Is the Silicon Valley a state of mind?

Stéphane Bernard & Olivier Pujol Perspectives Leave a Comment

Success is the encounter between an opportunity and a person willing to grasp it.

The constant buzzing of the Silicon Valley and the emergence of global champions in recent years fascinates. Managers in search of innovation even go on tour to explore the Silicon Valley and “become innovative”…

Their approach seems only logical. The grail of innovation is obviously something to be sought with new operators (technological, societal and infrastructural) to achieve a major competitive advantage. Silicon Valley has produced many of these so-called “rupture” innovations described by Schumpeter and Christiansen.

But if the Silicon Valley is certainly a source of inspiration and education, it may also be a decoy.
The historical statement of disruptive innovation is staggering, as is the list of innovations outputs of the Silicon Valley. But in reality, considering the time scale and number of innovations by sector, the conclusion is that disruptive innovations are rare.

In a very promising sector such as electronics, Sony produces no more than a champion every 10 years… And if we except Internet and telecom, other sectors are even quieter. Sony gives a striking example of how disruptive innovation works: most innovations Sony released existed in laboratories for many years before they were put on the market. The Art of Sony is not into finding breakthrough innovations: it is to maintain an internal pool of projects and to detect the right moment to launch it on the market with an unstoppable strategy and means. The first “e-book” of Sony goes back to 1985. In 2000, several giants of innovation such as Sony, Hitachi and Samsung had devices in their laboratories worthy of the iPad tablet. They were merely waiting for the right time: the decision of Steve Jobs…

A food chain process

If the Silicon Valley appears to be a mine of entrepreneurial success, the statistical reality is that these successes emerge from a tank of failures. Silicon Valley has historically concentrated a disseminated worldwide potential, but the mechanics of innovation there is the same as everywhere else. The washouts are just as phenomenal as the ROI from winners.

Also, disruptive innovations are often the result of a happy coincidence, the result of serendipity or fortuity (the example of Henri Becquerel and radioactivity is not unique). They require a rare combination of talents, opportunities, expertise and luck. They appear most often in the informal world of startups where the ambitious (and sometimes impossible) projects abound. Then they undergo a ruthless darwinian selection process during the search for investment phase. Silicon Valley is actually a paradox: it has attracted entrepreneurs because it had attracted venture capitalists. Competition among these investors has certainly helped finance an abundance of exceptional projects, but also to fund pure aberrations which would have had no luck anywhere else.

Detecting disruptive innovations is a matter of venture capitalism, not management!

It’s a state of mind

Startups are not a 21st century phenomenon. There were periods of incredible creativity driven by organizations that worked on the same lines as our current startup ecosystem. The most successful startups have gone through several phases where, despite their funding, they flirted with disaster. What makes some companies more successful than others is not their ability to take less risk. It is their ability to respond quickly and effectively: agility.

Another strong factor of success is, paradoxically, the lack of resources. Most of startups are the most creative at the beginning, when they have little money but compensate with creativity and innovation.

But when success happens, the company grows, and usually starts to develop a more classical structure of management. With rules, comes operational efficiency, but also a loss of the original agility. Theorists of organizations explains that the maximum size for an innovative structure is 200 people. From our observations, the threshold is even lower: hierarchies are already needed past few dozen employees.

Therefore, the main lesson from the Silicon Valley culture is that winners are usually the most agile ones.

But this model cannot be reproduced in a company as a recipe. Those who have tried did not achieve anything (except perhaps the high-tech campus of Philips in Eindhoven). Disruptive innovations are like diamonds among a pile of rubble: rare, difficult to detect, slow to develop.

What Silicon Valley really teaches us about innovation is:

  • Create opportunities again and again…
  • Create a state of mind conducive to the detection of all useable innovations, even the most innocuous…
  • Acquire the necessary agility to turn the most promising projects into a global success.

To discover more insights from these authors, you can read Le plaisir d’innover, Kawa editions.

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Olivier PUJOL : After a international career in industrial sectors in France, Olivier assists start-ups and large groups at all stages of development of their innovation. Stéphane BERNARD : He creates Egide Consulting in 1991. He helps many organizations to transform and optimize their structures in a variety of contexts, ranging from large groups to SMEs and SMIs and the public sector.

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