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Lynda Gratton

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The new competency agenda


Some competencies are more valuable than others. Lynda Gratton's latest research provides a route to the most valued competencies of tomorrow.
At any point in time, some competencies are more valuable than others. Generally this is because they are easily seen to create value and others can judge them on these criteria; because they are rare and demand for the competency or skill exceeds supply; and finally, because it is difficult for others to imitate them.

Because they create value

For a skill or competency to be valuable, it needs to be easily observed to create high value. Ideas about what is valuable have changed over the years. In the eighteenth century, for example, the skill of blowing glass was valuable because glassware was increasingly important to elegant living, and much valued in the domestic lives of the wealthy. In the nineteenth century, the skills of the engineer were considered highly valuable because from 1830 onwards, the wealth of a town was dependent on whether it had a railway connection. It's no surprise that in 1830, Isambard Kingdom Brunel, the engineer behind the Great Western Railway, was the pin-up of his time and engineering was seen as an important competence to develop. From the twentieth century onwards, the value of engineering waned in the UK, although it continues to be highly prized in Germany, where the designers and the engineers at BMW and Mercedes Benz are revered and engineering is considered a highly valuable skill to develop.
"For a skill or competency to be valuable, it needs to be easily observed to create high value."
Over time, skills, competencies and abilities have risen to ascendance and then descended or languished as they are seen to be less valuable, or as the basis of their value is questioned. Take investment banking for example. In 2007, Richard Fuld, then the CEO and Chairman of the investment bank Lehman Brothers, earned $40m in 2006 and $34m in 2007. Some of the bankers in other investment banks were paid similar amounts. The justification was that what they did created such value that they were worth it. So, for example, if an investment banker brought in $100m of revenue (or value), then to receive, let's say, $10m for themselves was considered part of the value proposition. However, since the bankruptcy of Lehman's in September 2008 and the global recession that followed, the value of investment banking has been questioned. As a consequence, the skills and competencies of investment banking are considered less valuable, and the numbers of the most talented people aspiring to join investment banking will drop.
So, the challenge you face is to try to predict what skills and competencies will create (or be seen to create) the greatest value in 2025.

Because they are rare

Skills and competencies become valuable because they are rare, and are seen to be rare. Clearly if everyone has the same competencies and skills, and there is a large pool of these talents, then they will not command a premium. That's the logic, for example, behind the valuation of world-class footballers. Hundreds of millions of children in the world play soccer, and many of them dream of World Cup glory. Talent scouts from the leading football clubs scour the earth for raw talent, and even poverty is not barrier – some stars come from the favelas of South America or the slums of South Africa. Once chosen for a club, the rarity of the skills of the player is tested every time he walks onto the pitch. Tens of millions of people watch him play and draw their own conclusion about whether he is indeed unique or rare.
World-class footballing talents are rare and therefore considered valuable. But it is not just footballing talents that are rare. At any point in history, resources become rare because demand outstrips supply, either because those already in the occupation are leaving (mostly because they are retiring) or because the demand for the skill is rising.
These supply trends are intimately linked to demographic variables. All over the world there are industries in which the number of skilled workers who will retire over the coming two decades is significantly greater than those capable of joining. We see this played out in the aerospace industry. At Boeing, for example, the predicted skills gap is marked. One of the US's biggest manufacturers and exporters, by 2015, 40% of the aircraft maker's skilled workers will reach retirement age. That's 60,000 skilled, knowledgeable workers who will potentially walk out of the door. It is not just Boeing that will experience these skills gaps. In the US manufacturing sector generally, in 2009, about 19% manufacturing workers were 54 and older, and only 7% under 25 years old. This is not just a US phenomenon. Across the developed world, as we saw in the hard facts of demography, the retirement of the largest cohort in the history of mankind – the Baby Boomers - will create huge skill and talent deficits.
Take the UK, for example, where between 2007 and 2017 retiring Baby Boomers will create 11.5m job vacancies. By 2010, companies had begun to face difficulties in securing specialist skills included science, technology, engineering, maths and project management. The UK Government predicts that demand for these skills will continue to grow over the next decade. It is estimated that in the UK alone, an additional 1.3m people with professional and technical skills and 900,000 managers and senior professionals will be required by 2017.
"To be valuable, a competency or skill has to be difficult to imitate – and that can be by technology or by a person"
Skills also become rare when a sudden explosion of demand exceeds a readily available supply, typically when a new technology opens up a whole new portfolio of skills and competencies. For example, the competencies and capacity to program in Fortran or Java were both highly sort after skills at the time these programmes were released.
So, the challenge you face is to predict what skills and competencies will be in short supply in 2025.

Because they are difficult to imitate

Finally, to be valuable, a competency or skill has to be difficult to imitate – and that can be by technology or by a person. When a skill can be imitated, it moves to the lowest paid imitators. That was the reason why between 1985 and 2010 over 768,000 back office jobs moved to the low wage economy of India, and why in 2009 China's outsourcing industry recruited nearly 700,000 new employees.
Of course, the source of imitation need not be another person, it can also be a machine. This began in the mid-nineteenth century with the weaving machines in Lancashire towns that put thousands of skilled weavers out of business and continued with the car assembly plants of Detroit. Now, the source of imitation can be an application rather than a machine. For example, publishing software has meant that one designer can do what many once could; administrative departments can be slashed with the introduction of advanced spreadsheet software; and the development of robotics is increasingly likely to encroach on employment positions in the service and care industry.
The challenge is to find and develop competencies, skills and abilities that are difficult for others and for machines to imitate. So, in the light of the forces that will shape your work over the coming decades, ask yourself what are the likely skills and competency areas that will be seen to create value, which will be rare, and which cannot be easily imitated?
Lynda Gratton is professor of management practice at London Business School. Her latest book is The Shift (Collins, 2011). Ranked by the Thinkers 50 as one of the top 20 business thinkers in the world, Lynda is the founder of the Hot Spots Movement (, dedicated to bringing energy and innovation to companies. The movement has offices in London, Singapore and California, more than 5000 members, and advises over 40 companies and governments around the world


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