Forbes: Why Your Company Should Kill Noncompetes

February 28, 2021

The advent of digital technologies that enable remote collaboration combined with increased job specialization has led to a highly liquid workforce.

The article was originally posted on Forbes.

Increasingly, businesses can capitalize on individual expertise for narrow needs, ad-hoc projects and consultations. On the flip side, businesses are more open than ever to specialized talent contributing to multiple companies at once. Knowledge transfer between companies, employees and even countries is more fluid than it’s ever been before.

In many ways, the astounding innovation that’s come from Silicon Valley over the past decade is a product of just this type of knowledge liquidity. As a recent New Yorker article put it, “Silicon Valley was built on job-hopping.” Indeed, the culture and laws (noncompete clauses are illegal in California) in Silicon Valley have always been friendly toward labor switching. The proximity of startups and tech giants to each other is no accident; tech startups set up shop near each other precisely because talent naturally moves between companies, and resulting knowledge spillover spurs competition and innovation.

Today, it’s not just Silicon Valley that’s capitalizing on niche talent from remote companies or geographic locations. The fragmentation of the workforce and specialization of talent have come together to create a new market of highly dispersed, highly valuable knowledge.

Silicon Valley Spillover: Why Companies Should Embrace The Era Of The Side Gig

One in three workers in the U.S. worked as freelancers in the last year, according to a recent study. Twenty years ago, noncompete clauses were the norm, and most forms of consulting or side gigs were forbidden by employers. Today, switching between competitors, freelancing and working in more than one position are the norm. In fact, Google even acquired several side projects that its employees founded.

Accenture has likened this fragmented workforce to a “human cloud,” of “digitally connected, often crowdsourced network of skilled expert contractors and collaborators.” Like digital cloud infrastructure, today’s workforce allows companies to rapidly access shared knowledge from geographically distributed sources. To fully take advantage of this workforce, though, business leaders will need to reimagine how they access knowledge.

Noncompete clauses, particularly those that last years after an employee has terminated their relationship with a company, hurt the industry as a whole, not to mention the individual. The intent of a noncompete — to ensure trade secrets and proprietary information are not leaked — can easily be accomplished through a nondisclosure agreement (NDA). This enables talent to spur innovation at whichever company they choose. Companies need to take advantage of the wealth of talent available while also recognizing that their own employees will likewise want to take advantage of their value to other companies.

Already, top talent sees the lack of a noncompete clause as a competitive advantage. Companies that don’t offer this benefit will find that candidates turn away in favor of companies that embrace the culture of the side gig.

Spur Innovation Through Knowledge Transfer

Traditionally, both executives and employees have had to learn best practices through published wisdom, mentors, or MBA or other graduate programs. If an employee didn’t have access to an expert in, for instance, structural SEO and there was nobody in the company who could teach them, they had to learn through trial and error, testing out different approaches published online.

Now, though, business leaders can access knowledge in esoteric topics by connecting with talent around the world, often through a company like mine or various others. They can learn structural SEO best practices through an hourlong consultation with a former Google Search Engine executive who knows the algorithm backward and forward. Knowledge transfer is accessible for every topic on the planet.

Innovative leaders will take advantage of this access and kill noncompetes to expedite innovative practices and be on the cusp of the latest best practices in every area of business.

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