Companies like Microsoft and Google are great examples of how today’s info-based economy lets businesses create vast shareholder wealth using very little financial capital but loads of human capital. Software firms are hardly the only examples. Pharmaceutical firms like Lilly and Amgen, retailers like Kohl’s and Walgreen, even manufacturers like Dell and Applied Materials are all devising business models that generate tons of wealth with very little capital. The phenomenon is global. The world is steadily becoming less capital-intensive, generating more wealth from less financial capital. Money isn’t what today’s firms need most. Even if it were, it’s abundant and cheap–look at all those buyout firms trying to invest more money than they know what to do with. No, the best companies understand what they desperately need. It’s talent. Talent of every type is in short supply, but the greatest shortage of all is skilled, effective managers. It’s hard to believe that China could have a shortage of anything human, but it does. Even there, where you can hire factory workers by the million, companies can’t find enough managers. “They’re constantly getting stolen away,” says Tom Johnson, former CEO of Chesapeake Corp., a packaging maker with a plant in China. “Labor is abundant, but management is scarce.”
The most valued traits in managers, especially if they’re approaching the highest levels, are not entirely what they were five or ten years ago. Obviously they still have to deliver knockout results. It’s how they do it that’s changing.