TBIXI3

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IT'S A JUNGLE OUT THERE...
...and this book might be the way out. Silicon Valley is roughly
thirty years old, and while the region's success has been
lasting, replicating similar technology hubs elsewhere has
proven especially challenging. Considerable resources have
been applied to understanding Silicon Valley, but what was
hoped to be a model still seems more like a mystery.
Two respected Silicon Valley insiders, Victor W. Hwang and
Greg Horowitt, now claim to have solved the mystery by
proposing a radical new understanding of Silicon Valley's
innovation system in their book, The Rainforest: The Secret to
Building the Next Silicon Valley.
Using clear language and concrete examples, Hwang and
Horowitt upend conventional wisdom by demonstrating that
"free markets" are actually constrained by invisible
transactional costs created by social barriers, such as the
perceived differences between people in class, status, culture,
and language. These social barriers reduce trust, the authors
argue, impeding the flow of information and the circulation of
resources throughout the system, thus limiting the ability of
entrepreneurs and innovators to access the means they need
to succeed.
In productive innovation systems like Silicon Valley - what
Hwang and Horowitt call "Rainforests" - people are
encouraged to trust each other regardless of cultural
background, status, or social group. Individuals are willing to
share resources without expecting something of equal value
immediately in return. Thus, transactional costs are reduced,
speeding the movement of talent, ideas, and capital. A young
entrepreneur in Silicon Valley, for example, can therefore
more easily access the assistance of a seasoned business
professional than they could in a traditional social
environment.
"To explain the difference between highly productive
systems like Silicon Valley and most other places in the world,
what is most important are not the ingredients of economic
production, but the recipe - the way in which the ingredients
are combined together," the authors write. "Human systems
become more productive the faster that the key ingredients of
innovation - talent, ideas, and capital - are allowed to flow
throughout the system."
Hwang and Horowitt also challenge the fundamental
notion that economic productivity is highest when the rational
pursuit of selfish motives is greatest. When it comes to the
culture of Silicon Valley, and to innovation systems in
general, they claim individuals must rise above short-term
selfishness and focus on long-term mutual gain in order to
produce the greatest overall economic benefits.
Describing how a rainforest works requires a host of
scientific disciplines. Similarly, the authors draw from a
range of natural and social sciences to detail the human
ecosystem of Silicon Valley - including sociobiology,
economics, political science, psychology, chemistry,
neuroscience, physics, and mathematics. Their emphasis
on practical observation and application, however, is what
enables them to combine ideas from disparate studies into
an accurate depiction of the ways innovation hubs work in
real life, with all the complexity, dynamism and symbiotic
interdependence of real-world ecosystems.
The book also provides specific tools that incubator
professionals and others can use to improve their
innovation systems. These tools include the underlying
rules of behaviour that cause people to come together in
successful innovation communities, and an actual recipe
for fostering the environmental conditions that cause an
innovation Rainforest to flourish.
The authors' perspective is informed by their
experience as entrepreneurs, venture capitalists, and
consultants in Silicon Valley and around the world. Their
firm, T2 Venture Capital, combines a venture capital fund
with an international technology development consultancy
specializing in regional innovation hubs.
Whether you're an incubator professional, venture
capitalist, entrepreneur, economic development expert, or
whatever your field, the book has a wealth of ideas and
tools you can apply to foster innovation in your work.
innovationrainforest.com
theReview
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