(Business 2.0) – Enduring thousands of bad auditions each season is enough to make any executive snarky. But when Simon Cowell rips apart contestants on American Idol, he's just doing his job. The hit Fox show is more than a place to trot out his best put-downs: Like any good manager, he's charged with recognizing top talent, fine-tuning potential, and giving credit only where it's due. And his assessments are key in protecting partner RCA's estimated $3 million investment in the lucky winner. Not scheduled to return to the judge's table for the third season of American Idol until January, Cowell recently took a moment to explain how a little bit of tough love can coax the best performances out of your people. --BETSY STREISAND

On American Idol, I'm applying my own experience in the music industry to the show. That is, most auditions are a shambles, most of the people who turn up for them won't fulfill their dreams, and there is never a kind way to let anyone down.

But all over the world, kids with no experience think they know more than you. Every kid who tries out for American Idol thinks he or she is the greatest undiscovered talent in America, and I'm here to tell them they're not. I'm the wake-up call.

Of course, it would be so easy to patronize everyone, but I was educated, not patronized. I started out at the absolute bottom, serving tea and sorting mail at EMI, then worked my way up to talent agent. Whether it's the process of elimination on a reality show or the corporate ladder, starting people at the bottom and giving them an education is without question the best way to train them. If it's done me good, I think it will do them good. That's part of the reason I am the way I am on the show. I just try to do what's been done to me. Music is a sarcastic, insincere business.

As a manager, my job is to be the creative element and focus on the details. Staying hands-on is very important to motivate people. The minute a manager goes hands-off, everyone loses interest. I have to show them that I believe in my own ideas, and they will believe in them in turn.

I also like to hire creative people who aren't just going to agree with me--that's boring. I want to find someone who can talk to me as a fan rather than someone who just believes he or she is an expert.

Human nature often makes us want to be nicer to people than not. I make sure to compliment people--but only when there is a reason and when it means something. Otherwise it doesn't do them any good. Because of the Internet boom and the whole fame epidemic, young people believe they can be rich overnight--and I tell them, if you're lucky you can, but you probably won't.