Thursday, October 15, 2009

Building a Knowledge Economy - Lessons from the Silicon Valley

This was the topic at the 9th PIMA Public lecture held at PIM on 14th October 2009.

Speaker of the day, Prof. Hilton Roots (a academic from the Stanford University) shared his experience on the evolution of Silicon Valley. According to him Stanford University was the main reason for the valley.

Interestingly there appears to be two main systems within which technology revolution in the USA.

1. Technology development based on Massachusetts area. This is in the East Coast in America (Boston)
2. Technology based on Silicon Valley located in the West coast of the USA.

Interestingly both these localities house some of the best known educational institutions in the world. Boston (Massachusetts) house MIT, Harvard. Silicon valley revolved around Stanford University. In fact the most of the land where the initial valley developed was lease land of the university which was given to high tech companies. (in the form of an industrial park)

One of the key cultural aspects which fueled Silicon valley innovations was the weak social ties prevailed in the society. This lead to many facets including regular job swapping by employees which lead to exponential growth in knowledge sharing. It wasn't uncommon for a person to work in 10 or so companies by the age of 30 in Silicon Valley. The social institutions were the very fabric which fashioned the valley culture.

Probably what determined commercial success of most of these companies were the unique breed of venture capitalists who developed themselves in the valley it self. Apparently by the year 2000, lead up to the dot com burst they were pumping the valley with funds worth 103 billion USD for a year. More than the money these VC firms brought about unique performance driven culture in t Valley organizations where the start ups had very little option other than 'some how make it happen'.

Prof. Roots also cited multitude of examples from his experience in countries such as China and India where prolonged attempts to developed such places with billions of dollars worth of funding. However he was quick to point out such initiatives have failed purely because they tinkered the winning formula. Such tinkering came in the form of government intervention, control and excessive controls over profit taking.

So the question was asked whether developing countries such as Sri Lanka should create their own 'valley' model. Prof. Roots strongly felt that the incubation should happen in the valley and he went on to categorically mention an attempt to create a home grown solution will lead to failure. He also suggested that those countries such as Taiwan which replicated the winning formula, based their model and more importantly gained extensive experience in the valley before replicating the successes in their own country (Taiwanese spent considerable time in the Valley before coming home and setting up operations in their own country).

Madu Rathnayake from Virtusa fame who was a panelist echoed this sentiments by saying that they launched their big operation in the US in Boston which helped them to find Venture Capitalists and other 'necessary' skills and resources which fueled their expansion which enabled them to grow up to the level of being listed on NASDAQ.

1 comment:

Hiran Jayasekera said...

Hi, Priyanga,

Tks for the post. I couldn’t make it for the session.

I would say that Prof.Roots has given us a direct advise for Sri Lanka.

tks again.