Update as of Feb. 14, 2019: Since the publication of this article, Amazon has announced that it will no longer use New York City as its H2Q location.
In Amazon’s year-long search for a second headquarters location (quickly dubbed HQ2), the company faced a Goldilocks-like conundrum. Tier-one cities with expensive real estate or an over-saturation of technology competitors risked being too big. Cities that didn’t have the required real estate, transportation or labor pool were too small. Amazon’s much-heralded and ultimately controversial decision to split its next headquarters between the New York City and Washington, D.C. regions confirmed that, for them, two talent pools is just right.
Analysis of what the winning regions offered, compared to what the runners-up did not, ultimately reveals what matters most: a ready supply of the right skills and competencies.
Thriving Tech Talent in U.S.
Like other large technology companies, Amazon has an ever-growing need for people with technology skills to support their business. The company made no secret of seeking HQ2 bids from cities with technology talent. And, with seven of the world’s ten largest technology companies, the U.S. offers multiple tech-driven cities to choose from.
Following Amazon’s announcement of its finalist short list, CBRE shared its tech talent rankings for each city. Not surprisingly, finalists all ranked in the top 50 U.S. cities for tech talent. Perhaps less surprising, Washington, D.C. (#3) and New York (#5) ranked in the top five.
But the broad category of “tech talent” doesn’t tell the full story. Amazon needed the right talent – along with a promise of future tech employees.
D.C. and NY Tech Talent Fit
Even when doubters expected Amazon to reject New York City based on the very high costs to build, the city bet on the appeal of its large and diverse talent pool. Cornell Tech’s 12-acre campus on nearby Roosevelt Island is a plus, with the potential collaboration to shape the skills required for a future tech workforce. Ultimately, Amazon followed the lead of Google, Facebook and Spotify – who have expanded in New York City in recent years – to select this high-priced, tech-talent-rich location.
When it comes to computer science, “the Washington, D.C., Metropolitan Statistical Area produces more computer science graduates than any other metro area in the county,” explains Forbes Council Member Sebastian Post. Crystal City in Arlington, Virginia – the actual D.C.-area HQ2 location selected by Amazon – benefits from a regional population where one in two residents have achieved at least a bachelor’s degree. Post points out, too, Crystal City’s proximity to renowned tech universities like Virginia Tech and George Mason, which are investing in nearby Innovation Campuses to shape the skillsets of future tech workers.
Competencies Beyond Tech Skills
Amazon’s CEO Jeff Bezos is known for making big and small decisions based on data, so it shouldn’t be surprising that he selected HQ2 locations that best meet one of his must-have requirements: “Locations with the potential to attract and retain strong technical talent.”
It turns out, D.C. and New York provide talent benefits beyond deep tech skills. Each offers labor pools with unique, and distinct, competency sets that are unmatched in other cities.
New York is a global finance city. Tech workers aside, this booming hub of global finance boasts skills and competencies of a different kind. Business leadership. Finance. Marketing. Advertising. International relations. Talent management. As Amazon sets its sights on spanning multiple markets, its HQ2 decision must have taken into account the specialized business management talent that New York has to offer.
Similarly, Crystal City in Virginia is on the doorstep of the country’s D.C. political hub. No other region in the nation has a better inside view of government leaders and the massive U.S. Department of Defense. And no other region would have workers with the relationships, experience and skills to navigate the federal government.
Competency Mapping Supports Strategic Decisions
Amazon’s HQ2 decision resulted from a data-driven process to find the best fit for tech talent, specialized skills and competencies, and location. Organizations that routinely use, update and analyze the competencies of their workforce are the ones that make competency-driven strategic decisions. When they map current workforce competencies against business priorities, changing workforce demographics and potential new market, answers emerge. It becomes easier to make dispassionate decisions about how to align their workforce and organization for success.
We don’t know for sure that Amazon conducted a competency mapping exercise to guide their decision. But they could have. And we know enough about their process to see that workforce skills, competencies and talent were leading factors in making their final HQ2 decision.
Are you facing a strategic business decision that could (and should) factor in your workforce competencies? Read our “7 Powerful Reasons to Use Competencies” white paper to get started. Or contact us to learn how to map your workforce competencies for strategic decisions.