World, land of all opportunity and really cheap Walmart TVs, though if you’re more cynical and from a more historical perspective you may add a third, that track record is a pedigree, a form of validation for the people who are fated to the elite not by inherent merit, not by choice of path, but by accident of birth; that they are made just as talented as the others but then given the best opportunities, for no reason but that someone must be, and that this order works just as well as any other; and that those opportunities themselves, in demonstrating their value and cementing their position, make them qualified candidates for “the next step”, members of the appropriate social and organizational stratum.

Notice that all these mindsets at some point have axioms.

For example, the first mindset answers the question of why track record matters, but not how merit translates to track record (we know the world is not just) or why merit is unevenly distributed in the first place or how merit should be judged. In mathematical terms, let there be merit, let it have a distribution D across a population, the people several standard deviations more deserving have better outcomes. Approximating D outside scope of this paper.

The second model supposes that opportunity is evenly distributed. Both models assume challenges faced by two sets of people can be readily compared. The third model does not have this issue but it brings the question of which accidents of birth guide one to which stratum, what are the strata, and why outliers exist. Once upon a time it would have been much easier to fit this framework to reality, but since we now live in a world where people write books quantifying the importance (in monetary terms) of going to Harvard versus having books in the house as children, we may rightfully question these parameters.

The model I’m interested in today is a more economic model of track record (and organizational agency in general). Its tenets are very simple: people (agents) in an organization have roughly four resources they can use to effect change in the organization (“power”) and protect themselves from unwanted or unforeseen changes (“weight”). Those resources determine the extent of their freedom from external choices, circumstances and effects (“agency”).

The resources are referred to by the acronym MIMI: Money, Means (of production), Information and Influence.

In an organization where human labor represents the primary means of production available to the organization, the “means” resource is essentially equivalent to manpower – for an individual contributor their own productivity, for a manager the sum of their productivity and that of their whole organization. In contexts where machinery, natural resources, etc. are more important, then the “means” of an individual are the sum of all the resources they control, that enable their productivity.

In general only managers (or executives) directly control money to any significant degree, and they also have much larger means than individual contributors (This is excluding the case where the individual contributor is a capitalist, or some kind of part-owner of that organization or another; in that case their means can be quite great.). This is by virtue of their position only; they are in effect entrusted with those extra resources to use them on behalf of the organization as a whole in a scheme to grow the total pool of resources available to the organization as a whole. “Growth” is the term for what happens when this strategy works. “Politics” is what happens when it doesn’t (usually because growing the total pool of resources is either physically impossible or the managers, and other agents that control money, don’t have access to enough information to tell whether they are growing it).

All agents have influence and information, but not at the start. As resources influence and information grow best when they are spread out, unlike money and means who grow best when they are concentrated, and as a result most everyone in an organization finds themselves at some point near a free flowing current of one or the other. The importance of seniority relies on influence and information. Longer tenures mean more exposure to currents, which means more (even passive) accrual of stray influence and information. Sort of like information or influence inflation, if you will. Influence and information are just more plentiful, and therefore worth less, when you have been there longer. This is why it is never against a new person’s interest to ask questions.

Influence and information are also why new managers hired externally face more challenges. They are given a “starting budget” in terms of money and means (their authority is effectively control over means), but their influence and information bank is empty, which means they must convert their resources fast because in most organization being MM-rich but II-poor is an unsustainable position. (This makes rational sense. People with more II would make better use of the extra MM, since they have more power to go around period. In general, at all levels, but especially if you are richer in MM, being low on II, or low on II relative to others of the same level, is a huge problem. The reverse, being II-rich but MM-poor, is frustrating but sustainable. This is why sometimes you get career bureaucrats who do not do an ounce of actual work and are quite happy not advancing, but will insist that you run every form by them when it concerns their area.)

In contrast, people promoted the “normal way” have been building up their influence and information, and in general are promoted because one or the other reaches a critical mass that enables them to compete at the next level; therefore, they start on a more equal footing. The bigger problem for managers from the inside is that they sometimes have trouble correctly managing both their money and their means, but there is usually training for that, whereas nobody gives externally hired managers formalized training on the accrual of information and influence. (Tip of the day: such a lesson could be summarized, “Beg, borrow, and steal”).

There is a certain rate of liquidity for each resource. Money, of course, is the most liquid, readily transacted and converted in any other resource, and means generally the least liquid, because it is least readily tradable and transactions take a long time. Most organizations have rate limits on all resources, so that even with infinite money you couldn’t buy all the means or information you want instantly; in that sense the imperfections of the market are a built-in aspect of the strategies of the agents.

Here I refer to people (again, managers and not) as agents, because I am quite tired of the trope that people are abused sheeple who are incapable of rational choices. Their choices are circumscribed and limited by the resources they are equipped with and the market that there is for those, and their own information (and the validity of that information) regarding those markets, but they all have resources, and they all have to allocate them rationally, and they all generally find a strategy to do just that.

So, back to track record. Track record is essentially the MIMI net worth. It is solid proof that you were able to exert power, ergo, to accrue agency, ergo, to manage resources to get there. In general at the point where one is examining track records one is considering straight up giving resources, “no strings attached”, to one of several people for the purpose of growth. It is quite important in that case to pick someone who knows what to do with the resources when they get them and how to get more resources from there.