Attending Social Media Week last week in New York, one would have got the impression that New York is the centre of the tech universe. In particular, during one keynote, venture investor Jalak Jobanputra quipped that Silicon Valley entrepreneurs from San Francisco were asking her ‘how do I get to New York?’, referring to the fact that more was happening in ‘Silicon Alley’ (New York) than in ‘Silicon Valley’. Apart from the obvious answer that came from someone in the room (fly JetBlue), it seemed to be that panel of speakers were all convinced that New York now had more going for it than the Valley.

When you look at deals, the volume of deals is still higher in Silicon Valley (by about five times more than New York), but when comparing 2011 numbers to 2010 numbers, VC investments in New York rose 64.3 percent in terms of dollars and 10.2 percent in terms of deals, while investment in California rose only 24.4 percent in terms of dollars and 5.0 percent in terms of deals (see ‘Venture capitalists favor Silicon Valley, but Silicon Alley is rising fast’). So one can see where the New York tech community representatives were coming from.

Silicon Valley also saw significant jobs and wealth growth – according to the 2012 Silicon Valley Index, more than 42,000 jobs were created in the region in 2011, and Silicon Valley’s per capita income in 2011 expanded by four percent to reach $66,000. The index also revealed that patent registrations leapt by 30 percent over 2009 with 13,311 new patents registered in 2010, largely in computers, data processing and information storage.

Given the title of this publication, we often get asked “Where is the next Silicon Valley”.  Actually as we have established above, Silicon Valley might set the global benchmark, but given the question posed at the beginning of the article, it might not actually be a relevant question, given that it is possible to collaborate using social and online collaboration tools. What seems more relevant is whether a good innovation ecosystem can be formed locally that can connect with the global network.

In this scenario, and it already happens extensively, start-up and fast growing tech (and non-tech) companies are building teams in the relevant locations where there is expertise and where the customers are located – these are increasingly in different and multiple locations – and then exploiting the benefits of online tools and social media to build globally dispersed teams from the outset.

And some investors are beginning to recognize the fact that they need to venture to other innovation hubs (for example Dave McClure going to New York and various parts of South America last year) and not just in their back yard.

So the question is not about whether you should be in Silicon Valley vs Silicon Alley, or Bangalore vs Recife: the question is more about how you can build across multiple innovation hubs simultaneously. Innovation is now global not just local.

In fact the word ‘innovation’ actually appeared 35 times in the 100-page agenda of the World Economic Forum – compared to 14 mentions of ‘governance’, 24 mentions of ‘war’, and five mentions of ‘poverty’.

It seems Davos was trying to make itself more relevant – according to The Washington Post, it must counter popular perception that it is largely an event for out-of-touch global elite and assorted celebrities to determine the fates of the other 99%.  As part of this objective, this year’s participants include new voices from the Arab world as and ‘global shapers between the ages of 20 and 30’ (see below) who can inject new energy into finding a solution to the world’s most critical issues. The event also had a significant online presence, on Facebook, YouTube and Twitter.

In the ‘shaping new models’ session, the leaders explored how organizations build creative, engaging and energizing workplaces.
 Participants addressed ‘designing creative environments’, ‘creating a culture of successful failure’ and ‘managing energy and time for resilience and performance’. All are key indications of success of an innovation hub. It also led a conversation around the question of how ‘art and science of creativity’ will change in a century of engineering – in other words, looking at how to build creative ecosystems; and a conversation on how ‘informed and connected consumers’ are reshaping product and service innovation.

Leadership and innovation models

At the leadership and innovation models session, they debated the scope of innovation: “We think of innovation as involving technology,” said Johanna Mair, professor, Stanford University, USA, global agenda council on social innovation. “We need to shift gears and reboot to look at innovation as not limited to physical technology, but involving social technology as well.”

The session concluded that the business world is trying to keep pace with new technology, and the political world is trying to catch up to the business world. The public sees all of this as a kind of creative chaos, and is calling on a new generation of leaders to make sense of it all, and do it quickly. New leaders will need to have a much broader scope than those of the past. To avoid being overtaken, they will need to closely monitor a far more diverse range of social factors and groups than ever before.

Youth – global shapers

Recognizing that youth drive the technological-cum-social change the world is going through, the World Economic Forum invited 70 young ‘global shapers’ to the 2012 annual meeting. According to the official web site, since half of the world’s population is under the age of 27, it was vital that young voices were heard. This group came from 44 city-based ‘hubs’ established by the forum in 36 countries, including China, Egypt, India, Israel, Mexico, the Palestinian Territories, Russia, Switzerland and the USA. The community has an average age of 27 and its representation included 20 chief executive officers, a 24-year-old mayor from the Philippines, a bioengineer who created a cardiac surgery simulator used by over 3,000 surgeons worldwide, and a professor of nanotechnology from Zurich.

“Once, the best indication of success was an individual’s past experience. Now, with the world as interconnected as it is, we find the old models are no longer working and we need fresh approaches to solving the world’s most pressing problems,” said Professor Klaus Schwab, founder and executive chairman of the World Economic Forum.  “The Global Shapers are ‘digital natives’ who grew up with the Internet. They have vision, think laterally, act quickly and make connections across networks in order to successfully solve problems. This community is of vital importance and we see tremendous opportunities for shapers and today’s leaders to learn from one another.”

“Young people don’t need today’s leaders to empower them. They are already empowered through their passion, ideas and access to information and technology. That’s true whether they live in Berlin, Bamako or Ulaanbaatar,” says David Aikman, Head of the Global Shapers Community at the World Economic Forum.

In summary, innovation has become a key theme on the economic and political agenda, and the debate has moved on considerably from just innovation in technology. In this age of social media and a generally young global demographic, it’s also recognized that the young global shapers will increasingly influence much of this global innovation both in terms of business as well as governments – as we have seen both in the likes of Facebook and the changes being effected by the Arab Spring.

So the visit by a delegation of senior level leaders from the Arab World to Silicon Valley this month didn’t go un-noticed.  A key part of this mission to the valley was an event entitled, ‘Unlocking the Potential of the Arab Spring’ – which had speakers comprising high-level officials from Egypt, Jordan, Lebanon, Iraq and Oman. The event was organized by TechWadi, which bridges interests and enables collaboration between Silicon Valley and the Arab world.

As the New York Times has commented this week, it could take up to 10 years, but the Middle East and North Africa region is ‘on the cusp of creating its own Silicon Valley experience’.  Governments in the region are ready to pour billions of dollars into developing their own innovation ecosystems and, ultimately, entrepreneurs that create companies that create jobs.

They are looking for know-how to rebuild the country’s economy, and especially how to create the right environment for this to happen, by sparking a culture of entrepreneurship. This was stated for example by the Iraq communications minister Mohammed Allawi at the TechWadi conference, and is something that other ministries around the region have said in recent months. The leaders acknowledge that security is an issue but is something they will no doubt work on improving.

While western countries are looking at innovation and clusters forming the basis of a growth strategy to come out of recession, for the Middle East and Africa, innovation and entrepreneurship is going to be a way of empowering a growing young demographic who have finally been liberated after years, and who have the aspirations to build their own versions of the next Google and Facebook.

Whether it will be in Egypt, Jordan, United Arab Emirates or Libya, there’s a very good chance that there will be some level of success in the region creating multiple clusters capable of creating world-beating entrepreneurial companies.

With a harsh economic environment during 2011, one question that must be on many minds is this: what are governments doing to come out of recession, or to drive economic growth?   It seems that while debt-ridden Western economies are cutting and not always re-investing in growth (or even able to), the global trend, according to a poll of International Association of Science Parks (IASP) members, is about 50:50 in terms of governments maintaining or increasing their support for science parks, and that the majority of parks have grown in 2011.

Science and technology parks are a key ingredient of innovation clusters, and of growth in the 21^st century knowledge economy, so the IASP poll is a good barometer of confidence in the prospects of the innovation economy.  It had asked two questions: 1) if the level of support provided by governments/public administration to parks had changed in the current economic environment, and 2) the extent to which members’ parks had grown in 2011 in terms of tenant companies located in them.

To the question about government support, a total of 49% said that it hadn’t changed or was the same as before, or had increased government support.  A total of 18% were not yet sure of the effects of the economic climate on public support, while 33% said it had decreased.

On the question of growth, the results showed the majority of the parks (64%) grew by up to 19%; meanwhile, a total of 24% of parks saw growth of more than 20%, and 5% of parks grew exponentially by increasing the number of tenant companies by more than 50%; in addition, 5% experienced high growth between 30-50%. Only 14% of respondents said their park experienced no growth in 2011.

Growth is coming from all regions around the world – in recent weeks, the IASP has added or upgraded members from Slovenia, Italy, Vietnam, and the USA too.

In a recent interview carried out by The Next Silicon Valley’s editor, Richard Wallace, you can also see why China is becoming the next big thing in the electronics industry, and particularly in fabless semiconductors. South East Asia is also becoming a goldmine for angel and venture capital investment, especially in the emerging markets, quietly creating a maturing and entrepreneurial culture itself.

Australia is also a rising star in the global scene (Top tech successes and failures of 2011); according to this story, investment in Australian tech startups boomed in 2011, with several receiving funding from large US venture capital firms. It’s reported that US venture capital firm The Founders Fund (headed by PayPal co-founder Peter Thiel and Facebook’s first president, Sean Parker) is sending three of its top executives to Australia this month to meet with local tech startups.

The increasing global connectivity combined with knowledge ecosystems, funding sources and good infrastructure is a the key to the growth of the science parks in 2011, and this is likely to be a continuing trend as new business models emerge in this global marketplace . As Thomas Friedman says (“So Much Fun. So Irrelevant.”), the best ecosystems will be cities and towns “that combine a university, an educated populace, a dynamic business community and the fastest broadband connections on earth; these will be the job factories of the future. The countries that thrive will be those that build more of these towns that make possible ‘high-performance knowledge exchange and generation’.”

In the article, Friedman notes that throughout history economic clusters have always required access to abundant strategic inputs for success – where it might have been access to abundant flowing water and raw materials in the 1800s, and access to abundant electricity and transportation in the 1900s, our economy today and the rest of this century will rely on access to abundant bandwidth and abundant human intellectual capital.

With this kind of infrastructure being important for growth, we can see why government support for science parks has broadly continued positively on a global basis – and those regions that will emerge as the best next Silicon Valley or cluster are those that will have strong government backing plus the other essential ingredients needed – talent and funding.