29 Oct Cisco’s John Morgridge Speaks on How Wisconsin can Develop Successful Technology Clusters
Share information with your competitors? Job hop? Both might be counter-intuitive for Wisconsin technology professionals and managers, but both behavioral patterns might be critical to the success of high-tech industry in Wisconsin, according to one industry guru.
Wisconsin expatriate John Morgridge, Chairman of San Jose-based Cisco Systems, described his vision for what is needed for Wisconsin to develop successful technology clusters at the Wisconsin Economic Summit.
Morgridge described the elements that lead to the development of a successful IT cluster in the Silicon Valley. It was apparent that from his discussion that many of the critical factors are not currently developed in the state. Jay Smith, CEO of JLS Investment Group and co-chair of the Wisconsin Economic Summit, acknowledged in his introduction of Morgridge that cluster development in Wisconsin has not materialized as it could.
“We have hit a bump because we have not been positioned as a state as well as we should be,” Smith said.
Where’s the anchor?
Morgridge stressed the importance of having one or more major industries to anchor a cluster — pointing to the crucial role that Hewlett Packard has played in the development of Silicon Valley.
“It is important to have an anchor property in each of your clusters,” Morgridge said. “They provide money to create other companies and ideas. Make sure you involve the anchor firm or firms in your cluster.”
Wisconsin’s biotech industry lacks a strong anchor technology company. Ron Kuehn, executive director of the Wisconsin Biotech Association, pointed out at the conference that the life science industry in Wisconsin generates less than $25 billion in annual revenue per year
“Apart from physical concentration, cluster development requires a culture that is more often associated with California than Wisconsin,” Morgridge said. “The workers in Silicon Valley’s work force are intolerant of hierarchical structures and change jobs often, carrying ideas and expertise from one employer to the next. Information is exchanged at the top of the food chain as well because managers with like firms to talk openly to their competitors,” Morgridge said.
In contrast to California’s mobile work force, Morgridge said universities in Wisconsin tend to graduate “plantation people” who start at one company and stay their whole lives. Wisconsin’s life science industry does not foster many of the cultural traits of success that technology clusters located elsewhere exhibit.
“They have never really bonded in terms of looking at the market opportunity and working together to create opportunities,” Morgridge said of clusters in Wisconsin. “In Silicon Valley, there is cross talk irrespective of direct competitors. It is hard to keep a secret in Silicon Valley.”
Management Skills Missing
Another obstacle is the absence of management talent, according to Morgridge. He described the challenges in assembling a management team for companies funded through the Wisconsin Alumni Research Foundation.
“There is a challenge in terms of getting the management right — to grow that company,” Morgridge said.
Lack of Entrepreneurial Culture
More than anything, the lack of an entrepreneurial culture may be the most significant impediment to growth in the state according to Morgridge.
“Why did it happen in Silicon Valley?” Morgridge asked, pointing to his company’s explosive growth. “Cisco is not the only company that has done this. One of the things that is fundamental to Cisco is that we have access to huge …educational resources.”
Tolerance for risk – another entrepreneurial culture issue and one factor Morgridge said is key to cluster development — at may be lacking in Wisconsin as well.
Morgridge said growth requires “a high premium in the work force for taking risk for a generous reward. A good stock market, the use of options are all part of the fundamental business model in Silicon Valley.”
“The presence of venture capital is also vital for success,” Morgridge said. “But in California, the presence of state and private money were not as important as a culture of entrepreneurialism,” he said.
“It is really a whole fabric … it is not just money,” Morgridge said. “It is not just state support. Entrepreneurialism taught not just in the business schools, but, in the law schools and the engineering schools. All of those schools have entrepreneurial spirit — the idea that I can go out there and start a company.”
But while universities may need to teach the risk-tolerance of entrepreneurialism, according to Morgridge, they must also provide a risk-free environment for research.
“Universities provide the risk-free environment for people to develop ideas,” he said. “They permit failure, and that is an important part of success.”