Is California the Center of the Universe?

Can other regions of the world replicate the unique mix of innovation drivers that California – and especially Silicon Valley – has been able to put into one magical growth elixir? That was the topic of conversation during a panel I participated in at the Milken Global Conference last week.

It was a rich issue to discuss and, in some ways, debate.  Two of my fellow panelists represented Southern California:  Gil Elbaz, CEO of Factual, and Adam Miller, Founder and CEO of Cornerstone OnDemand.  The other two of us were Silicon Valley residents transplanted from elsewhere, Bracken Darrell, President and CEO of Logitech -- originally from Kentucky -- and me, originally from Canada.  Moderator Kevin Klowden from the Milken Institute kept it moving.  We didn’t get into the SoCal vs. NorCal argument very much, actually – but I did note that LA was colder than the Bay Area on this particular day!

While California continues to be on the leading edge, we have to invest to stay ahead.  Three key takeaways stood out to me from the discussion:

• California has all four key factors needed for innovation and growth. Access to capital, via the venture capital community; access to great research institutions; diversity of talent, including gender, racial, orientation, age and cultural mix; and an environment where risk-taking is encouraged and rewarded.  These factors unquestionably drove the formation of companies like Adobe, as well as a long list of other success stories.
• California is not alone in its ability to grow an innovation hub. Incredible innovation is coming from many locations around the globe. For Adobe, locations such as India (Noida and Bangalore) have the right mix of geography and resources needed.  The growth of multiple global hubs will help all of us with ideas and breakthroughs in technology and beyond. Some of my fellow panelists argued for virtual innovation, where people can work from anywhere; I personally feel that there is power in co-locating employees to drive innovation.
• Threats are looming over California’s innovation leadership. There are some serious issues that need to be addressed by our government leaders and business community. The most serious is the under-funding of our education system – from elementary through the state university system.  In the case of our state universities, the increase in of out-of-state students (who pay higher tuition) while in-state students must go elsewhere to get an education is concerning.  This export of our young talent – and the overall strain on families who need to invest for four or five years to complete a degree – is an impediment to growth in our state. The other factor is the high cost of living, especially in the Bay Area. Creative solutions to affordable housing, especially for young college graduates, is becoming increasingly critical.

As a “transplant” to California, my perspective is the state has had an early and strong advantage – not unlike the leading position a company takes when entering a new market – but we can’t expect it will continue without focused efforts. In boardrooms, universities and legislature, it’s important we continue to discuss ways California can retain its leading position in innovation and invention. It’s not only key to the future of this state, it’s importance is global. Past performance is usually the best predictor of the future – and think about how many life-changing innovations start here in California.