Week of June 25, 2001
WORLD CONGRESS REPORT
World War III: The Battle for Brains
Message from IDRC Pacific Northwest World Congress was clear:
The real contest in the 21st century is not a competition for space or location; it is the race for talent.
By RON STARNER Site Selection Magazine Editor
SEATTLE - There's a reason why Microsoft is the world's biggest software company. There's a reason why Boeing is the world's largest aerospace firm. There's a reason why Starbucks dominates the world of coffee-shop retailers.
No, it's not because all of these corporate giants got their start in Seattle. It's because they have the largest inventory of the one resource every one of their competitors wants: talent.
"The real war is the war for talent," said Jacques N. Gordon, international director of research for LaSalle Investment Management, during the Spring 2001 Pacific Northwest World Congress of the International Development Research Council. "The game is still about access to knowledge workers."
Although the five-day gathering of some 2,500 corporate real estate and economic development professionals in mid-May was labeled "Leveraging Technologies in an Internetworked Economy," the convention just as easily could have been titled "How to Win the Battle for Brains." Virtually every speaker touched on this topic.
Gordon, who spoke at a theme program titled "Strategies for Managing Through the Economic Downtown," counseled corporate real estate executives to pay close attention to the process of "creative destruction" now occurring in the American economy. "Layoff announcements in the second, third and fourth quarters of 2001 will get worse, not better," he said. "But the good news is that there is no greater source of job growth than the group that just got laid off."
Finding that talent -- as well as finding just the right kind of talent -- will be the biggest challenge corporate managers face in the next decade, noted several of the World Congress speakers. "Creative talent is the scarcest resource on the planet," said John Rhodes, senior vice president with Moran, Stahl & Boyer, during a workshop titled "Tools and Techniques for Assessing Labor Markets." For that reason, he said, real estate executives must accurately assess the labor markets where they plan to operate.
"Competing for labor is a game we are playing with very high stakes," Rhodes told IDRC attendees. To compete effectively and to win, "you must understand the 'five C's' of labor competition." He listed those as company image and culture; compensation and benefits; career opportunity; community quality of life; and commuter-friendly trips within the metro area. If your company can provide better-than-market benefits and amenities in each of these areas, said Rhodes, you will win the battle for the best and the brightest workers. More importantly, he added, you will keep them from leaving your organization for a competitor.
Matthew S. Szuhaj, senior manager for Deloitte & Touche Fantus in Chicago, said that before you locate any corporate facility, your site selection criteria should include benchmarking your competitors in the local market. He advised managers to measure their competitors in the following areas: nature of operations; tenure in the local market; employee turnover; corporate culture; operating environment; compensation policy; and facility locations in proximity to labor.
"The civilian labor force in the United States typically is between 40 percent and 50 percent of the total population," Szuhaj said. "The key is to conduct a potential share analysis to determine how many of those available workers you can expect to convince to come work for you. To do that, you must begin by asking yourself, 'Who are my competitors for labor in this market?'"
Lesson 2: Digital Convergence is AcceleratingIf talent is king in the new economy, then the crown prince is your company's ability to leverage technology to enhance productivity and profits, said a number of speakers at the World Congress.
Jim Young, president of the Jamesan Group, put it succinctly: "Our lives, both personal and business, will become more digital in the next 24 months than they have over the last 20 years." Speaking at a session titled "Powering Productivity with Technology: A Corporate Real Estate Perspective," Jamesan noted that "digital convergence" will require all corporate space managers to take a closer look at their management practices and be prepared to change. He further predicted that in coming months managers will see a proliferation of flexible, digital-based technologies.
The pace of that digital convergence is accelerating faster than the ability of many managers to adapt, said Robert J. Herbold. He should know. He is the executive vice president and chief operating officer of Microsoft, a company that introduces a new generation of software about once every two years.
"The power of the chip has doubled about every 18 months," said Herbold during his keynote address on "Leveraging Technologies in an Internetworked Economy," adding that "no other industry is making that kind of progress."
What does this mean for corporate real estate executives? If companies take advantage of these new opportunities to leverage technologies, it can affect their bottom line, Herbold said. A case in point is American Airlines, which used to supply all passengers with paper tickets at a production cost of $12.20 per ticket. When the company began using technology in its processes, the creation of e-tickets cut the price to 9 cents.
Herbold also cited the example of Charles Schwab, which challenged the old design of discount stock brokers. Account executives used to charge customers $79.95 per trade. The company today allows customers to execute their own trades online for $29.95. The entire system is Web-based, whether the trade is ordered online or through an account executive. "They (Schwab) provided customers with choices," Herbold said. "Today, they have 3.5 million online accounts, a 148 percent increase from a year ago, and they have 42 percent of all online assets. They grew revenue by a factor of two by a change of design."
The impacts of leveraging digital technology include improving customer service, generating better financial results and creating a more contemporary image for the company, said Herbold. "Also, it gives the company the opportunity to drive out legacy systems and legacy people," he added.
Real estate managers at top companies also shared their best practices in Web-based management with IDRC attendees at a session called "Web-Based Management in Corporate Real Estate: Lessons Learned from Operation eCRE." Keith Perske, manager of workplace resources for Sun Microsystems, noted that digital convergence forced Sun to adopt a different workplace model altogether. "Giving workers a say in how and where they work is an important employee-retention tool," he said. Perske envisions a day when 80 percent of the company's employees work in unassigned workspace, and much of that environment depends on more processes being handled on the Internet.
Chevron's approach to assessing its Internet readiness was to form a work group known as the e-Enabling Management Team, said David Mitchell, a consultant and former vice president at the company. Sub-groups were assigned specific tasks and weekly project updates were held to make sure the company moved forward with its assessment.
Lesson 3: The Nature of Work Itself is ChangingIt may seem almost too fundamental to say it, but the nature of the work that most people do today is changing, said several experts at the World Congress. "Work is now a thing we do and not a place we go," said Dr. Charlie Grantham, founder and chief scientist of the Institute for the Study of Distributed Work.
Speaking at a session titled "Redefining Sense of Workplace and Its Role in Corporate Innovation," Grantham said that the balance between the virtual workplace and the face-to-face of business is the new challenge for corporate managers.
"In the future, one-half of the employees will be doing twice the work for three times the pay," said Dr. Joe Ouye of San Francisco-based Strategic Planning/Information Systems. Ouye said the place of work will change functions as it becomes more of a place for innovative learning and exchange of ideas. Ouye further claims that support for innovation and creativity ought to be the primary concerns for future workspace developers.
The competition for talent also impacts workspace design. "Generation Y votes with their feet," said John Igoe, vice president of real estate and site services for Palm Inc. Igoe contends that younger workers want so-called "green offices" with plenty of natural sunlight and environmentally friendly workspaces. "We are now designing office buildings that should last 40 to 60 years," he said. "The challenge is that we also have to have flexible space capable of changing within months."
Dr. Christopher Meyer, professor and author with the Strategic Alignment Group in Silicon Valley, closed the conference by suggesting that "Talent and Technology Are the Driving Force Behind Capital Gains." The thesis of his Future Watch Forum speech was simple: "Innovation requires difference," he said. "If you're going to change a corporation, you must be somewhat weird."
Meyer challenged his audience to become leaders and champions of innovation in the workplace. "Your job is to create a culture of innovation," he said. "And the best leadership looks for the right question to ask, not the right answer. You must be willing to lean into the future."
If you do this, Meyer suggested, you will win the hearts and minds of your employees. "The most talented people don't want or need management," he said. "They want leadership."
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©2001 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.