The Nature of Innovation–The Bell Labs Lesson

An important article in today’s New York Times (2.26.12) by John Gertner http://www.nytimes.com/2012/02/26/opinion/sunday/innovation-and-the-bell-labs-miracle.html?pagewanted=1&ref=opinion chronicles the rise of Bell Labs, the institution responsible for some of the most important technological discoveries of the last century:

Consider what Bell Labs achieved. For a long stretch of the 20th century, it was the most innovative scientific organization in the world. On any list of its inventions, the most notable is probably the transistor, invented in 1947, which is now the building block of all digital products and contemporary life. These tiny devices can accomplish a multitude of tasks. The most basic is the amplification of an electric signal. But with small bursts of electricity, transistors can be switched on and off, and effectively be made to represent a “bit” of information, which is digitally expressed as a 1 or 0. Billions of transistors now reside on the chips that power our phones and computers.

The silicon solar cell, the precursor of all solar-powered devices, was invented [at Bell]. Two of its researchers were awarded the first patent for a laser, and colleagues built a host of early prototypes.  They created and developed the first communications satellites; the theory and development of digital communications; and the first cellular telephone systems; and they built the first fiber optic cable systems

The article goes on to suggest how Bell Labs was able to achieve such a startling degree of innovation and contrasts it with today’s Silicon Valley.  The difference he says is that while Facebook and Google are all based on ‘breaking things’, lightning speed and response, Bell took its time and not only developed new ideas but applied them to products:

[The experience of Bell Labs] shows us that to always “move fast and break things,” as Facebook is apparently doing, or to constantly pursue “a gospel of speed” (as Google has described its philosophy) is not the only way to get where we are going. Perhaps it is not even the best way. Revolutions happen fast but dawn slowly. To a large extent, we’re still benefiting from risks that were taken, and research that was financed, more than a half century ago.

It is worth looking at the specific elements of Bell Labs that contribute to innovation:

1. Physical Proximity. Kelly (the founder) was convinced that physical proximity was everything; phone calls alone wouldn’t do.  Bell Labs housed thinkers and doers under one roof – purposefully mixed together on the transistor project were physicists, metallurgists and electrical engineers; side by side were specialists in theory, experimentation and manufacturing.

2. Aspiration. Bell Labs was sometimes caricatured as an ivory tower. But it is more aptly described as an ivory tower with a factory downstairs. It was clear to the researchers and engineers there that the ultimate aim of their organization was to transform new knowledge into new things.

3. Organization. Kelly set up Bell Labs’ satellite facilities in the phone company’s manufacturing plants, so as to help transfer all these new ideas into things. But the exchange was supposed to go both ways, with the engineers learning from the plant workers, too.

4. Freedom. Some of his scientists had so much autonomy that he was mostly unaware of their progress until years after he authorized their work.

5. Time. One might see [allowing years to develop a product] as impossible in today’s faster, more competitive world.  Nobody had to meet benchmarks to help with quarterly earnings; nobody had to rush a product to market before the competition did.

Gertner asks what innovation should accomplish:

By one definition, innovation is an important new product or process, deployed on a large scale and having a significant impact on society and the economy, that can do a job  “better, or cheaper, or both.” However ‘innovation’ can describe a smartphone app or a social media tool; or it can describe the transistor or the blueprint for a cellphone system. The differences are immense. One type of innovation creates a handful of jobs and modest revenues; another, the [Bell Lab]type, creates millions of jobs and a long-lasting platform for society’s wealth and well-being.

He concludes:

To consider the legacy of Bell Labs is to see that we should not mistake small technological steps for huge technological leaps. It also shows us that to always “move fast and break things,” as Facebook is apparently doing, or to constantly pursue “a gospel of speed” (as Google has described its philosophy) is not the only way to get where we are going. Perhaps it is not even the best way. Revolutions happen fast but dawn slowly. To a large extent, we’re still benefiting from risks that were taken, and research that was financed, more than a half century ago.

The experience of Bell Labs, however, cannot be replicated because it is from an earlier era – one of big monopolies like Bell Telephone which, without competition, could afford to spend money and enormous amounts of time in basic research.  Bell did not tell the researchers at the Lab to come up with a laser, or the digital basis for communication.  It simply asked them to work within a general context – how to make communication faster, more efficient, and more economical.  From there, the workers were on their own. While the article does not spell out the innovative process at Google or Facebook, it suggests that it is more narrow, focusing on the smaller steps – e.g. a new phone app – than the larger, more fundamental and revolutionary changes to improve communications in ten years.

I am not so sure this is true.  Every day I read about computer ‘chips’ that are microns small.  Recently, a discovery was made that will enable one atom or a microscopic fragment of DNA to be today’s transistor.  These discoveries are not made in one, giant laboratory, but in university laboratories all over the United States. Innovation in basic research as well as in product design is now done by thousands of smaller institutions –start-ups and individual laboratories.  The market seems to be working well.  The research laboratories are working for profit – to be able to patent their new invention and realize royalties whenever their new discovery is used by Apple or Google. Start-ups work feverishly to outdo the competition for new product design and applications.  

While this narrows the focus of research facilities somewhat, and gives them a shorter time horizon, the end result appears to be the same.  The same is true for the product designers and manufacturers.  Apple, for example, recently upgraded its I-Phone.  This was not a product that would enable you to levitate – the quantum leap of technology sought by Bell Labs – but it did improve the camera, add advanced voice recognition software, and other features.  The voice software already existed as a Siri app, but the innovation of Apple was to integrate it into the I-Phone’s operating system.

Some of the other elements of Bell’s success are still important today, but in a different context. The functional link insisted upon by Kelly between ideas and things is still important, but Steve Job’s insistence on a glass screen, for example, heavier but better than a  plastic one that scratched easily – he almost instinctively understood the very nature of the device he had built and exactly how consumers used and valued it – was translated into a product within weeks by outsourced, inexpensive, disciplined, and tireless Chinese factory workers.

Kelly’s argument for an integrated workplace is still valuable and the basic idea has been expanded, adapted and modified for a modern setting.  Not only are workplaces more integrated, but they are integrated across product lines. A variety of creative people  working on different ideas and products, but all in the innovative phase of thinking, are put in proximity.  Entrepreneurs have understood that the very process of innovation is critical and common to all, and that by sharing space and thinking, all design work will be enhanced. 

Kelly’s insistence on two-way flow of communication has been a staple of management for decades, but with limited success.  Kelly understood that actual face-to-face communication was not essential, but that communication between people in different areas of the world or different stages of the design or manufacturing process was essential.  We are adapting slowly to virtual communication links.  The live, ‘real’ handshake, and ‘look-‘em-in-the-eye’ mentality still persists, but economics if nothing else will force a change.

Innovation is such a fascinating subject because as President Obama has said in his recent State of the Union address: “Innovation is what America has always been about.” Over the last 100 years, America has been the uncontested leader in innovation in manufacturing, finance, technology and communications, among other important areas; and, despite the remarkable and revolutionary new ideas and products that come from America, the future may not be as productive. 

Our educational system, for example, is still mired in the 19th century.  Innovation, entrepreneurial thinking, and risk-taking are discouraged rather than encouraged.  Religious conservatism has held back what could have already been dramatic life-saving innovations in stem cell technology.  Public outcry over what critics consider the negative impact of genetically modified products has slowed innovation which could help feed the world.  The practical potential of the spectacular discoveries concerning DNA, such as the understanding of the human genome and recombinant DNA techniques, have been held in check because of 18th century conceptions of human nature and reason.  Human nature itself is not outside the reach of an engineered genome.

Innovation, therefore, is possible only when the most favorable environment is possible within our very diverse democratic society – where politics, religion, philosophy, organization, economics, and genius coincide.  This conjuncture is very uncommon; and that is why the increased attention paid to innovation is critical and essential.