It's the Talent, Stupid
Six presidential campaigns later, I've still got Bill Clinton's iconic 1992 slogan running through my head: It's the economy, stupid. But it's not the economy that I'm thinking about--it's corporate relocation that's on my mind. What was so effective about Clinton's irresistible one-liner is the way it redirected American attention. He not-so-politely told us that, when it came to diagnosing national unrest, we were getting it wrong.
Similarly, the press is missing the real issue when it comes to corporate relocations. Recent articles in The Washington Post and The Wall Street Journal highlight the stories of businesses moving headquarters domestically and internationally for tax concerns. While it's certainly true that some companies are abandoning their states and the U.S. altogether to dodge taxes, the media is overstating the importance of these fiscally-motivated moves.
Much more significant are the large multinational manufacturers that are actually relocating to higher tax areas to attract the best talent and to develop a line of sight toward emerging markets and technologies. This is a very different story from the one you'll find in the media--a story that involves some of the biggest, most stalwart American companies out there.
For example, in the early 2000s, Boeing moved from Seattle to Chicago. Part of the organization's justification was that Chicago, with its wide array of top educational institutions, provided more opportunity to attract new talent. Last year, Cadillac moved from Detroit to New York City, which of course has a much greater tax rate. And General Electric, just this past week, moved from Fairfield, Connecticut to Boston.
The traditional argument is that lower tax rates attract the best companies. But the numbers suggest otherwise.
The states with the highest amount of venture capital per person, which is an indicator of growth potential, are California, Massachusetts, and New York. These are also among the top tier of places with the biggest state and local tax rates. So why are all these giant, multinational companies with tons of moving parts and pieces moving to these expensive locales?
It turns out that all three states are also among the very top tier of higher education rates. The people who live in these places are more likely to have graduate degrees than their peers elsewhere, and the states themselves are abundant with elite research universities and institutes. Additionally, they have diverse and multi-cultural populations with global perspectives on all issues. This is becoming especially important because these multinational companies are making more and more of their profits in countries outside of the U.S.
The trend goes beyond these three states. Forbes' list of the most-educated American cities are disproportionately college towns with significantly higher employment rates and far better paying jobs than the rest of their surrounding regions. While some of these jobs are associated with academic institutions, most of them are with companies that have built around these areas to get talent.
It's an indisputable fact: organizations locate in places where top talent is readily available. People want to live in these areas because of access to culture and education. Furthermore, these spots are typically more inclusive than other locales because they've historically welcomed people from all over the world and embraced a multiplicity of worldviews.
The lure of great talent is so attractive to organizations that it overshadows the expense of higher taxes. But why now? Why are we suddenly seeing all these companies willing to spend more money to move?
The days of easy growth are over. Just take a look around: China is slowing down. Oil prices are falling, so the whole notion of getting rich off of a commodity doesn't really exist anymore. And the cost of capital is increasing, which means that we'll soon see interest rates go up dramatically. We can no longer just make profits by selling to a new region or by betting on natural resources or depending on cheap money. Innovation is now required. It's officially the only game in town.
Innovation assets are intangible. They walk in and out the door every day with the workforce. Talent can be located anywhere. Indeed, you'll find some of the highest-educated cities and college towns in unexpected, out-of-the-way places with extreme climates and otherwise less-than-favorable living conditions.
So how can you build up your innovation assets? Here are three strategies for bringing the best and the brightest to your front door.
Focus on education. Compulsory higher education and continuing education are crucial for building a promising talent pool. This requires increased spending: you get what you pay for. We also need to develop alternative intellectual pathways: apprenticeship, service, accreditation, and certifications. Seek out and promote hands-on experience, specialized skills, and relevant life histories to enrich and enlarge your talent. Expand the very medium by which education is transmitted. Make use of multimedia like the Khan Academy, Big Think, and TED Talks. Delivering knowledge this way greatly reduces the cost of education.
Create opportunities and incentives that attract top talent. We need to embrace both democracy and meritocracy. In the Pixar film, Ratatouille, Remy the Rat's favorite quotation encapsulates this idea: "Anyone can cook." It's not until the end of the movie that Remy comes to understand the meaning of these three wonderful words: talent can come from anywhere, but it doesn't mean that everyone is equally talented. Democracy means that everyone is given the chance and meritocracy means that, when given that chance, a few will be significantly better than all the others. Pay attention to who has talent. The other thing that will help us discover talent is putting an end to the culture wars. Talent centers are often held in contempt by the rest of the region, where leaders often enact laws simply to stifle differences, driven by xenophobia, misogyny, homophobia, and racism. Thus, the areas in the immediate vicinity of these talent centers come to resent the inclusivity of these intellectual and cultural hotspots. So we must launch initiatives that will bring regions together rather than pit them against each other.
Take the long view. Areas that draw top talent were established a long time ago and viewed as investments in the future. Puritans founded Harvard almost 400 years ago because they believed that, in order to be saved, you needed to read the Bible, and so it was crucial that people learned how to read. Whether it's the University of Michigan, started in the pioneer days, or the Research Triangle formed in the 1950s, or Silicon Valley in the 1960s, the creation of talent centers requires deep foresight and the culture and capability to pull off something special. Three words come to mind here: pay it forward.
Most of us want to pay less taxes, see our investments create huge returns in the very near future, and only live with people who appreciate our work. But attracting top talent to make innovation happen isn't about what we like--it's about what we need, stupid.
Jeff DeGraff is the Dean of Innovation: professor, author, speaker and advisor to hundreds of the top organizations in the world. You can learn more about his groundbreaking University of Michigan Certified Professional Innovator Certificate Program and Innovatrium Institute for Innovation at www.jeffdegraff.com/cpi and keynote speeches through BigSpeak Speakers Bureau. Is your team innovating? Get Jeff's free 7 Deadly Sins of Innovation Leaders eZine at www.jeffdegraff.com/cpi. Connect with Jeff on Twitter @JeffDeGraff.
Senior Managing Director at The Opes Group
8 年Thank you for this forthcoming, honest, down-to-earth article. It's refreshing to say the least.
Board Certified Psychotherapist (LCSW-BCD), Long Beach CoC Board Member, Non-Profit Exec. Director, Disabled U.S. Veteran (Army/Marine Corps)
8 年The Intersection of Donald Trump, Jury Duty and Los Angeles Traffic While driving home from jury duty on Friday, the usual Los Angeles “bumper to bumper” traffic provided me with ample time to contemplate life’s great mysteries and explore our current social challenges. It also allowed me to test my ability to resist primal urges to engage in a traffic induced fit of road rage, but that’s another story. As my mind aimlessly wondered from one topic to the next, I began to think about the second of two days of Jury Duty that I had just endured. While I slowly digested the event s of the day, a radio show’s topic wafted into my car from another Angelino fighting the rush hour congestion. The voice sounded like the unmistakably loose-jowled and often inflammatory rhetoric of Rush Limbaugh. His fiery words had something to do with the Black Lives Matter campaign and unrelated protests related to cancelled Chicago rally for presidential hopeful Donald Trump. As the car moved out of range my mind drifted back to thoughts of Jury Duty. Earlier that day, while waiting to be selected from the jury pool, I was in earshot of many conversations that debated the concept and notion of civic duty as a whole. I began to realize that this was a common topic of conversation, and also that I heard it repeatedly over the course of the two days of Jury Duty. The conversations basically centered on the broad subject of “civic duty” and its relation to each citizen’s real or perceived responsibility to their nation. In general most of the conversations changed to meet the point of view and background of the person that was speaking. These conversations ranged from complaints about the obligatory nature of jury duty to other areas where some jurors felt there should be a compulsory link to civic duty (e.g. voting in presidential elections, military service, etc.). These wide ranging topics varied in their depth, viability, and links to reality; however, they all harkened back to the notion that each of us has some civic responsibility to this nation. Naturally, my next inclination was to seek a definitive answer to the question of what each American’s civic duty to our nation truly is and what it should be. In an effort to explore this topic further, I tried to remember a conversation I had with my Marine Corps recruiter, when I was fresh out of high school, about service and responsibility to our nation. This was because that was my first real thought or notion about what each of us owes to our country. I remember being awe struck by his sense of duty and honor when he described his responsibility to protect the country from those who sought to do it harm. More specifically, I remember a phrase he uttered that I would hear repeatedly throughout my military career. That phrase was “I will support and defend the Constitution of the United States against all enemies, foreign and domestic”. This phrase is part of the military enlistment oath, and is extremely fitting in context to the armed services. But what oath or pledge do regular citizen need to follow to guide their individual sense of civic duty? One might naturally point to the pledge of allegiance; however, it is more of a marriage vow between you and your country than a defining statement of your responsibility to your nation. This lead me back to the military enlistment oath and its mention of the U.S. constitution. In my opinion, the constitution has always been a symbol of what my rights as a citizen are and not a symbol of what I must do. In other words, it was not a document specifically prescribing what I owe to my country. But as I pondered on the subject a bit more, the memorable and often quoted stanza “life, liberty and the pursuit of happiness” began to bounce around in my head. As I looked around at the sea of stalled traffic, I began to take stock of the people locked away in their cars, slowly swimming upstream to destinations unknown. I assume in their own way, each of these people where engaged in the proverbial “pursuit of happiness” and that they were actively exercising their rights to life and liberty. I wondered if they took for granted the blood, sweat and tears that were shed to ensure those rights. If so what do we owe this country for providing that right and the past sacrifices that have been made? This is where the notion of civic duty and the radio broadcast from Rush Limbaugh came full circle. Since there is no true doctrine that states our obligation to our country and fellow citizens, maybe we should look to the constitution as a guide. Just as jury duty is inextricably linked to civic duty, maybe in some way it is also our civic duty to boldly embrace and defend the ideas and actions that foster life, liberty and the pursuit of happiness. Perhaps we can reframe the conversation to state that it is not only our right to enjoy the benefits spelled out in that great stanza, it is our duty to embrace and defend it as well. If this was the case, maybe Mr. Limbaugh would look at the protesters as defenders of our way of life rather than detractors. He may even begin to see parallels between the founding fathers who were seen as dissidents and political terrorists by the authority of the British Crown before they escaped persecution and left to establish this great nation. With this framing of the notion of civic responsibility and the constitution, he may have drawn a link between civic duty and the need for dissenting voices. In some ways the protests are a manifestation of this reframed idea of the constitution; that is, that we must defend those who are voiceless. Political dissent and protest are the primary tools of the powerless and the marginalized. Accordingly, one could even make the stretch to say that the protests (which were aimed at showing dissent for Donald Trump’s controversial vision for this country) are an extension of our civic duty to speak out against his divisive rhetoric. Additionally, the notion of protest is not just reserved for Republicans. The link between protest and civic duty that I’m suggesting should be equally utilized for Democratic, Socialist and Libertarians alike. Perhaps we could all benefit from a simple exploration of what civic duty means and what we owe to this nation of ours. It is more than likely that there will be more protests, Jury Duty is here to stay and Rush Limbaugh isn’t putting down his gold plated microphone anytime soon. But in these moments of civil unrest, uncertainty and fear of the future, maybe we should all take stock of what life, liberty and the pursuit of happiness really means to the people around us and to our fellow citizens. Far too much time has been spent on our own pursuits, perhaps it is time to harken back to the words of JFK… and ask what we can do for our country. https://www.dhirubhai.net/pulse/intersection-donald-trump-jury-duty-los-angeles-washington-mba?trk=pulse-det-nav_art
HR Executive Podcast Host ??? | Encouraging HR leaders to reduce employee household expenses at no cost to the company.
8 年Good read. I would add that Salt Lake City is also emerging as an attractive market for technology companies, largely driven by inviting, government incentive plans and the talent found in surrounding universities. And, it responds well to the question of "is this a livable, fun, safe and intellectual place to live?" that is so often asked by the talent seeking new opportunities. There is a connection between talent and innovation and competition. Competitive, geographic markets also force companies to be innovative, because their ability to survive depends on their ability to intelligently plan and iterate in markets of almost absolute uncertainty.
Interesting concept.....am wondering how much real talent (as opposed to checkbox heros) would be working for these bastion brands rather than the unknowns who will ultimately disrupt them.
C-Suite Executive Assistant supporting senior leaders in Financial Services industry |Business Partner for strategic, proactive and thoughtful support of business cycle |Liaison for stakeholders across the globe
8 年Absolutely agree! The quality of people is different. This makes a big impact in all the decision-making processes.