What makes Silicon Valley companies so successful?
Tom Beakbane of Beakbane Brand Strategies & Communications explains why Silicon Valley companies are so successful?
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What makes Silicon Valley companies so successful?

Eric Schmidt, the executive chairman of Google and Jonathan Rosenberg, former senior vice president of products were on stage at an Empire Club event in Toronto discussing their new book How Google Works. They started by ignoring questions  posed by the moderator CBC’s Amanda Lang, instead recounting funny anecdotes about Google and the practical jokes Larry Page played on them. When a member of the audience asked about the timing of the next big thing they explained they did not have any confidence in predicting anything beyond five years. When the question came up again about when technologies like self driving cars would become common on the roads, they joked that it would happen in “about five years”. These two executives from a hugely profitable company were clearly having fun and were not taking themselves seriously.

Why are Google and other Silicon Valley companies so astronomically successful? Is it because they are highly strategic and run by extremely intelligent executives? Or is it because the companies are fun places to work and run by leaders who are modest and playful?

Innovation versus production mindset

An answer to the question is proposed by Victor Hwang, the CEO of T2 Venture Creation, a Silicon Valley firm, in a blog and book called The Rainforest: The Secret to Building the Next Silicon Valley.

In a post titled, Why do good ideas fail? he describes a “systemic process by which we turn ideas into useful things. On one hand, the traditional techniques of business administration have provided managers tools for analytical strategy and rigorously quantified decision-making. On the other, businesses today are creating so much real-world value by turning decentralized ideas into innovative products and services, based on fuzzy notions like culture and creativity. You can think of it as a clash between two opposing worldviews. The battle might be described as rigor versus intuition. Hard versus soft. Or even numbers versus people.”

When a company is launched it has an “innovation mindset.” By necessity there has to be collaboration, team-building and shared risk taking. These are “positive-sum” behaviors that create value where there was none before. However, as the company grows and becomes valuable a “production mindset” takes over. The goals become to drive down costs, reduce inefficiencies and take share from the competition. These behaviors are associated with traditional economics and strategic management. They are “zero-sum”.

Mindsets need to be combined

The values of an innovation mindset have opposites in the production mindset. Openness is paired against excellence, diversity against loyalty, serendipity versus dependability, fairness versus success, experimentation versus quality, play versus precision and giving versus reciprocity.

Victor Hwang illustrates the evolution of a company with a graph that shows how the production mindset replaces the innovation mindset consumer. The result is that consumer value decreases. When both approaches are harnessed they create a vibrant ecosystem, slightly chaotic yet highly productive, that creates value. He likens it to how little plants grow wildly in a rainforest.Company Evolution

Running a communications agency and as a director of an engineering company I witness first hand how the two mindsets need to be combined. The production mindset is easy to appreciate. The innovation mindset with the harder to define “soft” values of playfulness, modesty, respect and trust are also essential for teams to become productive and create systemic wealth.

 

By Tom Beakbane