Where to look? The three Californian “tigers”: Silicon Valley, San Diego and Los Angeles

Occupying most of USA’s West cost, California is a nuclear state on what concerns the concentration of activities based on knowledge, innovation and technologic intensity. It holds cities, regions and metropolitan areas that are among the most dynamic when it comes to the industries and services of bigger growth over the last two decades as well as a great percentage of people with the necessary capacity to innovate and to put new products and services in the market, to create employment, to sustain the continuous increase of productivity and to continue making north-American economy the “giant incubator” that Kaihla[2] talks about. In this article some characteristics of the three main sub regions of California (Silicon Valley, San Diego and Los Angeles/Orange County) are presented, and at the end, I put forward some explicative factors of the Californian success.

Silicon Valley is the most shining global pole on what concern knowledge economy and the production of technology, being the greater concentration of high-technology offices in the world. Robert Metcalfe, a famous businessperson of the area, founder of the 3Com commented:

“Silicon Valley is the only place on Earth that is not trying to find a way of becoming Silicon Valley”. San Jose is the capital of Silicon Valley, being the metropolitan area of the USA with greater percentage of employment whether in sectors linked to Information Technology (48,9%) or sectors linked to high-technology (24,8%). São Francisco/Oakland, area of initial growth of the USA linked to the gold rush, is, nowadays, the world leader in high-technology, capital of risk and biotechnology and the most attractive region of the USA for qualified workers in the areas of the knowledge economy. San Francisco is 1st in the creativity index (big cities) of Richard Florida with 34,8% of workers belonging to the “creative class”. It is one of the epicenters of talent in the USA, with its pool of scientists, engineers, artists, cultural creators, managers and liberal professionals.

Gifted with a unique geography (sitting between the ocean, the desert and the mountains), San Diego is 3rd in the creativity index (big cities) of Richard Florida with 32,1% of workers belonging to the “creative class”. San Diego County, an urban region which is clearly growing had, between 2000 and 2002, some of the biggest gains in terms of companies (more than 1100), employment (30 000 new jobs) and salaries (increase of 2 billions of USD) of the whole US. In spite of a quarter of the employment still being in the defense sector, San Diego has managed to diversify the productive tissue, with the rise of clusters associated to telecommunications and medical/biotechnology’s sciences. This last cluster has assumed itself, in the last years, as the main motor of development.
More towards the south, the Los Angeles’ region is characterized by a great economic diversification, not so much concentrated in internet/dot.com companies like in Silicon Valley, or in biotechnology/defense as San Diego. This diversity gives greater stability at the Economy but, by lack of a better defined economic motor, it limits the creation of wealth and employment in periods of expansion of certain activities. It coexists, however, with a particular importance of the entertainment, Aerospatiale, services to companies and some activities in the sector of non-lasting possessions.
Orange County (nowadays world famous because of the television series O.C.) went from suburb and residential zone supporting Loa Angeles in the 70’s and 80’s, to the 4th place of the big metropolitan areas of the USA in terms of percentage of employment, whether in what concerns sectors linked to the Technologies of Information, or when it comes to high technologies’ sectors. The strength of the Aerospatiale industry contributed a lot to the development of countless innovative companies in sectors like computer components, industrial machinery, medical equipment and scientific instruments.
Among the factors that most contributed to California’s success in high technology and creativity activities we can point to (i) the quality of Universities – sustained effort by the state government in reinforcing some of the great universities, namely Stanford, California–Berkeley and California-São Francisco. For example, Stanford University participates in the capital of hundreds of startups – including Google, the biggest internet search engine in the world – that uses technologies developed at the university; (ii) the availability of capitals thanks to the existence of risk capital and of the strong presence of the investment bank; (iii) the attraction of public investments and of suppliers of public programs in the areas of Defense and Space – of these, the Space centre of Houston and the investments of Pentagon’s great contractors should be of particular mention; (iv) the unique combination, in intensity of knowledge and competences in two great technologic routes that marked the last twenty years: Life Sciences and Computer Sciences; (v) the cultural environment and lifestyles favorable to innovation and creativity. San Francisco is an example: being one of the main creative centers of the USA, it has a solid mix of industries and high technologies with a rich history, with great appeal when it comes to qualified workers in the areas of knowledge economy (for example, the new campus of San Francisco of the University of California dedicated to biomedicine and that would employ 9000 researchers); (vi) the geographic position that since always, has facilitated an opening to the outside and, in a more recent period, a greater interaction with Asia, translated, among other aspects, in the attraction of talents from India and China to the state universities, most of them subsequently involved in the creation of innovative companies. (example: in 2000 there were in San Jose 3755 companies belonging to Indians and Chinese, corresponding to a business volume above 23 millions of dollars and 88 000 jobs.[3]

[2] Paul Kaihla: Boom Towns, Business 2.0, March 2004, pp. 94-102.
[3] For a deep analysis of the California case and of other regions of the USA see Marques, I., Chorincas, J., Alvarenga, A. e Félix Ribeiro, J. M., “Prosperidade e Inovação nas Regiões dos EUA”, Informação Internacional - Análise Económica e Política, DSP-DPP (MAOTDR), Lisboa, 2006, pp. 9‑102.

Why do it differently in Portugal?

Last week, I had the opportunity to go back to Romania, more concretely to Bucharest, through my involvement in an European network of researchers in the area of Prospective/Foresight. The meeting was quite interesting, allowing the exchange of different national experiences, the exploration of common work possibilities and contributing for the conceptual, methodological, and empirical “densification” of the discipline. The usual thing in these European networks (when they go well, of course).
I had been in Romania 12 years ago, involved in an European project of implementation of a Business Innovation Centre in Timisoara, in the west of the country.
At the time, the image I retained both of Timisoara and of the rest of the country was quite greyish (in spite of recognizing the richness of its landscape), of a castrating poverty, of detachment, contrasting with the cultural and historical dimensions of these places. They were accounts of an Orwellian dictatorship, communist and populist, which managed and conditioned everything, spearheaded by Nicolae Ceausescu and his wife Elena.
The cars and buses fell apart, except for the limousines of dealers (of people, drugs, arms, etc.) that beneficiated a lot with the conflicts associated to the desegregation of Yugoslavia.
Today, if in Bucharest, we can still find signals of the anachronic dictatorship of Ceausescu and comrades (though similar signal also still exist, for example, in Berlin), not much is left of that Romania of 1994.
There are still a few Dacia but the company has been, meanwhile, bought by Renault. There are loads of BMW and similar cars. The multinationals are present all over the country and have become landmarks of the capital’s image. The center of Bucharest can be perfectly mistaken by any other European capital. Deloitte Offices, young executives of dark suits, design coffees and bars, restaurants of every colours and forms, Irish pubs… The Ibis Hotel has rooms, on special offer, at 99€/night (in 1994 to cross Timisoara in a falling apart taxi , in roads full of potholes cost something like 4 escudos in the exchange rate of the time).

The traffic is chaotic. At night, I watch BBC and Chelsea TV in my hotel room. Everything is transformed, everything is built. Roads, motorways, apartments, skyscrapers. Distribution is also on a high with the presence of great European networks like Lidl and Carrefour.

There are also Portuguese. Lena Construções is, for example, in charge of the motorway connection works between the airport and the city. Coindu (upholsteries) is also present in Romania, like Mota-Engil, Infosistema (information systems consultancy) and, of course, BCP (just to give some examples). The bathroom of my hotel was equipped with ‘Valadares’ Ceramic.
There are clear signs that some Portuguese groups (essentially linked to construction) understood that they can replicate in the East the experience accumulated in Portugal. Romania is only an example that is still just starting.
Therefore the doubts I have in relation to those who defend that it is this time that Portuguese capital, given the possible profitability reduction of the sectors linked to the “soil” (construction and similar) and to distribution, would finally start to look with more attention towards industries and services linked to knowledge.
At the end of the day, let’s be frank, why do it differently in Portugal if we can earn so much more money doing the same in any other place?

To deal with uncertainty: a lesson from Shell

Shell is, probably, the most emblematic case of application of Scenario Planning, having used this methodology (widely divulged in the business circles from the 60´s onwards) in his success route through the instability of the oil market.

In the beginning, Scenarios were not more than evolutions of the traditional approaches, meaning that, instead of a unique linear prevision, a probabilistic evaluation of different futures was carried out, identifying a projection as the most probable.

Starting from the recognition of this system’s failures, Shell started to base its Scenario Planning on qualitative causal thought (moving away from linear projections), appealing to the need felt by decision-makers of understanding and anticipating the structural changes of the society. Using the method of Herman Kahn (the precursor of Scenario Planning in the USA), namely when it comes to distinguishing between uncertainties (crucial) and pre-determined elements (that can be anticipated), Shell built multiple histories of plausible futures (Scenarios) which could be used to test strategic decisions and options. Therefore, each Shell project was evaluated in terms of two or three Scenarios (considered as equally plausible), generating two or three different results for the company (one for each Scenario). The decision to proceed or not with the project was taken according to the different results of the projects, tested in the several Scenarios.[2]
Scenario Planning strengthened the construction of projects and the decision-making, testing it against a collection of alternative futures. This added value, that is not the only one of Scenario Planning, is more and more decisive in a business context (and also, for example, in the regional and cities context) which is more complex, competitive and uncertain, where the anticipation and perception of structural changes (for example, in the markets and technologies) can mean a huge difference between success/survival and unsuccess/ decay.


[2] For a more detailed presentation of the evolution of Shell’s Scenario Planning take a look at Kees van der Heijden book in which this small introduction was based on: “Scenarios: the Art of Strategic Conversation”, John Wiley & Sons, 1996”.

“Demain ne sera pas comme hier, il sera nouveau et dépendra de nous”[1]

Local elections are nearing. It is a moment for speeches and promises. For inaugurations and (particularly) wide political smiles. Time for new demands (and for the renewal of old ones), for stickers, electrical appliances (was it true?) and little flags. A time very often for a dangerous discrediting of the political system. In a context of deep changes in the role of local government (in which they can affirm themselves or not as promoters of development) and of great budget limitations, it is more and more important to define, together with the population and other actors of regional development, the priorities of public local action. What does the population want from its councillors? How to adjust public spheres to a world in transformation, allowing the Administration to be at the same time creative and renown? What is our collective project? What mobilizes us? These are some of the questions I would like to, at least see being considered and debated during the next electoral campaign. To decide about my vote, I am going to look for ideas and projects for the region. Someone who throws challenges to the population and to the actors of development. Who understands the importance of the economy and growing competition (increasingly also between local councils) in the caption and maintenance of knowledge, talents and investments. Someone who associates strategy and actors, public and private, cooperative and entrepreneurial. That says what he want to do and with whom he wants to do it with. That promotes the participation of actors, committing them and hold them co-responsible for the future. That understands that the collective intelligence of a region is far from just concerning the public sector. And that from that perception draws conclusions. Someone who, basically, believes, in permanence without hesitations that “tomorrow will not be as yesterday, it will be new and will depend on us”.

[1] Extract of “Phénoménologie du temps et prospective” (Gaston Berger, 1964).