Ten years ago - if you wanted to build a strong, profitable business, you needed; easy access to capital, a geographic region that you could command and decent systems in your value chain to move stuff profitably from manufacturing to the consumer.
That may have been the case back then, but something very interesting has been happening more recently.
We often hear that there is a global race for talent.
We all know the mantra, and yes...everyone knows that highly-skilled individuals are in short supply.
But the fight between brains vs brawn has never created such a clear and massive gap in value, as what we are seeing right now.
BTW - brains being talent which can tap into creativity, innovation and leverage that through technology; brawn being financial and infrastructure capital that dominates a market.
Illustrated in financial terms, in the above graph you can clearly see the massive divergence between the Top 5 tech companies listed on the S&P 500 [the brains] and the value of the other 495 companies in the index [the brawn].
Amazon, Apple, Facebook, Google and Microsoft are focused on attracting the world's best creative and innovative talent and then leverage that talent, seamlessly, using technology on a global scale. And clearly this is creating an astounding amount of value for these companies.
Similarly, companies that focus on leveraging creativity and innovation to build great brands are also more recently radically outperforming those with less of a focus on brand building, exponentially.
The gap has always been there, but more recently that gap is growing.
The gap between the brains and the brawn is increasingly widening - just look how it does so in this graph above from about 2014 onwards.
As interest rates around the world continue to fall and the value of the moat that you can create for yourself by having better access to capital declines - the need and demand for brains - and those that can create new value through creativity and innovation will intensify.
As much as we have a focus on technology in the future, the real value lies in the creative human minds that can leverage that technology on a global scale. Humans aren't actually being replaced by machines, but in combination with them - a whole new economy is opening up.
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