Silicon Valley Management Style
The Silicon Valley business model is an entrepreneurial and innovative management system associated most closely with technology companies located in the Silicon Valley region of Northern California, USA. First envisioned and popularized in the late 1990s, Silicon Valley is widely known for collaborating among stakeholders to create high-growth, high-margin businesses utilizing innovative technology. Silicon Valley is commonly seen as home to the leading technology corporations in the world including Apple, Google, Amazon, Microsoft and Facebook, in addition to hundreds of smaller startups.
The Silicon Valley model is built upon three principles: collaboration, risk-taking, and focus on high-value activities. It additionally rests on the foundation of four essential components: an engaged workforce, a laboring environment where ideas can be tested and explored, access to capital, and access to networking opportunities that can provide introductions to other professionals, investors, customers, and business partners. These components encourage a culture of collaboration and risk-taking; the employees actively work together to identify where innovation can help their business unlock solution to complex challenges. The creative thinking and fearless risk-taking inherent to the Silicon Valley model allow for the development of ‘disruptive’ technologies that can be immediately applied to a business’s advantage in the marketplace.
The Silicon Valley entrepreneurship model works by empowering entrepreneurs to take risks and pursue initiatives that cannot be achieved within traditional corporate structures. It does this by allowing entrepreneurs to establish independent companies and capitalize on their respective strengths. As such, the model takes advantage of a network of experienced professionals to help design and develop a business plan and guide the individual in the right direction.
The model formulated in Silicon Valley has been adopted and adapted globally to create local ‘Silicon Valley’s’ around the world in countries such as Japan, India and the UK. The adaptability of the model is evidenced by the fact that it can be tailored to meet specific local needs and challenges, while still maintaining its core principles. For example, the Japanese government established a ‘Silicon Valley 2.0’ in Tokyo in 2008. This focused on fostering the development of entrepreneurial-based economies with a focus on attracting venture capital and seeking out potential business opportunities.
The Silicon Valley model of managing and operating a business has proven to be successful, with many of the largest technology companies in the world listing Silicon Valley as their home. Its principles have also been effectively applied and adapted to numerous sectors, businesses, locations and economic climates. Its three core principles- collaboration, risk-taking and focus on high-value activities- and four core components-engaged workforce, laboring environment, access to capital, and access to networking opportunities- serve as the basis for an effective and successful Silicon Valley model of entrepreneurship.
