Book notes: The Idea Factory: Bell Labs and the Great Age of American Innovation

Where is the knowledge we have lost in information? —T. S. Eliot, The Rock


At the peak of its reputation in the late 1960s, Bell Labs employed about fifteen thousand people, including some twelve hundred PhDs. Its ranks included the world’s most brilliant (and eccentric) men and women.

In a time before Google, the Labs sufficed as the country’s intellectual utopia.

Most of Bell Labs’ patents were made available at pittance due to anti-monopoly laws

It was where the future, which is what we now happen to call the present, was conceived and designed. For a long stretch of the twentieth century, Bell Labs was the most innovative scientific organization in the world. It was arguably among the world’s most important commercial organizations as well, with countless entrepreneurs building their businesses upon the Labs’ foundational inventions, which were often shared for a modest fee.

Some contemporary thinkers would lead us to believe that twenty-first-century innovation can only be accomplished by small groups of nimble, profit-seeking entrepreneurs working amid the frenzy of market competition. Those idea factories of the past—and perhaps their most gifted employees—have no lessons for those of us enmeshed in today’s complex world. This is too simplistic. To consider what occurred at Bell Labs, to glimpse the inner workings of its invisible and now vanished “production lines,” is to consider the possibilities of what large human organizations might accomplish.

Impelmentation matters more than the science

Thus it was almost certainly the case that the inventor of machinery seemed more vital to the modern age than someone—a trained physicist, for example—who might explain how and why the machine worked.

Industrial revoltion was not due to progress of science, but due to technology solving day to day problems.

And it was true. In the boom times of the Industrial Revolution, in the words of one science historian, inventing products such as the sewing machine or barbed wire “required mainly mechanical skill and ingenuity, not scientific knowledge and training.”

Robert Millikan was the godfather of American physics

authentically, irresistibly American about Millikan. Though he’d received a year’s worth of instruction in Paris, Berlin, and Gottingen, he was nevertheless the son of an Iowa preacher, cheerful, earnest, conservative, boyishly handsome, and almost always neatly dressed in a collared shirt and bow tie. Also like Kelly, Millikan was a man of action.

Graham bell and his associates invented the telephone without a strong foundation in the physical theories. The next problem was to keep the signal strong over long distances and this needed science.

Here was a new approach to solving an industrial problem, an approach that looked not to engineers but to scientists.

They solved the problem with Vacuum tubes acting as signal amplifiers in the middle. During the SF world 1915, Watson from SF called his boss Graham Bell in New York. It was an expensive service.

Alexander Graham Bell, the inventor who had long since stopped having any day-to-day responsibilities at the company he founded, was stationed in New York to speak with his old assistant, Thomas Watson, in San Francisco.

It was a wry bit of stagecraft. For AT&T, it was also an encouraging sign that Vail’s notion of universal service might indeed be possible—at least for customers who could afford to pay about $21 (about $440 in today’s dollars) for a three-minute call to California.19

The call right now costs almost 0 USD. Progress

Centralize research under one division Bell Labs

By establishing one central lab to serve two masters, the phone company would simply be more efficient.8 On January 1, 1925, AT&T officially created Bell Telephone Laboratories as a stand-alone company, to be housed in its West Street offices, which would be expanded from 400,000 to 600,000 square feet. The new entity—owned half by AT&T and half by Western Electric—was somewhat perplexing, for you couldn’t buy its stock on any of the exchanges. A

Bell Labs’ new president, Frank Jewett, controlled the laboratory. The Labs would research and develop new equipment for Western Electric, and would conduct switching and transmission planning and invent communications-related devices for AT&T. These organizations would fund Bell Labs’ work. At the start its budget was about $12 million, the equivalent of about $150 million today.9 As president of Bell Labs, Jewett now commanded an enormous shop. That an industrial laboratory would focus on research and development

The industrial lab showed that the group—especially the interdisciplinary group—was better than the lone scientist or small team. Also, the industrial lab was a challenge to the common assumption that its scientists were being paid to look high and low for good ideas. Men like Kelly and Davisson would soon repeat the notion that there were plenty of good ideas out there, almost too many. Mainly, they were looking for good problems.

Since Labs started right after the Great Recession, they had good picks for candidates.

At that point, Kelly successfully argued for extra funding to hire a group of scientists for his research department. He had his pick of almost anyone.

At the NYC Bell Labs the quantum nature of light was proved.

(In an experiment, Davisson had bombarded a piece of crystalline nickel with electrons, and the results demonstrated a theory first put forward by the Austrian physicist Erwin Schrödinger that electrons moved in a wave pattern.)

Ideas were brought to America by travelling scientists.

It also was the case that a scholar from abroad (a 1931 world tour by the German physicist Arnold Sommerfeld, for instance) would bring the new ideas to the students at Caltech or the University of Michigan. Indeed, the Bell Labs experimentalist Walter Brattain, the physicist son of a flour miller, was taking a summer course at Michigan when he heard Sommerfeld talk about atomic structure. Brattain dutifully took notes and brought the ideas back to New York. At West Street, he gave an informal lecture series to his Bell Labs colleagues.

Bell System had a lot of money and resources

“The [Bell] System,” Danielian pointed out, “constitutes the largest aggregation of capital that has ever been controlled by a single private company at any time in the history of business. It is larger than the Pennsylvania Railroad Company and United States Steel Corporation put together.

And so the Bell Labs managers set up an extraordinary supply chain so they could get the perfect quartz, so they could make the perfect quartz filters, so they could try to perfect the system that, by its very nature, could never be perfected.

The shadow of being a monopoly

That was a point even Danielian conceded. AT&T’s aggressive strategy to patent its inventions, meanwhile, made it difficult for individuals and smaller companies to compete; it was also a tool for generating profits. But Danielian likewise acknowledged that the discoveries at Bell Labs had been essential to the progress of society at large. “They have not only made things better, but have created new services and industries,” he wrote of the scientists and engineers. “They have also made significant contributions to pure science. For these, no one would wish to deny just praise.”

Nature of innovation

WE USUALLY IMAGINE that invention occurs in a flash, with a eureka moment that leads a lone inventor toward a startling epiphany. In truth, large leaps forward in technology rarely have a precise point of origin. At the start, forces that precede an invention merely begin to align, often imperceptibly, as a group of people and ideas converge, until over the course of months or years (or decades) they gain clarity and momentum and the help of additional ideas and actors. Luck seems to matter, and so does timing, for it tends to be the case that the right answers, the right people, the right place—perhaps all three—require a serendipitous encounter with the right problem. And then—sometimes—a leap. Only in retrospect do such leaps look obvious.

The war puts breaks on semi conductor research

At the same time, wartime engineers had an additional responsibility. They were charged not only with building everything better but building everything faster, which meant striving to improve their processes as well as their products. In the summer of 1943, Kelly wrote an article for an engineering publication called The Bridge that directed attention to the contributions of the American engineers working on the Allied war effort. In particular he remarked on the speed with which U.S. industry had caught up with the military economies of the Axis powers.

This led Labs executives to hire hundreds of women to replace the men. What’s more, for the first time, the Labs began to hire Jews, bucking a strain of anti-Semitism that ran deep within the AT&T establishment, though not, apparently, within Kelly.

AT&T and the radar

Scientists who worked on radar often quipped that radar won the war, whereas the atomic bomb merely ended it. This was not a minority view. The complexity of the military’s radar project ultimately rivaled that of the Manhattan Project, but with several exceptions.

On deadlines

know what to do,” he would say, “do something.” Or: “We have now successfully passed all our deadlines without meeting any of them.”

A believer in granting a degree of autonomy to researchers, he had not asked about, and had not been kept apprised of, Bardeen and Brattain’s work. What’s more, there was a tendency at Bell Labs to confine important developments to middle management for a purgatorial period, lest word of a breakthrough reach upper management too soon. The concern was that research that appeared to be important could turn out, upon closer inspection, to be nothing of the sort. Thus the practice was for a supervisor to move any big news up a step—a week or two at a time, in Brattain’s recollection—only after he was convinced of its importance. The worst scenario would be telling Kelly without being sure.

In the current world we keep lobbing up even a small piece of trivial noise up to managers.

Claude Shannon

Shannon’s advisor at MIT, the engineering dean Vannevar Bush, described his young student a decade earlier.2 “He is shy, personally likable, and a man who should be handled with great care.”3 Bush’s assessment might have raised some questions—namely, why handle Shannon with great care? His thinness (five foot ten and 135 pounds) notwithstanding, it wasn’t a question of physical fragility: Shannon was athletic and energetic, never more so than when he was setting up machinery or ripping apart old electronic equipment to salvage parts for some kind of contraption he was building. Rather, it seemed to Bush and a handful of mathematicians who encountered Shannon in the late 1930s that he mightn’t be just another exceedingly bright graduate student. He was something else entirely. One professor at MIT, informed in the late 1930s that

“There was this little postcard on the wall,” Shannon later recalled, “saying that M.I.T. was looking for somebody to run the differential analyzer, a machine which Vannevar Bush had built to solve differential equations.”6 He applied for the job and got it.

Labs’ offices at 463 West Street in the morning and to the local jazz clubs every night. Working in the mathematical research department, moreover, turned out far more pleasant than he imagined. Mostly he was considering the design of relay circuits, which related directly to the work he had done at MIT.

New Jersey, where Albert Einstein was in residence. “I poured tea for him,” Norma recalls of Einstein, “and he told me I was married to a brilliant, brilliant man.”

Labs had the best minds

At the Labs this was sometimes known as going to “the guy who wrote the book.” And it was often literally true.

The guy who wrote the definitive book on a subject—Shockley on semiconductors, John Tukey on statistics, Claude Shannon on information, and so forth—was often just down the hall. Saddled with a difficult problem, a new hire at Bell Labs, a stuttering nobody, was regularly directed by a supervisor toward one of these men. Some young employees would quake when they were told to go ask Shannon or Shockley a question. Still, Labs policy stated that they could not be turned away.

Labs invented the solar cell

“The solar cell just sort of happened,” he said. It was not “team research” in the traditional sense, but it was made possible “because the Labs policy did not require us to get the permission of our bosses to cooperate—at the Laboratories one could go directly.

AT&T and anti trust

The first was its agreement not to enter the computer or consumer electronics markets. The second concession, at least on its face, seemed far more dramatic: The phone company agreed to license its present and future U.S. patents to all American applicants, “with no limit as to time or the use to which they may be put.” In other words, eighty-six hundred or so of AT&T’s U.S. patents “issued prior to January 24, 1956 are in almost all cases to be licensed royalty-free to all applicants.” (All future patents, meanwhile, would be licensed for a small fee.)

Project Echo and the first satellite

Horn antennas were already a crucial component in microwave towers across the country: They allowed for the reception of signals in a focused manner that greatly reduced surrounding noise and interference. There was no reason to think they couldn’t be adapted for satellite communications.

Other inventions, meanwhile, had to do with semiconductors. On the surface of Telstar were thirty-six hundred solar cells to provide the power that allowed the satellite to function; there were also thousands of transistors and diodes, many of them used to make radiation measurements.

For a while scientists ran the comities in government, off late it has been only economists.

His group was not lacking in brainpower. Baker pulled in John Pierce and John Tukey from Bell Labs—“the country’s keenest thinkers,” both of whom now had top secret clearances—along with several other scientists, including the future Nobel physicist Luis Alvarez.

Why was the Integrated Circuit not invented at Bell Labs

To the engineers and scientists at the Labs, the integrated circuit was not a complete surprise. “We knew we could make multiple transistors within a piece of silicon, we knew we could make resistors, we knew we could make capacitors,” Ian Ross recalls. But it was the received wisdom under Jack Morton, Ross adds, that such devices could never be reliable. Even though the quality of manufactured transistors was improving, there was still a significant failure rate. And on a chip with hundreds or thousands of components? Some of those components would inevitably fail, thus rendering the entire device useless. Kilby and Noyce opted to believe, correctly, that the manufacturing challenges could be worked out later. Morry Tanenbaum

Picturephone a failed product

According to Irwin Dorros, one of the Bell Labs executives involved in the launch, the team working on the Picturephone had never doubted its eventual success. “Groupthink,” as Dorros puts it, had infiltrated the endeavor. Yet as the Picturephone’s demise became more evident, even its most ardent proponents began to ask why it was failing and why they hadn’t anticipated that outcome.

The knowledge needed to make such an engine had by then coalesced to the point that his innovation was, arguably, inevitable. By the 1970s, the mobile business was ready to happen, Engel was sure, even if the marketers had their doubts. The technology was there. It was now just a matter of who was going to do it, and how fast they could make it work. “It was,” he says, “steam engine time for cellular.”

Focus on the Unknown

technical staff when they were asked to work on something new. Whether it was a radar technology for the military or solid-state research for the phone company, Kelly did not want to begin a project by focusing on what was known. He would want to begin by focusing on what was not known. As Pierce explained, the approach was both difficult and counterintuitive.

Do we need long term thinking?

On the future

capture the value of a big breakthrough. So why do it? To put it darkly, the future was a matter of short-term thinking rather than long-term thinking. In business, progress would not be won through a stupendous leap or advance; it would be won through a continuous series of short sprints, all run within a narrow track. “In American and European industry,” Odlyzko concluded, “the prospects for a return to unfettered research in the near future are slim. The trend is towards concentration on narrow market segments.”4 *

“Unfettered research,” as Odlyzko termed it, was no longer a logical or necessary investment for a company. For one thing, it took far too long for an actual breakthrough to pay off as a commercial innovation—if it ever did. For another, the base of science was now so broad, thanks to work in academia as well as old industrial laboratories such as Bell Labs, that a company could profit merely by pursuing an incremental strategy rather than a game-changing discovery or invention.

Are the next great leaps in energy research or biotechnology? Do we yet have the scientific base—akin to the “substantial gains” of transistors or lasers or optical fiber—on which to build that future economy? Or are we still living off the dividends from ideas that were nurtured, and risks that were taken, a half century ago?

And yet his grand design was undone by time. In his memorial tribute to Kelly, John Pierce pointed out that Kelly never had the opportunity to change his views on research and development in the wake of evolving business circumstances. As a result, Pierce concluded, “Kelly may have overestimated the amount and quality of research that could in the future be expected from industry, and perhaps from the nation.”11 Pierce was probably correct. In succeeding decades, for instance, Bell Labs’ own journey—as it moved from its monopoly status to Lucent and Alcatel-Lucent, shucking off employees and entire departments all the while—demonstrated that a large industrial laboratory had to change with political and legal regimes. It became increasingly difficult to fund basic research; instead, Bell Labs had to focus more on development and engineering. The Labs also needed a narrower focus on products and short- or medium-term goals. The new industrial lab had to succeed not only in engineering, but in business, too.

incidentally, in the process of backing a winner, everyone involved could get very, very rich. Bell Labs invariably lent some of its genetic material to this process—a number of the new ideas for computers or software relied on transistors or lasers or the Unix operating system or the C computer language. Eugene Kleiner, moreover, a founding partner at the premier venture capital firm Kleiner Perkins, was originally hired by Bill Shockley at his ill-fated semiconductor company.

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.

A technically competent management all the way to the top. Researchers didn’t have to raise funds. Research on a topic or system could be and was supported for years. Research could be terminated without damning the researcher.

Its not the market

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.18 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.

Markets do not lead to innovation

“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.19 Clearly, at least in regard to innovation, capitalism is more deeply intertwined with government than many of us realize.