The workforce you have may be better than you think.

When Donald Horne called Australia "the lucky country" in 1964, he wasn't paying Australia a compliment. His argument was that our prosperity owed more to geography and good fortune than to hard work or good management, and that if we did not wise up, the luck would run out.

Sixty years on this lesson is as relevant as ever: we must not coast on the assumption of fixed and innate brilliance, when what we may be observing is luck.

My PhD advisor, Eddie Lazear, argued this beautifully when he showed that even after sensible promotion decisions, we should not expect to observe strong performance. Past performance, after all, depends on luck, not just ability.

Yet 20 years on from his seminal paper, we live in a world obsessed with talent.

Tech companies are now paying AI researchers sums that used to be reserved for sports stars. Some individual compensation packages have run into the hundreds of millions.

Our obsession for talent rests on two misconceptions.

The first is that we are capable of observing what actually drives performance. Decades of behavioural research show that we consistently mistake confidence for competence, and visibility for value. And when we are more likely to hire people like us, this issue compounds as overconfident people hire other overconfident people.

Decades of behavioural research show that we consistently mistake confidence for competence, and visibility for value.

The baseball scouts in Michael Lewis’s book Moneyball, for decades, mistook the visible stuff – a strong swing, a big arm, the look of an athlete – as the key drivers of success. Expertise and capabilities are important, but they are not nearly as easy to observe, or attributable to successful outcomes, as we might think they are.

The second misconception is that capability is fixed. Carol Dweck, author of Mindset, would beg to differ. Just as we shouldn't tell our children that they should give up and stop trying, we shouldn't do it to adults either. We do our best work when others believe in us, push us to do more and greater things, and give us praise.

Our obsession with talent has horror stories.

Enron was the most aggressive talent shop of its era. It recruited ruthlessly from elite business schools, promoted stars without regard for experience, and ran a performance review system known as "rank and yank", in which the bottom graders were pushed out. It was held up as the model of modern talent management, but we all know how that story ended.

Writing shortly after the collapse, Malcolm Gladwell asked a question that still resonates: what if Enron failed not in spite of its talent mindset, but because of it? His diagnosis was precise. "The broader failing…" he wrote in The New Yorker, "is their assumption that an organization's intelligence is simply a function of the intelligence of its employees." It is so much more than that.

There is a more optimistic reading of Eddie Lazear's paper. While luck can inflate the performance of some, it also obscures the misfortune of others. Invest in systems, development, and belief in your whole organisation and you should expect to find a broadly productive organisation.

While luck can inflate the performance of some, it also obscures the misfortune of others.

Stanford Professors Charles O'Reilly and Jeffrey Pfeffer made this case in Hidden Value: How Great Companies Achieve Extraordinary Results with Ordinary People. Hiring stars is easy to copy when your competitors are chasing the same people. Building a culture in which ordinary people consistently perform like stars is the hard but effective part. A quarter century on, when I asked O’Reilly this week, his view hasn’t changed; he points to the strong culture and employee engagement at MECCA, where investment in education and training for all team members is a core pillar of the business.

General Motors shut down their worst-performing car plant in the early 1980s. It reopened as a joint venture with Toyota with most of its workforce rehired, and within a few years was one of the most productive car plants in North America. The workforce was largely the same. What changed was the organisational effectiveness of the plant.

So why are we still talking about “high-potentials”? Because the alternative requires investment in building skills and capabilities across the whole workforce, not just a few. The former is hard, the latter is easier.

Imagine telling one of your children they deserve a good education, but not the other. In the same vein, when we restrict feedback and development to a select set of individuals within an organisation, we unwittingly incentivise self-preservation, in addition to the introspection, learning and contribution that we expect from leadership programs. And, we shouldn’t be surprised when the rest of the organisation feels disheartened.

Instead, look to companies like Bunnings, who find brilliance in all their employees, give each person accountability and ownership over a section within the shop, and treat everyone with the respect and kindness they deserve. They have not given up on those with grey hair: they invest in them.

The companies that win the next decade will not be the ones that paid the most for stars.

Horne's warning was that a country coasting on luck, mistaking it for capability, would not see the reckoning coming. The same warning applies to organisations. No matter where AI takes us, the companies that win the next decade will not be the ones that paid the most for stars. They will be the ones that know how to bring out the best in the people they have.