The Doric Column
December 2, 1998
High-Tech Heebie-Jeebies
The Wretched Article
Incubating Silicon Valley Style
Some Ideas from HBR
Minnesota's high-tech community experienced some high anxiety over the November 9th edition of Newsweek magazine.
Newsweek ran a cover story on "The Hottest Tech Cities." We didn't make the cut.
The 10 "hot spots" that are set to challenge Silicon Valley included the usual suspects. Boston, Seattle, Austin, and Salt Lake City were there. Washington, D.C. and Champaign-Urbana were there as upstarts.
A few foreign spots to make it global: Cambridge UK, Tel Aviv, and Bangalore, India.
Then there was the kicker. Boise, Idaho. Boise! I thought Boise was the hotbed of spuds, not nerds.
The article did not go over well with the spiritual descendants of Engineering Research Associates, Inc. and the other post-WWII computer firms that put Minnesota on the technology map in the 1950s and 60s.
Just a month ago Vance Opperman was rallying the troops at the Minnesota High Technology Association (MHTA) "Laser Awards" banquet, as he had a year before at the Digital Technology Summit.
Opperman is MHTA chairman and president of Key Investment, Inc., an investor in infotech start-ups in Minnesota. He's a sort of Billy Sunday at the pulpit when he gets going on the subject of the state's technology future.
I contrasted the theatrical Opperman, flanked by multimedia, with MIT economist Lester Thurow who spoke to a modest gathering at my neighborhood library in St. Paul a couple years ago, then took questions and signed books.
Thurow was promoting his book The Future of Capitalism: How Today's Economic Forces Shape Tomorrow's World. He gave us a pretty good idea of what's in store for the global economy with the end of the Cold War and the rise of technology. After 20 months, his predictions look prophetic.
The spread of electronic media is serving to accelerate short-run individual consumption. Yet economic success will depend on the willingness to make "long-run social investments in skills, education, knowledge, and infrastructure."
He made one off-handed remark that made me wince slightly. Not meaning to offend anyone, he said, the real pockets of innovation were in his neighborhood of Boston, in California, and a few other places. We didn't make the cut.
The subhead to the Newsweek article read: "Across America and around the world, hot spots are challenging Silicon Valley. Where to find the new jobs, the new wealth and the sheer fun of the Information Age today."
The "sheer fun" may help explain how Boise got in.
Communities on the globe that are consciously rewiring themselves are called "Silicon Valley wanna-bes."
To be a successful Silicon Valley wanna-be, six elements are necessary. (By implication, aspiring wanna-bes looking to be included in next Newsweek story on the subject should, in AA fashion, adopt the six-step program):
1. They have a major research institution nearby
2. They have at least one megasuccess story
3. They have high-tech talent to draw from
4. They have ready access to venture capital
5. They have infrastructure
6. They have the "proper 'tude." That reads "attitude."
Let's take them one by one as a wanna-be hoping to be included the next time Newsweek runs the story.
1. A major research institution
We have the University of Minnesota, the place where I work. The U of M is one of the biggest research universities in the country, but it did not have a Frederick Terman on its faculty 50 years ago.
Terman was dean of engineering at Stanford. He is credited with engineering an institutional change in attitude that encouraged faculty to be entrepreneurial.
Anticipating bigtime government investment in science and engineering following WWII, Terman "saw the potential to build a community of technical scholars to rival Oxford, Bologna, and other great centers of knowledge," according to Business Week in its special double issue on Silicon Valley (August 18-25, 1997).
An institutional change in attitude was slower in coming to many other major research universities, including the U of M. But it is well underway here now, powered by new leadership and loads of encouragement from state legislators, trade associations, public policy tanks, and citizens' groups.
2. At least one megasuccess story
We have a number of success stories, but none in the megapantheon of current information technology leaders, none like Microsoft, Intel, Cisco Systems, Novell, Dell, AOL, or the late Netscape Communications.
3. High-tech talent to draw from
A high-tech labor shortage is our number one problem in the mind of Rick Krueger, MHTA president.
A while back, MHTA launched a media campaign, Upgrade-to-Minnesota, to lure talent, especially native Minnesotans, from Silicon Valley. More than 600 resumes were submitted online.
4. Ready access to venture capital
We have plenty of venture capital locally. Indeed, Minneapolis was dubbed "Moneyapolis" by Forbes magazine. But our bucks are going out of state.
The PricewaterhouseCoopers Money Tree shows where the record venture money is going across the country. All regions were dominated by investments in technology in the most recent quarter. Very little money went to Minnesota companies.
5. Infrastructure
Minnesota ranked eighth best in the nation in integrating information technology into government in a recent survey.
The state's Office of Technology is coordinating infrastructure issues. Its Strategy 1.2 includes a list of projects designed to ensure development of a "statewide network."
Right now we're not as wired as we need to be to compete with other tech towns.
6. The right attitude
The cultural contrast between the "Valley" and Lake Wobegon couldn't be greater.
Take the Microsoft trial and all the nasty things being said. Normally we don't behave that way here.
And just yesterday I read in the newspaper one commentator's perspective about Medtronic's purchase of Arterial Vascular Engineering:
"Arterial Vascular is a Silicon Valley company. It isn't 'Minnesota Nice.' Its industry segment is cutthroat, and it is likely to spit in your eye. Everybody out there wants to be Bill Gates."
Incubating Silicon Valley Style
Last March, the New York Times Magazine ran a cover story by Michael Lewis that makes the point.
The cover shows "a dreary squat building with the charm of a third-class German motel" built by NASA. It is a Silicon Valley incubator.
It is "where young men who have just discovered their inner entrepreneur hope to grab their billion-dollar slices of Silicon Valley's new world."
It houses, the title of Lewis's article informs us, "The Little Creepy Crawlers Who Will Eat You in the Night."
The clincher comes 10 paragraphs into the story: "Never have so many had so little regard for the status quo."
New ideas and status-quo shakeups are, well, cool. But it's hard to imagine the Valley mind-set being exportable to Minnesota. I'm not sure we'd want it. Certainly not with all the Valley's trappings, the cost of living, the struggling schools, the traffic.
We hear a lot about collapsing product cycle times. In the Valley it's human evolution that's being squeezed.
I used to hitchhike through Silicon Valley before the boom, just before Intel produced the world's first microprocessor. I was in the Army, stationed at Fort Ord near Monterey, and would visit my brother in San Francisco on weekends. I remember a pastiche of small towns and farms, office buildings, retail outlets and development projects.
I remember the tremors, but I missed the 'quake.
Today, as a middle-aged male, I want to evolve according to a reasonable script. I want to do the things that Gail Sheehy is admonishing middle-aged men to do in her latest book, Understanding Men's Passages.
The Web has changed how I work and how I think, but the Valley scares me. Here at least I have a fair shot at finally getting in touch with my feelings.
And I want to avoid, when possible, the Valley's "signature psychological disorder."
Paranoia.
But the Valley, as depicted in the Times Magazine article, is not without redeeming values that can be profitably imported here.
"The message beamed into the renal cortexes of young engineers and computer scientists is simple: Invent something! Start something! For God's sake, man, the world is getting better! Look for something to do!"
The words of Seymour Cray echo in my mind from my interview with him 15 years ago.
"I hope I die with my boots on," he told me. "I'm looking forward to that possibility."
Though I do most of my work on a computer and commute to and from virtual communities, I really don't know much about technology. (I invite you to remind me of that fact via the feedback form at the bottom of this page.)
I am interested, though, in how technology changes things, how technology manages to have its way, historically speaking. It's pretty clear today that communities comfortable with technology and the change it represents will have a leg up on the others.
I've purchased two issues of the Harvard Business Review in my life, which began not long after Fred Terman started shaking things up at Stanford. At $15, you practically need to be a venture capitalist to make the purchase of HBR a guilt-free transaction.
The lineup on the cover of the current issue (November-December) was too good to pass up, if you have an interest in tech communities, innovation, and networks.
Here * are a few examples.
* "Clusters and the New Economics of Competition" by Harvard economist Michael Porter.
Clusters are "geographic concentrations of interconnected companies and institutions in a particular field." New clusters may arise "from one or two innovative companies that stimulate the growth of many others. Medtronic played this role in helping to create the Minneapolis medical-device cluster."
New clusters often emerge at the intersection of existing clusters. Such an intersection, I believe, is occurring in Minnesota: software and Internet companies popping up in response to changes and opportunities in health care.
The bane of existing clusters is groupthink. "If companies in a cluster are too inward looking, the whole cluster suffers from a collective inertia, making it harder for individual companies to embrace new ideas, much less perceive the need for radical change."
* "The Discipline of Innovation" by Peter Drucker.
This is a reprint of a 1985 HBR article by the father of modern management.
Planned systematic innovation "begins with the analysis of the sources of new opportunities." Successful innovation starts small, is focused and driven, sees the big picture in the distance, and is characterized by "work rather than genius."
Knowledge-based innovation that seeks to exploit advances in technology takes longer than any other and involves higher risk, but it can be deliberately pursued and managed.
* "How Venture Capital Works" by Bob Zider.
Zider is a Silicon Valley venture capitalist. In the article he seeks to separate myth and reality. For example: "The myth is that venture capitalists invest in good people and good ideas. The reality is that they invest in good industries."
This is where they invested during the last quarter (percentage of total in parenthesis):
- Software/Information = $1.457 billion (38.6%)
Communications = $931 million (24.7%)
Healthcare = $278 million (7.4%)
Biotechnology = $191 million (5.1%)
Medical Instr/Devices = $153 million (4%)
Computers & Periph = $113 million (3%)
I'm a late arrival on the tech scene, but I've always been well treated by the GEN-X'ers I've mixed with on campus and at local Internet companies and computer expos. They're impressive.
Minnesota has never been at a loss for brainpower. We just need to make sure that we give new ideas and the brains that carry them a fair chance to succeed.
--William Hoffman hoffm003@tc.umn.edu