Be the best version of your city, not the ‘Next Silicon Valley’
My last blog - ‘Do you really want to be the ‘Next Silicon Valley?’ - argued that Silicon Valley is not the right model for most cities or regions and was almost impossible to replicate in any case.
So rather than simply asking how can we be the ‘Next Silicon Valley?’ more useful questions to ask include:
How can we be the best or next version of our own city?
How we can be a relevant, dynamic, connected, 21st Century economy?
What strengths and advantages does this city have to build upon?
How to be inclusive and involve ambitious people and businesses of all ages and stages?
How do we develop skills to help people and businesses grow?
The quote from the Thomas Friedman article highlights two key elements for success:
1. A community that understands today’s world.
2. A community working together.
Today’s world is very different to the world of 20 or 30 years ago, we are experiencing a massive transformation from the industrial era to the information or knowledge era and beyond. Technology is a key driver of change and opening up markets to increased competition, disrupting entire industries, automating many roles but also opening up new opportunities for businesses of all sizes to access global markets, supply chains and talent.
Mining for talent
The original drivers behind the establishment and growth of many cities and regions have disappeared, highlighting the need to find a new reason for being and new ways to compete in today’s economy. So a city that was founded to take advantage of a river, harbour, agricultural land or mineral deposits for trade and employment now needs to focus more on capitalising on human capital, growing industries or clusters where it has a distinctive advantage and building connectivity with the world.
The overwhelming impact of technology has led some cities to the conclusion that their future is all about being the next Silicon Valley and this leads to an emphasis on tech startups, finding the next unicorns and support mechanisms such as Accelerators and venture capital investment.
In this environment, the heroes are the entrepreneurs and investors who build a business to unicorn status - private companies and startups with a billion dollar valuation – or who exit by selling the business. This is undoubtedly a great reward for the vision and hard work of the individuals involved but - according to a recent Harvard Business Review article by Gary Hamel and Michele Zanini:
‘A few unicorns are no substitute for a competitive innovative economy… the unicorns represent a tiny slice of the economy. As of November 2016, the market value of the world’s 179 unicorns was estimated to be $646 billion. U.S. based unicorns accounted for 56% of the total, with a combined market value of $353 billion. While that’s a big number, it’s less than 2% of the market value of the companies that make up the S&P 500 ($19.9 trillion). By this barometer, the unicorns are mostly irrelevant.’
So there is a lot of excitement about tech startups, unicorns and that is fine to an extent, but I agree with Gary Hamel and Michele Zanini when they write:
‘So let’s stop worshipping the unicorns and start working to make every organisation entrepreneur-friendly.’
A more balanced and inclusive approach
A more balanced and inclusive approach recognises that its not just about creating the next unicorn, instead it is about helping more organisations of all sizes and stages to innovate and compete in today’s global economy. Key elements of this more balanced and inclusive approach include:
Understanding today’s world and how to fit in and make an impact.
Identifying and build on key strengths of the city or region in a global economy - deepen specialisations.
Supporting businesses at all stages of their lifecycle - from startups to scaleups and the longer tail of smaller businesses.
Encouraging technology enabled businesses - across all sectors - as well as technology creators.
Providing opportunities to develop the skills of all people – not just the young white men often associated with tech startups but also women, people of colour and recognising the average age of a successful founder is more like 40 - 45 and not 20.
Boosting networks and connectivity within the region and with the rest of the world.
A collaborative approach to regional economic development, not just government.
This approach is based on the idea that change is best driven from the local level and - according the Bruce Katz and Jeremy Nowak in the New Localism - communities can create new vehicles to to get things done. They argue that ‘power has moved downward from the national and state government level to the city and metropolitan area. It has also moved horizontally, from the public sector to networks of public, private and civic actors, and globally along circuits of capital, trade and innovation.’
Chattanooga - reinventing a city
Chattanooga, Tennessee is an example of a smaller city with around 180,000 residents that is attempting to take control of its own destiny and shape its future. Chattanooga is the first Gig City in the US, providing gigabit internet speeds for its residents in 2010. Quoted in the Guardian, Chattanooga Mayor Andy Berke describes of the drivers for establishing the Gig in Chattanooga:
‘The Gig was going to go a lot of places before it came to Chattanooga. For us, like a lot of cities, you either decide to do it yourself or you wait in line. We chose to do it ourselves.’
The Gig City initiative is part of a wider plan to grow the local economy and provide a high quality of life for residents. Other activities include the development of an innovation district in the city, supporting small businesses - including minority, veteran and women-owned businesses - and under the banner of Chattanooga 2.0 major efforts focused on education to building the smartest community in the South. This recognises the need to up skill the whole community and seeks to double the percentage of graduates from local public schools that obtain a post-secondary degree or credential and increase the overall percentage of adults with a college degree or technical training certificate from 38 percent to 75 percent by 2025.
Chattanooga understands the importance of connectivity in today’s economy and recognises the need to invest in education so that its benefits are felt across the community.
The many changes in the economy will continue to have a major and sometimes negative impact on many cities and communities around the world. However, this is also a time that presents many opportunities and a time that needs local leadership and community actions - and to draw on the title of a book on Jack Welsh, GE’s famous CEO - a time for cities to control their destiny or someone else will.