Part of our recently released ebook “Innovative Africa: The new face of Africa“, studies startup ecosystems or clusters, what makes them tick and what it takes to create one.
As far as creating startup ecosystems especially as far as technology goes, Silicon Valley is usually the model deferred to and most observed. This has evidenced itself in the branding of nascent innovation hubs as ‘Silicon XYZ‘ – Silicon Savannah (East Africa), Silicon Cape (South Africa), Silicon Lagoon (Nigeria) and so on (which is interesting given the term ‘Silicon Valley’ is quite relevant to that area given the concentration of companies in the semiconductor industry when the term was coined yet neither of these nascent areas have the same, maybe more relevant terms should be coined… ?). It goes without saying that indeed, Silicon Valley is an amazing place, but it would stand to reason that there are other areas we can look to for lessons on how to groom large scale innovation. This is why in the book we not only consider Silicon Valley, but also study the startup scenes in Israel (the Startup Nation) and China (specifically Zhongguancun).
Despite the fact that these areas have drastic differences, there are some common threads that run across them, at least as far as technology innovation and entrepreneurship go. One of these observations is what I’ve come to summarise in a simple equation:
SC = EC + IC
Startup Culture = Entrepreneurship Culture + Innovation Culture
By ‘Startup Culture‘ I’m referring to the tendency for individuals and groups to create new companies at scale – that is, very many individuals or groups go ahead and start companies, and most of those individuals start more than one company and in fact at times create new companies many times over. Furthermore, this phenomenon is concentrated to a) a geographic area hence creating a cluster, and b) a particular industry. This is the kind of thing we see in places such as Silicon Valley, Zhongguancun and the nation of Israel. But it’s not just a matter of starting new companies, but new, innovative companies – in other words, a vibrant Startup Culture is actually the result of a vibrant Entrepreneurial Culture and a vibrant Innovation Culture.
A Culture of Entrepreneurship
Basically, where such a culture exists, the people are not afraid to start new companies. It’s a culture of risk. Entrepreneurs risking failure by starting new companies. Investors risking losing money by investing in those companies. Risk is a key feature (probably the primary characteristic) of entrepreneurial cultures. Being a risk-taker in such a culture is the norm and is actually celebrated, and more than that, even expected and rewarded.
Coupled with this is usually an element of tolerance of failure. Failure is not stigmatized, so long as one learns from their failure.
Put these two features together and you have a culture that enables a lot of experimentation, and a lot of trial and error. There’s no fear of taking a risk because it’s the norm, and furthermore, you will not be stigmatised if you fail. And this happens at scale – a lot of people making attempts and many of them making attempts over and over again. Such a culture is bound to produce some great entrepreneurial successes if for nothing else then by sheer probabilities – the more attempts there are, the higher the probability of some great successes.
The Innovation Culture
It’s not enough that the likes of Silicon Valley have vibrant entrepreneurial cultures. They are also vibrant innovation cultures. Israeli companies for example have created many innovations that we use on a daily basis from Instant Messaging (ICQ, the first internet-wide IM service) to innovative Intel chips to innovative online fraud detection mechanisms used by PayPal. In fact, Israeli companies have a history of being rapidly acquired for their innovative creations.
It takes two to tango
It is possible for one to exist without the other: a lot of entrepreneurship activity can be taking place with very minimal innovation taking place, for example a lot of people may be opening up businesses but their business activity is just trading in goods or services – buying and selling without adding any innovatively new value to either their good or service or in their processes.
On the other hand, there can be a lot of innovation happening but that does not link with entrepreneurs who can take innovations and find a market for the innovation and then refine the innovation and present it to the market in a profitable fashion. What you really have in this case is really good R&D but no connection to the marketplace.
Culture, Culture, Culture
It’s all about culture really. Culture, Culture , Culture – culture of entrepreneurship, culture of innovation… startup culture.
The core competitive edge of Silicon Valley or any other startup ecosystem will always boil down to having the right cultural mix. It’s less about the hard infrastructure and more about the soft matter – willingness to take risk, tolerance to failure, creative experimentation, entrepreneurship. These are the core tenets of vibrant startup culture. They are also very hard to create where they are not found given their very qualitative nature – hard, but not impossible and these should be a key focus as different regions in Africa aspire to becoming such clusters.