What does the Silicon Valley and NASCAR have in common? Upon reading a press release
announcing a recent study on the issues confronting the Silicon Valley economy, it sounds as
though they have been heavily influenced by the racing series.



According to the press release on the recent study; ‘2010 Index of Silicon Valley’ released in
February by the Joint Venture: Silicon Valley Network and Silicon Valley Community Foundation,
it reads and sounds more like Darrell Waltrip from FOX Sports doing color commentary on the
weekly race broadcast than describing the economy of the Silicon Valley.

"Silicon Valley's innovation engine has driven the region's prosperity
for 60 years, but at the moment we're stalled," Joint Venture chief
executive Russell Hancock said in a statement. "What's hard to say is
whether we're stuck in neutral, which has happened before, or whether
it's time now for a complete overhaul," Hancock said.

Light heartedly, the stakeholders statements appear to be more akin to a NASCAR Crew Chief
describing the details associated with preparation for a race than an economy. But maybe the
comments are appropriate in explaining the requirements of supporting a high performing
economy like the Silicon Valley.

The stakeholders in their press release illustrate that the economic downturn has caused jobs,
patents and venture capital investment to decline in 2009.  The report claims that the global
economic crisis has taken a heavy toll on the Silicon Valley and its future as the US center of
innovation is apparently at risk.

Additional quotes from the leadership of the stakeholder organizations illustrate further impacts. 
For example, “With the loss of 90,000 jobs between the second quarters of 2008 and 2009, the
cutting-edge innovators of Silicon Valley apparently could not insulate itself from the larger
economic downturn," said Russell Hancock, Joint Venture president and CEO, and Silicon Valley
Community Foundation CEO Emmett Carson, in a joint statement. And apparently through the
findings of this report the stakeholders feel the Silicon Valley has new challenges. Again, in their
press release they state, "There are clear warning signs suggesting the Silicon Valley has entered
a new phase of uncertainty, and that our competitive standing is at risk." 

Their concerns stem from the impact of the recession coupled with a new era of uncertainty in
attracting top talent, funding innovation and preserving a decent quality of life.
                                     
                                    
                                           Darrell Waltrip of Fox Sports

According to the report, the Silicon Valley is no longer able to attract the foreign talent which
has been its ‘lifeblood.’ The report indicates that "Inflows from China and India continue to
rise, as does investment and collaboration between the Valley and those two nations, but
China and India are both experiencing rapid economic growth." "As they do, opportunities
in those countries will slow the flow of talent here."  So as the global partnerships increase,
the Silicon Valley grows ever more dependent on foreign talent creating problems.  And in
concert with this, the terrorist attacks of 9/11 coupled with the rise of other global high tech
regions, have both made the Silicon Valley less accessible and less attractive.

In addition, the report identified that "The level of investment continues to decline, and venture
capitalists generally have not realized significant returns for the past decade." "Silicon Valley's
economic and innovation engine has cooled off," the report identified, citing a one-percent
decline in 2009 in the number of patents from the region and all-time high office vacancy rates.
Additionally, the report said Silicon Valley is not attracting significant federal funding for research
and was being ‘slammed’ by the California state budget crisis and ‘political dysfunction.’  "Our
vulnerabilities don't mean Silicon Valley's best days are behind it, but they do suggest we're a
region at risk,” according to the report.

In response to the press statements and the findings from the report, it appears that
enhancements, improvements, refinements are always needed.  The stakeholders of the
Silicon Valley have tried to be good stewards working diligently to make the Silicon
Valley a high performing economic region, the model, if not the brand synonymous with
high tech in the world.  Thus, the statements convey a tough time in the pits for the
Silicon Valley. 

However, the Silicon Valley has been the recipient of recent positive news. For example,
the recent comments from the co-CEO of Motorola, Sanjay Jha who stated to the Wall
Street Journal in an article that the talent Motorola needs is in Silicon Valley and
upon its future break-up, it needs to go to that talent base.  That comment should be
proof enough of what outsiders still think of the Silicon Valley. In fact, this comment
unto itself should have jump started the Valley’s engine, hence diminishing any previous
thoughts to the contrary.

In addition to this comment, there has been the recent announcement of the Invest in
America Alliance initiative. This private sector initiative has been created to support
 investment in U.S.-based growth-oriented industries and to significantly increase job
opportunities for this year’s college graduates. The initiative serves as the private
sector's complement to existing state and federal job creation programs through long-
term investment in industries and talent poised to produce the next breakthroughs in
technology innovation. The two-pronged effort includes a commitment from Intel Capital
and 24 leading venture capital firms many based in the Silicon Valley that will invest
$3.5 billion in U.S.-based technology companies over the next 2 years, and no doubt,
many in the Silicon Valley might benefit. These investments will target key innovation
and growth segments such as clean technology, information technology and biotechnology
(new pistons for the Silicon Valley’s motor). Additionally, the Invest in America
Alliance also includes commitments from 17 technology firms and other corporate
leaders (again many from the Silicon Valley) to increase their hiring of college
graduates, some by as much as two times, to create the products and provide the
services of tomorrow.

And recently there was a meeting amongst the mayors of the seven largest cities in
the state hosted by San Jose Mayor Chuck Reed in the Silicon Valley to meet and
discuss with tech companies the issues of importance in growing the high tech sector
in the state and to identify opportunities and directions by teaming with local
political leaders to help in the effort.

There are two sides to every story, but the recent actions coincidental or not sure seem to
be timely to the findings of the report, specifically in keeping the pole position in the context
of the global race for the ‘center’ of high tech.

And while positive press goes a long way to convey a message, the statements from
the stakeholders are reminiscent of the script from the comedy movie about a goofy
stock car racer Ricky Bobby played by comedian Will Farrell and his side kick academy
award winner (Oscar for ‘Best Supporting Actor”), John C. Riley in the film ‘Talladega
Nights.
                                   

The stakeholders appear to be acting like the film characters, specifically Ricky Bobby,
whose judgment has been affected by being too close to the exhaust pipe.  And for the
stakeholders possibly and unfortunately to close to the subject matter. However, both
are endearing to their audiences for their attempts of achieving success and wanting
to be winners. Certainly, the stakeholders’ statements on the report bring forth valid
concerns, but they illustrate a glass half full scenario by failing to mention all the great
work in building such a dynamic center- the Silicon Valley, that the statements just don’t
seem warranted for the leader, granted a battered around the fenders leader, but very
much a track tested leader of the high tech sector of our nation and the world.

But from a NASCAR aficionado’s perspective, the solution seems clear.  Upon a first
glance, it does not appear that the Silicon Valley is stuck in neutral.  But it does
appear that there is something wrong with the engine.  And upon further review, there
is no reason to perform an expensive and time consuming overhaul.  Based upon the
stakeholders statements of the need to attract top talent, acquire funding for innovation
and preserve a decent quality of life, it appears that Silicon Valley’s engine is impacted
by a restrictor plate on its engine’s carburetor (a constrained business environment). 
To solve this problem, develop a plan and solve for each. Go back to the fundamentals,
hire and elect a crew chief and a pit crew, (team members), that are experienced and
successful, e.g., from the public sector (mayors, city council members coupled with city
managers and key department directors), utilize the institutes of higher education and
seek the experience and wisdom of private sector leaders to help put the Silicon Valley
back on to the track and into the lead. But in either case, get over it and get on with it,
because when the yellow flag of this economy gives way to a green one and the Silicon
Valley is not prepared, it will be left in the dust. And as the film character Ricky Bobby
would say, “If you ain’t first, you’re in last.”  And maybe moving forward, that should be the
slogan for the Silicon Valley.

From Your #1 Fan
Tim Johnson
tjohnson@californiabusinessminute.com