Why are some competencies valued?
Firstly, because they create something that people value: for a resource to be seen to be valuable, it needs to be able to actually create something that others value. This is important because notions of what is considered most valuable changes over time. In the 18th century the skill to blow glass was valuable because glassware was an increasingly important and valued part of the domestic scene of the wealthy. In the 19th 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. 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 19th century onwards the value of engineering waned except in some places like Germany where the engineers in the BWW and Mercedes Benz companies are revered and engineering is considered a highly valuable skill to develop.
Skills, competencies and abilities rise to ascendance and then can languish as they are seen to be less valuable or as the basis of their value is questioned. The challenge is to predict what skills and competencies will create (or be seen to create) the greatest value in 2025.
Secondly, because they have something that is rare: resources 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 boys 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 – many stars come from the favelas of South America. 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. The challenge here is to be able to identify these important capabilities across the world, as the football scouts are able to spot raw talent.
World-class football talents are rare and therefore are considered valuable. But it is not just football talents that are rare. At any point in history resources become rare because demand exceeds supply. Skills become in short supply because those already in the occupation are leaving, and/or because the demand for the skill is rising.
In the UK for example, the vast majority of labor market movement in the years to 2017 will be accounted for by the replacement of those leaving jobs for retirement. Between 2007 and 2017, it is expected that as the Baby Boomers retire they will create 11.5 million job vacancies. In the UK, companies already face difficulties in securing specialist skills including science, technology, engineering, and math 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 1.3 million people with professional and technical skills and 900,000 managers and senior professionals will be required by 2017. One real challenge (which we will return to when we consider working across five generations) will be to capture these skills whilst retraining others.
Skills also become rare when the demand for them exceeds the supply. Typically this occurs when a new technology opens up a whole new portfolio of skills and competencies. For example, the capacity to program in Fortran or Java was a highly sought after skill at the time these programmes were released. The challenge is to predict what skills and competencies will be in short supply in 2025.
The challenge is to find and develop competencies, skills and abilities that is difficult for others to imitate.