In the 1950s, Detroit was a hotbed of innovation. Home to the top three global car companies, “the world’s leading entrepreneurs flocked there for access to talent, capital, and culture,” according to a recent Fast Company article by Alex Lazarow. Over time, however, this changed as other regions became innovation hubs for automotive manufacturing, and Detroit ultimately fell behind.
Lazarow suggests that Silicon Valley may be headed for a similar fate unless it finds ways to “cement its dominance in the tech world.” His piece outlines a few opportunities, including:
Focusing on different industries. By evolving to focus on solutions to global challenges such as healthcare, education, financial inclusion, and agriculture, Silicon Valley can combat some of the threats from other innovation markets. According to Lazarow, only 18 percent of U.S. unicorns are currently invested in these areas—representing a huge untapped opportunity.
Innovation from diversity. As Lazarow puts it, “Silicon Valley has long been obsessed with disrupting existing but inefficient industries with new software-based tools. The future opportunities will come from creating solutions for the mass market and particularly for the underserved.” A key part of doing this right is embracing greater diversity not only in the workforce but in capital distribution as well. He urges venture capitalists to expand beyond their typical technology leadership profile and seek opportunities to fund companies led by people from different backgrounds.
Rethink talent. It follows that organizations must change their approach to recruiting and workforce management as they bring on the right employees to help the company succeed in the long term. Lazarow writes, “Distributed teams will be increasingly important to tap the world for talent, as technology skill sets grow globally and more remote work becomes the norm.” As these changes take shape, companies may need to lobby government bodies to ensure that immigration issues don’t prevent them from hiring and keeping the right people.
Prioritize resilience over growth. According to Lazarow, “There will be a lack of appetite for business models that include subsidizing costs as part of its way to incentivize and gain customers. Instead, Silicon Valley will need to refocus on building startups that are sustainable, resilient, and built to last.” For many firms that still embrace the traditional cutthroat Silicon Valley mentality, this represents a real change in operating strategy, however, Lazarow believes it’s essential in order for the region to remain an innovation hub.
As Lazarow puts it, “When the world goes through a seismic shift like the current one, people, companies, and governments all have to pivot to stay relevant.” In this environment, in which geography is becoming less important for success, Silicon Valley must change its approach in the areas outlined above in order to avoid repeating Detroit’s mistakes.