silicon valley 2015

SILICON VALLEY

SUCCESS A.ARPUTHA SELVARAJ APMP IIM CALCUTTA

What is Silicon Valley? 1,500 square miles

35 Cities, 4 counties

2.4 million people, 40 percent foreign born

1.2 million workers

81 percent high school diploma; 40 percent college degree

25 percent of workforce in high-skill occupations

Income average 60 percent higher than US

5 percent US GNP, 10 percent of US patents

Productivity rate 50% higher than US average

MOST IMPORTANT CHARACTERISTIC: Region Continually Re-Invents Itself

MILESTONE SILICON VALLEY INNOVATIONS

Vacuum tube (Varian)

Transistor and Integrated Circuit (Fairchild)

Microprocessor (Intel)

Microcomputer (Apple)

Graphical User Interface (Xerox PARC)

Relational Databases (IBM Almaden)

Internet Search (Google)

However, the Valley’s edge does not stem from innovation alone . . .

… but also from entrepreneurship

Silicon Valley has a remarkable capacity to create and grow new companies

New Companies New Technologies

(Entrepreneurship) (Innovation)

Endogenous Growth

New Wealth Creation

+

Valley spawns the leading companies in every technology generation

1950s Defense Electronics Hewlett-Packard, Varian

1960s/1970s

SemiconductorsNational Semiconductor, Fairchild. Intel, AMD

1980s Personal Computers, WorkstationsApple, Silicon Graphics, Sun

1990s Network Computing, packet switchingCisco Systems, Sun

InternetNetscape, Yahoo, eBay, Google,

2000s? New technologies, new companies, new business models

LARGEST SILICON VALLEY FIRMS

19821. Hewlett-Packard2. National Semiconductor3. Intel4. Memorex5. Varian6. Environtech*7. Ampex8. Raychem*9. Amdahl*10. Tymshare*

*no longer existed in 2002

20021. Hewlett-Packard2. Intel3. Cisco*4. Sun*5. Solectron 6. Oracle7. Agilent*8. Applied Materials9. Apple10. Seagate Technology

11. Also: Maxtor*, Palm*, Google*,Cadence*, Adobe*, Yahoo*

*didn’t exist in 1982

LARGEST DETROIT FIRMS

19821. Ford

2. General Motors

3. Chrysler

20021. Ford

2. General Motors

3. Daimler-Chrysler

Technology Regions Will Always be Driven by Waves of Innovation• New technologies drive dynamic waves New technologies drive dynamic waves

• Entrepreneurs take advantage of new opportunitiesEntrepreneurs take advantage of new opportunities

• Swarms of new firms cluster around new technologies creating Swarms of new firms cluster around new technologies creating short term bubblesshort term bubbles

• New products eventually become commodities and investment New products eventually become commodities and investment leads to breaking of bubbles. leads to breaking of bubbles.

• New technologies emerge New technologies emerge from the convergence of old from the convergence of old technologies and the process technologies and the process of “creative destruction” of “creative destruction” begins againbegins again

“SILICON VALLEY LOSING IT’S EDGE.” Cover Story, Business Week.

“DREAMS OF STRIKING IT RICH FADING IN SILICON VALLEY.” Front page, Los Angeles Times

“THIS IS THE END OF SILICON VALLEY AS WE KNOW IT.” Larry Ellison, CEO of Oracle.

“SILICON VALLEY LOSING IT’S EDGE.”

Cover Story, Business Week, 1985.

“DREAMS OF STRIKING IT RICH FADING IN SILICON VALLEY.”

Los Angeles Times, 1991.

“THIS IS THE END OF SILICON VALLEY AS WE KNOW IT.”

Larry Ellison, 2003.

So what’s the secret?A HABITAT for Innovation1. Results oriented meritocracy

2. Climate that rewards risk and tolerates failure

3. Strong markets (capital, labor)

4. Mobile, fluid workforce

5. Favorable government policies

6. Open business environment

7. Universities and national research institutions that collaborate with industry

8. Specialized infrastructure: venture funding, lawyers, accountancies, executive search

9. Quality of life

10. Cluster effect

So what’s happening right now in Silicon Valley?

RIGHT NOW?

It’s not the go-go 90s anymore Thank goodness! Region added 350,000 jobs. Sustainable? Since 2001, we have lost 220,000 jobs. Net gain of 130,000

Now, with retrospect, we understand the meaning Internet search was another wave (Google, Yahoo) Internet is a viable tool for commerce (eBay, Amazon) Consolidation, boom-bust cycle is taking its predicted

course

Rip Van Winkle Theory

If Rip Van Winkle fell asleep in 1998 …

… and woke up again in 2006 …

… He would actually be impressed!

Even through the downturn, most key indicators continued to rise

Value-Added per employee grows at twice the national rate

Region’s share of Venture Funding Continues to Grow

Average Pay Still Rising

Income Distribution Narrowing

High School Performance

Housing Density Increases

But disparities persist by race

Housing still out of reach for too many

But Rip Van Winkle would also be confused by something:

Valley productivity is not translating into burgeoning job growth.

In the future prodigious job growth in Silicon Valley is unlikely.

We can most likely expect steady, incremental growth.

The major opportunities will be in a few key clusters, and the industries that support those clusters.

Those jobs will be hard to get, and require significant training.

Why? What’s Happening?1. Intense competition. Rise of

competitor regions Companies doing more with less. They

have to. Bay area workers doing it with

productivity gains.

Why? What’s Happening?

2. Offshoring and outsourcing.Old story, except now higher-

end functions going off shore– Design– R&D

Why? What’s Happening?

3. Technologies we invented eliminated whole classes of jobsAdministrative classArchivists, others

Why? What’s Happening?

4. Many of the emerging clusters (web 2.0) aren’t big job generators to begin with.

Why? What’s Happening?

5. Nature of capitalism itself is changing

Vertical integration a thing of the pastCompanies down-sizingFocus on key competenciesGroaning under weight of overhead

Health care, benefitsReducing FTEs, using contractors

To survive and thrive, Silicon Valley has to be innovative, productive, and RESILIENT.

To survive and thrive, Silicon Valley workers must be innovative, productive, willing to re-invent themselves, and resilient

SILICON VALLEY WORKER OF THE FUTURE?

Will work in numerous places over course of career

Will have to re-train and re-tool

Will have to distinguish self with a unique competency

Will shoulder a heavier burden for coverage and benefits

Will need high-end skills: language, writing, communication, technical expertise

Jobs Leaving Silicon ValleyAREAS WHERE SILICON VALLEY IS NOT PRICE- COMPETITIVE

OCCUPATIONS LEAVING THE VALLEY

Mass Production High tech manufacturing and assembly (except high-end)

Back-office Operations

Office support (e.g., data entry clerks, etc.)

Business and financial support (e.g., processing staff)

IT support specialists

IT administrators

Legal assistants

Statistical analysts

Product And Process Enhancement

Entry-level computer and software engineers

Quality assurance and test engineers

Product and process engineers

Silicon Valley Job StrengthsBay Area Competitive Strengths

Sample Occupations Aligned with Regional Capabilities

New Business Creation and Entrepreneurship

Venture capitalists, lawyers and other occupations in the entrepreneurial infrastructure

Research In Advanced Technologies

and

Cross-disciplinary Research

IT, biotech and nanotech R&D professionals

Select computer and software engineers for research and advanced development (e.g., architects, systems level software engineers, software engineers with domain expertise)

Select engineering including electrical, mechanical and electronics

Concept And Market Development

Strategic managers in sales and marketing

Product marketing managers

Global Integrated Management

Managers of global teams and assets (headquarters, product development, IT, HR, etc.)

WAGE GROWTH IN KEY SECTORS, 2002-2005

So what’s next for Silicon Valley?

The Next Big Wave?1. We’re not finished with

information technology yetTelecommunications, hand-

held devices, entertainmentUbiquitous internet, WIFI,

WIMAXWeb 2.0

The Next Big Wave?

2. Alternative Energy, Clean Technology, Green

Buildings–VC activity starting a mini

boom

The Next Big Wave?

3. CONVERGENCE Nanotechnology,

Biotechnology, and Information Technology

Examples of Convergence

Our Organization Joint Venture: Silicon Valley Network

Business

Community-BasedOrganizations

Labor

Government

HigherEducation

The Joint Venture Program Tax and Fiscal Reform

Technology Convergence Consortium

Health Care Electronic Medical Records

Wireless Infrastructure Initiative

Transportation and Housing

Unified Building Code

Cell phone coverage

Disaster Preparedness

For more information …www.siliconvalleyonline.org

Thanks

Email me : arputhaselvaraj@gmail.com