4 main ingredients for innovation in Silicon Valley

Silicon Valley is home to the world’s biggest innovation and tech giants. A true melting pot of innovation and creativity, the nerve centre of new technologies. Silicon Valley too, is a source of inspiration for many business people around the world who dream of discovering the secrets of this success.

Silicon Valley can be defined as the global epicentre of innovation

Silicon Valley innovation
Innovation in Silicon Valley: what makes that part of California so fruitful and why so many successful startups were born over there?

5 years ago, I interviewed Guillaume Villon de Benveniste, a Franco American tech expert and friend, about what Silicon Valley really was about and why it is so fascinating to so many people and businesses. As I was doing some housekeeping on our site I came across that piece which I had never had a chance to translate.

I wonder if things have changed since then. And they probably have. I even wonder to an extent whether Silicon Valley isn’t more about money than it is about innovation. Yet, Guillaume’s depiction of the valley’s 4 ingredients for innovation still stands true in my opinion.

As I described in a previous post about the subject, there is not one single reason why Silicon Valley is different from what is seen elsewhere. It is often copied and rarely matched, even in the United States. This region is really a maelstrom of innovation and entrepreneurship.

Silicon Valley isn’t always what it says it is

At the same time, Silicon Valley isn’t always what it says it is. A lot of what is done there and sounds like the true spirit of start-ups is in fact standard big white-collar business for you. Similar to what we’ve known in the 1980s in the IT industry. To  an extent I even think that the 1980s IT industry was way cooler than all these high-strung start-ups which aren’t start-ups but humongous corporations after all.

Google today has as many employees as Unisys had in the 1980s. Unisys was number 2 in the IT world back in those days and look at what it is now. So things may change and they inevitably will and time will tell in what direction.

Yet, looking at how Silicon Valley is dealing with remote work sounds very much like traditional office building investment to me.

So, after all, is Silicon Valley so… innovative? It’s up for you to decide. Here’s Guillaume’s interview from 2016 with just a few minor changes, so that you can make an opinion for yourself.

In the nineteenth century, Paris was like Silicon Valley

Silicon Valley can be defined as the global epicentre of innovation. What’s interesting is that 120 years ago, Paris was the world’s Silicon Valley, the very place where this interview was recorded. At the time, people imagined that from the Avenue de l’Opéra, which was very broad, airplanes would be able to take off!

Let’s talk about entrepreneurs in Silicon Valley? What are the businesses that have inspired you?

There are many of them, but I was very much inspired by Apple, as this company has achieved an unparalleled performance in innovation over the last decade. I was also inspired by the way they innovate in Silicon Valley. Europe could learn many lessons from that. My aim is to explain what people do in Silicon Valley, and how they achieve innovation and where we, in Europe, are struggling a bit.

What is Silicon Valley’s secret sauce?

There are four main secrets for success in innovation in Silicon Valley.

Silicon Valley’s number one secret, which we Europeans should be focussing on, is that everyone in Silicon Valley is convinced that innovation is the major ingredient for competitiveness. Here in Europe it’s been nothing but cost cutting in the past 30 years, and jobs have flown to emerging countries, and it’s been nothing but mergers and acquisitions. In Silicon Valley, I see that there is faith in innovation, not just because innovation is fun, but because there is an underlying understanding of its business impact and contribution to competitiveness.

Silicon Valley’s second secret is to make innovation meaningful. There are different ways of doing this, and the pitfall that we have in Europe is, from my point of view, that we are able to make new things that nobody buys. We invent stuff but revenues aren’t there because we are lacking a marketing culture. In an innovation process, question number one is: “What will trigger a purchase?” This is something we are not quite used to asking in Europe. Silicon Valley companies are less obsessed with technology and more about  what makes customers buy.

The valley’s third secret is consumer and customer culture. Let’s take the case of music: Over the last 75 years, music has been sold in various ways: 5-inch and 12-inch 45 rpm EPs, LPs, cassette tapes, CDs, iPods and now streaming platforms. It’s worthy of note that leadership kept changing as music formats evolved throughout the years. Even though the leader has a competitive advantages and should be able to invest in innovation. Strangely enough, music businesses have never been able to do this. For example, Philips was the leader in cassette tape technology, and it co-invented the CD with Sony, but lost its leadership when the CD became the dominant product form in the music world. You can’t blame Philips for not having invented the CD: they did invent, or co-invent it, but they may not have known how to innovate continuously. In this case, after Sony designed the Walkman, all the innovation in musical hardware based on CD technology was performed by Sony, not by Philips.

Silicon Valley’s fourth secret is the idea that moving from one product form to another is crucial. The idea is to make life easier for consumers: listening to music becomes easier by moving from CD to the iPod. Buying music also becomes easier with streaming as you don’t need to go to a store, and this has incredible economic consequences. Like Tower Records going under with 200,000 jobs disappearing [in this case, Internet piracy did play a major role however]. Consumers choose a technology, a product form and even an entire economic structure to make their lives easier, not out of love for technology.

For an innovation to last, one needs to understand what it stands for, and that makes the difference between innovations and widgets. Widgets are flavour of the month, but in the long run, they are not part of our lives in a lasting way like true innovations.

Silicon Valley is also very atypical of the rest of the United States

It is indeed quite atypical: a number of studies have been carried out to try to understand what makes Silicon Valley so special. During the Cold War, the American army invested heavily in Silicon Valley, in companies like Intel.

There is also the fact that today, on a slightly different level, we find a different culture in Silicon Valley than in Los Angeles, for example. There is a tradition of collaboration among engineers, investors etc.

One day I was in a coffee shop in Silicon Valley in San Francisco, and while I was waiting for someone, I was listening to what people were talking about. And I think about three quarters of the people were talking about start-ups, investment, what one person had lost, what another person had gained, etc. I also go to cafés in Europe and Paris in particular, where they talk about very different subjects, mostly politics, and not so much about innovation.

There is a growing interest for innovation and start-ups in Europe and especially in France. For example, it has become more common to raise money, whereas only three years ago business people were whinging that there was not enough money dedicated to innovation in Europe. This is a change for the better.

Yann Gourvennec
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