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Will Silicon Valley remain the stronghold for innovation

My attempt to answer the question in Quora about Will Silicon Valley remain the stronghold for innovation. Basically I try to demolish the idea that other people will catchup naturally.



The other answers are all base on "The World Is Flat" point of view. The believe is populations, talents, capital, and economic opportunities are spread widely through out the world. United States is all but a small part of the globe. It's leading position is temporary. The rest of the world will eventually catch up. Such is the natural order.

This "The World Is Flat" assumption is intuitive and have some merit. But it is very unsatisfactory. For one thing it fails to explain much of what we observe in the world, that different geographic regions has clearly identified strength and weakness. Its prediction that everything will eventually even out is all but a conjecture. We find no validation of such in the human history. Instead I will pose some questions. I believe a lot more insight can be gain by pondering these questions than assuming things will naturally even out.

Is the world created equal?

The assumption of "the world is flat" view is that there is no inherent advantage of Silicon Valley. The same ecosystem can theoretically be established anywhere in the world. This believe strongly contradict with the reality. Silicon Valley standout by many metrics like the amount of venture capital invested, the number of tech companies and the number tech workers they have. There are a few runner-ups. Otherwise the level of innovation in Silicon dwarf the rest of the country. You can find similar hierarchy elsewhere. In China, there are a lot of innovation in centers like Beijing and Shenzhen, but not so much in hundreds of cities otherwise.

On the other end of the spectrum, there are many very populous countries have make negligible output in innovation, Nigeria, Indonesia, and Bangladesh to name a few.

The world is apparently not created equal (a factual, not normative statement).

How has the innovative industry developed?

The simple answer is to add the ingredient of capital, economic demand, talents, and academic institutes, mix them together and then we get a replicate of Silicon Valley. Many governments have tried to do this top down. They attempt to create their version of "Silicon XX". Most of these effort falls flat.

There are a lot of study in the history and development of a region innovative industry. Many points to the intense interaction of entrepreneurs, venture capitalists, and academics. There is a cultural aspect of creativity and risk taking. There are also a concept of path dependency that the present is influence by specific sequence of steps taken in the past. Therefore every place have their destiny shaped by their history. Just adding the ingredients is not enough. A lot of circumstance has made Silicon Valley the way it is. It is not a natural path that other regions can follow.

Will the rich get richer?

The World Is Flatter has failed to account for the gravitational pull of innovative industry. Silicon Valley is a better ground for innovation because you are doing it with other creative people. The culture of creativity, the concentration of talents, and the services available give Silicon Valley a distinct competitive advantage to other places. Time and again people predict new companies will choose to start the business in low cost area avoiding the pricey Silicon Valley. Time and again they are shown to be wrong. The truth is these new companies are getting a lot by locating in an innovation center so much that the extra cost is justified. Recalled that "the world is flat" cannot explain the observation that the world is not created equal. "The rich get richer" concept explains it much better.


So will Silicon Valley holds its advantage forever. This is an easy question. The answer is no. Thought out the history we have never seen any group held power for a prolonged period of time. Given a long enough horizon, say in two generations, everything is a fair game. It is very likely this future will be a world we will not foresee today, one that new players will emerge and old leadership will be shuffled.

I imagine some day the Valley may finally done in by the incessant waves of drought and fire, a more biblical ending than just falling behind to Chinese competitors.

2016.08.07 comments

 

 

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