The Idea Factory: Bell Labs and the Great Age of American Innovation (51 page)

Mayo continues, “There are a lot of people that just don’t see the kind of things that are going to happen or likely to happen. They would prefer to invest in incremental improvements, and to have wonderful picnics, and make this quarter’s earnings without strain.” In part, Mayo connects this to the “immense stress” associated with funding research on ideas that may destroy your business if the results make your current product obsolete. Those who study innovation know this as the
innovator’s dilemma
, a term coined by the Harvard professor Clayton Christensen. “This is a very strong force,” Mayo points out. “It’s in me. And in everybody.” Strangely enough, however, it may not have been in Mervin Kelly or in some of his disciples—perhaps because the monopoly, at least for a time, guaranteed that the phone company’s business would remain sturdy even in the face of drastic technological upheaval. Kelly, for instance, who toiled for decades to improve and perfect the vacuum tube, effectively lobbied for a research program on the transistor that, when it succeeded, rendered his entire previous career in science irrelevant. And an array of other technologies at Bell Labs had a similar effect of discarding
the old in favor of the new. As Mayo says, “When I came to Bell Labs, and if you told me we were going to put a billion [transistors] on a single chip of silicon, we’re going to make glass so pure that you can shine light through it for hundreds of miles, or we’re going to use a computer to listen and speak like people do, I would have said, ‘You’re out of your mind. We’ll move in that direction, but that’s too far.’ But then, here we are.”

“CAN WE LEARN SOMETHING FROM THE EXAMPLE OF BELL LABS?” John Pierce asked, in all capital letters, one day in late January 1997. At the age of eighty-six—five years before his death—he had sat down at his computer, at home in Palo Alto, to write a proposal for a book that explored what his old institution had taught him. He never wrote the book. But the problem Pierce wrestled with that day was how to decouple Bell Labs’ success from its circumstances. “Bell Labs functioned in a world not ours,” he noted. The links between government and business were different in that era; the monopoly was deemed acceptable as well as vital. And the compensation scale for its researchers and managers could never suffice in the modern economy. In Pierce’s era, the top officer at Bell Labs made about twelve times that of the lowest-paid worker; in the late 1990s, it was more typical at large American firms for the CEO to make one hundred times the salary of the lowest-paid worker. Back in the 1940s and 1950s, moreover, smart and talented graduate students could never be wooed away from the Labs by the prospect of making millions. It wasn’t even thinkable. You were in it for the adventure. “I don’t think I was ever motivated by the notion of winning prizes, although I have a couple of dozen of them in the other room,” Claude Shannon said late in life. “I was motivated more by curiosity. I was never motivated by the desire for money, financial gain. I wasn’t trying to do something big so that I could get a bigger salary.”
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It may be obvious, but it is nonetheless worth noting that in 1997 and in the present day there is little possibility—and, admittedly, little reason—for the return of a phone monopoly. Communications is a thriving,
innovative industry, thanks in part to the fact that it has been built upon the foundation laid down by Bell Labs. “I’ve often said to my old friends that we were very lucky we got to work there, in an environment that I don’t think will ever exist again,” remarks Dick Frenkiel, who worked on the first generation of cellular technology. “It’s hard to say something will never happen again. But with the monopoly gone, with the whole concept of monopoly essentially discredited, how could there ever be a place like that again?”
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Still, to explore what we can learn from the example of Bell Labs isn’t the same as pining for its return. Rather, it is to ask what aspects of Bell Labs made it succeed, and whether other organizations—or other governments, as they attempt to plan far into the future in energy, biotechnology, nanotechnology, information technology, and the like—can salvage what was valuable. Pierce, to put it simply, was asking himself: What about Bell Labs’ formula was timeless? In his 1997 list, he thought it boiled down to four things:

It is an interesting list. But it is hard to see it as complete. The fact that the telephone engineers faced an unceasing stream of technical and logistical problems always urged them toward innovative solutions. Without question, the size of the staff at Bell Labs, and its interdisciplinary nature, were large factors in its success, too. So was the steadiness of the Labs’ funding stream, guaranteed by the monthly bill paid by phone subscribers, which effectively allowed the organization to function much like a national laboratory. Bell Labs managers knew they could support projects—the undersea cable, for example, or cellular telephony—that might require decades of work. The funding stream also assured the managers that they could consistently support educational programs to improve the staff’s expertise and capabilities. And as Morry Tanenbaum,
the inventor of the silicon transistor, points out, Bell Labs’ sense of mission—to plan the future of communications—also had an incalculable value that endured for sixty years. The mission was broad but also directed. Bell Labs’ researchers, Tanenbaum notes, had a “circumscribed freedom” that proved to be liberating and practical at the same time.

And what about competition? It is now received wisdom that innovation and competitiveness are closely linked. Companies that are good at innovating are good at competing in the market; the uncompromising nature of the market, in turn, is a powerful force on companies to innovate. But Bell Labs’ history demonstrates that the truth is actually far more complicated. It also suggests that we tend to misinterpret the value of markets. What seems more likely, as the science writer Steven Johnson has noted in a broad study of scientific innovations, is that creative environments that foster a rich exchange of ideas are far more important in eliciting important new insights than are the forces of competition.
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Indeed, one might concede that market competition has been superb at giving consumers incremental and appealing improvements. But that does not mean it has been good at prompting huge advances (such as those at Bell Labs, as well as those that allowed for the creation of the Internet, for instance, or, even earlier, antibiotics). It’s the latter types that pay to society the biggest and most lasting dividends. And it was almost always the latter types that Kelly and Pierce and Baker were striving for. It may be the case, too, that we not only mistake the potential for free market competition to prompt big breakthroughs. We may also misunderstand how the private sector produces the most promising innovations in any given year. For instance, a 2008 study titled “Where Do Innovations Come From?” concluded that partnerships among corporations, government laboratories, and federally funded university researchers has become increasingly essential to the U.S. innovation pipeline over the past several decades. In 2006, for instance, “77 of the 88 U.S. entities” that produced significant innovations were beneficiaries of federal funding.
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Clearly, at least in regard to innovation, capitalism is more deeply intertwined with government than many of us realize.

There may be one other observation worth adding to Pierce’s list. In
recounting what he learned from Bell Labs, John Mayo, among other things, offers this: “We learned that the impossible is not impossible. We learned that if you think you can do something you may very well be able to do one thousand times better once you understand what’s going on.” It may be easy to overlook something crucial in what Mayo is saying. But it relates back to Bell Labs’ origins—back when Frank Jewett and Harold Arnold set about creating the laboratory at Western Electric that ultimately became Bell Labs. The men built it upon the notion that by encouraging their staff to understand a technology, they could create advances that were not only useful but revolutionary. An industrial lab, Jewett explained, was a group of intelligent men “specially trained in a knowledge of the things and methods of science.” As he saw it, a properly staffed and organized lab could avoid the mistakes of cut-and-try experimentation and in turn “bring to bear an aggregate of creative force on any particular problem which is infinitely greater than any force which can be conceived of as residing in the intellectual capacity of an individual.”
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The vacuum tube repeater, which allowed a phone call to reach from New York to San Francisco, was only the first great proof of this. And then many others followed.

A drive for understanding separated the great scientists and engineers of the twentieth century from their predecessors. And it separated their inventions and business successes, too. The thin, slow-moving physicist named Clinton Davisson, who was hired at the Western labs just before World War I, found that it was the only thing he cared about. And that, in turn, made a permanent impression on Davisson’s best friend and office mate, the young and impetuous physicist from Missouri named Mervin Kelly. They were there to get ahead. But Kelly could see that they were only going to get ahead by understanding what they were doing.

C
OMPARING THE INFORMATION BUSINESS
of Kelly’s era to that of the present can be enlightening as well as tricky. How do the technology giants of today—companies like Apple, Microsoft, Google, or Facebook—measure up to Bell Labs? To be sure, there are similarities. All of these companies
have carved out a near-monopoly status in various electronic hardware or computer software markets. All are sitting on enormous reserves of cash—tens of billions of dollars in some cases—that they could invest at will on research or new ideas. All of these companies seem intent on controlling, or at least dominating, our communications markets.

All of these companies meanwhile employ some of the finest engineers and computer scientists on the planet. And to house those employees, corporate executives have built citadels on expansive, grassy campuses—informal, creative environments that reward innovative thinking with financial rewards and (thanks to the easy proliferation of software) speedy product rollouts. Google has even picked up on an old Bell Labs tradition: It encourages workers to spend part of their time—up to 20 percent—on a project that captures their interest, just as Joel Engel did when he planned a cellular phone system in Holmdel’s Black Box in the late 1960s.

Still, the contrasts between these organizations and Bell Labs are crucial. “This was a company that literally dumped technology on our country,” the physics historian Michael Riordan has said of Bell Labs. “I don’t think we’ll see an organization with that kind of record ever again.”
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The expectation that, say, Google or Apple could behave like Bell Labs—that such companies could invest heavily in basic or applied research and then sprinkle the results freely around California—seems misplaced, if not naive. Such companies don’t exist as part of a highly regulated national public trust. They exist as part of our international capital markets. They are superb at producing a specific and limited range of technology products. And at the end of the day, new scientific knowledge matters far less to them than the demands—for leadership, growth, and profits—of their customers, employees, and shareholders.

Perhaps information technology, then, is the wrong place to look for a new Bell Labs. We might do better to poke around in other parts of the economy. One place to consider is a complex of buildings set amid a 689-acre campus some thirty miles north of Washington, D.C. Known as Janelia Farm, the campus serves as an elite research center for the Howard Hughes Medical Institute. Janelia opened in 2006 with the intent of attacking
the most basic biomedical research problems; it is patterned after Bell Labs and backed by a multibillion-dollar endowment. The primary goal is to understand consciousness and how the human brain processes information, but the approach to innovation is familiar: a close, interdisciplinary exchange of ideas between the world’s brightest science researchers, all of whom are given ample funding and tremendous freedom. The directors of Janelia urge their researchers to take risks and to flirt with failure as they “explore the unknown.” There are no classes to teach, no papers to grade, no federal grants to pursue. And while the scale of the research effort is smaller than at the Labs—Janelia is home to about three hundred researchers and a hundred visiting scholars—it’s difficult not to conclude, just as Kelly might have, that it’s very much an institute of creative technology. By early indications, too, the results at Janelia and Howard Hughes outshine the results of academics working within the existing structure for federally financed medical research.
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Also, there is another place to look for a new Bell Labs. Moving the global economy from one that runs on fossil fuels to one that runs on renewables is almost certainly the most difficult challenge—the wickedest problem—of the twenty-first century. Whether we succeed or fail at these efforts, which are only now in their infancy, will determine how dramatically our climate will change in the coming century. It will also determine the political and economic strength of nations that now rely on the production or consumption of oil, gas, and coal. As U.S. secretary of energy, Steven Chu, who won the Nobel Prize for his research at Bell Labs in the early 1980s, has proposed a number of research projects to spur clean energy innovation. Chu calls these projects “innovation hubs,” which are effectively meant to function as miniature copies of his old employer. So far, the hubs focus on making breakthroughs in synthetic fuels, nuclear power, and energy efficiency. “I believe that to solve the energy problem,” Chu said in 2009 at a U.S. Senate committee hearing, “the Department of Energy must strive to be the modern version of Bell Labs in energy research.”
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