Creating thick value
Silicon Valley may be the “intersection of venture capital, start-ups, markets, and IPOs,” but Umair Haque –Bubblegeneration founder and media strategist-believes the “great engine of innovation has got Disruption Deficit Disorder.” Mr. Haque cites research showing that the greatest number of new jobs is created by startups. One reason the aftereffects of the Global Financial Crisis-high unemployment-continues to haunt the American economy is that venture capitalists aren’t creating enough jobs, or the right kind of jobs.
Instead of creating companies with “thick value”-or “sustainable, meaningful” value-Mr. Haque suggests that Silicon Valley is transfixed on “lightweight, feel-good ideas” such as Zynga and Facebook. These companies, he argues, do nothing to help the economy. Venture capitalists are focused on digital versions of Britney Spears and Katy Perry rather than the Nelson Mandela and Mahatma Gandhi ideas that can unlock prosperity.
In Mr. Haque’s view, Silicon Valley is stuck in the 20th century. “Here’s my impertinent, and perhaps gigantically thick-headed suggestion,” he wrote recently on the Harvard Business Review blog. “Silicon Valley should be the crucible of 21st century capitalism instead of the last bastion of 20th century capitalism.” How is it possible, you might wonder, for an industry inescapably tied to innovation to become so “been there; done that?”
The reason is that the industry may be looking for new ideas, but its approach to business hasn’t changed with the times. The 21st century “ventureconomy” should be built atop markets, networks, and communities, “just like other 21st century industries,” Mr. Haque argues. But Silicon Valley’s thinking is rooted in “funds,” “product,” “revenues,” and “scale.” He worries that the ventureconomy may be stuck in a “competency trap,” unable to profit and unable to change.
According to Mr. Haque, Silicon Valley may be even more resistant to change than traditional industries, unwilling to submit itself to the chaos of transparent markets, liquid networks that share resources, and self-organizing communities that collect and organize knowledge and share investment ideas. He challenges Silicon Valley to adopt a perspective of innovation that doesn’t rely solely on technology, but also new institutions that more efficiently transform technology into revenue and jobs.
This Silicon Valley angst Mr. Haque deplores interests me on many levels, but one in particular, surprisingly, for the Philippines. One of the key members of the Valley’s oligopoly flew into Manila recently, taking a 12-hour flight to attend a one-hour meeting with Philippine President Benigno S. Aquino III, and leaving again almost immediately. The once poor farm boy from Iguig, Cagayan, Dado Banatao, couldn’t spend the night, so tight was his schedule.
The venture capitalist is an engineer by training. Mr. Banatao invented the first IBM-compatible chip set, in effect creating the personal computer. He has also done breakthrough research that enriched the graphics experience on PCs. His firm. Tallwood Venture Capital, boasts an impressive portfolio of successful startups, many that have similarly contributed significant new technologies that in turn contributed to the creation of many of the jobs Mr. Haque says is Silicon Valley’s economic role and responsibility.
Mr. Banatao made the frenetic trip to plead with Mr. Aquino to continue a P3.5 billion project that originated under the president’s predecessor, the Engineering Research and Development for Technology (ERDT) initiative. The project-a consortium of eight top engineering schools-will soon run out of money. Its purpose is to properly educate and train scientists and engineers and make them innovators capable of creating high-value technology products. Mr. Banatao provided $500,000 in seed money towards establishing a research institute within the consortium, and to convince former president Gloria Macapagal-Arroyo to provide additional funding.
Six University of the Philippines engineering students are also beneficiaries of Mr. Banatao’s efforts to create a true, fundamental research culture and capability in the Philippines. They are Banatao Fellows at the University of California at Berkeley. He is not convinced that the six educators will return to the Philippines eventually to work towards fulfilling his vision of the Philippines as a real, global technology innovator worthy of the 21st century Silicon Valley’s attention. But he hopes they will, after their stint “doing pure research and working with the best engineering minds from all over the world.”
I don’t know if Mr. Banatao agrees with Mr. Haque’s ideas about Silicon Valley, and its perceived rut. Maybe he does. But one thing is certain: If Mr. Banatao is successful in leading the transformation of the Philippines into a true center of innovative research, the country will benefit from creating thick value, rather than the thin value and mediocrity that characterize manufacturing today. That’s a hugely ambitious 21st century objective. And one worth pursuing.
(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author. His latest book is High Visibility: Transforming Your Personal and Professional Brand . Write him at email@example.com and follow him on Twitter, Facebook and LinkedIn.). Copyright © 2010 Michael Alan Hamlin. All Rights Reserved.)