In the early 80s, there were two primary computer technology corridors in the U.S. The first was the Route 128 beltway around Boston (once known as America’s Technology Highway). The second was a little known spot called Silicon Valley. The two regions were equally pitted for success — from military spending and university-based research to workforce talent and tax rates. So why did Facebook, Dropbox and WePay all bail on Boston and set up shop in Silicon Valley?
According to AnnaLee Saxenian, dean of the UC Berkeley School of Information, it was the more open and laid-back approach of California’s entrepreneurs that tipped the scales in Silicon Valley’s favor. Back in the 80s, Boston’s buttoned-down, insular business culture fostered company cultures that valued discretion and trade secrets, a linear top-down flow of information, in-house rather than outsourced production and long-term corporate loyalty from employees. California’s laid back culture lent itself to more open-sourced development, a more free-flowing labor market and a more collaborative style of competition — all of which contributed to the flow of new ideas and the pace of technological development.
In Silicon Valley, new ideas were more easily shared within and even between companies. Enthusiastic professionals were able to easily find and take promotions at outside companies within the valley rather than waiting for in-house promotion opportunities to open up. Instead of developing everything in-house, Silicon Valley startups became famous for focusing on a niche core competency and outsourcing to other niche startups as suppliers and service producers. The use of outside rather than in-house services made these new idea-driven startups leaner, more agile and better able to pivot in response to market changes and technological advances. This led to leaner, more agile, more innovative service producers. The free flow of new ideas throughout the region created a culture of innovation and contagious excitement that became magnetically attractive to entrepreneurs and investors around the country.
Facebook founder, Mark Zuckerburg, says it was the energy of Silicon Valley that lured his startup social network from Boston to California. “In Silicon Valley, you get this feeling that you have to be out here,” Zuckerburg explained in a talk he gave at Stanford. The energy of Silicon Valley and the competitive advantage of being located in a region known for its networked business approach has had a direct effect on local rents. In Silicon Valley, rent prices have gone up $390 a month since 2012.
The “need to be out here” feeling has begun to shift, and not just because of the skyrocketing cost of living and doing business in Silicon Valley. You don’t have to be located in Silicon Valley to cultivate a culture conducive to innovation.
3M, headquartered in St. Paul, Minn., cultivates a culture that sparks innovation, by encouraging employees to invest 15 percent of their time on speculative projects and new ideas. This “bootlegging hour” has only one requirement: Ideas must be shared with colleagues. Why? Because the flow of ideas within the organization sparks new ideas, kickstarts creative problem solving, fosters collaboration and creates synergy between related projects and ideas.
In his book The Little Black Book of Innovation, Scott Anthony defines innovation as “something different that has an impact.” While sharing ideas does make an idea more vulnerable to theft, sharing ideas also prevents blind spots. Much like the blind spots in a car, an innovator’s blind spots are the pieces of the puzzle that creators fail to notice. Blind spots can prevent the best bets, the most radical technologies and the most relevant ideas from achieving an impact.
Phillips was the first television manufacture to launch an HD TV back in the mid 1980s. The technology was brilliant, the idea was genius and their stealth meant none of their competitors were ready to launch televisions that could beat their definition. The problem? A massive blind spot: Until HD-compatible devices were more widely available to Phillips customers and until the quality of cable TV improved, HD technology just wasn’t worth the expense. It took 20 years for the industry to catch up to Phillip’s HD technology, and Phillips took a $2.5 billion dollar loss. A few conversations beyond the think tank may have informed the planning and buffered the losses.
The moral of the story: A tight-lipped, closed-door approach to new ideas and the ideation process can stifle the momentum and an idea’s potential for impact, but you don’t have to pay Silicon Valley rents to cultivate a culture of innovation. Encourage and embrace new ideas, cultivate a culture of idea sharing rather than secrecy and embrace the two-direction flow of information within your organization.