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Should Smaller Indiana strive to be like Silicon Valley?
Nwodkedi Idika only arrived at Smaller Indiana Yesterday, but he immediately caught my attention when he said, "I'm hoping to meet others who want to see the Midwest become more like Silicon Valley."
What do you think of this goal? Should we strive to be like Silicon Valley?
Before you answer this questions, you might want to consider: how did Silicon Valley become the hotbed of technology that it is today? What makes it tick? And how has it sustained itself over time even as other regional technology clusters have tried to emulate its success?
If you need a bit more background / perspective on this topic, here's a good article describing the differences between Silicon Valley and other U.S. technology hotbeds. Excerpt from article: As world markets strive to be the "Silicon Valley of (fill in the blank), the differences even among U.S. geographies has me thinking what makes Silicon Valley so different from other geographies that have the same raw ingredients you'll find in the 57-mile stretch from San Jose to San Francisco.
There is a marked difference between the Valley and Valley wannabes. This difference is the intangible "it" that is as difficult to describe as it is to replicate. The spirit and culture of entrepreneurship thrive in Silicon Valley. It is a culture that eschews stability and certainty. When a business fails, its people scatter to new ventures that are the basis of new possibility and economic growth. (Read whole article here).
If you have an academic interest in this topic, check out a book called "Clusters, Networks and Innovation," by Stefano Breschi and Franco Malerba (Oxford University Press). One interesting side note from that book examines another technology region in Hsinchu-Tapei, Taiwan:
"...the authors argue that a key ingredient to their success has been the contributions given by a community of US-educated engineers who have built social and economic linkages between Silicon Valley and Hsinchu economies. This technical community formed during the 1970's and 80's as US educated Taiwanese engineers started to organize collectively and form professional networks and organizations. The reversal of this "brain drain", spurred by the acccelerated growth of the economy in the 80's, thus brought back to Taiwan an increasing number of returnees with strong professional and personal ties to Silicon Valley. Moreover, a growing population of new "argonauts", constantly travelling between companies with activities in both regions, also contributed to establish and co-ordinate a sustained flow of technical knowledge, skills, contacts, capital, and information about new opportunities and new markets. The development of this transnational technical community has also transformed the relationship between the Silicon Valley and Hsinchu economies from one-way to more decentralized two-way flows of technology, skills, and capital, but highly complementary capabilities."
This section goes on to say that multi-national corporations may no longer be the best way for ideas and innovation to spread globally. Innovation spreads as much through social and professional networks of people working on a local level.
There's no arguing with Silicon Valley's success, but it's harder to pin down the reasons why the region has been able to sustain its competitive advantage in the entrepreneurial, high tech arena. Is it the geography which clusters innovative companies closely together? Is it the social networks that connect workers across company lines? Is it the presence of venture capital? Is the the overall risk-taking mindset that seems to pervade the region? Is it the constant influx of bright minds who migrate there who help sustain the environment of innovation?
Should we immitate the "valley"? Can we immitate the "valley"?
Are we better served to immitate Silicon Valley? Or might we be better served to cooperate with the region as the Taiwanese engineers have done? What if we organized our own team of "argonauts" to live on the Silicon Valley "planet" for a time, and bring back to Indiana the knowledge and networks necessary to participate in the Silicon Valley ecosystem?
Or maybe that's already happening??
What do you think of this goal? Should we strive to be like Silicon Valley?
Before you answer this questions, you might want to consider: how did Silicon Valley become the hotbed of technology that it is today? What makes it tick? And how has it sustained itself over time even as other regional technology clusters have tried to emulate its success?
If you need a bit more background / perspective on this topic, here's a good article describing the differences between Silicon Valley and other U.S. technology hotbeds. Excerpt from article: As world markets strive to be the "Silicon Valley of (fill in the blank), the differences even among U.S. geographies has me thinking what makes Silicon Valley so different from other geographies that have the same raw ingredients you'll find in the 57-mile stretch from San Jose to San Francisco.
There is a marked difference between the Valley and Valley wannabes. This difference is the intangible "it" that is as difficult to describe as it is to replicate. The spirit and culture of entrepreneurship thrive in Silicon Valley. It is a culture that eschews stability and certainty. When a business fails, its people scatter to new ventures that are the basis of new possibility and economic growth. (Read whole article here).
If you have an academic interest in this topic, check out a book called "Clusters, Networks and Innovation," by Stefano Breschi and Franco Malerba (Oxford University Press). One interesting side note from that book examines another technology region in Hsinchu-Tapei, Taiwan:
"...the authors argue that a key ingredient to their success has been the contributions given by a community of US-educated engineers who have built social and economic linkages between Silicon Valley and Hsinchu economies. This technical community formed during the 1970's and 80's as US educated Taiwanese engineers started to organize collectively and form professional networks and organizations. The reversal of this "brain drain", spurred by the acccelerated growth of the economy in the 80's, thus brought back to Taiwan an increasing number of returnees with strong professional and personal ties to Silicon Valley. Moreover, a growing population of new "argonauts", constantly travelling between companies with activities in both regions, also contributed to establish and co-ordinate a sustained flow of technical knowledge, skills, contacts, capital, and information about new opportunities and new markets. The development of this transnational technical community has also transformed the relationship between the Silicon Valley and Hsinchu economies from one-way to more decentralized two-way flows of technology, skills, and capital, but highly complementary capabilities."
This section goes on to say that multi-national corporations may no longer be the best way for ideas and innovation to spread globally. Innovation spreads as much through social and professional networks of people working on a local level.
There's no arguing with Silicon Valley's success, but it's harder to pin down the reasons why the region has been able to sustain its competitive advantage in the entrepreneurial, high tech arena. Is it the geography which clusters innovative companies closely together? Is it the social networks that connect workers across company lines? Is it the presence of venture capital? Is the the overall risk-taking mindset that seems to pervade the region? Is it the constant influx of bright minds who migrate there who help sustain the environment of innovation?
Should we immitate the "valley"? Can we immitate the "valley"?
Are we better served to immitate Silicon Valley? Or might we be better served to cooperate with the region as the Taiwanese engineers have done? What if we organized our own team of "argonauts" to live on the Silicon Valley "planet" for a time, and bring back to Indiana the knowledge and networks necessary to participate in the Silicon Valley ecosystem?
Or maybe that's already happening??
Tags: entrepreneur, entrepreneurial, i.t., indiana, silicon, smaller, technology, valley
Replies to This Discussion
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Permalink Reply by Chris Lucas on -
I don't think anyone is saying that a state school starting a course in entrepreneurship is going to solve the problems/obstacles. But a combination of school and government initiatives combined with actual people creating successful business can help turn around the economy and create a viable tech community. As I said in my first post, recreating a SV here isn't prudent we should create something that is built upon our strengths, whatever we figure out to hang our hats on.
The weather is a cop out in my opinion, are you saying, Boston, NY, Reston, VA (another hotbed of tech) have far superior weather for businesses?
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Permalink Reply by Nwokedi C. Idika on -
So I'm from the D.C. Metropolitan area, and I know that Northern Va. has been considered the "East Coast Silicon Valley." The name of the game there is to have a Top Secret Security Clearance. Somebody with a Master's, a TS Clearance, and no experience can easily clear well over $100K/year working as an employee with a small company out there. The name of the game there is subcontracting work that is somehow connected to the government due to it's proximity to the nation's capital. So that region has its own identity.
Why can't Indiana be the "Midwest Silicon Valley" with its own identity?
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Permalink Reply by Jack Pincus on -
Ceating a high tech hub requires a critical mass of high tech researchers workng on leading edge projects. The D.C. metro area has many federal labs that constitute a critical mass. During the 1970s it was possible for reaseachers who wanted to start a company to leave a federal lab and take a sole source contract with them. Most of these companies grew by securing addtional government contracts. The Federal government was acting as a de facto venture capitalist. A biotecvhnology hub was also seeded in the D.C. area in the same way.
Indiana has two major research universities that have quality researchers but we don't have the number of reasearchers needed to fom a critical mass. Indiana University is pursuing additional state fudning to create a cricial mass of life science researchers. We hve to see whehter the legislature will consider this a priority.
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Permalink Reply by Nwokedi C. Idika on
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(Okay, I can't help myself) Are there any VCs/Angels on Smaller Indiana?? If not, we should invite them to join. According to this URL there are 6 VC firms in the entire state of Indiana (http://www.gaebler.com/Indiana-venture-capital-firms.htm).
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Permalink Reply by Jack Pincus on
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I think we can rephrase the question to "Can any region other become a Silicion Valley"? Evidence shows the answer is no. I lived in Silicion Valley for six years in the mid 1970s. The history of the region has been documented in several popular and scholarly books. The Valley's origins date to 1909. It's a different place with fundamentally different characteristics than any other place. It wasn't planned. Contemporary Silcion Valley evloved over more than sixty years and at least five waves of technology. It is an econsystem that keeps renewing itself. What we see today resulted from the right blend of people, institutions, and events. The Valley was fostered by a critical mass of expertise in and knowledge about electronics that is unparallelled elsewhere. It isn't possible to duplicate all of the elements that constitue Silicon Valley to create an electronics or any other high tech hub in other regions.
Many communities assume there ist a high tech recipe and one size fits all. This Every community must understand its strengths and weaknesses and develop a plan that fits with its resources and culture.
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Permalink Reply by Kevin Makice on -
There is also a negative side to that SV success story.
Raj Jayadev, founder of De*Bug magazine in 2000, came to talk and meet with Informatics students in 2006. He's a pretty amazing guy chronicling the hidden dark side of the economic explosion: working people who were employed as low-wage temporary workers. Smart business sense led to companies firing employed workers and rehiring them as temps from Manpower, saving a lot in both salary and benefits.
Most of these workers were Indian or other Asians who came to the Valley with the promise of riches, a modern day gold rush. They would willingly start in factory line jobs with the expectation that they, too, would work their way up to a Mercedes lifestyle ... only to find that the first economic slumps meant their jobs were expendable. De*Bug started distribution through the food trucks that would come to factories during lunch breaks. It contained mainly stories of these temp workers, giving them a voice that the media and management ignored. An interview with Raj appears in GlobalLocalPopEd and is worth a quick read.
If economic development is viewed as a game where there are winners, then there will also be losers, a group that will outnumber the winners. Perhaps as we are looking at ways to understand and strengthen our communities, we need to look for holistic frameworks that consider the groups not participating in this conversation.
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Permalink Reply by Jack Pincus on
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The problem you describe goes back to the 1960s. High tech industry create high paying jobs for people with post-secondary eductions. They leave the working class behind. Creating a high tech hub doesn't really foster classical economic develpoment.
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Permalink Reply by Kevin Makice on
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As with valuing environment, if economic holism is part of the discussion, it becomes part of the outcome.
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Permalink Reply by Jack Pincus on
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The same problems with creating a Silicon Valley in Indiana exist for creating a biotech or life scineces industry here. Atthough we have established life sciences assets and good university researchers, we don't have the critical mass of life sciences research needed to create a burgeoning cluster. The Brookings Institute published a report several years ago ranking metropolitan areas for biotechology. Indianapolis did not fare well in the rankings and did not measure up to those states with biotechnology clusters in the important parameters . It is noteworthy that Silicon Valley and Boston that have high tech clusters also have strong biotechnology clusters.
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Permalink Reply by Scott Hutcheson on -
We need to focus on "innovation" rather than "high tech" or a specific economic sector. Successful businesses are almost always "high innovation." They tend to be extremely innovative—developing new products and processes every year—which sets them on a powerful growth trajectory. This innovation is not only important for business success, but it helps create a culture of innovation that sets up a cycle of economic health and prosperity.
Only 5-15% of businesses are innovators in most economic regions. However, when more than 50% of the businesses in a region become innovators the economy becomes increasingly prosperous and resilient. And, in such an economy, the top performers among the regional businesses—in all sectors—will often move into the traded or export economy.
Prosperity does not come simply from “high tech” businesses, but occurs when there are breakthrough businesses in many sectors. For example:
Restaurants move into the traded economy by manufacturing some of their food offerings.
A dry cleaning business may innovate by developing a new green process for cleaning and have the potential to develop a national franchise.
A beauty parlor may have developed hair care training programs for employees that could be offered nationally.
In rural communities or urban neighborhoods, even those with few biotech or information technology firms, economic developers can still build a regional innovation economy by helping existing local businesses become master innovators.
When a couple of University of Seattle professors started a shop that sold Italian cappuccino machines, nobody would have thought of that as "high tech." Howard Shultz came along as a partner and told them they should actually start making coffee to sell in the shop - again not real high tech. Of course we now know that company as Starbucks. They had $7.8 billion in sales in 2006 and they've created over 145,000 jobs. If that can happen in Seattle it can happen anywhere.
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Permalink Reply by Jack Pincus on
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I agree that we need to focus on innovation. However, we have also entered an age of the flat world. Regional and national barriers to competition have fallen. We are competing with other regions with different characteristics that maygive them a strong advantage over us. Innovation alone may not be enough. Do we have all of the resources to innovate in a way that we can compete to get us where the puck is going?
A characteristic of Silicon Valley that is independent of technology is it is an ecosystem for growing businesses. It not only fosters new companies as others have noted, but it also adapts to change. I agree that part of the reason is innovation but the support strucutre and dense professional networks are equally critical. The Valley has undergone multiple changes to create businesses from ship to shore transmission, to vacuum tubes, integrated circutis and cpus, minicomputers, microcomputers, and the various version of the web. In each case, the Valley adapted as markets changed. How do we create a similar ecosystem in Indiana for whatever businesses make sense here?
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1. Please use your real name (first and last) when you sign up, or we cannot open your account
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4. You can post pretty much anything you want on your own personal page (self promotion, etc), and you can change the style of your personal profile page to reflect your corporate identification if you so choose.
5. Please keep all comments civil and polite. It's OK to feel strongly about a subject, and it's OK to be critical of ideas, but please refrain from personal attacks of any kind.
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6. Smaller Indiana is supported by its members, and by corporate sponsors. If you're interested in learning more about sponsorship, please call Pat Coyle at 317 332 7878.
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