TALENT SEARCH

SPOTLIGHT ON TECH HUBS

Harnessing talent through tech hubs BY Jayashantha Jayawardhana

It isn’t enough for global corporations to stay put in the hope that talent from all quarters will somehow gravitate towards them. With the war for talent raging and the business landscape growing ever more complex, this borders on wishful thinking.

No matter how difficult it is, businesses must uproot and replant themselves in foreign soil where talent abounds, far away from the familiar terrain. Or else, they risk growing irrelevant.

That’s why General Electric (GE) announced its decision to move its longtime corporate head office from suburban Connecticut to downtown Boston in 2016.

GE felt it needed to connect with Boston’s high-tech young ventures and talent, to grow more innovative and digital, and ensure that it would stay at the forefront of any emerging disruptive technologies.

Even for an iconic tech behemoth such as GE with a global reputation for innovation, this was something it couldn’t afford to overlook. Despite the weight of corporate history and tradition, and the pull of nostalgia, GE had to move.

At the time, its CFO Jeff Bornstein encapsulated the advantage of Boston to the Wall Street Journal (WSJ) as follows: “I can walk out my door and visit four startups. In Fairfield, I couldn’t even walk out my door and get a sandwich.”

Although this was an exaggeration, Bornstein’s quip underscores how important it is for corporations to strategically navigate talent hotspots.

Harvard’s Prof. William Kerr and author of the article Navigating Talent Hotspots, which was published in the Harvard Business Review (HBR), writes: “Leading cities have long had an outsize influence on the global economy. But today, the impact that top talent clusters like Boston and San Francisco have on innovation is especially pronounced. In 2017, America’s 10 largest tech hubs accounted for 58 percent of US patents.”

He continues: “Globally, cities such as Tokyo, Paris, Beijing, Shenzhen and Seoul produced a similarly large proportion [of patents]. The increased clout of these hubs poses a dilemma for companies that have historically located their leadership and talent in suburban industrial parks.”

“Having a presence in innovation hotbeds is crucial; but it’s also extraordinarily expensive – especially in the narrow innovation districts within cities where most of the high-tech activity takes place,” Kerr adds.

So how can companies optimally harness the benefits of these urban pools of knowledge and skills?

Kerr has found that corporations take three core approaches. At one extreme, they relocate their headquarters like GE did.

A more economical and easily reversible way to gain a brick and mortar foothold is to set up an innovation lab or corporate outpost in a talent cluster. And the most conservative option is to organise executive retreats and immersive visits in such talent hubs.

Moving a company’s headquarters into innovation hubs is not without extensive benefits for corporations. The increased access to talent or human capital that will propel such enterprises to the next level of growth is probably the most important of all the benefits.

It also goes without saying that relocating headquarters is a costly, difficult, time-consuming and disruptive process, given the complex need to uproot an existing workforce, change legacy customer locations, and build new local political connections and responsibilities.

And then again, talent hotspots tend to rise and fall.

Since such relocations are hard to reverse, a business may wind up overinvesting in a temporary competitive edge. And in such innovation hubs, talent can easily flow out as well – so businesses must continually guard against a leaky bucket.

Therefore, a corporation should carefully weigh the pros and cons of moving its headquarters before rushing headlong into it. And for business leaders who are bent on deeply transforming their organisations, all these risks may be warranted.

For many companies, a relocation of headquarters is out of the question; but they are receptive to the option of setting up corporate outposts and innovation labs in major talent hotspots.

That’s why though Walmart has its head office in Arkansas, its Walmart Labs is in Silicon Valley – so it has no intention of ceding the battle for talent by sticking close to home.

Executive visits to major talent hubs can be an economical path to stimulate innovation, and reimagine business models and management approaches. Although a weeklong trip seldom provides the missing piece to a company’s innovation puzzle, it can still help executives build a solid understanding of what’s unfolding at the frontier and how their companies should respond.

With more talent hotspots or tech hubs such as Orion City emerging in Colombo, even local companies will find these insights increasingly relevant.