The Rise of Talentism

As innovation produced by elites is going to be key to global competitiveness in 21st century, at its core will be high-quality human capital, a rare resource called talent.

The relative weight of any country in international relations can be traditionally measured at three levels: its dissuasive strength in terms of defense forces; the prosperity of its citizens and companies; and its influence as projected through intangible values. As far as all of these are concerned, innovation is the key. And innovation is something that is produced by elites.

This has been well explained from the time of the pioneering Schumpeter up until Acemoglu and Robinson and their essential book Why Nations Fail. Those who turn their backs on the knowledge, business, and policy-making elites that can bring about innovation become increasingly irrelevant nations. The outcome is diminished traditional power, a low degree of technological density in the economy, and a limited soft power projection.

The only way forward is to encourage elites to adopt one of two types of innovation strategies: either creative destruction or creative adaptation. The former means that the economy is in a permanent state of ‘evolutionary chaos.’ Innovators are the only ones to survive in a context of constant mutation. The replacement of typewriters by computers is a typical example of creative destruction.

Argentina used to be a wealthy country at the beginning of the 20th century thanks to agriculture and livestock. Its elite was well educated but little disposed to innovation. As a result, it entered the 21st century relatively poor. Meanwhile, the United States has been progressing since the 19th century thanks to its radically innovative elite. It became the wealthiest and most powerful nation in the world.

The second option – creative adaptation – means to do the same as the leader does, but adding a degree of innovation in terms of labor costs, logistics, and efficiency. This is the model that was adopted by Asian elites. The performance of South Korean companies in television, smartphones, and auto-making are typical examples of creative adaptation, as well as the great Chinese takeoff achieved since 1978.

The trouble is that in a lot of countries, companies, and elites get used to an environment that favors import substitution or agro-export models. In this context, ‘adaptation’ leads to obsolescence and conservatism.

Creative destruction-style innovation is not related to genius-like inspiration, even though it may seem to be the case at first glance. It requires visionary elites that are passionately committed to their country. Functional elites are those that can therefore mix patriotism and strategic planning, something quite difficult to achieve.

Having a large contingent of students coming out of high schools or technical institutes is not enough. Education should be both a civic requirement and an opportunity for all. In the meantime, however, innovation cannot be measured in terms of hours of schooling, but by what is actually being done with the teaching that has been received, in concrete and innovative terms. In this regard, innovation is produced by elites and elites, are the product of innovation.

Creative destruction-style innovation is not related to genius-like inspiration, even though it may seem to be the case at first glance. It requires visionary elites that are passionately committed to their country. Functional elites are those that can therefore mix patriotism and strategic planning, something quite difficult to achieve

Innovative elites lead their countries to a combination of ‘four virtuous founding elements’ of creative destruction: angel investment, knowledge, entrepreneurship, and business environments that are conducive to innovation.

Hunt for Talent

The perception that global competition among elites for talent will unfold is not exactly new. Talent, however, was once seen as synonymous with vocation. It was about developing one’s ‘natural’ abilities. We therefore idolized individuals who were ‘experts,’ companies with ‘core businesses’ and countries focusing on their ‘comparative advantages.’

In 2008, Malcolm Gladwell popularized in Outliers, his best-selling book on the DNA of success, the notion of the ‘10,000-hour rule.’ Talent and success would thus emerge from the devotion of that amount of time to specific activities, such as playing the cello or programming computers. And, of course, the sooner you start, the better. According to such a theory, talents of the stature of Yo-Yo Ma and Bill Gates emerged.

But in the new geoeconomic cycle we are stepping into, the benchmark is ‘post-specialization.’ Eight years ago, cloud computing, tablets, and their application ecosystem were incipient. Today, they allow for a shortcut in economic history. It is as if we could compress the 10,000-hour rule into something more agile. New technologies catalyze talent. So people, companies, and nations must be multifunctional and complex. It is all about engineers who can write well; sociologists who are comfortable with quantitative methods; agribusiness companies concerned with design; oil-producing countries turning into ‘hubs’ of entertainment.

There are already metrics to outline this new ‘Age of Talent.’ Harvard University has come up with an ‘Atlas of Economic Complexity.’ In such a study, we understand that more important than the number of class hours a student has been exposed to is what he can pragmatically accomplish with what he has learned.

Indeed, Klaus Schwab, founder of the Davos Forum, identifies ‘talentism’ as the successor to capitalism. Imagination and the ability to innovate – not weapons, natural resources, or capital – would be the drivers of what he calls the ‘Age of Adaptation.’ Along these lines, education can also be seen as one of the differentials between the dynamism of Asia and the rest of the developing world.

In a visit he made to Seoul in 2013, the president of the World Bank asked the South Korean president what should be the strategic priority of her country in the decades to come. The head of the multilateral agency was amazed at her reply: radically transform South Korean education structures in order to prepare her country for the challenges of innovation and the creative economy.

According to these new paradigms, education has to interact with a pro-market environment, ample access to venture capital, and entrepreneurship. So the coming competition goes beyond just ‘knowledge,’ and is therefore a function of ‘institutional ecosystems’ more or less able to provide innovation – and therefore prosperity and power.

The key element of innovation is high quality human capital, a rare resource called talent. To a certain extent, the great global race of the 21st century is therefore nothing but a major competition among elites.

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