There's a good reason why I've devoted my last few posts to the magic of Silicon Valley. That reason is that firms in the Valley have achieved a level of success that few other companies anywhere in the world have been able to replicate, try as they might.

A recent article in Scientific American makes this point loud and clear, noting that while geography and culture hold part of the key, that's far from the whole story. Author Barry Jaruzelski states that while the San Francisco Bay Area has become a global mecca for high-tech talent--as well as near-perfect circumstances for startups such as access to VC capital and an entrepreneurial environment fueled by top universities and research centers--those features can be found elsewhere.

Then what is the Valley's secret? That's the question that companies worldwide are feverishly trying to answer, from North Carolina's Research Triangle to China, where firms across diverse industries have boosted R&D spending by 64% per year on average for the last five years. Yet despite comparable advantages, no one has been able to crack the code that has propelled Silicon Valley to fame.

Because these South Bay tech giants are succeeding where so many others have failed, it can be instructive for the rest of us, if we're willing to examine what they're doing differently. My team at Pluralsight recently got this chance with a look behind the curtain at seven of these top firms, and compiled this list of lessons we can learn from them:

Make innovation part of your lifeblood. A simple stroll through the halls of Facebook or Twitter reveals just how tremendously these companies and others throughout the Valley value an innovative atmosphere. Constant creativity and outside-the-box thinking form their core, from their prioritization of luring Millennials with fresh insights to their engineering group, to their transparent, wall-less office space sprinkled with high-tech toys and brainstorming tools that encourage a new level of communication and collaboration. It's also a common practice in the Valley for tech firms to hold "hack days" and even "hack weeks" where the entire company drops the distractions--no meetings, no conflicting priorities--and hunkers down en masse to tackle ideas and translate them into reality together.

According to the results of a study called The Culture of Innovation, the ability of the Valley's firms to integrate innovation strategies with corporate strategies lies at the heart of what makes San Francisco Bay Area companies different from the rest. Specifically, the research initiative by the Bay Area Council Economic Institute and Booz & Co. found that Silicon Valley firms are almost four times more likely than other companies to closely align innovation strategy with overall business strategy. A separate annual study by Booz & Allen, Global Innovation 1000, found that organizations that manage to blend innovation strategies with corporate goals do better both in terms of net worth and profitability.

Create a culture where you'd want to work. The tech giants' investment in creating an office space that's conducive to their devotion to innovation is just one way that Silicon Valley prioritizes corporate culture. Providing onsite perks from pingpong tables, arcades, and yoga classes to general benefits like unlimited vacation makes for a place that people want to come, and to stay--often around the clock. With three square meals and all the snacks you can eat provided in a gourmet-style cafeteria, it's no wonder that Millennials have ditched traditional corporate gigs to join the Yahoos! and Instagrams of the world.

This special culture betters life for teams and firms alike, since providing employees with a setting that feels more like after-hours than work increases the chances that more work will get done. What's more, the Global Innovation 1000 also found that these free-spirited cultures are more than twice as likely as the non-Valley firms studied to be attuned to the organization's innovation strategy, which as noted above can play a key role in a company's financial success.

Follow the customer, not the engineers. As I recently revealed in "What Silicon Valley Knows That You Don't Know," the Valley's top tech firms share an obsession with improving the productivity of their engineering teams. In a reflection of the two previous lessons, it's no surprise to see that the Booz & Allen research also found that firms in the Valley are four times more likely to hire new-product development talent than the average U.S. company in the Global Innovation 1000. Their willingness to do so with much greater frequency than the norm shows that Silicon Valley is all about disturbing the status quo--whether their own or that of the larger industry.

In addition to using the strategies to fuel productivity and break down barriers that prevent it as described in my earlier post, the tech titans do something else differently as well. With their fingers collectively on the pulse of innovation, these firms have channeled that information into understanding users' needs, and determining how to meet those needs as quickly as possible. Ongoing investigation from Jaruzelski and Matthew Le Merle has uncovered that nearly half of the companies in Silicon Valley follow that customer-needs focused model, compared to only 28% of U.S. companies in the Global Innovation 1000. This distinction as "need seekers" has clearly played a large role in Silicon Valley's ability to consistently surpass--in both profits and company value--those that follow other models, such as technology drivers who take direction from engineering rather than customers, or market readers who rely on a "fast-follower" development approach.

Stay aligned, be transparent. With the overriding need to move quickly and pivot constantly to satisfy demands of the customer and marketplace, firms in the Valley must operate in a state of complete clarity and alignment throughout the organization. To that end, most of these fast-moving companies hold a weekly "Town Hall" meeting, where the entire firm gathers for an instant companywide information exchange. Strategy updates and status checks occur here, as does Q&A from teams to leadership.

This open-air environment promotes transparency and trust, helping to ensure that everyone is working in unison on the right things to push the company forward. Such transparency also helps keep the entire company focused on prioritizing what's best for the organization, before what's best for their teams or themselves. At the end of the day, this cultural focus on alignment gives Valley firms a leg up over companies that don't take the time to create this group clarity.

It's this fusion of innovation, culture, and customer-focused productivity--combined with transparency and trust--that creates the secret sauce with which Silicon Valley brews it's special mix of magic. Do you dare to follow their lead?

Published on: Nov 11, 2014
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