Is Silicon Valley Sustainable? Tapan Munroe, PhD Triple Helix 2011 Conference Stanford University Stanford, CA July 17, 2011

The Innovation Ecosystem Model Framework The Innovation Ecosystem Model 4. Workforce 2. Entrepreneurs 5. Social and Professional Networks 6. Quality of Life 8. Integrative Organizations,QB3,CONNECT © T. Munroe, 2011 7. Government 3. Investment Capital 1. Research Universities Tapan Munroe, PhD

Innovtion Ecosystem Issues Discussion of issues relating to each element of the innovation ecosystem follows:

California Budget Crisis Threatens State’s Top Universities Key Element #1: Universities California Budget Crisis Threatens State’s Top Universities $500 million cut from the UC system Research budgets cut Difficult to retain world-class faculty 3 prominent bio-scientists recently lured away from UC Davis to Rice University in Texas More may follow from UC Berkeley, UCLA, and UC San Diego Tapan Munroe, PhD

Key Element #1: Universities Top Entrepreneurial Universities: U.S.: Only 4 in Top 10 (3 are West Coast) Rank University Location 1st Stanford University Palo Alto, CA, USA 2nd MIT Boston, MA, USA 3rd Cambridge University Cambridge, UK 4th UC Berkeley Berkeley, CA, USA 5th Indian Institutes of Technology India 6th Oxford University Oxford, UK 7th National Univ. of Singapore Singapore 8th University of Copenhagen Copenhagen, Denmark 9th Stockholm University Stockholm, Sweden 10th UC Davis Davis, CA, USA Source: YouNoodle.com Tapan Munroe, PhD

How are Universities Ranked? Algorithm Developed by YouNoodle.com Key Element #1: Universities How are Universities Ranked? Algorithm Developed by YouNoodle.com Rank based on university’s significance a startup community Determined by factors: Number and quality of the startups Activity of its groups Business plan competitions Availability of talent Investment in the area Success of past startups Tapan Munroe, PhD

Business Plan Competitions: Many More Around the World Key Element #1: Universities Business Plan Competitions: Many More Around the World Source: YouNoodle.com Tapan Munroe, PhD

Start-ups: Key to Sustainability Key Element #2: Entrepreneurs Start-ups: Key to Sustainability The Valley’s success depends on a constant process of renewal Start-ups transform ideas and money into new products and services Start-ups ultimately create jobs and prosperity Net U.S. job growth comes from start-ups Need to encourage innovative gazelles Need to support scale –ups. Tapan Munroe, PhD

Skills Gap: A Serious Challenge Key Element #4: Workforce Skills Gap: A Serious Challenge Workforce Lacks Skills for Today’s Jobs Growing Number of Unfilled Jobs as U.S. Economy Recovers: Feb. 2011 - 3.1 million unfilled jobs(mostly STEM related) Much higher in 10 yrs if nothing is done to the education-to-employment system Talent War in Silicon Valley! Tapan Munroe, PhD

Skills Gap is a Global Issue Key Element #4: Workforce Skills Gap is a Global Issue Eastern Europe: Consistent drain of talent to Western Europe 44% employers listed skills shortages as their primary obstacle to growth Middle East: A minimally trained labor force Severe restrictions of foreign labor Latin America Lack of skilled labor Sources: NASSCOM, New York Times, McKinsey Tapan Munroe, PhD

Place Matters Even in Our Digital Age Key Element #6: Quality of Life Place Matters Even in Our Digital Age Smart people like to live in good places Silicon Valley is challenged by: Traffic congestion / Limited public transit High cost of housing (even with prices down) Declining educational performance Tapan Munroe, PhD

Fiscal Crisis May Undermine Valley Innovation Key Element #7: Government Fiscal Crisis May Undermine Valley Innovation U.S. fiscal crisis is likely to deter government investments in major cleantech projects Recommendation: need intense innovation effort in the Valley to make cleantech economically competitive State (Ca.)and regional governments can’t afford … Critical improvements in infrastructure Subsidies for Valley cleantech projects Tapan Munroe, PhD

Integrative Organizations(IO’s): Innovation Accelerators Key Element #8: Integrative Organizations Integrative Organizations(IO’s): Innovation Accelerators IOs bring elements together and stimulate collaboration Traditional universities aren’t equipped to play the entrepreneurial role States are creating new IO organizations: Within the university (e.g. QB3) Outside (e.g. USTAR, Science Foundation Arizona, CONNECT, San Diego) IO’s: “The next generation of industry-university research partnerships” Focused on creating, sustaining, and growing the innovation ecosystem Tapan Munroe, PhD

Silicon Valley: Still the Top Innovation Region Assessment Silicon Valley: Still the Top Innovation Region Strengths World-class culture of innovation and collaboration Easy access to capital and expertise Highly resilient: Silicon Valley has an incredible record of sustained success through numerous boom/bust cycles Once again the Valley is in a boom after a major recession Opportunities: Continuous process of innovation Example: Make cleantech cost effective New technology breakthroughs Tapan Munroe, PhD

Silicon Valley: Facing Many Risks – Local and Global Assessment Silicon Valley: Facing Many Risks – Local and Global Weaknesses: Quality of life issues e.g. traffic congestion & education skills gap-local as well as a global issue Poor results with scaling-up of startups. Threats: Increasing Competition from other tech regions Another bout of irrational exuberance? UC campuses losing faculty and funding? Cleantech may lose government subsidies? Tapan Munroe, PhD

Is Silicon Valley Sustainable? Observations & Conclusion Is Silicon Valley Sustainable? Observation: Silicon Valley has the capacity, experience and know-how to remain competitive in the global innovation race Conclusion: Yes, of course! But, the Valley’s innovation ecosystem faces many risks.

“Global economic competition is all about who can innovate the best and fastest” …..Marty Beard, President, Sybase 365,in Closing America’s Job Gap, January 2011

Thank You Tapan Munroe, PhD www.TapanMunroe.com www.ClosingAmericasJobGap.com tapan@tapanmunroe.com