IMD International

Lessons from Silicon Valley

Executive MBA Discovery Expedition

"We often hear that Silicon Valley is the fusion of people, money and technology. I'd push that further by saying it's the meeting place of smart, educated, ambitious people who know how to turn new ideas and technology into profits, and they’re passionate about doing that, while at the same time changing the world and making a lot of money for themselves," says IMD's Jim Pulcrano, who reports on the recent Executive MBA Discovery Expedition to Silicon Valley.

The IMD Executive MBA class of 2007 enjoyed its third and final Discovery Expedition to Silicon Valley in September. After having previously explored Dublin, Bucharest and Shanghai, the class had a week of total immersion in entrepreneurship, networks, technology and innovation. They met more than 100 people, including venture capitalists, entrepreneurs, public company executives, IP lawyers, researchers and HR executives.

On our first day in California, Professor Chuck Darrah of San Jose State University asked: "What is SV?", suggesting that some people define it geographically, others define it as "being in the technology business," others as "working with people in the technology world." However you define it, one way to understand Silicon Valley is through the eyes of our participants; what they saw and heard, and what they took away from their week there. 

What the EMBAs took away
Okay-to-fail-mentality. This Silicon Valley mentality is clearly conducive for innovation and entrepreneurship, something that somethimes we lack in corporate life. We have become too risk adverse.

The ecosystem of Silcon Valley. I was really impressed by how the different factors of this ecosystem come together to create this cradle for innovation i.e. the diversity, the available talent, the risk willingness (but also the limited risks when jobs are always available and it is OK to fail), mix of industries and companies, the culture, the money available etc….

My only remaining question is: Will this culture continue if the population of SV gets older and values of the next generation, such as work-lfe balance, become more important?

In its way the culture in Silicon Valley sustains itself. Small companies innovate and then fail, are bought or become big. The big companies essentially outsource their R&D to the small companies and offer an opportunity for the innovators to move between startups. The VC’s and Angels facilitate this process.

But in corporate life, how do we build an HR-brand to attract the right talent? What do we offer from an HR perspective? Who do we attract? These challenges are highly relevant as it becomes increasingly challenging to find the right talent.

Work-life integration
Talk about work-life integration rather than work-life balance. I find this concept interesting. There is the special rhythm of the Valley: 3-4 years of extreme effort, a couple of months of "holidays" to load the batteries, and then start again.

For me the success of SV is due to two factors: first, some of the brightest scientists in the world... they get together, exchange thoughts and emulate each other. Second, there is this understanding of the economic realities; that a company is there to make money. The SV researchers are scientists, yes, but they quickly turn into businessmen, or more cleverly perhaps, find the guy who has the business acumen to turn the idea into a viable business.

How do we compete with the small startups? Why compete? In Silicon Valley the startups are the R&D organizations of the large corporations.

There are many motivations for starting a company, but one of the most common threads was that the company founders believed they could do better than the status quo. A good part of that was probably curiosity and ego - but a bigger part of that is an honest, analytical look at what’s going on and not being satisfied with it.

Dealing with ambiguity
Where does work start and play end? Startups - money should not be the main driver for entrepreneurs. Make sure you have fun, as this might be all you get from your startup.

The key to Silicon Valley is not the entrepreneur, but rather the environment of constant encouragement for going for the “big one”, trying your idea out, and not being beaten by failure.

Being part of a network is key 
Silicon Valley can be considered as one big incubator. The established companies have ‘outsourced’ innovation to the region and its entrepreneurs by creating an environment which allows for failure and stimulates new initiatives. There is a mutual dependency, which keeps the Valley and the related innovation going.

The successful companies are mainly the ones that are aligning HR with business strategy Doug Engelbart embodies the true entrepreneur, whose grander objective stretches much further than looking for anything that could provide a financially attractive exit. From  meetings with the various entrepreneurs it was clear that those with the best chance of success are those who truly burn to take their idea to fruition and who would be very reluctant to cash out earlier in the process - even if the money would be life changing.

There isn’t enough space here to cover everything that we saw during our week in California, nor to list the many learnings that the IMD Executive MBA class of 2007 took from their expedition to apply “back home”. The class prepared well, worked hard, listened, asked great questions, brainstormed, asked more questions, synthesized and shared their learnings with each other. They took a great deal away from this experience, and now have only one more module to do before graduating.

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