An idea factory

(9 Mar 2020)

How would an efficient idea factory look like? You know, a place which produces high-quality practical ideas for the society. The Bell Labs is probably one of the most successful idea factories and Jon Gertner’s book “The Idea Factory: Bell Labs and the Great Age of American Innovation” tells its story nicely. In my opinion, however, the book concentrates a bit too much on telling the stories of selected individuals from the Labs, rather than describing the key principles behind the success. However, it is a good book on the topic. In the case that you are not familiar with Bell Labs, it is an organization which produced a high number of innovations which profoundly shaped our societies. These innovations include transistor, laser, optical cable, satellite, photovoltaic cell, foundations of the internet, digital photography, programming languages (C and C++) and Unix, to name a few. These innovations have been driving the American economy for decades. The organization has also awarded nine Nobel prizes, which demonstrates the quality of their basic research (especially in solid physics).

Why was Bell Labs so successful? The book does not give a clear answer, but provides some insights on the topic. Curiously, it is often claimed that competition drives innovation, but it is interesting that economic foundations of the Labs was based on monopoly. A huge phone company (AT&T) had a monopoly position in whole US back in the days, and it gave about 1% of its income for research purposes. That’s where the funding for the Labs came from. Likely the funding model was one key component behind the success, since it allowed the organization to concentrate on a promising (but still uncertain) scientific theme for example for 10 years with a huge budget of tens or hundreds of millions of dollars. Such opportunities are not typically available anywhere.

Anyway, not only funding makes a scientific organization successful. There are two dominating theories on the success. One of them emphasized the role of a group of brilliant individuals and one the role of the organizational system. Probably the great individuals of the Labs had many things to do with the success. For example the famous Shannon, who invented the information theory, and Barteen, Brattain and Shockley who invented the transistor (and received the Nobel prize also), worked there and likely attracted many other ambitious individuals. It sounds very likely that success of some individuals was a key generator of more success. However, when thinking about these matters from the point of view of the organization, it is likely that the principles of the organization allowed these individuals to flourish. The Bell Labs had the primary aim of hiring talent. So the aim was not to hire a specialist for a particular task, but they wanted talented individuals, who did not always even have a clear and well-defined job in the beginning of their career at the Labs. However, with time they would find a project where they could contribute. The individuals and the research groups were given a lot of freedom and autonomy. Often the manager would give them some years before much interfering with their research. Thus, trust was part of the organization culture. Therefore, probably the success was much about setting up a right kind of environment where talented individuals were given a chance to give their best shot.

Many of the ideas behind the organization structure came from the longtime director and president Mervin Kelly. Another key principle in the organization was that people had to collaborate and the collaboration was ensured with physical proximity. People with different background in the same building would easily mix and discuss issues in their everyday encounters. The researcher were demanded to work with their doors open and the young researchers were send to learn from the famous researchers. Basically he believed that a critical mass of talented individuals together would be able to create great innovations. Curiously, the book claims that Kelly instructed his researchers to concentrate on what was not known, rather than concentrating on the known principles. These sound like principles which could work to create something new. However, contrasting this, the famous Shannon did much of his work alone (and he kept the door of this room closed). His work was heavily influenced by other Bell Labs engineers and researchers, though.

Anyway, what is clear that the Bell Labs was a part of a huge company (globally the biggest during those days). They had a unique system which included basic research combined with applied engineering research, a huge production system and massive funding. All of these components working together for a common industrial goal was one of their primary aims. It is easy to imagine that this kind of system is able to push new ideas to the practice, if the idea had potential.

When the thinking about the innovations and about the basic research, it is also noteworthy that the research had the target to be useful for the products and business of the AT&T company. Transforming ideas into products. As Mervin Kelly often said, the innovations needed to make thing cheaper, better or both. Which they did. So the basic research with the great quality did after all originate from sort of demand-based settings. Not from really accurate demand for a particular thing, but anyway, the research was not only curiosity-based but was appealing from engineering point of view.

After its golden age, the monopoly of the huge AT&T was broken down, which also changed the Labs. Also the world did change during the golden decades. Other companies took advantage of the innovations and became competitive and curiously also other kind of innovation systems emerged. Some of the great scientist (Nobel prize winner William Shockley particularly) of the Labs founded their own tech companies in Silicon Valley, which were based on their work at the Labs. Shockley was notoriously bad leader, and some of his talented engineers (“the traitorous eight”) founded their own companies in the valley. These events did form the foundations for the Valley as we know it nowadays, and Shockley (together with Frederick Terman) is often credited being the father of Silicon Valley. Eventually, a different kind of innovation system emerged In the Valley. The system was not based on a huge industrial research organization, but on venture capital and small scalable companies. That’s a big contrast. Curiously, the Bell Labs is now owned by a Finnish company Nokia. As a proud Finn I hope that the Labs is still able to produce at least a couple of brilliant innovations to develope our societies.

P.S. Have you ever wondered why telephone poles are so durable? The research and design (and lots of hard work) was conducted at the Labs.