Does Location still Matter in a Globalised and Digital World?

June 12 2019

Before I founded Talent Intuition, I had dinner with the CEO of a major pharmaceutical business. He told me the business was relocating its R&D function from one country to another. This was to be based on the advice of a major strategy consultancy that had undertaken a viability study.

I knew the city they were moving to. “But you’ll be more than an hour away from the nearest R&D university, and miles from any competitors for talent” was my response. Four months later I found out the deal had been pulled because they couldn’t get the right people in the right place.

I realised the people piece – the central piece of the jigsaw - is too often overlooked in mergers, acquisitions and business growth plans. But in our globalised and digital world, does physical location still count?

The corporates with no HQ

Think of Wordpress. This global tech company powers 25% of all websites globally. But it has no offices, and the 400-person team works from home or in co-located offices in 43 countries.

“Everyone works from wherever they are in the world. It could be a coffee shop, it could be their home, it could be a co-working space. We hire people regardless of where they are.” Says WordPress CEO, Glenn Leibowitz. One of the key advantages being: “We can attract and retain the best talent without them having to be in New York or San Francisco or one of the traditional tech centres.”

Digital transformation is affecting the way we think about physical location of premises. This year’s World Development Report highlights that “Physical presence is no longer a prerequisite to doing business in a given market”.  However, a business-friendly environment does matter. “A country with a business-friendly environment has more start-up activity and job creation”.

Combining people data with broader commercial factors – and location -is the key to choosing the right place to do business.

Location analysis with a people lens

Regardless of whether people are at home, in co-working spaces, or in coffee shops, business growth needs people. The people with the right skills, in the right place, at the right time.

As we explored in our recent video on Stratigens user cases, there are important reasons to look at business location in this way:

  • Talent supply. If business growth is physical, you need know you can attract the right talent to meet your growth strategy. Where are the people you need? Is there ample supply or is demand high? Are people open to moving to this location?
  • Operating costs. This includes personnel (hiring new talent and relocating existing employees), property prices, travel costs, tax for employers and employees, overheads such as social costs and labour laws.
  • Cost of consolidation. Globalising converging markets mean consolidation of locations is becoming more commonplace. It’s important to identify where the cost of exit is higher, the locations with the skills you need, and those where competitors are based.

These people factors are intrinsically linked to commercial factors and need to be considered in location decisions.  

The changing nature of the organisation

“Many jobs today, and many more in the near future, will require specific skills—a combination of technological know-how, problem-solving, and critical thinking as well as soft skills such as perseverance, collaboration, and empathy. The days of staying in one job, or with one company, for decades are waning.” writes Word Bank President, Jim Yong Kim.

This quote brings the focus of organisational and national development directly onto human capital.

We developed Stratigens to elevate the role of human capital in strategic business decision-making. Stratigens brings together people and commercial considerations to help businesses make the right decision about location. Yes, location does matter, but location is about much more than bricks and mortar.

To see a demo of Stratigens, please get in touch.