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Coffee: The Secret to Innovation

April 16th, 2013

During the 70’s and 80’s, two separate clusters simultaneously developed in completely different industries, in completely different countries… and coffee just might deserve credit for both. The first was a cluster of automotive testing facilities in the rural town of Arjeplog, in Northern Sweden. The second is Silicon Valley.
Fika (FEE-kah) is a long-standing Friday afternoon coffee break tradition in Sweden and it’s typically enjoyed with a companion or two and a sugar-laden carb-based dessert. The ritual of Fika brings people together to share ideas, connect, and build community over a cup of java. The custom is also responsible for saving a burgeoning cluster in Arjeplog.

In the early 1970’s, two Arjeplog entrepreneurs happened to meet a few German engineers who were scouting locations for a winter facility to cold-weather test their automotive innovations. The Swedish entrepreneurs and the German engineers struck a conversation that turned business arrangement. The location, and the entrepreneurs’ ability to adapt local roads and lakes to meet manufacturers testing needs, attracted the attention of automotive manufactures across Europe. Arjeplog became the go-to testing location of Porsche, BMW, and Volkswagen. The region adapted to meet the tester’s needs. Custom testing facilities opened and the hospitality industry flourished throughout the region. Arjeplog began to blossom as the accidental cluster took formal shape.

Fika “created a forum for sharing ideas and discussing common issues” in Arjeplog. It brought business owners and government officials together to explore the potential and downfalls that challenged their efforts.  Problems that arose weren’t just solved, but rather, modifications and innovations were vetted, qualified, and adopted. Gaps in services were identified, suitable partners were aligned, and reliable strategies that might otherwise have failed were assessed and exploited in this human and entrepreneurial experiment.  Catching up and idea-sharing over coffee became an essential support system and an efficiency advantage to Arjeplog’s competitive evolution. Arjeplog is now the world’s largest winter car testing locale. More than 9,000 automotive representatives visit the region each year, creating more than 500 local jobs and brining $110million USD into the local economy annually.

Pair Silicon Valley with its early 80’s tech rival, the Route 128 beltway around Boston, Massachusetts, and you’ve got a legendary idea-sharing innovation success story. These two tech corridors were competing neck in neck, until the 80’s economic downturn. Both regions were equally pitted for success- military spending, workforce, tax rates… The difference: Route 128’s culture valued secrecy and corporate loyalty. Silicon Valley valued open-source technology, idea sharing, and entrepreneurship. Silicon Valley’s tech startups specialized their expertise and relied on the tightly honed niche talent of other local startups to meet gaps and amplify synergy. Route 128’s tech firms were insular, and incorporated as much of the technology development internally as possible, limiting the need for strategic partnership and collaboration. In Silicon Valley idea sharing spurred innovation, kick started new ventures, and made for a resilient and adaptable cluster that adopted agilely and pushed out the boundaries. When the two regions faced economic challenges and increased competition from abroad the differences made the difference. Silicon Valley was able to leverage its advantages to innovate forward. The isolated companies along Route 128 who were operationally and financially dependent on less agile ways of working were hard hit and left behind.

While Silicon Valley might not have relied on coffee directly, it just so happens to have rebounded from the 1980’s recession right alongside the expansion of a little west coast coffee roaster called Starbucks. By 1989 Starbucks owned 46 coffee houses across the Northwest and Midwest, and was selling more than 2million pounds of coffee a year. By 1990, Silicon Valley was exporting more than $11billion dollars in technology, accounting for 1/3 of the nation’s total technology exports, and was home to 39 of the nation’s 100 fastest growing companies, including Apple and HP. Route 128 was home to only 4 of the fastest growing companies, was exporting just over $4.5billion in technology, and it’s engineers were still drinking slow drip Folgers from a can.

Caffeine definitely helps jump start the creative juices, but it’s biggest innovation asset is its incarnation as a social institution that bring people together to share ideas. Starting in May 2013, BlackDog’s Sacramento Lab will be celebrating Fika the first Friday of every month, to help spur ideas, support innovation, and connect creative local minds. If you’re in the Sacramento area you’re invited to attend. Email to reserve a spot and get the location details.

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