Innovation - Location, Location, Location - or Rotation?

An article in the New York Times yesterday essentially arguing that that "geography trumps personality" when it comes to technological development, Silicon Valley etc etc. Jared Diamond meets Michael Porter....to quote:

Google’s astonishing rise and Apple’s reinvention are reminders that, when it comes to great ideas, location is crucial. “Face-to-face is still very important for exchange of ideas, and nowhere is this exchange more valuable than in Silicon Valley,” says Paul M. Romer, a professor in the Graduate School of Business at Stanford who is known for studying the economics of ideas.

In short, “geography matters,” Professor Romer said. Give birth to an information-technology idea in Silicon Valley and the chances of success seem vastly higher than when it is done in another ZIP code.

So, for Innovation, is Geography Destiny? Is it time for all us non-SV players to roll over dead?...Au contraire, I think the latest tech incarnation - the broadband 'Net - is a bigger threat to SV than any before, because it takes away some of the geographic advantages the SV crowd have.

Is this article in fact a setpiece for a bit of pride goeth before the fall hubris?. There are some good comments on the subject over at GigaOm on the subject, a fairly contrarian view by Ross Mayfield here

The issue - in my opinion - is not innovation - in my experience techies around the world think of the same things at roughly the same time - sure, SV has 2 great universities but there are other places with that. In the past it, has been the ability in SV (and the US overall) to get a well funded company into a large market faster than anyone else that has really made the difference.

The US had a number of advantages in technology development, mainly:

- a large homogenous market to roll the products out into, making many business cases fly
- US technical talent was often spinning out of existing market leading companies so had a better "story"
- better access to Ad-venture capital (as opposed to the EU's venture capital which tends to lend to things at a later stage)
- better access to buzz (the Tech Print Media are very US - and especially SV - centric)

I would also argue that some company and financial rules (eg capitalising R&D), an occasionally interesting interpretation of the word "Free" in "Free Trade", and sheer cultural dominance all played a part in the past, but I think the broadband 'Net is starting to impact these advantages now as penetration rises elsewhere - connectivity means customers, publicity and talent somewhere else have a more equal shot because:

- The homogenous market is now the global customer base for a particular service
- The US story is still good, but there is just so much more talent out there not sipping lattes in SV
- Everyone has access to buzz now - TIOTI, Joost and Babelgum for example are all non US WebTV plays picked up in TechCrunch

Ad-venture (ie Risk) Capital access is imho still the one main area where SV still has a major advantage, but there is so much liquidity around today that even this will (must?) be eroded. There are a lot of smart people not in SV, at some point that must count. And even "dumb money" in Quantity has a Quality all of its own.....mind you, its not always a bed of roses in the US either

But all things do eventually erode.....the NY Times quotes Sir Peter Hall:

“What makes a particular city, at a particular time, suddenly become immensely creative, exceptionally innovative? Why should this spirit flower for a few years, generally a decade or two at most, and then disappear as suddenly as it came?”


He is not the first to ask this...Byzantine Constantinople, the Italian Renaissance, the dark satanic mills of Industrial England - they have come and gone - how do they start, and what makes Things Fall Apart?

The how they start bit is quite hard to answer, but the "why do they fade bit (to me) seems quite straightforward in most cases - increasing competition, or at least a reduction in competitive advantage (or in Constantinople's case, a reduction of its great walls by the new tech invention of cannon).

As for SV....is the bloom fading? Not yet - but the competition is definitely increasing. Fading is a fairly slow process, the rot sets in long before the final ending, but some pointers:

- It is a far less pleasant place to live than even 10 years ago (or so some longer time SV denizens tell me*),
- Every tech country is trying to replicate or counter the model in some way.
- Labour costs are high compared to other capable areas - at some point all the mashups, barcamps and so on cannot help

So...where are the hot new new centres...answers on a postcard please, I want to know first

Postscripts - a point about the weakening of the benefit of centralism is here, and a note that SV is systemic even while the technologies change is here , and someone thought of the same heading here

* Or maybe after you've been there awhile it palls somewhat, or its a lifestage thing maybe, or there is always a past golden age?

Postscript - a good discussion is occurring on this subject now over at Vecosys