I have been asked many times why the Intelligent Community Forum does not include the collection of cities and towns called Silicon Valley in its global list of Intelligent Communities. After all, this small slice of California has probably given birth to more profitable technology innovation in fewer years than any other plot of land on the planet.
It's a good question and I have had to devise a standard answer. The Valley is not among our Intelligent Community examples because we focus on communities that develop a strategy and execute on it. And there is nothing like that in the history of Silicon Valley. Its growth was a series of unplanned events beginning with the formation of the Stanford University Park, early investments by wealthy individuals in start-up companies, and the rise of the venture capital industry with its base on Sand Hill Road. Government played no role whatsoever – which is why the success of the Valley is marred by overcrowding, sky-high property prices, and uneconomic commuting patterns that are bad for the environment. There have been attempts all around the world – from Silicon Glens and Silicon Fens to Silicon Alleys and Silicon Ditches – to repeat this pattern. Some are pretty successful but none comes close to replicating the impact of the original Valley.
To put it another way, there is little to learn from the Valley except that it would have been nice to buy real estate there in the 1970s. At ICF, we demand something more from Intelligent Communities. We want them to be teachers. We want them to share useful lessons with the rest of the world about local economic and social success, often against great odds, in the 21st Century.
And yet, the Valley does have one lesson to teach. Humility. The New York Times recently ran a story about a new class of successful ICT startups in Europe. ("Maker of Angry Birds Shows Way for European Start-Ups" by Eric Pfanner) For decades, European tech companies have be renowned for underperforming their American cousins. Those days appear, thank goodness, to be coming to an end. Firms from Rovio (AngryBirds) to Spotify (online music) are figuring out how to build category leaders rather than also-rans. But here was the big take-away from the article for me:
Another vibrant European startup center, Berlin, also shows it is sometimes the things that policy makers do not do that can be most effective in luring Internet entrepreneurs. While France and Britain, for example, have put in place tax breaks to support venture investments, Germany has not followed suit…
Instead of financial incentives, Berlin has benefited from other factors, like an influx of engineers from Eastern Europe. Low rents have helped cash-strapped company founders eke out an existence. Meanwhile, analysts say Berlin has also benefited from tougher immigration rules in Britain, which have made it more difficult for start-ups and technology giants alike to add jobs in London, Berlin’s biggest rival on the European Internet scene.
“While there are certain things that government can do, to a large extent it should stand out of the way,” said Paul Zwillenberg, a partner at Boston Consulting Group.
As we approach our annual Summit in New York City on June 6-8, I plan on keeping the lesson of humility in mind. Local governments, in partnership with business and institutions, can do amazing things to create a more prosperous economy and inclusive society. But there will always be the X-factor – that thing you cannot plan for but can only recognize and encourage when it happens.
An economy – even in a single municipality – is so complex a thing that we should never presume to understand it. It is the sum of thousands or millions of human decisions, of the culture and history that shape those decisions, and of that most potent of things, faith in the future. When we make it our top priority that our children lead better lives than our own, whatever the obstacles, not much can stand in our way.