Lessons from Silicon Valley's journey of hiring world's top economists
Economists are finding new lease of life within the business structure. With the growing importance data driven decision making within organizations, new talents pools are being sourced to find candidates with the relevant skill sets to do so. With companies presently at varying stages of adopting big data analysis, the huge amounts of data being generated and collected by organizations need a strong filtering process to assist decision making. Since most companies are in the early stages of adopting analytics within their business processes, learning from others within similar market settings becomes key towards setting up a sustainable way of ensuring data backed decisions are taken. As this demand for the right talent matures, organizations find the need of talent that cannot just make sense of the data but actually be able to translate that understanding into workable, achievable milestones for the company to grow.
Economists find this to be in their field of expertise. And most tech companies from the Silicon Valley have already realized this, pioneering the inclusion of academically sound economists to head various projects under the ambit of data analytics, product design and pricing. Hal Varian, an emeritus professor at the University of California, Berkeley helped Google develop their AdWords marketplace. This happened back in 2002. He currently serves as the Chief Economist within company.
Companies in USA have had a previous experience of similar hiring spree of economists during 1950s’ and 60’s. This was propelled by the advent of computers and strong processing systems which facilitated econometric analysis. As companies thought of leveraging these technologies predict fluctuations in business cycles and product pricing, they would go on to employ economists form reputed universities to help lead such business transformations.
There exists a similar need now. The advent of massively generated data and creation of tools of storing, filtering and presenting it have made companies to rethink their talent pools. As far as companies with the silicon valley that focus on analytics to be the backbone of their decision making, have already revamped their hiring strategies to target economists. Highlighting the problem Andrew Chamberlain, chief economist at the jobs and recruiting website Glassdoor puts it “Now you have all these new companies with tons of digitized data, and not only that, it’s data that describes human behavior,”. As their job is to extract insights that can help businesses improve their products or user experience and also produce research to shape policy, economists are finding the perfect fit in using their modelling and statistical skills on real life situations and guide businesses to perform better.
What does the talent pool have to offer?
“This is a great time for economists in tech companies—the most interesting firms in Silicon Valley are hiring chief economists as well as economic teams at a very rapid clip. Every week I am contacted to help fill a position, or I hear about a new hire by firms like AirBnb, Netflix, Pandora, Uber, etc. Amazon has built the biggest team, and has been actively hiring both senior economists and new PhDs.” Explains Susan Athey, Economics of Technology Professor, Stanford GSB in her response on Quora. Companies that look at tapping this talent pool of academics for more strategic partnerships stand to benefit in certain manners
a. Product design and Pricing issues
Microeconomics as a subject specializes in understanding the economic conditions that determine the price of a product in the market. This is done by analyzing the demand and supply conditions which in turn depend on host of reasons, specific of which are consumer preferences and cost structures. As Susan Athey explains, “Hal Varian was one of the first tech firm chief economists, and by his account he worked on the AdWords auction in the early days. At Yahoo! and Microsoft, economists (including myself) worked a lot with online advertising marketplaces.” This facet also extends to market design imperatives for organizations like AirBnB, Amazon among many as they venture into new markets.
b. Application in the field of data science
As companies enter into different stages of business transformation, a multitude of new skill set demand arises. Same goes with the adoption of data analytics. Companies, like the ones from Silicon Valley, who have reached stages where data creation and management are fairly structured are now in need of candidates with an understanding of not just managing data analytics, but who come in with understanding of how consumers make decisions. This helps companies establish product relevancy and predict performance levels of their existing product lines. This is where pioneering research done in the field of behavioral economics assists economists in making better decisions. With the right understanding of business analytics and the science of behavioral decision making, companies can leverage such talent to grow profitably in the inefficient markets that are overrun with cultures of biased decision making.
c. Enabling company design and policy formation
Microeconomists are generally experts at understanding strategy as well as questions about market equilibrium. They can help provide a framework for understanding what industry structures may be sustainable, and think through incentives for acquisitions and vertical integration. This helps company’s draw out important insights to assess dangers and opportunities more realistically. They also assist in policies around intellectual property, privacy, data security, etc. as all have a great role for economic analysis and an understanding of costs and benefits. Many public policy forums include economists and lawyers in decision-making, and economic research can inform these issues as well.
The Indian context
Although economists come with a varied skillsets, which don’t always fit into the markings of a data scientist, when it comes to the Indian context the employability is usually further restricted within the banking and BFSI sector. Within traditionally set job roles, organizations often end up wasting the potentially valuable academic knowledge which can help them drive business efficiency. But this slowly changing.
Economics graduates are now exploring areas within consultancy and data analytics to contribute towards business growth. And the need within the market for them to do so is growing exponentially. According to Jigsaw Academy CEO Gaurav Vohra in a response to Economic times "The demand for data professionals has grown but a corresponding surge in supply has failed to happen. Experts estimate a shortfall of around 2,00,000 data analysts in India by 2018. The extremely competitive pay scales reflect this incongruity."
As organizations redefine talent needs in the wake of business transformation, recruiter need to redefine their talent pools. Accessing this talent pool, recruiters would enable the flow of pioneering academic research to be used on real time situations, benefitting both parties. By looking at an amalgamation of skills within team members, they can ensure businesses have access to right talent they need to drive critical areas during the transformation period. With the incoming ambiguity within the market, the need for talent that can predict and chart the right course of action becomes an imperative, even of HR itself at times. As Susan Athey adds, “One economist to a team can bring a really valuable alternative perspective, and I’m not at all surprised that all the top tech firms are hiring them.”