Guest Opinion: Innovation climate is leading Valley out of recession | April 8, 2011 | Palo Alto Weekly | Palo Alto Online |

Palo Alto Weekly

Spectrum - April 8, 2011

Guest Opinion: Innovation climate is leading Valley out of recession

by Stephen Levy

Silicon Valley is leading an economic recovery that is slowly building strength in California and the nation. The region added 21,900 private sector jobs during the past year for the largest percentage gain statewide.

Job growth in the Valley is led by firms that apply technology and innovation to the development of goods and, increasingly, services that capture the approval of customers around the world. Three companies that develop new technology services, Facebook, Google and Groupon, have recently announced plans to hire additional tech workers in the Valley.

On the product side, the number of technology manufacturing jobs increased by nearly 4,000 last year as technology exports surged in California. One final data point is that the Bay Area captured nearly $2 of every $5 invested in venture capital start-ups in the nation, higher than the 32 percent share we captured in 2000 at the height of the boom.

Silicon Valley is no longer the only center of innovation in the world but we are still the largest center of innovation activity. This is happening without huge cash incentives to firms and despite a constant barrage in the media about how terrible California is for starting a business. Why, then, did venture capitalists invest $8.5 billion last year in Silicon Valley and why are companies in a frantic search for new talent and hiring here?

Currently I am participating in two workforce studies of innovation sectors in the Valley. I also serve on the workforce investment board (NOVA) that serves our area. We are being told that companies locate and expand here for one primary reason — access to talent and an environment that promotes innovation.

Silicon Valley has the largest talent pool for technology and innovation in the United States. Companies tell us that they have to be here for their most innovative activities although they also say that more routine activities are being located in lower-cost areas around the world.

In most discussions about strategies for economic prosperity the focus is on attracting companies — asking them what they want. But the implications of what potential Silicon Valley companies want — access to a large pool of talented workers — are profound for reshaping the debate about regional economic prosperity strategies.

The bottom line is that we compete for workers and their families. Now ask, what do they want, and you begin to see the outlines of Silicon Valley's major competitiveness strategy. We must strive to create and maintain communities that workers and their families want to live and work in.

In the past this was our strength, not a challenge. We had great weather, great access to cultural and recreational amenities, and great schools and universities. Transportation and housing were always challenges in terms of affordability and long commutes but these challenges have grown worse over time.

Now the attraction of having great schools and universities is threatened except for the wealthiest of families. People in the industry tend to think of education in terms of supplying a workforce of talented workers. This is true but it misses the importance of education as being a criteria for families choosing where to live and work — the opportunities for their children.

Making Silicon Valley communities great places to live and work has elements that are beyond local control. One example is state education funding. It has elements that are purely local, such as world-class public services and neighborhoods that are attractive places to live.

But many of the challenges are regional. Remember, firms are attracted by our talent pool. They pick the region first and the exact location second. Therefore, we compete as a region.

The important concepts for regional success are connectedness and cooperation. Two of our most difficult challenges in creating a region where people want to live and work are transportation, including both roads and public transit, and housing. Santa Clara and San Mateo counties will soon start the process of participating in the regional requirement to develop a Sustainable Communities Strategy, which is primarily about how land use, housing and transportation are linked.

The communities in Silicon Valley are connected to each other in our quest to create places where talented families and entrepreneurs will want to live and work. It is our collective housing opportunities and our collective system of roads and public transit that create an attractive region. That means we must cooperate to address regional housing and transportation issues. In a real sense we prosper or not as a group of connected communities.

I recently attended a Joint Venture Silicon Valley retreat, where most participants were staff or elected leaders from Silicon Valley communities. The meeting was focused on ways communities could cooperate and, potentially share some services to relieve the tremendous budget pressures our communities are facing.

But, without any prompting, table after table reported that their chief concerns for creating a vibrant future were the need to address the challenges of transportation, education and regional land-use planning.

I left with the hope that there was a chance that connectedness and cooperation could emerge at our regional level despite the enormous political gridlock continuing in our state and nation.

Stephen Levy is director of the Center for Continuing Study of the California Economy and a Palo Alto resident.


Posted by stephen levy, a resident of University South
on Apr 9, 2011 at 1:30 pm

stephen levy is a registered user.

I am interested in how readers feel about this part of the article.

"The bottom line is that we compete for workers and their families. Now ask, what do they want, and you begin to see the outlines of Silicon Valley's major competitiveness strategy. We must strive to create and maintain communities that workers and their families want to live and work in."

Posted by Robert, a resident of Palo Verde
on Apr 9, 2011 at 4:42 pm


Not only do you promte your own agenda, via this forum, but then you act to direct the answers! Real chutzpah, Stephan. Let us know when you decide to land on planet Earth.

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