06/21/2011 08:49 pm ET Updated Aug 21, 2011

Urban Living

The world is becoming more urban as more and more people are living in cities. In fact, the population of New York City -- 8.4 million -- is roughly the same number of Chinese who move each year from the countryside to a city. Researchers identified May 23, 2007, as the first time in history that city dwellers outnumbered the world's rural population. Because cities are growing, companies locate in urban areas as an efficient way to reach talent and customers. Jobs and opportunities will increase faster in urban areas as cities propel innovation and subsequently, growth. Cities provide an increased ability for networking, solving diverse customer needs through innovation, and streamlining distribution.

Social Networking

The Lovin' Spoonful song released in 1966, called Summer in the City, indicates the phenomena of social networking is not a new attribute of urban dwellers. The song's lyrics suggest why people migrate to a city: the hassles are greatly offset by the people you meet, the culture, the connectedness with like-minded men and women (and "babes").

Music captures the zeitgeist of the city dweller. Whether working in the city or traveling out of town, the city dweller is more likely to have a global network. For instance, an international conductor or musician would prefer to perform in large venues and will go to where the people and money are. Given time constraints, most people would prefer to connect across the globe through technology or through travel to be exposed to new ideas. This leads to business opportunities.

Innovation in the Cities

Much has been written about the new knowledge centers where creative people want to gather. For instance, Silicon Valley and Bangalore represent nexuses for innovation, respectively, in technology and venture capital, and through their technology research centers. Shanghai announced in 2002 its six businesses for future growth: electronics and information technology, cars, power and large-scale electromechanical equipment, petrochemicals, high-grade steel, and biopharmaceutical products. Not all cities can have capital-intensive industries as well as financial services and shipping industries, but Shanghai is an extraordinarily large city -- with 23 million people according to China's 2010 census. When I was in Shanghai in 2010, the number of buildings over 20 floors astounded me as compared to my first visit in 1994 when there were about 40 such buildings, mainly along the Bund. Now there are more than 4,000 skyscrapers in the city, many are architectural jewels with innovative designs. In other words, between my visits, the people of Shanghai increased enough to justify building 5 skyscrapers a week for 16 years.

As we have learned in the U.S., a healthy building sector creates jobs as well as ancillary businesses ranging from food to cable to furniture suppliers. People then demand services, as well as entertainment and luxury goods. Luxury goods companies need urban living with demand for their goods to achieve the return on investment of inventory and facilities. LVMH, owner of the Louis Vuitton and other luxury brands, grew revenues by 19% to $27.1 billion in 2010. Asian cities (excluding Japan) made up 25 percent of those sales. Tracking luxury goods companies is a good way to forecast where growth will be.

Streamlined Distribution

It's much more efficient to deliver to densely populated areas. Distribution and logistics costs are often a large cost for many producers and service providers. Distribution efficiencies will improve the economics of doing business in urban environments. Furthermore, there is not just one single market. Neighborhoods may have wealthy, urban poor or a mix of demographics. Thus, understanding the market place is still critical to match demand and supply. Led by C.K. Prahalad and other marketing strategy professors, companies have learned that opportunities at the "bottom of the pyramid" abound -- if you know how to distribute and price appropriately. P&G in India continues to thrive by selling smaller packages and at lower price points to the urban poor.

Urban living offers many benefits for individuals. For managers and company leaders, urban living can also offer opportunity to expand.