Article: Notes from the Director--The Knowledge Factor in Silicon Valley :: Smithsonian Lemelson Center
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Art Molella, Jerome and Dorothy Lemelson Director
The iconic Hewlett-Packard garage in 2009. Courtesy of BrokenSphere/Wikimedia Commons

Why does Silicon Valley continue to flourish and reinvent itself, despite periodic pronouncements of imminent decline or technological demise? What seems to sustain it through the rough patches, including some near-death experiences, is the region's resilient knowledge economy. Now a deeply internalized characteristic of Silicon Valley, the commitment to knowledge and especially knowledge-sharing is largely the legacy of one man, Frederick Terman, the Stanford University provost and engineering professor who is widely recognized as the father of Silicon Valley. It was Terman who mentored Stanford electrical engineering students William Hewlett and David Packard, who in turn founded their company, Hewlett-Packard, in a now-legendary garage and quietly heralded the beginnings of Silicon Valley.

Terman's goal was to import the Cambridge-MIT model of regional innovation (the subject of last month's Prototype) to the West Coast. For Terman, marrying the knowledge of the university to the practical concerns of industry was critical to the formation of a self-sustaining high-technology and knowledge region. Recalling his days as the doctoral student of MIT professor Vannevar Bush, one of the founders of the MIT innovation "hot spot," Terman observed: "'There was always an industry around Cambridge and MIT was right in the middle of it. It was easy for a professor to find things to do in industry where his specialized knowledge was of value to them, and it would be kind of fun for him to apply some of his knowledge to real world activities. Every place you looked you would find guys doing something with some company'" (Saxenian, pp. 14-15).

He saw to it that Stanford would do for the Santa Clara Valley what MIT had done for Cambridge and Boston's Route 128 Technology Corridor. Success far exceeded expectations, and soon Silicon Valley was outstripping Route 128 technologically and economically. Eventually, Route 128 faltered, while Silicon Valley continued to charge ahead.

What made the difference? According to sociologist Annalee Saxenian, a major factor was the development of a "collective learning" environment in Silicon Valley in which fierce industrial competitors agreed to collaborate and share basic technical knowledge for the benefit of all. Terman and Stanford played a crucial role in creating the nurturing atmosphere that turned competitors into collaborators. According to Saxenian, by failing to get over its hierarchical and competitive ways, Cambridge never achieved this easy flow of knowledge.

Frederick Terman. Courtesy of the IEEE History Center

In forming Silicon Valley, Terman clearly held intelligence in the highest regard. He probably inherited these values from his father, the pioneering Stanford psychology professor Lewis Terman, co-inventor and popularizer of what came to be known as the Stanford-Binet intelligence test, the IQ test that is with us to this day. But the son expanded his interpretation of intelligence to what economists call "collective intelligence." In his provocative new book, The Rational Optimist: How Prosperity Evolves, Matt Ridley argues that human inventiveness and technological progress, stagnant for hundreds of thousands of years of pre-history, took off spectacularly about 45,000 years ago with the rise of trade and cities. Ridley defines collective intelligence as "the notion that what determines the inventiveness and rate of cultural change of a population is the amount of interaction between individuals." Such collective interactions can accomplish far more than any single individual, especially with today's advanced state of knowledge. It was precisely this type of interaction that Terman successfully fostered in Silicon Valley and that arguably accounts for the region's enduring vitality.

Interestingly, even though Terman seemed to know this intuitively, he never quite succeeded in making it work elsewhere. While at Stanford and into his retirement, Terman became something of a proselytizer for the Silicon Valley model, involving himself in many attempts to establish it elsewhere, in Colorado, New Jersey, and Texas, for example. Few of these attempts enjoyed any measure of success. The main reason for failure seems to have hinged on perhaps the hardest thing of all to achieve--the ability to instill the value of shared knowledge among fierce technological competitors.

For further reading:

Stuart W. Leslie and Robert H. Kargon, "Selling Silicon Valley: Frederick Terman's Model for Regional Advantage," Business History Review, vol. 70, no. 4 (winter 1996), pp. 435-72.

Matt Ridley, The Rational Optimist: How Prosperity Evolves (New York: Fourth Estate, Harper, 2010).

AnnaLee Saxenian, Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Cambridge, Mass.: Harvard University Press, 1994).

From Prototype, June 2010

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