Micro climates of innovation

Today’s New York Times has a fascinating article about the microclusters of technology innovation in Silicon Valley — Silicon Valley Shaped by Technology and Traffic. Similar to the microclimates that determine the locations of the wineries, these microclimates are “collection of remarkably local clusters based on industry niches, skills, school ties, traffic patterns, ethnic groups and even weekend sports teams.”
Take, for example Palo Alto Networks:

Nir Zuk, its founder and chief technology officer, notes that Palo Alto is synonymous with high-tech innovation, and he was living there when he came up with the name.
“But in Silicon Valley, you locate a company where the engineers are,” he said. “You would never locate a networking company in Palo Alto.”

As the article points out,

a look at the microclusters within Silicon Valley demonstrates the business relationships, the social connections and the seamless communication that animate the region’s economy. It also suggests the human nuance behind the Valley’s success and shows why that success is not easy to copy, export or outsource.

That human nuance is the interaction of people and ideas and the transmission of tacit knowledge. In my paper Knowledge Management as an Economic Development Strategy, I noted that economic clusters succeeded because they are efficient knowledge management mechanisms. This micro look at Silicon Valley shows just how local that knowledge can be.
The irony of the information age is that while telecommunications technology has resulted in the “death of distance” for some types of information, being there is still important. It become even more important on the cutting edge of innovation, where face to face interaction and serendipity are key. As Richard Florida says, the world is not flat; it is spiky – because innovative and creative people need to be near other innovative and creative people.

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