Review: “Idea Factory” produces a few of its own

April 13, 2012

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

How does innovation happen? That’s the question Jon Gertner tries to answer in “The Idea Factory,” his history of Bell Labs. For fifty years, AT&T’s industrial lab pumped out a series of astonishing new products, including communications satellites and radar, as well as Nobel-prize winning ideas such as the transistor – and garnered prestige for its parent company. Gertner outlines how brilliance, contradictions, chance and steady hands make fertile soil for research.

In 1907, the American Telephone & Telegraph Corp was in a miserable state. The company had spent years fighting rivals in the market and courts, instead of investing in its network. New president Theodore Vail figured that the government would acquiesce to a monopoly if the result was reliable service at a regulated price.

Bell Labs figured prominently in his argument. It could discover and develop new ways to make telecom equipment and service both cheaper and more reliable. A simple development, figuring out how to coat lines with plastic to make them less likely to fail, saved AT&T more money than it spent in a decade on R&D. Perhaps equally important, the Labs could show the public – and lawmakers – that the AT&T monopoly served the public interest. Patents were licensed out to all comers at minimal cost and inventions such as radar helped win the Second World War.

The technical accomplishments only amplified the contradictions of the Labs’ mission. Monopolies are usually concerned with reaping high profits and fighting off competition. Yet here was one that spent vast sums on basic research that might not pay off for decades, or ever. Moreover, other companies would harvest much of the fruit from the Labs’ inventions – not just transistors but microwave towers, optical fiber and mobile phone networks. The Labs’ chiefs understood these products were the seeds of destruction for their monopoly, as they would eventually allow rivals to set up rival networks on the cheap.

There were also internal contradictions. Ideas were fueled by a heady mixture of collaboration and competition. The combined knowledge and skills of William Shockley and his colleagues built the first transistor. But Shockley hated to share any of the credit; that pride pushed him make a better transistor which he could call his own.

Administrators of the Labs, such as Mervin Kelly, were uniformly technologically competent and steady hands. But they also appreciated ignorance and chance. In the early days, Kelly had seen the happy results of researchers thrown together. He institutionalized cross-disciplinary encounters through work groups of differing specialties – people with only a vague understanding of a problem often provided a fresh solution – and a new headquarters which maximized random encounters.

The Kelly approach has become almost canon among tech companies. When Steve Jobs helped design the offices for Pixar, he said: “If a building doesn’t encourage encounters and unplanned collaborations, you’ll lose a lot of innovation and the magic that’s sparked by serendipity.”

Gertner’s lesson is two-fold. First, innovation marches to an irregular drumbeat toward goals halfway seen – satellite communications were the result combining research in, among others, solar power, transistors and rockets. Second, the tensions that spawn innovation cannot be maintained forever. Groups splinter, rivals arise, and gaps in knowledge are filled. In the midst of this intellectual creative destruction, the world is changed.

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/