The Silicon Valley economy is at risk. While Valley enterprises are reengineering to become world competitive, the region's economic infrastructure is not keeping up with its enterprises. How Silicon Valley addresses this growing imbalance between Valley enterprises and its economic infrastructure will determine its future.
Today, a number of significant warning signs indicate that the region is out of balance. On the enterprise side, we see dramatic business restructuring, slower employment growth, a slowdown in new business formation, and support industries in decline. On the economic infrastructure side, we see a slower growth in pre-competitive R&D, a growing skills mismatch, declining venture capital, rising cost of regulations, high housing costs and a perceived decline in quality of life. Competitor regions - such as Austin, Phoenix, and Portland in the U.S. and Singapore abroad - have been taking aggressive action to organize for the future by addressing defects in their economic infrastructure and building on their strengths.
Three possible futures illustrate the choices open to the Valley:
- High-Tech Manhattan: A headquarters and administrative center with production elsewhere. In this future, companies profit while the community loses employment.
- Virtual Valley: A node in a network economy with niche operations. In this future, companies gain global market share while the community loses value added.
- American Tenchnopolis: A dynamic community that supports technology enterprises and retains value added, employment, and wealth. Companies and the community both win.
Joint Venture: Silicon Valley is an unprecedented effort by Valley enterprises to work together to address the challenges of the future. It will address the growing imbalance by redesigning key elements of the region's economic infrastructure to create a more competitive environment.
This diagnosis identifies the key challenges that will be addressed by Joint Venture: Silicon Valley as leaders from Valley enterprises and the community begin to work together to identify specific steps to build a more balanced economy. By doing so, Silicon Valley can once again lead the way toward a next-generation economy. Silicon Valley can reinvent itself and create a new economic model for the twenty-first century.