Daily Archives: May 3, 2012

Where Should Your Supply Management Organization Be Located? Part III: The Mega Region

Our first post in this series began the discussion of where a better-than-average Supply Management organization on the path to becoming a world-class Supply Management organization should locate its new Centre of Excellence (COE) for its new centre-led Supply Management organization. We discussed the traditional factors of customer proximity, supplier proximity, business incentives, infrastructure, and the local talent pool and ended up demonstrating that the only thing that really matters is the local talent pool. This is because it is the people, not the process or the technology, that ultimately identify and drive the results. Our last post discussed what type of talent you were looking for and where they were likely to be found. We concluded that you were definitely restricted to major urban areas, but did not identify which particular urban areas are likely to contain the talent your organization needs. That is the subject of today’s post.

In short, based on the research of Richard Florida, as chronicled in Who’s Your City, you should probably locate your centre-led Supply Management organization in a city within one of the forty mega-regions, which are the new economic units of the “spiky world” that we live in. By overlaying maps of continual, unbroken, light intensity around the clock, innovation (as measured by patents), and economic activity, Richard was able to identify forty global mega-regions that each produce more than $100 Billion in economic output and collectively account for 23% of the global population, 66% of economic activity, and 86% of patents. Led by Greater Tokyo and surrounding area and the Boston-New York-Washington (DC) corridor, which produce in excess of $2.5 Trillion and $2.2 Trillion respectively, these mega regions are the powerhouses behind the global economy in which your Supply Management organization functions. They are so productive that the top two mega-regions produce more GDP than all but the top three economies (now that China has moved up the list) and the top six mega-regions place among the top ten national economies in the world.

The talent you need is going to be in one (or more) of these mega-regions, clustered around one of the global innovation centres in the region (which include Tokyo, Seoul, New York, San Francisco, Boston, Seattle, Austin, Toronto, Vancouver, Berlin, Paris, Stockholm, Helsinki, Osaka, Seoul, Taipei, and Sydney). But which one? Not only do the most talented and ambitious people need to live in the means metros in order to realize their full economic potential because the proximity of talented, highly educated people has a powerful effect on innovation and economic growth, but they need to live close to people they collaborate well with. Close to other innovators where their collective efforts make a whole that is greater than the sum of the parts. (When the right people come together, it has been statistically demonstrated that a doubling of population in an urban area results in more than two times the creative and economic output.)

But, as Porter has found, the economic world is not only taking shape around clusters, the clusters are becoming more specialized in individual locations. For example, if I say New York, you probably think finance and fashion, and you are right. And if I san San Francisco, you probably think technology, and you are right.

But since Supply Management is just emerging, we don’t really have Supply Management clusters (even though places like Singapore, where global companies tend to cluster and bring their Supply Management talent with them, contain higher than average Supply Management professional populations), and since not all clusters in early stages actually crystallize into long term clusters, what we do have may not be long-term. So how do we pick the right mega-region? Lucky for us, we know that a good Supply Manager has a certain personality profile and not only do we find clusters of talent, but we find clusters of talent with similar personality profiles.

At least in North America, Richard helps us out here again. He presents clusters for each of the five personality types, including the open personality type, which is the personality type that is required for Supply Management success given the need to interact with a wide range of people in a wide range of cultures using a wide range of processes and technologies. In North America, while such personality types are spread out across the country, they are clustered in only some of the mega-regions, and only found in significant concentrations in the following five mega-regions: the Boston-New York-Washington (D.C.) corridor in the Northeast; Miami and southern Florida in the Southeast; the Houston, Dallas, and Austin triangle in Texas; the San Francisco Bay Area down to LA on the West Coast; and the Portland-Seattle-Vancouver corridor on the West Coast.

In other words, we’ve already weeded out the Chicago-Pittsburgh Corridor, most of the Houston-New Orleans corridor (outside of Houston which we’ve opted to place in the Texas Triangle), the Charlotte-Atlanta corridor, the Phoenix-Tucson corridor, the Toronto – Buffalo – Chester triangle, and Mexico. And if you want your COE to be based in another part of the world (like Europe or Asia), all you need to do is get similar personality profile surveys or, where they are lacking, cultural profiles and you will be able to limit your options even further. For example, if you are thinking of Asia, while Singapore may be a great choice and Beijing a good choice (given the recent increase in innovation and cultural offerings in the area), given the lack of individualism, the lack of tolerance for risk, and the polychronic view of time in the Thai culture (as detailed in this SI post on overcoming cultural distances in international trade with Thailand), Bangkok is not going to be a good choice for your Supply Management organization. (On the other hand, it’s probably an excellent place to put a factory as they will want the factory to work like a Swiss time piece.)

The reality is that, when you do your homework, you’ll find that you really don’t have many options in the spiky world, and if you want to consider infrastructure, corporate strategy, or the willingness of your current superstars to relocate to one of the places on your short list, you’ll have even fewer, But considering that, by 2025, our world will be considerably more concentrated around mega-regions than it is today, this might not be a bad thing.