Boards review currency risk and customer concentration. Almost none review the ten-year-old perception
driving their biggest fixed commitment.
Walk through a typical board risk register: currency exposure, hedged. Customer concentration, monitored. Cyber, audited annually. Key-person risk, succession-planned. Now find the line item for “our beliefs about where to locate operations.” It isn’t there. It never is.
Yet consider what those beliefs are about to underwrite. A location decision fixes your salary bands, your talent ceiling, your logistics costs, and your access to support- for roughly a decade, with brutal switching costs. It is very likely the largest fixed commitment your company will make outside an acquisition. And the assumptions driving it- where our industry goes, which cities have the talent, what things cost there- were typically formed years ago, absorbed from headlines, conferences, and where competitors went last cycle.
Assumptions age badly in exactly the areas that matter. Talent markets reprice in a few years. Clusters form,
thicken, and saturate. Governments change what they prioritise. The perception a leadership team holds of any location is, almost by definition, a picture of that location as it was when the perception formed- not as it is. Nobody updates their mental map of cities the way they update a forecast.
The fix isn’t exotic; it’s governance. Treat location assumptions like any other material exposure: state them
explicitly, date them, and test them against current data before they’re allowed to drive capital. “We believe X has the deepest talent pool for our activity- last verified: never” is an uncomfortable sentence to write. That discomfort is the point. Sometimes verification confirms the instinct, and you proceed with real confidence. Sometimes it doesn’t- and you’ve just avoided the most expensive kind of mistake: the confident one.
Verifying those assumptions is a three-to-six-week exercise for our Locations Assessment & Facilitation practice– data-backed shortlists, then facilitated government conversations in the locations that survive the test. Audit the assumption before it signs the lease.
Reach us at zoe@nueconomy.co.
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