One of the major factor inputs in Silicon Valley are the universities and R&D firms. Universities are extremely important because one thing in common that every company we visited stated, was the there is a shortage of talent and more available positions than available bodies. Universities, such as Stanford, stand as a double input to the cluster. Stanford has one of the strongest Computer Science programs in the world and produces excellent talents for the tech industry and they also have a very strong research program. A lot of the people we met while visiting companies, were Stanford alums. That alone establishes connections for new grades to the different companies that are looking for new talent. The other strong input, is the research firms. The research firms partner with a lot of the companies, and help work on research theories or solving problems.
In Silicon Valley, there are a lot of different trade associations. They all either consist of or have been started off by respectable figures in the valley. These trade groups work with companies to create communication and dialog between organizations to discuss current and future progress of the tech industry. An example of a major trade association is Silicon Valley Leadership Group. They were founded in 1978 by David Packard of HP and represent over 300 employers on different issues and campaigns that affect the valley. Some topics of interest are education, energy, environment, federal issues, government relations, health, housing/land use, tax policy, transportation, and community (http://svlg.org/about-us
). There are many organizations such as this, some of which also like to set up meetings and events where the different companies in the region can get together and discuss issues such as these. The trade associations in the valley are extremely important and vital to the progress of the industry. By trading technology, data, information, and personnel, the cluster will grow together.
Managerial and Leadership Concerns
Those in leadership and decision making capacities at organizations, including participants of the Silicon Valley technology cluster, are concerned with factor conditions regarding employees, especially those with specialized skills. Michael Porter also discusses this in “Clusters and Competition,” when he writes, “Managers have nightmare visions of losing valued employees to rivals or spinoffs. […] [However,] the presence of the cluster expands their supply. […] Any increase in competition comes with cluster benefits in productivity, flexibility, and innovation” (Porter, 37). Here Porter says that cluster participants have access to an abundant pool of talented personnel, in spite of concerns that these employees may be tempted to leave their organizations. While not apparent during company visits in Silicon Valley, this became much more noticeable during the class’s visit to Groupon, which is located in downtown Chicago. Evidently, a culture difference in risk taking and career pursuing exists between Silicon Valley and Chicago. Those in Silicon Valley have a tendency for risk taking and are unlikely to pursue careers lasting decades, whereas those in Chicago are not as willing to take risks and prefer working at one organization for longer periods of time. Silicon Valley’s pool of employees willing to take risks, and, to a lesser extent, the concentration of venture capitalists, contributes to the presence of startups in the area, as well as innovation of new technology.
University Research Institutions
Stanford research institute is an organization that specializes in client-sponsored research and development. It provides services to government, industry, and private organizations. As a result Stanford Research Institute provides ventures, products, and services that enhance innovation in the Silicon Valley IT-Cluster (About Us). An example of an innovative product that was created by SRI is the voice recognition assistant Siri found in iPhones today. Siri, formally known as PAL, was a form of artificial intelligence created for the United States government to “build a new generation of cognitive assistants that can reason, learn from experience, be told what to do, explain what they are doing, reflect on their experience, and respond robustly to surprise”(SRI International). After SRI created this technology for the government, the institution wanted to bring it to the Marketplace. They did this by creating Siri, which in 2010, was acquired by Apple and integrated into the iPhone 4s in 2011(SRI International).
Concerns for Infrastructure
Participants of the Silicon Valley technology cluster address concerns for factor conditions regarding infrastructure in its various forms, in an attempt to give themselves an advantage over their competition. In the case of physical infrastructure, it was more or less represented by commercial real estate, which in many cases was previously owned by another or former participant of the cluster. For instance, the campus Google currently occupies, which is located in Mountain View, was once owned and operated by Silicon Graphics. The California suburb has seen technology firms settle down and move out, so Google’s decision to plant roots there is nothing new for Mountain View. By purchasing buildings that were already available in Silicon Valley, Google ensures itself an advantage with access to other conditions necessary to actively compete in the cluster.
In addition, Facebook inhabits buildings that were formerly utilized by Sun Microsystems, which was acquired by Oracle, another participant of the Silicon Valley cluster. Facebook’s headquarters is located in Menlo Park, centrally located in Silicon Valley and located near other cluster participants such as Google and Yahoo! Walking around Facebook’s campus, some remnants of Sun’s presence were minute but still somewhat noticeable. Accents in the architecture included the former firm’s logo, which Facebook seemed to opt for retention. A senior employee at Facebook who discussed the Silicon Valley cluster with us indicated that it was a sort of reminder that any participant competing in the cluster, such as Sun Microsystems, may someday cease to exist.
In his piece for the Harvard Business School Press titled “Clusters and Competition: New Agendas for Companies, Governments, and Institutions”, Michael Porter describes how factor conditions in a cluster contribute to innovation and productivity are usually only found within the cluster. He writes, “Specialized factors, especially those integral to innovation and upgrading […], not only foster high levels of productivity but tend to be less tradable or available from elsewhere” (Porter, 11). Although not explicitly discussing it, what Porter says here is quite applicable to the information and data available to participants within a cluster. This becomes much more apparent shortly after this when Porter says, “An important special case of the informational benefits of clusters is the availability of information about current buyer needs. Sophisticated buyers are often part of clusters, and other cluster participants often gain and share information about buyer needs” (Porter, 15). In these statements, Porter says the infrastructure for data is unique to a cluster, and this is attributed to the firms participating in it. This becomes obvious when studying the technology cluster in Silicon Valley, as companies in the region use the data available to them in varying capacities.
A major contributor to the technology cluster in Silicon Valley is the global giant Intel. Silicon Valley’s namesake is in fact attributed to the presence of Intel, as the company employs silicon as a semiconductor in products it manufactures. Since 1968, Intel has provided its customers, specifically other cluster participants, with microprocessors. Firms in the cluster benefit greatly from Intel’s products, which have been refined and improved over the years of Intel’s operation. Conversely, Intel benefits from its consumers buying its products, with research and development of new technology required by specialized firms throughout Silicon Valley’s technology cluster. By providing a specialized factor for cluster participants, Intel has not only encouraged innovation, but also has given itself a competitive advantage.
Yahoo! is another cluster participant that comes to mind concerning information of a buyer’s needs. Although competing with companies like Bing and Facebook, both companies also act as suppliers and consumers of Yahoo!’s products and services. Bing conducts research that Yahoo! implements, but is also a competing cluster participant by providing a similar search engine service. Additionally, Facebook is a competitor of Yahoo! as a mail service, as well as a supplier for Yahoo! as Facebook users share stories from Yahoo! News. However, Facebook also relies on Yahoo! when advertisements for the social media site are shown on pages of search results. These are roles that are usually found in clusters, and the relationships among Silicon Valley’s firms are rather commonplace and expected.