What do Facebook, Google, Apple, Salesforce and Netflix all have in common? Yes, all are largely technology companies based in Silicon Valley. Sure, they’re all cash-rich with lofty stock market capitalizations. And of course, each is led by a well-known CEO. But beneath the surface is an important truth: these companies are in the talent business first and foremost.
Sure, these companies have become successful by building incredibly valuable products and services. But visit any of these firms’ offices and it’s increasingly clear that none of them are in the technology business, the computer hardware business, the software business or the entertainment business first.
This was the realization an executive in the CEO advisory industry recently gave me when I asked him about why these companies are so successful. He said it is the “ah-ha” realization many CEOs come to after visiting Silicon Valley for the first time.
In fact, it’s such an important realization that it bears repeating: Every successful Silicon Valley firm is successful because it realizes it is in the talent business first, not the technology business.
It is a difficult mindset for many CEOs to adopt. After all, Google doesn’t have to spend each day worrying about money. It has plenty of it. Apple isn’t fretting about paying that coveted executive an extra $10,000 a year to make sure they don’t jump to the competition. It’s not even a question. Heck, Google is fine paying people to sit on the bench and do nothing instead of letting them walk to competitors.
These companies can recruit, retain and develop the best talent in the world. They can do it no matter the cost. They can build the best offices with the swankiest work environment. They can give employees lavish perks. They can offer the most generous compensation.
Unfortunately, most CEOs live in a different world. They live in a world where their view is entirely entrenched in a very finite set of things, most of them having to do with business outcomes and the cost of reaching those outcomes — and nothing to do with the business of talent.
Because most CEOs are consumed by the details of things like supply chain, risk, compliance and product management — not to mention that dreaded four-letter word, cost — the wrong things often blind them.
In a lot of companies, talent becomes a secondary issue, a means to an end, a persistent and annoying chore even. It’s viewed as the cost of doing business. For many CEOs, the fact that they have to hire real people as a means of production is a genuine pain in the ass.
Many CEOs don’t see office space as a talent-attraction and culture-building tool. They see it as a line item on the expense side of the balance sheet.
This is the wrong attitude. Business leaders are not in the [insert industry here] business. They’re in the talent business, and that talent creates a lot of value for them and their customers — value that compounds into profits down the line. Luckily, many companies have come to this realization.
Still, more CEOs need to invest — and invest heavily — in things that will bolster their talent businesses.
The stakes are high. Talent, perhaps more than money, is a finite resource in today’s economy. Capital isn’t in short supply. Most business infrastructure has moved online, in turn making it much cheaper and easier to build.
Talent, however, is a scarce resource, one that every business is competing for.
The only difference between the CEOs who find success in business and those who don’t is the realization that the bulk of the value a company creates comes from its talent. CEOs who adopt this mindset are likely to find success. Those who don’t are going to struggle to get by.
Keep that in mind the next time budgeting rolls around. Most things in business aren’t a zero-sum game. Talent is different. Leaders who focus on turning their business into talent businesses win. Those who don’t, lose.
Frank Kalman is Talent Economy’s Managing Editor.