Last Friday (September 16), as students gathered at the Stanford Graduate School of Business for the first day of classes, the school invited more than a dozen journalists for its inaugural Future of Innovation: A Peek Inside Stanford GSB’s Crystal Ball. A dozen Stanford professors and alums comprised three panels that focused on future leaders of a global economy, what a workforce centered around the shared economy means for the world, and Silicon Valley’s diversity issues. Panel discussions were led by Rob Siegel, Stanford GSB management professor, before being opened to questions from local and national media reporters.
From the opening statements of the first panel, John Roberts, John Scully professor of economics at Stanford GSB, offered some tough thoughts for the school residing at the so-called world capital of innovation. “This is supposed to be the future of innovation and my message is that we, as a school — and many journalists as well — are too obsessed with Silicon Valley,” Roberts said. “And as important as Silicon Valley has been — and certainly will continue to be — it’s a long way from deciding who is going to lead the global economy in the future.”
Of course, the answer to who will lead the future global economy could be spliced in many ways. Is it a country? A region? An industry? An idea? Something completely different? No matter the answer, the San Francisco Bay Area tech hub has a long to go, Roberts explained. “Really important ideas have certainly come out of the Valley, though their measurable impact on GDP is actually pretty small — and may be getting smaller,” Roberts continued. “And if you think about today, where there are people down the street lined up just excited out of their minds because they get to buy an iPhone without an earplug, we’re kind of a long way from inventing the lightbulb there.”
HUMAN CAPITAL RESTRAINTS KEEP SILICON VALLEY UNIQUE AND IMPORTANT
MBAs — particularly at the GSB — have certainly been infatuated with Silicon Valley and all it represents and offers in recent years. At Stanford, 28% of the MBA class of 2015 went into technology — more than any other industry besides finance (31%). Some 68% of the class stayed on the West Coast; of the 16% to found their own companies, 60% stayed on the West Coast to do so. In 2015, more international students founded companies within the U.S. than U.S. students. Nearly every year, Google pops up as a most desirable employer for MBAs. In 2015, five elite B-schools pumped more than 30% of their classes into tech companies. From early-stage financial tech ventures to long-standing tech goliaths, there seems to be a growing infatuation reciprocated between MBAs and “the Valley.”
And for good reason. As the panelists pointed out, no other place in the world has more venture capital and human capital floating around than Silicon Valley. “I think what Silicon Valley does better than anybody else is scaling companies,” George Foster, Stanford GSB’s Konosuke Matsushita professor of management, said during the first panel. “It’s not so much starting companies. It’s scaling companies.”
Which is one of many reasons MBAs want a piece of the Silicon Valley pie, and why Foster believes the Valley will continue to play a major role in the global economy — at least for the next five years.
“One of the biggest constraints is human capital,” Foster continued during the day’s first panel. “When you talk to entrepreneurs in different parts of the world, the biggest constraint they see going on is if they have employees to get from 50 to 200 to 500, they just don’t have it.”
SILICON VALLEY OUTPOSTS IN ASIAN NATIONS CATCHING UP
Still, that doesn’t mean other countries aren’t catching up — most notably the Asian nations, the panelists said. “I’m quite open to the fact that there will be some paths where the latest models in terms of products and services will be coming out of a variety of countries rather than just Silicon Valley or the U.S.,” Foster said later. Steve Ciesinski, Stanford GSB lecturer in management and president of SRI International, said countries like Singapore, Taiwan, Hong Kong, China, and India will all share leadership with the U.S. for influence in the global economy. A consensus of the group was the expectation that there will be an influx in Silicon Valley-like outposts popping up around the globe — especially in Asia.
“I think the trajectory is there for them to be co-leaders at some point in time,” Ciesinski said of the countries he listed. “I think that it’s definitely surpassing the mixup that has become Europe these days. And there are no other regions — at least on this globe — that make sense.”
Much of that growth potential comes from the talent and “grit” coming from those countries, said Daryn Dodson, the lone panelist who was not a Stanford GSB faculty member. Through his role as a venture consultant at the Calvert Funds, Dodson has supervised the New Orleans Entrepreneur Week, a week-long program that invites startups founded by MBAs from around the world. “One of the things I noticed in comparing the different groups of MBA students from different countries is that grit, in terms of creativity and application of grit, more innovative ideas are coming from other parts of the world,” said Dodson, who holds an MBA from the GSB. He also is seeing many open middle-management positions in developing parts of the world snatch would-be entrepreneurial MBA talent.