The role of ‘global cities’ in the new age of populism

For almost a decade now, A.T. Kearney has collected data and issued annual reports on what we call Global Cities — the major urban centers that propel world business, shape international culture and incubate the ideas of tomorrow. 

In a highly-competitive global economy where capital and talent can locate anywhere they wish, businesses are deeply interested in knowing the assets and drawbacks of individual urban markets. 

{mosads}This stands to reason: The decision of where to place a corporate headquarters — or invest in a major expansion — can define a company’s public brand and future trajectory as never before.

For just one example, look at General Electric. When GE announced its move from suburban Fairfield, Conn., to Boston last year, the company said Boston “was selected after a careful evaluation of the business ecosystem, talent, long-term costs, quality of life for employees, connections with the world and proximity to other important company assets.”

In short, one of the world’s most prominent companies banked its future on what our studies have repeatedly shown: The most successful cities are those that attract talented people and that offer those people connections both to one another and to a world of expanding opportunities. 

It’s no surprise, then, that Boston appears on A.T. Kearney’s latest annual Global Cities Index Top 25 list of today’s most attractive business centers — as well as on our Global Cities Outlook roster of the likely leading cities of the future.

Nor should it come as any shock that both lists are studded with such A-list metros as Tokyo, New York (which retakes the top spot on the index this year) and London (last year’s champ).

But while the urban rankings may seem stable on the surface, there are tremors underneath. Over the past year, leading cities — particularly in Europe and the United States — have had to confront an unexpected new reality: the rise of populist and nationalist movements that often find disdain with the basic values of urbanism itself.

Developments like Brexit and the election of Donald Trump reflected a geographically-dispersed hostility toward immigration, globalization, the financial sector, national bureaucracies and “elite opinion” — all of which are classically concentrated in or near major cities.

Add to this the unique vulnerability of certain major cities to a range of unpredictable disruptions (terrorism, cyber attacks and natural disasters, etc.), and you begin to encounter questions about what the future holds for our urban centers — and for the businesses that rely upon the unique vitality and efficiency of such places.

Our own conclusion — informed by our research — is that the incentives for global corporations and highly talented-individuals to cluster in major cities remain very strong and may become even stronger over time.

The reason? As technological progress accelerates, the gap between innovators and laggards widens. Companies and communities that nurture innovation enjoy compounded gains over time, while those stuck on the slow end of the curve have a very hard time catching up.

Given this reality, it’s very much in a company’s interest to be in a city that is truly open to new ventures. Such cities eagerly welcome outsiders, and they understand that innovation and competition are to be embraced, not feared.

Even a venerable firm like GE can benefit from a startup-friendly urban culture. After all, such a zeitgeist is deeply attractive to the talented, innovative workers upon whom GE’s future will depend. Indeed, the company has doubled down on this strategy with an ad campaign featuring a young techie explaining to peers and parents why he’s chosen to work at GE.

Cities, for their part, should do all they can to foster this spirit of openness and enterprise — while also keeping an eye on the nuts and bolts. 

We have consistently found that the primary factors executives weigh when determining where to incubate innovative new businesses are proximity to other innovative companies, access to talent, supportive local regulations and high-quality infrastructure.

By focusing on these criteria and taking advantage of evolving technologies, cities can become national, regional, or even global business capitals. For instance, our study identified Tel Aviv as a new global leader in infrastructure, Singapore as a standard-setter for online presence and Moscow as a hub of university-sponsored incubators. 

By choosing the right city for a major office or capital investment, a company can gain crucial advantages. By attracting the right businesses, a city can establish a virtuous cycle of broad-based growth and civic improvements.

While the broad principles for success are familiar, each business and each city will have its own needs, its own challenges and its own path to success in a complex and crowded global marketplace.

Andrés Mendoza Peña is a partner in the Strategy & Top-Line Transformation Practice with the global management consulting firm A.T. Kearney. Nicole Dessibourg-Freer is a manager in the firm’s Consumer Products & Retail practice. Both are co-authors of A.T. Kearney’s Global Cities Index and Outlook and are based in Chicago.

The views expressed by contributors are their own and not the views of The Hill.