“Entrepreneurship and innovation are the drivers of value creation in the twenty-first century.”

The Concept: Clusters of Innovation

‘Hot Spots’ Where Innovation Rules: Around the globe there are geographical ‘hot spots’ where innovation rules. New technologies germinate at an astounding rate. New companies capturing opportunities from these technologies are ‘born global’, targeting global markets from their inception. Pools of capital, expertise and talent foster the development of new industries and new ways of doing business.

What distinguishes these innovation clusters from the industrial business clusters described by Michael Porter and others? From 20 years of observation of Silicon Valley, the archetypal Cluster of Innovation, Jerry Engel distilled the unique components and behaviors that made possible the evolution of Silicon Valley and its continuing expansion and re-invention.

Key Behavior of a Cluster of Innovation (COI)

Alignment of Interests, Incentives and Goals:

Enterprises and individuals within a Cluster of Innovation benefit from a web of shared values, business practice and culture.

Win-Win Challenge as Competition:

While fierce competition certainly exists within a cluster
community, the grander competition is often with incumbent solutions and their providers. Although the innovators compete with each other, they participate together in a win-win challenge to displace existing methods and introduce new solutions. Venture capitalists share deal flow and co-invest as a regular practice in spite of fierce competition among firms. Shared ownership arrangements, such as stock options, break down traditional barriers between owners and employees and align interests of founders, managers, employees, advisors, and investors with the success of the venture.