silicon valley 2015
TRANSCRIPT
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
