When a prominent venture capitalist of California invested one billion dollars in high risk green technology, Silicon Valley recalled the world that in innovation, geography is karma. What Vinod Khosla’s story tells us is that location is crucial when dealing with innovation and technology. Thirty years earlier Vinod left India to study management at Stanford University in California. In 1981, fresh out, he founded Sun Microsystems, a computer manufacturer .
Innovations do not occur anywhere but often in geographic clusters where investors, large research universities, existing technology companies, engineers, designers, artists and scientists are always willing to think outside the box.
Those people are part of what Richard Florida calls the Creative Class. His paradigm asserts that innovation is the outcome of creativity, this latter being the outcome of human creation for a concrete realization which then might lead to innovation. As far as geography and clusters are concerned, the Silicon Valley has been for several decades considered as the only creative and innovative hub worldwide. This is clearly changing.
The geography of innovation is shifting. For proof, start with Google, which over the past ten years has taken the core R&D and innovation-oriented activities it once housed only in Silicon Valley and extended them into other cities. The company’s presence in London’s Tech City, New York City’s Chelsea district, and Pittsburgh’s Bakery Square reflects management’s calculation that being in cities increases the company’s access to growing tech-oriented ecosystems, advanced research institutions, deep pools of talent, and distinct regional specializations.
Bruce Katz and Julie Wagner define these districts as “geographic areas where leading-edge anchor institutions and companies cluster and connect with start-ups, business incubators, and accelerators. Compact, transit-accessible, and technically-wired, innovation districts foster open collaboration, grow talent, and offer mixed-used housing, office, and retail.”
This urban shift is evident in the rise of great urban centers like New York, London, Paris, Berlin, Beijing, Shanghai and Tokyo as important startup hubs. China is also evolving into something much more than world’s factory, with 26 billion-dollar startups along its East Coast, running from Beijing to Shanghai to Guangzhou. Most of all, the location of uber-successful startups is incredibly concentrated and clustered in a small number of the world’s largest and most advanced cities in North America, Western Europe and Eastern Asia.
For Richard Florida, the confluence of these disruptive economic, social and demographic dynamics has changed corporate calculus. As companies design forward-looking strategies, they should be asking whether and how a greater commitment to urban locales could help them to squeeze out even more success.
Gαlαtēe & Co 