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.

Portugal: Grow with the World and make the most out of change.

Friday, June 02, 2006


The drop in trade barriers and the circulation of capital and the sudden entrance of huge economies like China and India in the global competition for the markets of goods and services makes the capacity of economies like the Portuguese one to “grow with the world” even more decisive, meaning, to ‘tune in’ with the most dynamic sectors of international economy.

The problem is that not only is our business structure characterised by sectors losing out in global competition, but also central elements for the transformation of this reality (such as the education and scientific-technologic systems) have demonstrated great rigidity and resistance to change. Therefore, in spite of the indexes showing a growing qualification of human resources, the existence of an enlarged network of infra-structures (such as roads) and poles of R&D and centres of excellence for artistic creation, the Portuguese mission in a world in accelerated transformation appears quite a lot complex.

And here are the “heavy weights” (with a crescent opening of EU to Asia). And the EU is different, with new Member-States that directly compete with Portugal in many ranks, many of them with better conditions in terms of fiscal policy, qualification and location, making the position of economies like the Portuguese a difficult one on what concerns their relative atractiveness. Therefore the urge for attention to what is coming, for a selective definition of a strategy and of a perception of possible places for Portugal and its economy in growing activities related to, for example, sustainable mobility, health, the IT and entertainment.
It is change that affects and hits us. But it is also from this change and its exploration that opportunities emerge.

To explore change, it is essential, first of all, to be conscious of its nature and the relation of the actor, for example Portugal, with it. Here comes the distinction between changes in the context that the actor does not influence (“things that happen to us”) and changes “created” by the actor. And if the first type of change appeals to our attention and defines limits, supplying logics of behaviour and “rules of the game”, the second kind appeals to Portuguese capacity “to create its own future”, optimizing its capabilities and international positioning. It is about adding up the action (second type of change) to attention/monitoring/contingency (first type) and, above all, be conscious of the existing capacity to influence (second type) but that is contained within limits that one should known/make the most out of (first type).

On other hand, it is equally fundamental to understand the distinction between continuous, graduals changes, during long periods, which to do not threaten the reigning socio-economics structures; and disruptive, sudden changes, that put in cause the contemporary structures. This last type of change, normally less accompanied, is particularly important. Professor Peter Bishop, in a recent conference about Futures/Foresight in Munich advanced with the example of the speed of human movement: the appearance of the bike is clearly a disruptive change in relation to moving on foot; and a car is a lot faster than a bike; and no car, however fast it is, has the speed potential of a plane.

The problem is that all change brings problems and challenges structures that work. Moving by foot was great before bike appearance. Bike was excellent before cars emerged. And cars allowed for long trips until airplane came along.

E são precisamente estas estruturas que estão a funcionar bem aquando do surgimento da mudança disruptiva que é preciso abandonar para inovar e para aproveitar essa mudança. Como se intui, este processo é bastante difícil. Se, por vezes, é difícil descartar algo que comprovadamente não funciona, imagine-se o que é ter que abandonar algo que reconhecidamente funciona. Mas é precisamente neste repensar permanente dos seus métodos e práticas e na capacidade de abandonar modelos organizativos, opções e processos que funcionam que reside a vantagem competitiva de muitas organizações de sucesso, sejam elas empresas, regiões ou países.
It is precisely these structures that seem to be working well when disruptive change comes about that need to be abandoned in order to innovate make the most out of this change. As you can imagine, this process is quite difficult. If, sometimes, it is difficult to rule out something that has been proved not to work, imagine what it is have to abandon something that is recognized to work. But it is precisely in this permanent rethinking of its methods and practices and in the capacity to abandon organizing models, options and processes that work that resides the competitive advantage of many successful organizations, be it companies, regions or countries.