Harvard Business Review: Aggressive Talent Wars Are Good for Cities,
by Orly Lobel (San Diego):
California is often ranked among the world’s most inventive regions. But most observers miss one of the major reasons why: the absence of non-compete agreements.
Barring non-competes is one of California longstanding strong talent
mobility safeguards. Unlike most other states in the United States, but
more like innovative Western European countries like Germany, the
Netherlands, and Sweden, California has rules about allowing job
mobility within markets. The California Business Code voids all
non-competes agreements between businesses and their employees, while
the California Labor Code restricts the ability of corporations to
require their employees to pre-assign all inventions, even if unrelated
to the job, during the course of employment.
California courts have been so adamant about enforcing the state’s
prohibition of non-competes, they’ve held that companies who do not hire
or promote talented employees who refuse to sign a non-compete (which
would be void anyway if taken to court) are liable in tort and should be
subject to punitive damages. They’ve even refused to enforce
non-competes that were signed in other states, announcing them contrary
to state policy.
Conversely, Boston’s Route 128 tech beltway has not flourished the
way Silicon Valley has, in part because of restrictive non-compete
agreements. Non-competes have contributed to the more rigid, vertically
integrated, and prone to insourcing ethos of Boston’s high tech region.
California’s lack of non-compete agreements is the reason Marissa
Mayer could assume the position of CEO at Yahoo! immediately upon
leaving its direct competitor, Google. And, as it turns out, it’s the
reason California’s cities are some of the most innovative in the world –
and provides a model for fueling innovation and economic growth
Orly Lobel (San Diego), Talent Wants to Be Free: Why We Should Learn to Love Leaks, Raids, and Free Riding (Yale University Press, Sept. 30, 2013):
This timely book challenges conventional business wisdom about competition, secrecy, motivation, and creativity. Orly Lobel, an internationally acclaimed expert in the law and economics of human capital, warns that a set of counterproductive mentalities are stifling innovation in many regions and companies. Lobel asks how innovators, entrepreneurs, research teams, and every one of us who experiences the occasional spark of creativity can triumph in today’s innovation ecosystems. In every industry and every market, battles to recruit, retain, train, energize, and motivate the best people are fierce. From Facebook to Google, Coca-Cola to Intel, JetBlue to Mattel, Lobel uncovers specific factors that produce winners or losers in the talent wars. Combining original behavioral experiments with sharp observations of contemporary battles over ideas, secrets, and skill, Lobel identifies motivation, relationships, and mobility as the most important ingredients for successful innovation. Yet many companies embrace a control mentality—relying more on patents, copyright, branding, espionage, and aggressive restrictions of their own talent and secrets than on creative energies that are waiting to be unleashed. Lobel presents a set of positive changes in corporate strategies, industry norms, regional policies, and national laws that will incentivize talent flow, creativity, and growth. This vital and exciting reading reveals why everyone wins when talent is set free.