Silicon Valley is hotter than ever, according to the Wall Street Journal. Web 2.0 companies from all over the country continue to migrate to Silicon Valley, attracted by the easy access to venture capital money as well as a pool of highly-skilled tech workers and seasoned Internet executives. Even if it means packing up an office and moving across the country, it appears to be worth it:

“From early in the Web boom, there have been predictions that the Internet eventually would erode Silicon Valley’s pre-eminence in nurturing start-ups as entrepreneurs found it more attractive — and much cheaper — to do business online from other regions. Instead, companies like VideoEgg [founded by a Yale grad in Connecticut] are now migrating to Silicon Valley and environs. The trend shows how the San Francisco Bay Area continues to possess a unique mix of venture-capital money and skilled workers that tech firms — especially those that get to a point where they want to grow quickly — can’t afford to pass up.

Of course, pockets of tech remain active elsewhere in the country, notably around Microsoft Corp.’s home base near Seattle and also in Boston. But many companies — typically tech start-ups headed by entrepreneurs in their 20s, often with staffs of less than five people — are still heading to Silicon Valley. Mobius Microsystems Inc., a maker of technology that regulates timing pulses in microchips, relocated from Detroit to Sunnyvale, Calif., in March. LicketyShip Inc., an Internet firm that facilitates local deliveries, moved from New Haven to San Francisco last September. Meetro Inc., a maker of mobile social-networking software, transferred from Chicago to Palo Alto, Calif., in January, while Box.net Inc., an online file-storage-and-sharing site, jumped from Seattle to Silicon Valley that same month. Other companies are moving from overseas: Internet video company Metacafe Inc. is currently shifting its main office to Palo Alto from Tel Aviv.”

Not surprisingly, the start-up influx is helping to revitalize Silicon Valley. Many of the new companies are moving into offices that had been left empty by the tech bust of 2000. They are also ramping up their hiring and creating jobs. There’s a burgeoning social scene as well as a vibrant venture capital environment. For young companies early in their development, perhaps the only drawback of moving to Silicon Valley is the high cost of labor (see graphic):

“Moving to Silicon Valley has its complications. The cost of doing business in the area remains steep, particularly due to high labor costs. According to a recent report from the American Electronics Association, a trade group in Washington, D.C., and Silicon Valley, high-tech workers in San Jose, Calif., made an average annual wage of $126,700 in 2004, the last year for which data are available. That compares with the national average for high-tech workers of $72,400.”

[image: Peaks in the Valley]

In a presentation for students and faculty members at the University of California-Berkeley, Google’s director of machine learning, search quality, and research discussed some of the search giant’s newest innovations as well as the future of data analysis. In addition to developing a more accurate and human-like computer translation program, Google is also creating a number of other tools to help users deal with the ever-increasing complexity of the Web:

“The translation program is an example of how the ability to utilize large amounts of data is helping to expand the resources available to users. Google is also currently developing what Peter Norvig described as “sets”, in which the user types in a few different words and receives a list of related words. This technology would help searches be more accurate, he said.

Another new project that Google is developing is one that Norvig said he hopes will help them better understand users. It is the creation of user trend graphs that track the volume of different searches at different times of the year. “This is only an idea of new things we are working on, and the ways in which technology can be used. There is so much data and there are so many things you can do with it,” Norvig said.”

[image: Peter Norvig via The Daily Californian]

Yale School of Management is experimenting with a radically new MBA curriculum that hopes to change the way students think about business. Instead of taking traditional courses in finance, marketing or accounting, Yale MBA students will be taking multidisciplinary courses that cut across functional boundaries. For example, there are first-year courses called The Innovator, The Competitor and The Customer. Anyway, here are the details of the new MBA curriculum from Yale:

“The goal of the new curriculum is to provide management education in a richer, more relevant context. Yale’s new approach aligns the way management is taught with the way managers operate every day and challenges students to shape their career goals around their personal values and aspirations.

“The management profession has experienced profound change in the past few decades, but management education has not,” says Joel M. Podolny, dean of the Yale School of Management. “Most business school curricula are based on a model that made sense in the past. But today, a successful manager must be able to identify and frame business problems and move across a variety of organizational, political and geographic boundaries to solve those problems. Our new curriculum teaches the integrated skills contemporary managers need.”

“No executive wakes up in the morning and thinks, ‘I’m going to do finance today,’ so it doesn’t make sense for students to sit in a finance class and learn to crunch numbers absent of any context,” says Sharon Oster, the Frederick D. Wolfe Professor of Management and Entrepreneurship, who is one of a number of senior faculty who worked on developing the new curriculum and led the design of the “Competitor” course. “We are teaching them in a way that’s relevant in the real world.”

Max Goldman of the Performance & Talent Management blog points out that Yahoo! is following in the footsteps of Google by allowing its employees to spend more of their time on innovative new projects: “Called Brickhouse, the project is essentially an in-house incubator meant to give it’s entrepreneurial employees another reason to stick with the company. Not altogether different from the Google 20% – wherein Googlers get to spend 20% of their time on a project of their choosing – it is both a way to satisfy the innate desire to create as well as a method for harnessing that creativity.”

As GigaOm suggests, Project Brickhouse is designed to give superstar employees a chance to fool around with new ideas on the side, while at the same time preventing them from jumping ship to start-up Web 2.0 companies. At Yahoo!, there’s a realization that the Web 2.0 boom has changed the playing field for technology companies looking to recruit the best and the brightest:

“Big companies are no longer the safe havens they were during the tech bust. Self-styled “startup people” - especially those like Caterina Fake, who were brought in through acquisitions - long for the bureaucracy-free feeling of going up against the Man, not being the Man. With funding so easily available, Yahoo’s stock treading water, and most of their options vested, it’s tempting to jump ship… SideStep CEO Rob Solomon, who was employeee 2,100 or so at Yahoo, told me earlier this year there were perhaps 300 or 400 left of the employees who were at Yahoo when he started.”

Maybe it’s just me, but I think Yahoo! could have chosen a better name than Brickhouse. I suppose there are two ways of thinking about “brickhouse” - as a cute, one-story house that the big bad wolf can’t blow down or as a battle-scarred building in a charred out urban area. If I’m walking the streets of New York, and I see a building with a bricked up window, yo, I stay away. Every company needs to hold on to its top talent, but building a brick wall around that talent - is that the best solution?

[images: Urban Brickhouse and Wolf Blowing at Brick House]

Companies like IBM, Credit Suisse and BMW are now designing and funding curricula changes at major universities, partly in response to the perception that today’s graduates lack certain fundamental skills for a global economy. This means more than just donating free computers or books for a class - it means developing the curriculum from scratch, awarding financial incentives to universities to change the way they teach certain courses, and sometimes even providing the “professor” to teach the course — all in the name of producing graduates that are better prepared to work for their companies in the future.

As the Wall Street Journal explained earlier in the week (sorry, no link available), IBM has even developed a new academic field, “Service Sciences, Management and Engineering,” or SSME, that combines studies in such disparate fields as computer science, engineering, management sciences and business strategies. According to IBM, “these areas are too segregated in higher education, to the detriment of students, companies and, ultimately, the economy.”

The basic question, of course, is whether the extensive role played by IBM in creating and promoting the new curriculum represents a breach of academic integrity. For its part, IBM claims that the new SSME curriculum will help students even if they never eventually work for the company. Yet, at the same time, IBM acknowledges that business considerations are driving the “services science” initiative at a growing number of universities.

For example, Cal-Berkeley has already worked with IBM to create a certificate in “Services Science. Management and Engineering,” while a course taught at Berkeley’s School of Information (”The Information and Services Economy”) includes must-read articles and journal selections written by IBM employees. Other universities jumping on the IBM bandwagon include North Carolina State University, Arizona State and (to a more limited degree) NYU. As one professor sucked into the IBM vortex explains, “It’s a serious idea from a serious company with serious money. You have a big gorilla jumping up and down. How can you not listen to it?”

While the idea of FORTUNE 500 companies invading the hallowed halls of our nation’s best universities is a bit alarming, I have to admit that the whole field of services science is fascinating - check out the presentation slide above from IBM about the emerging field of services science.

Tags: IBM services science innovation

[image: The Academic Context for Services Science]

Many of the military’s newest and most sophisticated technologies are now being developed by researchers at America’s most prestigious universities. As John Edwards of Electronic Design points out as part of a comprehensive look at the current state of military R&D spending, “the government is increasingly relying on university research programs to develop new and innovative ways of fighting wars.” Formerly, the U.S. military used to rely heavily on corporate R&D skunkworks for new ideas (hence the term “military-industrial complex”), but all that is changing as many corporations wind down their massive R&D efforts. Presumably, the same kindly professor who is teaching your son and daughter the finer points of organic chemistry is also secretly developing lethal biological weapons to help America win the War on Terror:

“Fed by cash from the Defense Advanced Research Projects Agency (DARPA), the National Science Foundation (NSF), and numerous other government agencies, university researchers toil on projects covering the full spectrum of military needs, including health, security, decision support, communications, transportation, and tactical innovations. The government’s role in sponsoring academic military research began in the days of the Manhattan Project and continues to this day… Along with government money, many labs rely on funding from corporate partners. Businesses are increasingly turning to academic labs—and their skilled researchers—to develop technologies that can be sold to the government and, later on, to consumers and businesses. In fact… a growing number of businesses are finding it more cost effective to farm out specific projects to appropriate university labs than to conduct their own R&D.”

Anyway, the “Military R&D 101″ article includes a number of interesting examples of the type of research being conducted within academia. It all sounds relatively harmless - “artificial muscles that are up to 100 times stronger than their natural counterparts” - but remember, this is the same U.S. government that created a secret CIA prison network without our knowing about it until too late. Paraphrasing President Eisenhower’s famous 1961 warning: “We must guard against the unwarranted influence, whether sought or unsought, by the academic-military-industrial complex.”

Tags: military industrial innovation academia

[images: Why We Fight]

According to Alan Wood, CEO of Siemens UK, investing in innovation is the way to win for British manufacturers:

“Recent evidence has given grounds for optimism that British manufacturers are adjusting to low-cost competition and global structural change, viewing it as an opportunity rather than a threat. Output is rising and many firms have their most positive prospects for some time as the world economy expands. The investment outlook - a traditional weak spot - is the most positive for almost 10 years. EEF research shows a large majority of firms have increased spending on skills, innovation and design since 2003, and more than half plan to boost spending further in the next three years. Those companies that are upping their game on innovation are delivering improved profits…”

In addition to boosting R&D spending on innovation and design, British manufacturers are also collaborating with universities, investing in skills training for their employees and developing innovative solutions for both social and environmental problems.

Tags: Siemens manufacturing British innovation

[image: BBC News]

In the August edition of its monthly trend briefing, Trendwatching.com suggests that even the best-informed business thinkers and management gurus are likely suffering from innovation overload: “We live in a world of absolute innovation overload: clever entrepreneurs, inventors, and marketers from all over are coming up with so many innovative ideas, that even innovation blogs have a hard time keeping track…” (Yep, that includes me!) With that in mind, Trendwatching offers three insights about the current state of innovation in an increasingly globalized world:

(1) Innovation isn’t rocket science. It’s an obsession with understanding or creating what makes consumers happy, what delights them, which problems they face, and then creating something that delivers to those needs.

(2) Innovation is not necessarily about serious people in white coats puttering about in R&D labs. In an experience economy… marketing innovations rule.

(3) Wherever you live, you have absolutely NO excuse to be unaware of innovations popping up in Austria, in the Netherlands, in Japan, in Brazil, in the US, in Turkey, in South Africa, as it’s all out there.

Tags: innovation overload

[graphic: Trendwatching.com]

Just weeks after FORTUNE magazine featured a cover story on the end of the Jack Welch era (complete with a giant red cross through Jack Welch’s face) , the two co-founders of MySpace - Tom Anderson and Chris DeWolfe - have landed on the front cover. Apparently, MySpace is everything that GE is not, as Patricia Sellers explains in her FORTUNE article on the MySpace Cowboys.

The MySpace site is all about user control, grassroots growth and authenticity - three buzzwords that are helping to ignite Web 2.0. While skeptics claim that the site’s relationship with Rupert Murdoch and News Corp. is starting to erode some of the freewheeling, indie appeal of MySpace, the site now ranks among the top three most heavily-trafficked web sites in the world. To give you an idea of the reach of the site, MySpace is currently home to 2.2 million bands, 8,000 comedians, thousands of filmmakers and “millions of striving, attention-starved wannabes.” In fact, the site is turning into a “lifestyle brand” that is popping up on the radar screen of major Fortune 500 advertisers.

No word yet, though, on whether Jack Welch has created a profile page on MySpace.

Tags: MySpace innovation

[images: FORTUNE]

Starbucks continues to blur the line between product innovation and business model innovation. Recognizing that it’s not enough simply to roll out new coffee products every six months, the company is searching for new ways to build out its entertainment offerings (i.e. selling CDs in stores, promoting movies like Akeelah and the Bee). As Springwise points out, Starbucks is now looking to extend its brand experience with the opening of a temporary arts and performance coffee house in New York City this fall. The Starbucks Salon will be open September 8-17, with tentative plans to open similar “pop up” salons in San Francisco, London, Beijing, and Boston sometime in the future: “The concept builds on coffee houses’ history of being informal venues for arts and entertainment, and the Salon will feature both up-and-coming and established artists, including Ursula Rucker, Jose Gonzalez and Jim Carroll. A website and full program for the New York Salon will be online on August 25th, and the coffee house will be located at 76 Greene Street.”

Tags: Starbucks salon innovation

[graphic: Springwise]