A cluster of great people in one location is key to the next Google

INNOVATION TALK:WHY ARE THERE not any Googles, Oracles or Apple Incs from Europe ? Why are there not any from Ireland ? Will a sustainable global top 10 technology company ever emerge from Ireland ?

The largest European technology company, by revenue, is the Finnish mobile phone company Nokia, which reported more than $50 billion of revenue for 2011: however, it made a loss of over $1.5 billion. Some of the top European technology companies include SAP (German, manufacturing and process software) which had 2011 revenues of about $18 billion; Dassault Systemes (French, computer-aided design software) about $2.4 billion; Sage (British, accounting software) about $2.1 billion; Software AG (German, database software) $1.4 billion; and ARM Holdings (British, phone chips) $790 million. By contrast, Apple had 2011 revenues of $108 billion, Google $38 billion and Oracle $35 billion.

Apple, Google, Oracle – it is striking how many global top technology companies are clustered within Silicon Valley. There are other US centres such as Austin, Boston, Chicago and New York, but the Valley leads all by far. Is it a coincidence that some of the world’s best universities are also in the San Francisco Bay Area, thus supplying a continuous stream of highly talented and extremely smart young people to drive the technology sector? The 2012-13 Times Higher Education world university rankings confirm that three of the top 10 universities in the world are in the Bay Area - CalTech (no 1), Stanford (no 3) and Berkeley (no 9). Of all the numerous European universities, only three are in the global top 10: Oxford (no 2), Cambridge (no 7) and Imperial (no 8) – strikingly, all in the UK.

If there is a strong correlation between great universities and great technology regions, then by this argument the London area should clearly be by far the dominant European high technology region, matching the Bay Area in the US. Since this is not the case (Anglophiles may counter), then possibly having a world-class university is not in fact a prerequisite to a world class innovation cluster. Since the technology industry is now global, some assert that location is no longer a key factor: conceivably the next great start-up could come anywhere on the planet, since the web and cloud based infrastructures enable a global reach and market presence.

Perhaps. But the Bay Area continues to reinvent the technology industry, ahead of any other location on the planet. The core catalyst is, of course, great people. Great people attract other great people and clusters thus form. The Bay Area absolutely thunders with some of the world’s very brightest and best: European, Asians, Americans all chose to relocate there, drawn by the sheer exhilaration of working with – and indeed leading – world-class teams. The pace of innovation and business is intense: everyone wants to advance their careers, work for a really hot start-up, and ultimately create wealth and fun. In turn, this raises the entire game, elevating the entire region to even higher standards of rapid innovation. The system becomes Darwinian. Weaker ideas and average companies may get funded, but they then have difficulties attracting great people and inevitably have even more difficulties retaining them. Such companies fade away, while the hottest companies gain traction and increase momentum as they act as magnets for talent and experience.

The large pool of what Malcolm Gladwell has called (in his book The Tipping Point, published in 2000) “connectors”, “mavens” and “salesmen” (Gladwell’s term) is at the core of the Bay Area. Connectors are people who personally know an extraordinary number of other interesting people. Mavens accumulate knowledge, especially about an industry and a marketplace. Salesmen are charismatic with strong personalities, who can readily persuade. The sheer density in the Bay Area of these three categories of tipping-point agents are the catalyst to the Darwinian process where only the best companies are allowed to thrive.

A concentration of great innovators, top class engineers, and adventurous entrepreneurs, coupled with a strong social pool of connectors, mavens and salesmen, in turn attracts financial capital, professional advisers, and a strong service sector – restaurants, retail and property. The entire economy of the region strengthens, driven the prosperity and the redistribution of the created wealth through prudent taxation.

If there can be a European complement to the Bay Area, then attracting and retaining truly great people has to be the key. The Dublin Web Summit held last week was beneficial in this regard. It showcased Dublin – our city, our culture, our enthusiasm – to some of the very brightest across Europe and from further afield. The more top talent that is attracted to live here, the more that will be attracted, particularly since a really dominant technology region somewhere within Europe has yet to emerge. Perhaps, too, Michael O’Leary’s Ryanair has done more to help foster European integration and the emergence of a technology cluster than the European Union or any national government initiative: it has made credible the option of low-cost commuting to a common centre.

If Europe is ever to create a collection of sustainable global top 10 technology companies, then getting great people clustered together will be the foundation. Social networking technology has itself so far failed to do this, and social discovery is the next great technology opportunity. In social political democracies, direct government incentives targeted to specific individuals are usually unacceptable. Instead, carefully promoted indirect actions, coupled with explicit incentives for the hottest companies, may yet win.