Silicon Valley and the San Francisco Bay Area are famous for their long history of leadership in computing, semiconductors, software, biotechnology, internetworking, and innovation-based industries. But what makes it unique, beyond the laboratories, talent base, and access to capital? And what exactly is this oft-cited “culture of innovation”?
Sean Randolph and his team at the Bay Area Council Economic Institute (BACEI) set out to find the answers.The Bay Area’s ‘innovation system’ is an organic, integrated, and highly interactive network of research institutions, financial institutions, service providers, and entrepreneurs, who are each linked to one another by the Bay Area’s distinct cultural environment. That culture provides all of the key players, across many different disciplines and sectors, with the critical ‘connecting tissue’ that brings them together into a coherent system of interdependent and mutually supporting relationships – all of whom are working within the context of a highly competitive set of tech industries.
But what about innovation at the firm level? Are there qualities of thought and decision-making inside companies that can make them more or less innovative? The recent proliferation of the word “innovation” in corporate reports and executive titles begs the question of whether real innovation is actually occurring, and whether this activity is benefitting the bottom line. To help answer this question, the BACEI worked with Booz & Company, authors of the 2011 Global Innovation 1000 study to identify the strategic, cultural, and organizational attributes that have led to the sustained success of companies in the Bay Area. In developing the report, The Bay Area Innovation System, BACEI and Booz & Company compared survey results from Silicon Valley companies with those from the Booz & Company Global Survey, to determine if there are cultural and organizational elements that make them inherently different. Follow-up included conducting interviews with Bay Area executives to deepen that understanding.
The base survey for the Global Innovation 1000 identified three strategic types of company: Need Seekers, Market Readers, and Technology Drivers. What differentiates them is primarily their approach to markets and customers. Need Seekers tend to concentrate on gathering the deepest insights possible into both the articulated and unarticulated needs and desires of their customers. Market Readers look to meet the needs of their customers, but they typically follow already established market trends. Tech Drivers depend heavily on their own technical expertise to develop attractive products and services. Thus, Need Seekers tend to want to be first to market; Market Readers tend to be fast followers; Tech Drivers typically bring their technology-driven products to market with somewhat less regard for timing. While companies following any of the three strategies can outperform their peers, the study found that Need Seekers tend to be best aligned both culturally and strategically, and therefore more successful.
By this critical measure, it turns out that companies in the Bay Area do indeed stand out. BACEI research found that they are almost twice as likely to follow a Need Seeker innovation model, compared to the general population of companies in the global survey—46% versus 28%—while the proportion of Tech Drivers is almost exactly the same as the overall population. And they are almost three times as likely to say their innovation strategies are tightly aligned with their overall corporate business strategies— 54%, compared with just 14% for all companies. When asked if their corporate cultures supported these strategies, 46% of Bay Area companies strongly agreed, compared to just 19% of all companies, more than double the general population.
To learn about the several important discoveries unearthed by the new study, return to this blog tomorrow……