While providing consulting services to the governments of the Middle East on how to build cities that are powerhouses of talent we at HireLabs realized the true meaning of the saying ‘birds of a feather flock together’. The same logic holds true for talent. True talent usually has a hunger to learn and innovate, and when you create an environment where talent lives and works in close proximity to each other, you are on your way to building a knowledge economy.

Before we started our research, we made a claim: Talent attracts talent.

Our research noted how history points to Baghdad at the turn of the first millennium as a thriving knowledge economy. The next major knowledge economy was created when Venice and Florence took Europe from the Middle Ages into the Renaissance era. In modern times, England transitioned into the industrial age from an agricultural society. Most recently Silicon Valley has set the tone for technology innovation. All of these revolutions have been fueled by talent flocking to the new centers of innovation and contributing to the knowledge economy.

In all cases the evidence pointed to the fact that when you have a lot of like-minded talent in close proximity, their work influences each other and stimulates them towards innovation. Then if you introduce the element of social networking, you have just created a multiplier effect and increased innovation exponentially, further fueling the growth of the knowledge economy.

If we were right in our claim that talent attracts talent, we needed to differentiate the two groups of talent to study the effect of each group individually. We label the initial as Talent A, and the latter as Talent B. The birth of a knowledge economy starts when there is an active flow of Talent A to a specific location, and the quality and caliber of this Talent A sets the tone for the culture that the knowledge economy will adopt.

As Talent A lays the foundation for the knowledge economy, it starts generating income and has its respective spending habits. This gives rise to consumerism and a service industry is born by Talent B which monetizes on Talent A’s needs. It is interesting to note that the shape and structure of the knowledge economy will depend upon the cluster of services provided by Talent B. Our findings were further clarified when we studied two financially profitable knowledge economies: Las Vegas and Silicon Valley. Both regions are high revenue generators, but the quality and caliber of the talent in both regions was very different. During the birth of the Las Vegas area in the 1930s, the quality and caliber of Talent A (the labor) that was building the Hoover Dam, gave rise to a service industry powered by Talent B (the casinos and other adult entertainment that came later on). Whereas in Silicon Valley the quality and caliber of Talent A (university graduates and entrepreneurial employees) that was fueling entrepreneurship, gave rise to a very different service industry powered its own Talent B (high-tech companies and venture capital). In both cases a very different kind of a knowledge economy was created, both have sustained growth and continue to attract talent.

To further explore the story of how a City can benefit from talent attracting talent, we studied the quality and caliber of the leadership needed to build a sustainable knowledge economy. The leadership’s ability to understand how to unlock the power of its talent will determine the rate of growth of the knowledge economy. This is true for leadership in the corporate sector as well as the public sector. The best example in the corporate sector is Google, whose hiring strategy recruited the smartest talent in their respective fields. Google’s leadership realized that to yield optimum profitability the talent should be allowed to research and develop new ideas. Hence the leadership encouraged that their talent spend 20% of their time in researching any concept even if it was not related to their job description. This strategy has made Google the darling of innovation and a powerhouse of the knowledge economy. Similarly in the public sector, Sheikh Mohammad, the ruler of Dubai, understood that during the dot com burst in 2000, global talent needed a new champion. He built technology districts and free trade zones in Dubai while technology companies were closing down in the west. This move attracted a wave of entrepreneurial Talent A, and a diverse service industry fueled by Talent B followed immediately. This strategy has made Dubai into an entrepreneurial icon of the Middle East.

Conversely, the leadership’s inability to understand its talent leads to a demise of an already successful knowledge economy. In the corporate sector, Carly Fiorina, the former CEO of HP carried out the largest layoff in the history of HP, even after 86% of the work force took a voluntary pay cut earlier. Fiorina did not understand that the company was in a turn-around phase and it could not be run if the talent is not empowered to work with the leadership. This miscalculation led to Fiorina’s demise and a 50% reduction in HP’s shareholder value in 2003-2004. Similarly in the public sector, President Robert Mugabe of Zimbabwe confiscated the land from the Caucasian farmers of the country and redistributed the land to the indigenous population. Mugabe miscalculated the new landowners’ ability to run the established infrastructure, which led to the complete destruction of the nation’s economy and the farming infrastructure. Google and Dubai succeed in attracting and retaining talent, whereas HP and Zimbabwe drove talent away.

Talent is clearly the key to building value, and as value becomes evident, it will attract more talent. The strategy that a city, or a company sets today for the acquisition of Talent A, will draw in the reciprocal Talent B tomorrow. We are advising our clients to identify where they would want to be 100 years from today, only then should a talent strategy be crafted.