Jul 29, 2006

John Hagel on the skills shortage

from the edge perspectives blog:

As JSB and I suggested in an oped piece in the Financial Times almost one year ago, a much more productive way to view these developments involves focusing on skill building arbitrage – the opportunity to participate in relationships and environments that can build capabilities more rapidly than would be possible elsewhere. This broader perspective begins to bring into sharper focus the significant management innovations that certain Chinese and Indian companies are pursuing to build capability more rapidly. In an earlier blog posting, I outlined three forms of management innovation that these companies are pioneering.

In this context, the intensifying competition for talent will only accelerate the management innovations that are already under way in these countries, making the companies even more formidable competitors or providers, depending on where you stand in the global value chain. In fact, from their earliest days, these companies have understood that their success depends upon attracting and retaining talent. More importantly, they have discovered that if they develop their talent more rapidly than anyone else, they will also have an advantage in attracting and retaining talent, so that has been the focus of many of their management innovations.

They have also understood that not all talent needs to reside within their enterprise if they can collaborate effectively with a broad range of specialized companies, so another dimension of innovation has been the development of scalable process networks that bring together hundreds, and often thousands, of specialized business partners.

The economic growth of China and India only marginally depends on their formal education system – much more important has been the emergence of a set of innovative companies that have figured out how to access and develop talent much more rapidly than most Western companies. Both countries have also benefited from a flourishing (and admittedly very uneven) ecosystem of private training institutes and services that help to bridge the gap between what the public schools produce and what businesses require in terms of technical, language and management skills.