How Your Company Can Thrive If It’s Not Located in a Talent Hub

William Kerr

<article-ideainbrief class="article-ideainbrief">
 <h4 class="ideainbrief-title">Idea in Brief</h4>
 <div class="ideainbrief-contents">
  <h5>The Shift</h5>
  <p>Leading cities have long had an outsize influence on the global economy, but today the impact that top talent clusters such as Boston and San Francisco have on innovation is especially pronounced.</p>
  <h5>The Challenge</h5>
  <p>Urban innovation hubs are extraordinarily expensive. How can companies harness the benefits of their dense pools of knowledge and skills in the most effective manner?</p>
  <h5>The Solution</h5>
  <p>Companies have three options: Relocate their headquarters to hubs; set up innovation labs or corporate outposts there; or run executive retreats and immersions there.</p>
 </div>
</article-ideainbrief><p>In 2016, General Electric announced that it was moving its longtime corporate headquarters from suburban Fairfield, Connecticut, to downtown Boston. The company felt it needed to plug in to Boston’s high-tech young ventures and talent to become more innovative and digital—and ensure that it would be on the forefront of any emerging disruptive technologies. Jeff Bornstein, then the CFO, summed up the advantage of Boston to the <span class="mediatitle">Wall Street Journal</span> this way: “I can walk out my door and visit four start-ups. In Fairfield I couldn’t even walk out my door and get a sandwich.”</p>

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<p>Innovation clusters like San Francisco and Boston have long had an outsize impact on the global economy, and their influence keeps growing. In 2017, for instance, America&#8217;s 10 largest tech hubs accounted for 58% of U.S. patents. Globally, cities such as Tokyo, Paris, Beijing, Shenzhen, and Seoul produced a similar proportion. The increased geographic concentration of innovation activity poses a challenge for firms based in suburban industrial parks. To stay relevant, they need to tap into urban hotbeds, but setting up operations there can be extremely expensive.</p>
<p>In his work on global talent flows, Harvard Business School&#8217;s Kerr has seen organizations try three solutions: At one extreme, they can relocate their headquarters to a hub, as GE recently did (but make them much smaller). A less expensive strategy is to create an innovation lab or corporate outpost in a talent cluster, as Walmart did with Walmart Labs. The most conservative strategy is to run executive retreats and immersions in talent clusters&#8212;a tactic Vodafone uses effectively.</p>
<p>These three options aren&#8217;t mutually exclusive. Given the need to stay in touch with multiple clusters, companies may want to try them all. Each one involves substantial risks that executives must manage. But together they offer a good playbook to firms that are finding themselves outside the action as the clout of a handful of cities grows.</p>

Navigating Talent Hot Spots

Innovation clusters like San Francisco and Boston have long had an outsize impact on the global economy, and their influence keeps growing. In 2017, for instance, America’s 10 largest tech hubs accounted for 58% of U.S. patents. Globally, cities such as Tokyo, Paris, Beijing, Shenzhen, and Seoul produced a similar proportion. The increased geographic concentration of innovation activity poses a challenge for firms based in suburban industrial parks. To stay relevant, they need to tap into urban hotbeds, but setting up operations there can be extremely expensive. In his work on global talent flows, Harvard Business School’s Kerr has seen organizations try three solutions: At one extreme, they can relocate their headquarters to a hub, as GE recently did (but make them much smaller). A less expensive strategy is to create an innovation lab or corporate outpost in a talent cluster, as Walmart did with Walmart Labs. The most conservative strategy is to run executive retreats and immersions in talent clusters—a tactic Vodafone uses effectively. These three options aren’t mutually exclusive. Given the need to stay in touch with multiple clusters, companies may want to try them all. Each one involves substantial risks that executives must manage. But together they offer a good playbook to firms that are finding themselves outside the action as the clout of a handful of cities grows.

Navigating Talent Hot Spots

Summary.

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