Thursday, March 08, 2018

Is Silicon Valley Worth It?

Have you ever wondered why technology start-ups aggregate in Silicon Valley like moths to a flame?  Office space is expensive.  Hiring employees in the valley is costly.  Competition for talent is fierce.  Buying a home is cost prohibitive and traffic is horrible.  Yet start-ups continue to locate here.  What are the attractants?  Let's consider the following:

Traditional consulting practices promote the fact they have decades worth of accumulated business processes, system designs, economic models, methodologies and experiences from years of providing IT and business strategy consulting to large multinational companies. The problem is the large legacy S&P 500 companies are not the models for agility and digital acumen today - think about the trouble GE is in.  Today the average number of years a company can stay in the S&P 500 is predicted to be only 14 years.  Today, agile Silicon Valley companies are the ones commanding the most attention.

Having Silicon Valley DNA today is more important than archives full of historic processes and decades of experience deploying legacy systems.  Silicon Valley is the very epicenter of digital transformation and the companies here think and act differently.  Silicon Valley DNA is a digital mindset, a paradigm, a culture, a perspective and an operational strategy.  It assumes there are competitive advantages to be found in change and innovation - just waiting to be exploited.  It aggressively pursues new business models and innovations based on the belief there is value in learning, whether the experiment is a success or a failure.  It seeks examples of successful proof of concepts across all industries, and then seeks ways to apply those findings to other business problems and situations.

Consulting companies with Silicon Valley DNA are not attracted to projects involving the implementation or deployment of legacy technologies and business models.  They may do them, but only as a means to an end, which is to get more challenging and transformative projects and business. They seek opportunities to help companies advance, in leaps and bounds, rather than in small risk-free iterations.  

Businesses with real Silicon Valley DNA are located in the Silicon Valley.  It means they are surrounded by innovative people both inside and outside the company that are working with and learning about emerging technologies and business and economic models every day.  It means they are collecting and working with new ideas every day - assembling and reassembling them to form new products, services and businesses.  It means they have unleashed their employees’ creativity to integrate and test unique combinations of technologies in search of additional value. 

Being located in the Silicon Valley and having Silicon Valley relationships also benefits new start-ups seeking to fund interesting ideas and new ventures.  In addition, start-up teams benefit from being in close proximity to experienced technology leaders, investors and advisors. 

Consulting companies with Silicon Valley DNA, are made up with people that think differently.  They thrive in an environment and culture that attracts ambitious, competitive and driven innovators and entrepreneurs.  They are not seeking status quo, but rather they are trying to make a positive impact through change.

Where many traditional businesses struggle with change and experience a deep-set institutional and leadership resistance to it, businesses with Silicon Valley DNA recognize change as an opportunity to capture additional competitive advantages and deliver more value.

Businesses with Silicon Valley DNA also look at risk differently.  Where traditional businesses might fear risk and see it as something to avoid, Silicon Valley companies are willing to work with it.  They see risk as a gateway to potential opportunities and competitive advantages that are worth exploring.

Silicon Valley consulting companies often have an abundance of knowledge and experience on how to take an idea from a concept to a new business ventures.  Often within leadership teams they have the accumulated experience of having worked in dozens of different start-ups.  This experience has shaped them into entrepreneurs.  Their natural approach to any project is from a business start-up perspective.  This mindset is missing from many consulting companies that focus primarily on staffing and long-term ERP implementations and deployments.

Another Silicon Valley DNA character trait is a healthy disrespect for how things have been done in the past.  Traditional market rules and behaviors, business model norms, institutional and industry practices are often not respected.  In fact, they are often viewed as mere artificial limitations created by incumbents for the purpose of protecting their own status quo and limiting customer choices and options.  In the Silicon Valley rewards are given most often to those that think out-of-the-box, not to those trying to fit in it.

Silicon Valley consulting companies and entrepreneurs often believe in fuzzy math.  They believe that 2 + 2 does equal 5.  They have witnessed firsthand entrepreneurs networking independent car drivers together with ubiquitous wireless broadband, maps, mobile apps, mobile payments and a demand for transportation into – Uber!  They have experienced the value of collecting concepts, ideas, technologies and best practices from many different industries and combining them into new business models that thrives and add exponential business value!

Businesses with Silicon Valley DNA by their very nature also look beyond technologies.  With an entrepreneurial mind they consider competition, markets, regulatory environments, industry trends and much more.  This is a requirement for start-ups and these considerations are embedded in their approach to consulting.

We have of course generalized in this article.  Not every business with Silicon Valley DNA is geographically located in Silicon Valley, but having this DNA is a huge advantage.  


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Kevin Benedict
Senior Vice President, Solutions Strategy, Regalix Inc.
Website Regalix Inc.
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***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I work with and have worked with many of the companies mentioned in my articles.