Decoding the Contradictory Culture of Silicon Valley. By Jeanne G. Harris and Iris Junglas Research report June PDF

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Decoding the Contradictory Culture of Silicon Valley By Jeanne G. Harris and Iris Junglas Research report June 2013 It s a geographical area of just a few hundred square miles, but Silicon Valley boasts
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Decoding the Contradictory Culture of Silicon Valley By Jeanne G. Harris and Iris Junglas Research report June 2013 It s a geographical area of just a few hundred square miles, but Silicon Valley boasts achievements that are outsize. For example, it contains the highest concentration of high-tech workers, the most high-tech manufacturing activity and the largest number of millionaires and billionaires on a per-capita basis of any major metropolitan area in the United States. Indeed, Silicon Valley is home to a veritable who s who of high-tech luminaries, including Apple, Cisco Systems, ebay, Google, Hewlett-Packard Co., Intuit, LinkedIn, Oracle, Sun Microsystems and Yahoo. But all this raises a crucial question: What makes Silicon Valley such an exceptional hothouse for innovative new businesses? 2 Accenture Institute for High Performance Copyright 2013 Accenture. All rights reserved. One key to the region s success is the close ties among outstanding educational institutions, research organizations and businesses. But it s not just the physical proximity of a world-class university that has made Silicon Valley what it is. For example, Stanford University has long espoused a meritocratic culture, a strong entrepreneurial spirit, active engagement with local companies and industry, and an affinity for technological innovation all of which has led to tremendous startup activity. A recent study found that the alumni and faculty of Stanford University alone have created nearly 40,000 companies and 5.4 million jobs since the 1930s, which collectively generate annual revenues of $2.7 trillion. If all that business activity were amassed into an independent nation, that country would rank as the world s tenth-largest economy. 1 The region s highly educated, diverse workforce has also played a major role. In Silicon Valley and the adjacent Bay Area, 45 percent of the general population has at least an undergraduate university degree (compared to 28 percent for the United States as a whole). Nearly 20 percent hold a graduate or professional degree. More than 60 percent of the college graduates working in science and engineering fields in Silicon Valley were born outside of the United States. 2 That diversity has led to an influx of novel ideas and fertile crosspollination, all leading to higher innovation. But looking beyond those talented, diverse individuals, what role does the area s overall workplace culture play? What are the different components of that culture? What fosters those different cultural characteristics? A culture of contradictions To answer such questions, we conducted extensive interviews with dozens of academics, economists, executive recruiters, HR executives, entrepreneurs, venture capitalists, CIOs, and high-tech executives and professionals in Silicon Valley. We also conducted a focus group with Silicon Valley entrepreneurs to try to identify the most important factors behind the region s success. In the course of these conversations, we began to hone in on the crucial role of the Valley s culture which has stimulated entrepreneurial minds and companies in a host of ways that have led to unique, innovative businesses. Silicon Valley is like Tasmania or Madagascar. It s developed different life forms than anywhere else, notes Steven John, strategic chief information officer of Workday. To develop a view informed by data, we also probed Silicon Valley s cultural characteristics in a survey of more than 600 full-time IT professionals. Roughly half were based in Silicon Valley; the other half were scattered throughout the United States. The two populations were similar with respect to breakdowns in age group, sex, industry, size of company and job roles, which included corporate IT, product or program managers and data scientists. But the results of the survey showed significant differences between the two groups in the way they approached their work. Those differences were especially pronounced for IT professionals younger than 40. Although our survey focused on just a subset of those who work in Silicon Valley, our follow-up interviews with entrepreneurs, venture capitalists, high-tech executives and others confirmed that they represent the larger culture. We discovered that the culture in Silicon Valley consists of five seemingly contradictory characteristics. (See Five apparent contradictions. ) It s the complex mix of those characteristics that has enabled the region to flourish and that has made Silicon Valley so difficult to replicate. In the sections that follow, we take a closer look at each of the five contradictions. Silicon Valley is like Tasmania or Madagascar. It s developed different life forms than anywhere else, notes Steven John, strategic chief information officer of Workday. 3 Accenture Institute for High Performance Copyright 2013 Accenture. All rights reserved. Five apparent contradictions The workplace culture of Silicon Valley consists of five seemingly contradictory characteristics that have helped the region produce life-changing innovations and many of the world s most successful companies. Contradiction Description Resulting benefits Supporting mechanisms Laid back yet driven for speed Congenial and laid-back, people will nevertheless work intensely for long hours for their companies. High productivity Relentless innovation Company policies that favor taking a done is better than perfect attitude, taking risks and breaking things and then quickly pivoting to fix those things to move on Committed yet independent People are deeply committed to their work and their colleagues. Yet they are essentially free agents with no strong allegiance to one company. A mobile workforce that fosters a greater exchange of ideas and information across company borders California laws that make it difficult to enforce non-compete clauses in employment contracts Strong venture capital community Virtually no unemployment for IT skills. Competitive yet cooperative Companies and individuals can be ruthless competitors. But they also cooperate regularly toward larger goals. Information sharing across organizational borders, leading to greater cross-fertilization and innovation Employee stock options Open-source projects Personal professional networks Pragmatic yet optimistic People realize that failures are inevitable. But they are also optimistic that any problem can eventually be solved. Prudent risk-taking Higher resilience Greater experimentation that leads to more innovation More shots on goal leads to increased chances of success Strong venture capital community Company policies that don t punish reasonable mistakes Fluid employment market Extrinsically motivated yet intrinsically fulfilled People are motivated by money. However, their fulfillment comes from being recognized for their creativity and innovation. Best talent attracted to difficult problems because of the inherent challenge Stock options Company awards Work that is challenging, worthwhile and interesting 4 Accenture Institute for High Performance Copyright 2013 Accenture. All rights reserved. Laid back yet driven for speed One thing that a visitor to Silicon Valley notices is how polite people are, especially on the roads. Drivers won t cut someone off who s trying to merge into traffic; instead, they ll wave that vehicle in. And the whole culture can seem stereotypically laid-back Californian, from the casual attire to the coffee-shop hangouts. Yet that laid-back attitude is just part of the story. Inside the office, workers are highly driven and routinely push themselves outside their comfort zones to take on increasing responsibilities, regardless of their age or experience. They are willing to work extremely long hours at a frenetic pace, always rushing to complete projects with aggressive deadlines. Their product development cycles typically span just weeks, not months. They are like ducks that appear to be gliding serenely on the water and yet are paddling furiously beneath the surface. But it s a certain kind of speed that drives Silicon Valley. High value is assigned to incremental experimentation and adoption rather than to figuring out everything at the outset of a project. A common mantra is Do it. Try it. Fix it. And companies recognize that the road will inevitably contain bumps. Perhaps nowhere is that mentality captured better than with software. Nobody expects a perfect product; instead, everyone assumes that major software releases will contain bugs that the manufacturers will fix in future updates and releases. IT professionals in Silicon Valley sometimes are even encouraged to break things in order to make them better. But they are also expected to quickly repair what they break. David Henke, a senior vice president at LinkedIn, explains that philosophy: The rule of thumb here is, since we re not running a bank, it s okay to break something; you ve just got to fix it fast. We care deeply about MTTR mean time to repair. That philosophy also extends to decisionmaking. Quick, agile decision-making is prized over slow, methodical consensusbuilding. Indeed, people have little tolerance for corporate bureaucracy, governmental regulations or anything else that might slow them down. In the Accenture survey of 600 IT professionals, almost 60 percent of respondents in Silicon Valley said they believe their company makes faster decisions (and with less rigor) than other firms. Only a little over 33 percent of non-silicon Valley professionals felt that way. The high-tech industry thrives on indeed, it requires relentless innovation. In such an environment, products are becoming obsolete faster and faster as they succumb to rapid disruption. And as the window of opportunity for new offerings continues to narrow, companies and their employees as well as their business ecosystems must move as swiftly as possible. Thus it s better to release an imperfect item quickly enough to capture a market opportunity than to release a flawless gem too late. Companies in Silicon Valley have cultures that tend to emphasize getting things done quickly (however imperfectly) versus agonizing over every flaw or kink. A sign painted on a wall at Facebook summarizes that attitude: Done is better than perfect. Technology workers in Silicon Valley are twice as likely as those elsewhere to agree with this approach. People have little tolerance for corporate bureaucracy, governmental regulations or anything else that might slow them down. 5 Accenture Institute for High Performance Copyright 2013 Accenture. All rights reserved. Where loyalties lie IT professionals in Silicon Valley have a greater allegiance to their employers than do professionals elsewhere. My professional allegiance is with my company* SV 60.5% When the going gets rough When they re unhappy, IT professionals in Silicon Valley are much more likely to quit their jobs. If I were to get upset with my company, I would walk out tomorrow* SV 71.2% 24% 39.7% Committed yet independent In essence, Silicon Valley is a company town, with employees regularly logging in long hours at the office. More than two-thirds of the Silicon Valley professionals surveyed said that their allegiance was to their company. That percentage was more than 10 points higher than for professionals who work in other regions. (See Where loyalties lie. ) Yet professionals in the Valley were also far more likely to quit their companies when they hit a rough patch or when a better opportunity comes along. (See When the going gets rough. ) What explains that apparent contradiction? Through a deeper investigation, we found that although people in Silicon Valley might profess an allegiance to their employers, their true loyalties lie more toward their work and their colleagues. Eben Hewitt, former CIO of O Reilly Media and currently CTO at Choice Hotels, sums it up this way: In the Valley, you have people who don t feel beholden to a company. They re interested in their idea; they re interested in working on what they perceive to be an interesting project, with people they like and think are smart. Employees have numerous such opportunities. The strategy of many Silicon Valley companies is to bring together the best people for a particular project. This might entail hiring individuals or retaining them as contractors, rather than enlisting employees who just happen to work at the organization at that time further contributing to the independent quality of the culture. 6 Accenture Institute for High Performance Copyright 2013 Accenture. All rights reserved. Job hopping Since demand for their skills outstrips the supply, technology professionals have a relatively easy time finding a new job, especially those located in Silicon Valley. It would be easy for me to find a new job within two months* 47.1% SV 54.5% In addition, Silicon Valley professionals have a deep commitment to the larger overall cause of creating the future. They love what they do and they do what they love. The company they work for is more of an ancillary detail. That s why people are willing to move from one company to another, especially for an exciting project and the opportunity to work with top-notch colleagues. In that sense, people in Silicon Valley behave more like independent contractors, or free agents, who move easily from job to job. The result is a highly mobile base of talent. This raises the chicken-or-egg question: Do workers in Silicon Valley change jobs frequently because the employment market is so fluid? Or is the employment market so fluid because people in Silicon Valley change jobs so frequently? Whatever the answer, the result has been the same: a cycle in which people switch companies often, which makes the employment market more fluid, which encourages people to hop companies, and so on. Silicon Valley professionals who responded to our survey reported they were significantly more likely to receive employment opportunities frequently. Slightly more than half said that it would be easy for them to find a new job within two months (see Job hopping ). The committed-yet-independent characteristic of Silicon Valley s culture benefits the region enormously. A commitment to work leads to greater productivity and higher innovation, while an independent (and thus mobile) workforce enables a greater exchange of ideas and expertise throughout the region. Many Bay Area companies also view the ongoing infusion of fresh talent as a critical advantage. The fact that California employment laws make it all but impossible to enforce non-compete clauses encourages this continual job hopping, as employees are not legally prevented from switching jobs within the industry. For their part, companies have accepted if not enthusiastically embraced the fluid movement of labor. Firms in Silicon Valley expect that employees will continually come and go, and that the churn rate will be higher than in other regions. As such, they rightly recognize the competitive importance of their HR activities. Some 70 percent of Silicon Valley IT professionals said that their company pays strong attention to recruiting, attracting and retaining the best talent (compared to less than half of employees outside Silicon Valley). Managers openly poach talented individuals from competitors, and there s little stigma attached to workers who leave for greener pastures but then return to their former companies. 7 Accenture Institute for High Performance Copyright 2013 Accenture. All rights reserved. To operate in this mobile (and competitive) talent market, companies have developed creative approaches to fill positions. For instance, Andreessen Horowitz, a venture capital firm co-founded by Marc Andreessen, does much more than just fund and provide advice to startups. It has developed a database of top managerial and technical talent and has assembled a small in-house group to help startup businesses recruit the staff they need. Additionally, many companies complement their workforce with contract workers for added flexibility. The IRS indirectly encourages Silicon Valley s mobile workforce, since federal tax regulations limit the time that contractors can work for a company before they have to be hired as employees. So firms take care to keep rotating their temporary outside help. The continued high demand for technology skills has created a large, highly mobile, in-demand workforce of tech workers who see themselves as freelancers, migrating from one project to another. The independent characteristic of the Silicon Valley culture also shows up in people s desire to be their own bosses. In the Accenture survey, more than 40 percent of the IT professionals in Silicon Valley said that they would rather be running their own company (see Setting up shop ). That desire is fully supported by a strong venture capital presence as well as a vigorous community of entrepreneurs who support each other. In the Valley, people always seem to be working on business startups, and funding is readily available to those with good ideas and the wherewithal to start their own companies. In fact, firms in the area received 41 percent of the United States venture capital investments. 3 Competitive yet cooperative Companies in Silicon Valley can be ruthless competitors, with many adopting a take no prisoners approach to business. Yet there s also a pervasive attitude of cooperation and a sense that firms should be working together toward a larger goal: developing technologies that will improve people s lives. As such, companies don t always compete head-on, and coopetition has become a popular strategy. That mindset is reinforced in many markets in which competitors can also be one another s customers. Setting up shop More than four out of 10 IT professionals in Silicon Valley said they would prefer being their own bosses. Deep down, I would rather be running my own company* No worker is an island Co-workers are more of a deciding factor in employment decisions for IT professionals in Silicon Valley than elsewhere. I chose my job because of the people I m working with* 33.8% SV 41.3% 34.5% SV 45.9% This competitive-yet-cooperative characteristic is true on the company as well as individual level. Employees are ambitious and will work harder and longer to do what it takes to get ahead, even if that means sometimes stepping on colleagues toes. And yet Valley denizens are not ruthless loners. Most have a healthy appreciation for the importance of good teamwork. In the Accenture survey, Silicon Valley professionals were more likely to choose their jobs based on the people they d be working with, as compared to non-silicon Valley professionals. (See No worker is an island. ) 8 Accenture Institute for High Performance Copyright 2013 Accenture. All rights reserved. Moreover, people in Silicon Valley tend to believe in helping others through the free exchange of information. Venture capitalists and serial entrepreneurs are often more than happy to provide free guidance and support, all in the general belief of paying it forward. That is, people feel an obligation to help others succeed, just as they themselves might have received help in the past. The overall philosophy is that success is not a zerosum game. Such beliefs easily transcend any company loyalties, as people regularly cooperate across organizational borders. More than twice as many IT professionals in Silicon Valley report that they actively participate in crowdsourcing than do their non-silicon Valley counterparts. And more than twice as many contribute often to open source projects. (See Extracurricular activities. ) Our findings indicate that technologists in Silicon Valley may be more loyal to their open-source projects than to their employers. Jim Stogdill, general manager at O Reilly Media, explains it this way: The connective tissue for a lot of folks inside of these companies is the open-source software projects they re involved in. The cooperativ
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