Transfer Market or Academy?

When you’re identifying new talent in your line of work, what are you looking for? The marquee signing from a big-name team, a solid performer to keep things ticking over, or an unproven youngster with a bit of flair?

In the world of football (aka soccer), there are typically two approaches.

First there’s the transfer market. The transfer market is a tried and tested arena to operate in, where everything has a commercial value and a clear path has already been forged. The transfer market is somewhat de-risked, but it’ll cost you to play.

As well as the financial cost, there’s a gravitational pull towards the big players and they often have the resources and reputation to acquire the best. Even the most loyal hometown hero can find their lure irresistible.

Most of us can play in the transfer market to a degree, but to compete we either have to stay around our level of pulling power, or find other more innovative ways to gain an advantage.

Two of the more well known options have been to find the best scouts (a transfer market in itself) to hunt out unpolished and undervalued gems, or to gain deeper insight from data (the story told in Michael Lewis’ ‘Moneyball’ book springs to mind here).

Of course as these methods have become more popular, the smarter established players have invested their considerable resources to out-compete on these fronts too, and are additionally putting more into the further development of their top-tier talent.

There’s still a place for most of us in the transfer market, but it can be a brutal place to compete.

The alternative to the transfer market is the academy.

The academy doesn’t tend to invest huge amounts upfront but the ongoing cost of development and infrastructure adds up over time as the academy has a need to serve more talent, better. There are additional costs to consider — no guarantee of returns and a high risk from investing in the unproven.

However, when the academy finds the sweet spot of being able to identify, develop and propel their young talent the investment can pay off handsomely. Examples of this in football include Ajax of Amsterdam in Holland and Southampton in England.

Whilst both clubs are successful, the challenge they and others like them have is two-fold: ensuring they don’t lose all their homegrown talent; and staying competitive by investing the profits they do yield into the right transfer market acquisitions.

The big players are now competing with the Southamptons and Ajaxes by not only opening their own academies, but by going into partnership with smaller clubs and using them as both a pipeline for new players and a finishing school for their current crop who haven’t quite yet made the grade. This method is far from proven but Chelsea are starting to see results from their loan scheme with Vitesse Arnhem.

The transfer market & academy model and its various intricacies can now be seen in all sorts of places; from the music A&Rs at record labels and booking agencies, to the seed investors and VCs in tech, and the M&A and innovation teams in the corporate world.

As the transfer market becomes more challenging to compete in, we’ll see more academies spring up across industries; from construction to banking, and maritime to transportation.

In both models it comes down to the ability to identify, acquire and then develop.

Another way of putting this is to:

• See which skills are going to be important in the future
• Present a compelling story to persuade, convince and inspire
• Deliver engaging, collaborative and future-proof development programs

And in what the World Economic Forum refer to as the Fourth Industrial Revolution, wherever we choose to compete we’re going to need to identify, acquire and then retain great talent — just like the best football academies.