Introductory keynote delivered at the Global Innovation Forum (a project of the National Foreign Trade Council Foundation) that took place in Palo Alto on June 15, 2010. For highlights, see Twitter coverage under #gifsv (http://twitter.com/#search?q=%23gifsv).

1. Innovation in Silicon Valley Mark Bernstein Global Innovation Forum (NFTC) June 11th, 2010

2. 2 Caveats on ‘Innovation’ ‘Innovation’ is seen as universally good Technology, product, process, incremental, radical, modular, architectural, market, organizational, business model… ‘Innovation’ has many incomplete theories More innovation is better…but not necessarily Creative Destruction – Joseph Schumpeter Incremental vs. Radical – William Abernathy Continuous vs. Discontinuous – Michael Porter Sustaining vs. Disruptive – Clayton Christensen ROI on innovation is not well understood Complex interaction of economic & social contexts Impact on internal resources & external markets are different Clarity of short term payoff vs. fuzzy long term costs & trade-offs Research Innovation is fundamentally longer term & uncertain Technology, execution, market risks are all compounded

4. U.S. Government: Funding for aerospace

6. 4 The Vision for Xerox PARC Bold strategic investment Founded by Xerox in 1970, recognition of the coming digital revolution semiconductors, software, systems were emergent in Silicon Valley Chartered the organization to create “The Office of the Future” Challenged researchers to become the “architects of information” Unique multi-disciplinary culture Physicists, electronics engineers, computer scientists…theory & practice Able to see problems and integrate solutions from multiple perspectives PARC Copyright 2010

8. What are the ingredients? Talent motivated to make a difference in the world From everywhere in the world that can contribute Grounding in market and technology realities Abundant networks of experiences & relationships Funding to support progress on important problems From governments, industries, entrepreneurs, & some VC’s Loosely coupled intimate interaction with customers Constant iteration and flexible, modular structures Going forward, capital and resource efficiency Tighter integration of global collaboration

9. Example: Solfocus Incubation A new model for business engagement Understand business/technical problem Invent & file patents License technology for equity and royalties Incubate the new company inside PARC Ongoing research in return for additional equity A range of benefits to the PARC community Excitement of a fast-moving, growing business (2 to 60 employees) Exposure to VCs through participation on Solfocus Board of Directors Opportunity to engage partners of Solfocus for other projects Pat Maeda, Mike Weisberg, Scott Elrod, Dave Fork PARC Copyright 2010

10. Thank You www.parc.com