The Ability Ladder

The Ability Ladder is a new framework to understand the six different human abilities, the role they play in the world of work, and is the foundation for discussing problems and solutions in the labor market in the future.

The World of Work

The global economy is worth over $100 trillion and is composed of unique markets for thousands of goods and services. However, the foundational market that supports all other markets is the labor market. Here, humans contribute their unique talents to produce goods and services and in exchange receive money to support themselves and their families.

Philosophically, every human being is a unique individual. Economically, as part of the labor market, we are inputs of production who sell our time and energy for a price based on the number and level of abilities we each possess. Workers signal their abilities to employers using letters, resumes, credentials, and degrees. Employers identify the abilities they require for a job and communicate them to potential employees using job postings, recruiters, and interviews. The efficiency of the labor market is determined by how simple or difficult it is for workers and employers to find one another, evaluate abilities possessed vs. abilities required, and agree to work together.

We Need an Ability Framework

Because human abilities are the foundation of the labor market itself, we need a framework to describe them. We also need a framework to enable us to use the same language for discussing problems (e.g. the “skills gap”) or proposing solutions (e.g. apprenticeships) to problems with the labor market.

Below, I’ve created a mutually exclusive, collectively exhaustive framework called the Ability Ladder. The Ability Ladder is a hierarchy of Natural Abilities and Learned Abilities that each person possesses.


AbilityLadder2


Natural Abilities are the result of genetics and socio-cultural pressures (e.g. our childhood experiences), and are largely fixed by adulthood. There are three natural abilities:

  • Physicality is the degree to which you are physically capable of participating in a given work environment. This is the foundational human ability that enabled hunter gatherers to do the work of finding food. Even today, nearly every job in construction, mining, or agriculture requires a certain level of physicality.
  • Personality influences the work you find intrinsically interesting and the tasks you’re intrinsically suited to perform. Personality is best understood using the Big 5 personality traits model. The Big 5 traits are Openness (curiosity vs. caution); Conscientiousness (organized vs. careless), Extraversion (outgoing vs. reserved), Agreeableness (empathetic vs. detached), and Neuroticism (nervous vs. confident). However, employers also use their own psychometric evaluations, including MBTI and DISC, to evaluate similar attributes. To understand the importance of personality, imagine the relative success of a salesperson low in trait extraversion vs. high in trait extraversion. A poor proxy for personality in corporate culture is “cultural fit”, a term often used to describe how a job candidates personality would fit within the corporate culture.
  • Intelligence is your overall intellectual horsepower and problem solving ability. The most robust and transparent measure of intelligence ability is the Intelligence Quotient (IQ) test. It is not often used in the labor market, but proxies for the same thing dominate the world of work. For example, the most common measure of intelligence in the U.S. labor market is the rank of the college where you received your bachelor’s degree (e.g. Harvard vs. State U). Your acceptance to this college was based primarily on your SAT scores and high school GPA, themselves measures of intelligence. The value of intelligence ability in the labor market is substantial as evidenced by the millions of dollars every year that students (and their parents) spend on SAT prep to get into the highest ranked college.

Learned Abilities can be attained and enhanced throughout your life. Every book, class, and work experience, contribute to the learned abilities you bring with you into the labor market, and include:

  • Knowledge are the facts in your head, including math and scientific theories, the names of people, places, and things, and the concepts and mental models you use to make decisions.
  • Skills are the ability to apply knowledge in the real world. You apply your knowledge of addition and subtraction to the skill of creating a formula in a spreadsheet. You use your knowledge of logic and a specific programming language to the skill of writing computer code.
  • Tools are aids used to apply skills in the real world. You use a hammer to pound a nail, Excel to build a financial model, or Python to write code.

The Language of Ability

Each person has a unique combination of natural and learned abilities. This combination is called a “talent stack”, a phrase popularized by Scott Adams, creator of the Dilbert comics. On the other hand, people typically refer to abilities gained at school as “education” and abilities gained at work as “experience”. This is the difference between say, having a bachelors degree in computer science (education) vs. having worked as part of a team to commercialize a new software product (experience).

Properties of the Ability Ladder

The Ability Ladder has the following unique attributes:

Each step forms the foundation for the subsequent step.

  • If you lack a knowledge of algebra, you will never be able to learn the skill of accounting, let alone use the tool of Quickbooks to get paid as an accountant by an employer.

The more ability layers a job requires to be completed, the more money you can earn to complete that job.

  • If you have the physicality to climb a ladder, you can get paid as a construction worker. If you add to that physicality a knowledge of electronics, you can get paid more as a solar panel installer.

The more a job requires a higher level of ability, the more money you can earn to complete that job.

  • If you’re a good basketball player, you can get paid a modest salary to coach a basketball team. If you’re one of the world’s best basketball players, you can get paid $35 million a year.

Most entry level jobs are gated by education (abilities gained in school), whereas higher level jobs are gated by experience (abilities gained over time by working): 

  • If you want an entry level job in computer programming, you will likely require a college degree in computer science. The college degree serves as a validation of your starting abilities in computer science. However, if you want a higher level job in computer programming, you will likely be required to have experience. For example, that you’ve acquired new abilities through working that are rarely taught explicitly, such as agile development, project management, or specific coding languages.

Beyond the Framework

In future articles, I’m going to apply this framework to the real world to highlight real problems and potential solutions in the world of work and higher education. Here’s a preview:

Education bundles: College degrees are a simple bundle of two ability certifications: intelligence certification (rank of college), and knowledge certification (college major and classes taken). Most people conflate the two, but they are in fact separate. In the future, we are going to see these two ability certifications “unbundled”, and its impact on the world of work will be substantial.

The “skills gap”: When employers can’t find workers to help them, this is often referred to as the “skills gap”. However, as we’ve seen, skills are one of only six abilities an employer requires to complete a job. Hence, are labor market imbalances the result of a “skills gap”, a “knowledge gap”, a “tools gap”, or a lack of workers with sufficient physicality or intelligence to do the job in the first place?

Job postings: Employers signal their interest in abilities using job postings and interviews. However, employers rarely break down a job into the component abilities required. For example, many employers state a requirement for a college degree, when in fact a more specific ability bundle may be necessary.

The Ability Ladder provides a framework for thinking about each of these topics and uncovering new insights that can help us solve real world problems.


Sources:

  1. Gross world product

Published by

Micah

Micah is the author of Rethink the MBA. He works and lives in Silicon Valley.