Schafer: Innovation culture is inherently Midwestern

Business professor Anne Marie Knott looked at her state-by-state data on innovation and couldn't easily explain why Minnesota ranked just behind California, home to the innovation hotbed of Silicon Valley.

The thing is, she wrote in a post for the Harvard Business Review, California and Minnesota are just not much alike. Californians enjoy a sunny Mediterranean climate on the coast, while here in the heartland the climate is more like Sweden's, only colder.

She may have been too quick to dismiss cultural similarities, though. The innovation culture of the Twin Cities maybe isn't as different from Silicon Valley as people might first think. That's because if you look back far enough into Silicon Valley's past, you see some very Midwestern roots.

It's a stretch to say one person "founded" Silicon Valley, but it's hard to overstate the influence of entrepreneur Robert Noyce, very much the son of a Congregational minister from central Iowa.

He may no longer be so well-known, because his work really predates even the computer. What he did was help create the building blocks of the digital revolution, the integrated circuits made out of silicon.

Noyce grew up in Grinnell, Iowa, a town then of about 7,000, and got introduced to an experimental device called the transistor while attending Grinnell College. After getting a graduate degree from MIT, Noyce eventually found his way to Northern California in the 1950s to work for a fledgling semiconductor outfit.

Later a group of his colleagues decided they'd had enough of the autocratic ways of the boss and decided to start their own company. They recruited Noyce to be CEO. Together they formed a company called Fairchild Semiconductor, with the financial backing of an East Coast company called Fairchild Camera and Instrument.

A limo alone was enough to turn heads in the Santa Clara Valley, Wolfe wrote, at the time known mostly for its apricot and plum orchards. But what brought employees to the windows all day to see for themselves was the sight of a uniformed driver sitting around for hours with nothing to do but wait for the great man inside.

That was stunning. And somehow very wrong.

Where Noyce came from, the people didn't go much for the trappings of high status. There was really no social hierarchy of any kind, not even, Wolfe wrote, anything that could be called the country club set. There was no social penalty for being poor. There was for being ostentatious.

These instincts, nurtured in Iowa, guided how Noyce ­created the prototype company of Silicon Valley. In his company, there were no fancy offices, no executive washrooms and certainly no car and driver for an executive. There wasn't even a reserved parking space for the CEO.

No one had to ask his permission to buy anything. Any employee, even first-year engineers, could make any purchase so long as no one objected enough to try to stop it. What really mattered was proving a good idea and then getting it into production.

Years later, when researcher AnnaLee Saxenian came along and compared the thriving Silicon Valley to the faded technology corridor of greater Boston, called Route 128, she traced the competitive advantage in California to what Noyce created.

In Silicon Valley the corporate structure remained very flat and highly adaptive. The trappings of status mattered little. Failures were quickly forgotten and the innovators moved on to a new, better idea.

Technology companies back East, she found, had a corporate hierarchy that John Carter of Fairchild Camera would've easily recognized. There was a corporate ladder to climb. Planning for research and development came from the top, and information was tightly controlled.

Which is the Twin Cities more alike? Ask anyone still around who worked in the early decades of Medtronic, founded in the 1940s in a garage in Minneapolis. The answer is clearly Silicon Valley and the model created by Noyce and his colleagues.

The presence of so-called "vibrant firms" like Medtronic is one of the factors that Knott, who wrote the HBR blog post on innovation last week, identified as critical to a strong innovation economy.

Knott, a professor at Washington University in St. Louis, was intrigued by my suggestion that the Twin Cities and Silicon Valley could be culturally much more alike than not.

What's been working in Minnesota, she said, is clearly cultural. It's not about a locally developed technology or one particular hot industry.

That's why regions that have tried to jump start innovation can find it tough going. They've increased funding for research universities, but Knott said a great university isn't enough without the entrepreneurs willing to try making an idea into a product.

Minnesota's business culture also looms large in the research work of Myles Shaver, of the U's Carlson School of Management. He's working on our big constellation of corporate headquarters, not necessarily innovation, but he noted that the wealth of know-how and cultural attributes in a region can easily outlive the firms that helped create them.

"There were two great computer clusters, Silicon Valley and Route 128 around Boston," he said. "The next after those two was the Twin Cities. We had Control Data, we had Sperry and we had Cray. Those companies maybe don't exist anymore, but to say that the people and the ideas don't exist in town anymore is just plain wrong."