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Silicon Valley is dead, long live Silicon Valley – which core ideas will remain after Peak Valley?

September 12th, 2018 At Copenhagen’s TechFestival 2018 (“where humans and technology meet”) Silicon Valley’s primacy as the leading global technology hub was deeply questioned. Geographically and culturally an isolated outpost made up of adventurers, capitalists and hippies, Silicon Valley has evolved into the single most important source of innovation impacting the life of billions ...

September 12th, 2018

At Copenhagen’s TechFestival 2018 (“where humans and technology meet”) Silicon Valley’s primacy as the leading global technology hub was deeply questioned. Geographically and culturally an isolated outpost made up of adventurers, capitalists and hippies, Silicon Valley has evolved into the single most important source of innovation impacting the life of billions. Technology invented and commercialized by a few has descended upon the majority of the world’s population while disregarding local economies, regulation, social fabric, political context, cultural nuances. But the very success of Silicon Valley’s (and in general the US west coast’s) tech giants will lead to its relative demise: ideas, insights and inspirations have spread globally, collaboration tools bridge time zones, concepts such as design thinking or co-working are commonplace anywhere. So which are the core ideas that will live on long after Silicon Valley has been dwarfed by its offspring everywhere on the planet? Here are 12 core ideas associated with the valley’s success in the game of innovation:

1. If you want innovation, go back to theory

Deep insights into customer preferences and applications of science and technology often require cutting through the haze of current standards, norms, regulations, practices – the whole current state-of-the-art. Profound theoretical advances drive innovation. Deeply understanding and effectively utilizing the results of scientific research – be it in particle physics, electro-chemistry or human psychology – is essential for entrepreneurial success.

2. Innovation requires a supercritical mass of nerds

Silicon Valley in its mostly used geographic definition encompasses an area of 20 by 50 miles. Roughly 1m scientists and engineers work there. That makes 1000 brainworkers per square mile – an unsurpassed density of “nerds” in one place. These people work for corporate tech companies, start-ups, service firms, universities, Government agencies, private accelerators, venture capitalists, research & technology providers, NGOs, Industry and Trade associations, component suppliers, system integrators, etc. Supply chains and value- added- networks for whole industries are found in the valley. Ideas, products and people float around. Every entrepreneurial need can be met literally within a bike ride distance. 

3. Meritocracy levels most social barriers

When status is based on merits alone, personal history, family pedigree and socio-economic class become less and less of an issue. University graduates with advanced degrees in artificial intelligence, electrochemistry and neuroscience fetch top posts at corporate tech giants based on their expected contributions. Successful entrepreneurs with 9 digit liquidity events are cherished like pop stars. On the side of the spectrum, personal failures are respectfully disregarded as factual happenings of everyday life. You are supposed to get up and don’t whine. People are changed when weighed by their current contribution only. They are changed by the opportunity to lean-in with little external barriers to do so.

4. Dataism promises a new economic order

We all agree that data is the new currency. Ever since Gordon Moore postulated his “law” of doubling data processing power every 18-24 month in 1966, software has eaten more and more into the value-added of one industry after the other. In the valley techies are religious about data. The religion is called dataism. Their leaders are called chief evangelists. The unswerving belief in solving wicked problems by just having enough data on them – that makes the difference. Et voilà, if you can solve all problems, you can fill all needs and serve all markets, globally.

5. Global Brain Influx and ‘Californication’

I have never met more Vietnamese boat people than in Silicon Valley. “Well-to-do” experts and refugee “have-nots”, they all flock in to build their career and find their professional opportunity. Silicon Valley is a transient society with people expected to move on to the next thing after an average of seven years. As a result, and as long as the economy is running, there are openings of all kind. The incoming movers and shakers are being ‘californicated’ already at their port of entry. Integration takes place at the accent reduction class in Stanford, at the DMV waiting line and at the workplace with ruthless efficiency. If you have highly-sought-after capabilities to offer, Silicon Valley’s ubiquitous equal opportunity programs at Universities, Government Agencies, Start-Ups and Corporates will suck you in. 

6. Sharing is the new way of working

Co-working originated in the necessity to share the open space in Silicon Valley’s garages. Then necessity became a virtue. Sharing workspace means sharing ideas, sharing cost, sharing tools, sharing workloads – sharing resources in general terms. Privacy is at home. In your professional life sharing equals multiplication of resources or even exponential benefits. Silicon Valley garages directly led to Maker Spaces and Hacker Spaces. Places like Hacker Dojo thrive on their member network and many creative industries have emulated these open workspace designs. World-renowned architecture firm Frank Gehry has built a one-room open office for his several hundred architects and then built a one-mile long office for all of Facebook. Of course, there is more to the new way of working than here to capture in a single paragraph: work-life-balance enhancement, digital collaboration tools, work experience design, digitally enabled tool sets and so forth. 

7. Demo-or-die

Design for impact is the motto. By example, Singularity University advertises its programs with a bold thinking hurdle: You should aim to have your product positively impact the lives of at least 1 billion people. If you cannot demonstrate that you are willing to touch the stars with your product, don’t even attempt the pitch. If you do, you are destined to a sure and sudden death. Eating is the proof of the pudding. 

8. Science & Technology Cluster

Science and technology meet customer needs through applications. Intertwining Universities and Research Centers with Government Agencies and Private Enterprises yields Silicon Valley’s meshed network of innovation. And that is no accident: Silicon Valley and the greater Bay Area are home to a carefully orchestrated cluster of labs and RTD centers. Just to name a few where regularly lunch and dinner talks for interested audiences are hosted: NASA Ames, LL National, Stanford d-school, SLAC, PARC, etc. Again, geographic concentration is essential. 

9. Deeply rooted Venture Spirit

Silicon Valley had been a wind-swept desolated outpost occupied by several shepherds up until 1848. The gold rush changed everything. Venturers heard the message “yes you can” and stormed in by ship in a 6-9 month journey and ox wagon in a 4 month journey. The venture spirit never left. Stanford University’s early President Frederik Terman pioneered the new doctrine “becoming an entrepreneur is more important than earning a degree” and helped to build a start-up community off-campus already in the 1930s. Hewlett-Packard was among the first successes of this new policy. Then came the adventurers from the east coast building tech spin offs in the west, then the computer freaks, then the venture capitalists, then start-up ecosystem builders disguised as accelerators and hacker spaces, and then, not to forget: the first generation of successful entrepreneurs did not retire to some tax shelter island in the Caribbean Sea, but stayed in the valley to provide their experience, network and capital to the next generation of venturers, now called serial entrepreneurs.

10. Sandhill Road

Of the world’s venture capital, roughly 2/3 is provided in the US and roughly 1/3 in offices clustered around what is essentially a 3 mile long stretch of asphalt: SandHill Road, Menlo Park, Silicon Valley. Asked why they succeeded, the Google founders remarked once laconically that in the early days they “never ran out of money”. The major VC firms have deep roots in the valley’s ecosystem; the best deals are first pitched to them and only then flow down the food chain. These VC firms have the power to oust start-up CEOs, merge start-ups, wipe out early investors, force products onto markets, create defendable IP portfolios from scratch, run campaigns to kill competitors and – most importantly – find early lead customers for promising start ups. But the core idea remains: never run out of money.

11. First innovate then regulate

As we know, innovation comprises invention and commercialization. Commercialization in turn is driven by economies of scale. Thus the strong push for scaling-up once the early adopters have bought the product concept. Early regulatory governance stifles innovation and the early scaling up. In order to avoid this automatism, corporations try to move innovation teams away from corporate processes, creating so called “skunk works”. On a bigger scale we’ve got Silicon Valley where innovations impacting whole industries, called disruption, can be rolled out. These are places were the sheer speed of innovation is faster than the governing regulatory processes. There is a sweet spot in the scaling up of innovation where you cross the valley of death and allow innovation to yield societal benefits on the one side and on the other side allowing societies to adapt to the changes. Think about couch surfing or ride hailing.

12. Open Innovation Platforms

When Stanford Professors Norvik and Thun ran their “Introduction to Artificial Intelligence” course as the very first MOOC (massive open online course) in 2012, instead of the usual 100-200 students, more than 150.000 people participated worldwide. And surprise: the top 200 performers were not Stanford students. TESLA opened its patent portfolio on battery technology to further promote battery applications and thus to enlarge the markets for electric vehicles and solar photovoltaic. Open source software has been a powerful concept for decades now and enabled a multitude of companies to build their proprietary solution layer upon layer on open sources. Open innovation is built on the powerful idea that creativity and ingenuity outside of your perimeter is always larger than inside.

These ideas will persevere

These 12 core ideas might be collectively comprehensive but they are not mutually exclusive – and that is the very point and the reason why Silicon Valley is so difficult to replicate. These 12 core ideas are overlapping in scope, are re-enforcing each other and will persevere. Yes, The Copenhagen Letter is right, tech is not above us and progress is more than innovation. Yes, we need to move to humanity-centered design of products and no we don’t want to be governed by a few wealthy tech stars on the west coast. But nevertheless, we might learn from these core ideas when building the future innovation hubs around the world after peak valley.

© Thomas J. Dittler 2018