Bringing Silicon Valley Inside (HBR OnPoint Enhanced Edition) | Gary Hamel

book: Bringing Silicon Valley Inside (HBR OnPoint Enhanced Edition) | Gary Hamel

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Bringing Silicon V...

	Bringing Silicon Valley Inside (HBR OnPoint Enhanced Edition) Gary Hamel Harvard Business Review, 2000 - 18 pages average customer review:based on 1 review view larger image
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In 1998, Silicon Valley companies produced 41 IPOs, which by January 1999 had a combined market capitalization of $27 billion--that works out to $54,000 in new wealth creation per worker in a single year. Multiply the number of employees in your company by $54,000. Did your business create that much new wealth last year? In Silicon Valley, ideas, capital, and talent circulate freely, gathering into whatever combinations are most likely to generate innovation and wealth. Unlike most traditional companies, which spend their energy in resource allocation--a system designed to avoid failure--the Valley operates through resource attraction--a system that nurtures innovation. In a traditional company, people with innovative ideas must go hat in hand to the guardians of the old ideas for funding and for staff. But in Silicon Valley, a slew of venture capitalists vie to attract the best new ideas, infusing relatively small amounts of capital into a portfolio of ventures. And talent is free to go to the companies offering the most exhilarating work and the greatest potential rewards. It should actually be easier for large, traditional companies to set up similar markets for capital, ideas, and talent internally. Big companies often already have extensive capital, marketing, and distribution resources, and a first crack at the talent in their own ranks. Some are doing it. The choice is yours--you can make sure you never put a dollar of capital at risk, or you can tap into the kind of wealth that's being created every day in Silicon Valley.

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Conservation versus wealth-creation in traditional companies

Gary Hamel is a Distinguished Research Fellow at Harvard Business School, a Visiting Professor of Strategy and International Management at the London Business School, and chairman of Strategos, a California-based consulting firm. He is author of 'Leading the Revolution' (2000), and co-author of 'Competing for the Future' (1994) and 'Alliance Advantage' (1998).

Hamel refers to Silicon Valley as "the distilled essence of entrepreneurial energy", which provides "unfettered imagination and unbridled ambition". According to the author, companies need to move away from traditional conserving stewardship to wealth-creating entrepreneurship. In order to free up the entrepreneurial spirit inside companies, they have to set up and sustain dynamic internal markets for ideas, capital, and talent. This requires them to move away from resource allocation (traditional capital budgeting), which is about managing the downside, to resource attraction, which is about creating the upside. Hamel then discusses the market for ideas, the market for capital, and the market for talent in more detail, whereby he uses Royal Dutch/Shell GameChanger-initiative, Sun Microsystems' Andy Bechtolsheim, Richard Branson's Virgin, GE Capital, Xerox's Palo Alto, and Monsanto's transition as examples. Gary Hamel concludes that large companies do have their own advantages (resources, such as capital, brands, distribution assets) over Silicon Valley start-ups and should use those advantages in combination with preferential access to ideas from their employees to create (even more?) wealth.

People who have read books and articles by Gary Hamel before know that they are never dull and always raise questions and discussions. This article is not any different, but I must admit that I found this article the weakest one. There is just too much speculation and over-generalization on large companies and their employees (especially executives) with little back-up by facts. Especially with the hindsight we now have on the Internet-hype (this Harvard Business Review article was published late-1999), some of the statements and conclusions are very questionable. After reading this article, I am left wondering whether I should open his book 'Leading the Revolution' or not - it is currently collecting dust in my bookcase. The article is written in simple US-English. Please note that this article runs on Acrobat eBook Reader software and is not a .pdf-file.

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