When U.S. policymakers are brainstorming ways to spur innovation, chances are one of the first things they'll think of is Silicon Valley, the hub of innovative startups and creative minds. They may think, "How can we emulate the kind of innovation taking place in the northern California to foster the same spirit across the country?"
Dan Breznitz, co-director of the Innovation Policy Lab at the Munk School of Global Affairs at the University of Toronto, thinks that question is inherently flawed. In a Harvard Business Review article, Breznitz makes the argument that we should not look to Silicon Valley as a model for innovation.
"Not only is Silicon Valley pretty much impossible to recreate as an innovation eco-system, it's also no longer the only global paradigm for innovation," he writes.
For one thing, production of goods and services is more fragmented globally, meaning that different regions specialize in different parts of the production process. Countries and regions no longer can own the entire production of a good or service.
"The global reorganization of production and services has produced a new logic of value creation, as well as a new set of specialization and innovative capacities," Breznitz writes. In other words, each country or state needs to specialize in one area and excel in that specific area.
Silicon Valley came to existence after World War II before such globalization had occurred and the area could feasibly own an entire good from start to finish, he says. The location got its name after the silicon chips that were being developed and produced in the area.
But that is no longer the case. Now ideas are born in Silicon Valley and products are brought to existence internationally. Now the ideas that Silicon Valley entrepreneurs think up are carried out by manufacturers in places like Taiwan.
These Taiwanese companies are where the innovation is truly happening. They need to continue to step up their game in order to get the business from thinkers in Silicon Valley.
"They know that the minute they fall behind their competitors, the best Silicon Valley companies will stop choosing them as their preferred partners in production and fabrication," Breznitz writes. "So they need to continually improve--in fact, they have to be every bit as innovative as Silicon Valley's entrepreneurs, but with a different goal. Instead of trying to come up with the next blue-sky idea, Taiwan's entrepreneurs focus on production and design improvements that will allow them to turn American startups' ideas into physical reality faster than competitors and at ever-falling prices."
While the Silicon Valley entrepreneurs are working on early-stage innovation, that's not where the economic growth is really taking place. Instead, we need to really think hard about our goals and our capabilities to determine the best way to innovate. For instance, Breznitz writes, if we're looking to create more jobs, focusing on invention may not be the wisest move. Most job growth happens in the next stages of innovation when products and services are developed and sold.