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Want to be an innovation hot spot? Don’t copy Silicon Valley

Written by: John Morgan
Published on: 22 Feb 2021

American actor Jack Haley as Hickory/The Tin Man in 'The Wizard of Oz', 1939

Source: Getty

Follow a different road: ‘There are many paths to innovation-based growth’

Dan Breznitz’s Innovation in Real Places: Strategies for Prosperity in an Unforgiving World might surprise some people. The forthcoming book advises regions to shun the Silicon Valley model of innovation. It says prestige research universities are peripheral to innovation. It uses lots of Wizard of Oz quotes.

Many politicians, policymakers, business leaders and journalists believe that innovation means one thing: the venture-capital-funded tech start-up model that sprang up in Silicon Valley around Stanford University and the University of California, Berkeley.

But Professor Breznitz, the Munk chair of innovation studies at the University of Toronto and co-director of its Innovation Policy Lab, wants people to look beyond that to “innovation-based growth models that supply vast quantities of good jobs to people with multiple skills backgrounds, instead of a few fabulous jobs that are available only to the graduates of the world’s elite universities”.

The core argument of Innovation in Real Places is that “we should remember what innovation is and why we care about it”, Professor Breznitz told Times Higher Education. The first part comes down to realising that “innovation is not invention”, he explained.

The book defines innovation as “any activity along the process of taking new ideas and devising new or improved products and services and putting them in the market”.

It breaks innovation into four stages: novelty; design, prototype development, and production engineering; second-generation product and component innovation; and production and assembly.

In the early days of the technology giant Apple, much of that whole process happened in California. But those pushing the Silicon Valley “novelty” model as the route to growth are behind the times, Professor Breznitz said.

He argues that now that the innovation process can be cut into small stages and moved around the world, the spillover benefits from the US technology industry are accruing for people in Taiwan (the global hub for creating electronics and semiconductors needed for the products devised in Silicon Valley) and Chinese Pearl River Delta cities such as Shenzhen (which puts a “high degree of innovation” into the complex process of putting together tablets and smartphones from components manufactured around the world).

Back in California, the graduates of elite universities now working in start-ups might become billionaires, but they create “very few good jobs for the people around them, unless, of course, you are a celebrity chef or a plastic surgeon”, said Professor Breznitz, an Israeli-born academic whose previous books have compared Israel, Taiwan and the Republic of Ireland as innovation nations, and examined innovation across three Chinese regions.

In Israel, whose rapid growth in technological innovation saw it transition from relatively equal to highly unequal society, those not part of the technology industry are now “in a worse state – just like the people in Silicon Valley – because everything around them is much more expensive”, he continued.

“People don’t really think about the consequences [of the Silicon Valley model], and they don’t really understand that the world has changed and that there are many, many different paths to successful innovation-based growth,” said Professor Breznitz.

Taiwan, Finland and Sweden have excelled in innovation without unleashing massive inequality by specialising in parts of the innovation process beyond the Silicon Valley stage, he argued. Germany is another nation concentrating on “second generation” rather than “novelty” innovation.

And those countries have done so without having “world leading” universities. Three of the big “common obsessions of innovation consultants worldwide – venture capital, science parks, and globally competitive research universities – very rarely played roles” in successful regions, Professor Breznitz writes. The universities of Cambridge and Oxford have long soared in the THE World University Rankings, yet “looking at the UK’s economy, one would be hard pressed to find any discernible positive effects on innovation”, he observes.

Where universities do play a role in innovation regions – such as Taiwanese institutions or McMaster University in Hamilton, Ontario, highlighted in the book – they mostly don’t look anything like Stanford or Oxford, Professor Breznitz argued. These universities are “completely weaved into the local industry, in terms of training, in terms of creating R&D capabilities”, but “what they don’t do is somehow by themselves create all the start-ups” or “have a huge backyard” to start a science park, he added.

Stanford is a one-off, and if your innovation policy relies on universities, then “you are barking up the wrong tree”, he said.

Professor Breznitz intends his book to be readable and accessible to anyone “interested in local economic development”: a policymaker or citizen “who really cares about Yorkshire”, for example (the Wizard of Oz quotes seem to highlight the fantastical visions of the “misconception mongers” selling the Silicon Valley model).

If we “wake up to the global reality and change our innovation policies, there is no reason to believe that the future of democratic capitalism is either horrifying levels of inequality or depressing economic stagnation”; if not, “we will be doomed to one of these two options”, writes Professor Breznitz.