Attracting Talent in Spikes and Firms

From edgeperspectives by John Hagel

"If you want to create wealth, find and address scarcity. Chris Anderson proclaims the economics of abundance, but abundance in certain areas inevitably generates relative scarcity in others.
Emerging ScarcitiesI have posted in the past about the growing relative scarcity of attention. This is a key factor in the growing power of customers and their ability to squeeze margins of firms, especially in times of great abundance. There’s another scarcity that will also squeeze margins of firms, at least in the near-term. That’s the relative scarcity of talent. In times of great abundance, the ability to stand apart from all the others becomes increasingly valuable and this in turn depends upon the ability to mobilize talent. In more and more domains, talent is capturing growing premiums. Between pressure from customers and talent, corporations will find it increasingly challenging to capture economic value in times of great abundance because they have not yet mastered the techniques required to address the new scarcities.

These two scarcities are related at multiple levels. As just one example, the growing power of customers resulting from the relative scarcity of attention increases the need for sustained innovation which in turn increases the relative value of talent.

Talent in SpikesRichard Florida recently did a great post summarizing the role of talent in driving regional economic development (by all means, don’t miss the study by Edward Glaeser on “Cities, Information and Economic Growth" cited in Richard’s post). Reading this account, I couldn’t help but think about the role of talent in driving value creation for the firm. One of the most important observations Richard makes is:

• While most economists . . . continue to conceptualize human capital as a “stock” or “endowment” of a given place – either you have it or you don’t. But the reality is that human capital is a flow. The key question thus becomes: What factors shape that flow and determine the divergent levels of human capital across regions?

Human capital, or talent, is definitely not a stock, especially in rapidly changing times. Talent flows readily across geographies (immigration laws permitting – for a fascinating comparison of trends in immigration laws in seven high income countries, check out this report and then this discussion of "brain drain" from rural to metropolitan areas in the US), attracted by opportunities to realize greater economic value. Talent similarly flows across institutional boundaries."

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