The Rainforest: Building the Next Silicon Valley

For over a decade, Silicon Valley has been a hub of technological innovation and the home of some of America’s best known and fastest growing companies. Think Apple, Google, and Facebook.  As the U.S. seeks to restore its economic advantage, academics, businesspeople, and policymakers alike have turned to Silicon Valley as a model for jumpstarting economic growth.  The primary focus has been on innovation and the development of the next wave of technologies that the American economy can ride to renewed prosperity.  However, this task is much easier said than done, for creating a thriving entrepreneurial ecosystem takes effort and purpose.

In an attempt to answer this question, Victor Hwang, co-founder and Managing Director of T2 Venture Capital in Silicon Valley and coauthor of the new book The Rainforest: The Secret to Building the Next Silicon Valley, lays out a new model for thinking about innovation hubs and entrepreneurial epicenters.  Hwang uses the model of the “rainforest vs. the plantation” in order to illustrate his new framework.  The “plantation model” is the current model we use for innovation, defined by its controlled environment.  Plantation farmers know exactly what they are planting and how they are going to do it.  The outcome is organized and expected.  Rainforests are the complete opposite.  Growth in the rainforest is wild, asymmetric, and serendipitous.  The heterogeneous assortment of wildlife creates new species, and weeds actually grow best in the rainforest.  Hwang believes that the new species and weeds are the most valuable, symbolic of the new technologies or unconventional ideas often become the big breakthroughs that change society.

Much the way rainforests combine many different species, innovation can best be encouraged by bringing together people from diverse backgrounds and different locations.  In order to develop innovation on the scale of Silicon Valley, we should focus on human interaction, collaboration, and exchange over economists’ “factors of production.” However, we do not need to stress having a geographic location for this interaction.  If we simply emphasize connecting individuals and companies, it doesn’t matter where they physically are.  In addition, Hwang states that we should focus on the “creative re-assembly” of old and new ideas over the pursuit of “creative destruction,” which can be expedited through interaction.  Rather than developing explicit policy recommendations, Hwang instead outlines the tools that policymakers could use to help build more “rainforests.” These include an emphasis on learning by doing, enhancing diversity, celebrating roles models and peer interactions, building “tribes of trust,” creating social feedback loops to test ideas, and making social contracts explicit.

While Hwang’s ideas are on balance more philosophical than concrete, this new approach serves well to alter mainstream perspectives and infuse the innovation debate with fresh ideas. Hwang calls for a turn away from the neoclassical or cluster economics approaches to innovation.  Instead he argues that “social capital is the competitive advantage of the future,” and creating networks and strengthening human connectivity are the keys to developing that advantage.  Policymakers would be wise to reorient themselves towards this shift, and maintain America’s place as the center of great ideas.

Posted by: Brian Gowen

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3 Responses to The Rainforest: Building the Next Silicon Valley

  1. Pingback: The Rainforest: Building the Next Silicon Valley « America and the Global Economy « the innovation rainforest

  2. Santiago M. López says:

    Clear, a good perspective but in any case this The Rainforest is so near to the ideas of Science Republics of Merton and Polyany

  3. The Rainforest book is a must-read for anybody interested in understanding the process of innovation. The type of ecosystem described in the book is not needed just for economic development, it should exist within every corporation.

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