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

by Jon Gertner

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.

Almost all of them had found a way out—a high school teacher, oftentimes, who noticed something about them, a startling knack for mathematics, for example, or an insatiable curiosity about electricity, and had tried to nurture this talent with extra assignments or after-school tutoring, all in the hope (never explained to the young men but realized by them all, gratefully, many years later) that the students could be pushed toward a local university and away from the desolation of a life behind a plow or a cash register.

to ensure that the products manufactured by Western Electric were of the proper specifications and quality, a Bell Labs mathematician named Walter Shewhart invented a statistical management technique for manufacturing that was soon known, more colloquially, as “quality control.” His insights not only guided the manufacture of items within the Bell System for the next few decades, but in time were applied to improve industrial processes and products around the world.9

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.

Kelly’s articulation of a solution—a product, in essence—was fairly straightforward, even if the methods for creating such a product remained obscure: Perhaps the Labs could fashion solid-state switches, or solid-state amplifiers, with no breakable parts that operated only by way of electric pulses, to replace the system’s proliferating relays and tubes. For the rest of his life Shockley considered Kelly’s lecture as the moment when a particular idea freed his ambition, and in many respects all modern technology, from its moorings.

Bell Labs engineers had become fond of the suffix “-istor”: Small devices known as varistors and thermistors had already become essential components in the phone system’s circuitry. “Transistor,” the memo noted, was “an abbreviated combination of the words ‘transconductance’ or ‘transfer,’ and ‘varistor.’”8 To the company brass, the other names had some winning aspects, too. Iotatron, for instance, “satisfactorily conveys the sense of a minute element.” Semiconductor triode, the memo noted, was a “fairly good name,” if a bit unwieldy. But when the ballot results came in, transistor was the clear winner.

The term “innovation” dated back to sixteenth-century England. Originally it described the introduction into society of a novelty or new idea, usually relating to philosophy or religion. By the middle of the twentieth century, the words “innovate” and “innovation” were just beginning to be applied to technology and industry.29 And they began to fill a descriptive gap. If an idea begat a discovery, and if a discovery begat an invention, then an innovation defined the lengthy and wholesale transformation of an idea into a technological product (or process) meant for widespread practical use. Almost by definition, a single person, or even a single group, could not alone create an innovation. The task was too variegated and involved.

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 young Shannon was taking piloting lessons, considered intervening so the scientific community wouldn’t risk losing him prematurely in an air crash.4 There was, in other words, a quiet accord among the professors at MIT: People like Shannon come along so rarely that they must be protected.

Of course, these two philosophies—that individuals as well as groups were necessary for innovation—weren’t mutually exclusive. It was the individual from which all ideas originated, and the group (or the multiple groups) to which the ideas, and eventually the innovation responsibilities, were transferred. The handoffs often proceeded in logical progression: from the scientist pursuing with his colleagues a basic understanding in the research department, to the applied scientist working with a team in the development side, to a group of engineers working on production at Western Electric. What’s more, in the right environment, a group or wise colleague could provoke an individual toward an insight, too. In the midst of Shannon’s career, some lawyers in the patent department at Bell Labs decided to study whether there was an organizing principle that could explain why certain individuals at the Labs were more productive than others. They discerned only one common thread: Workers with the most patents often shared lunch or breakfast with a Bell Labs electrical engineer named Harry Nyquist. It wasn’t the case that Nyquist gave them specific ideas. Rather, as one scientist recalled, “he drew people out, got them thinking.” More than anything, Nyquist asked good questions.41

But Bell Labs had the advantage of necessity; its new inventions, as one of Kelly’s deputies, Harald Friis, once said, “always originated because of a definite need.” In Kelly’s view, the members of the technical staff had the great advantage of working to improve a system where there were always problems, always needs.

His larger view of innovation, as a result, was that a great institution with the capacity for both research and development—a place where a “critical mass” of scientists could exchange all kinds of information and consult with one another for explanations—was the most fruitful way to organize what he called “creative technology.” A corollary to his vision was that size and employee numbers were not the only crucial aspect. A large group of physicists, certainly, created a healthy flow of ideas. But Kelly believed the most valuable ideas arose when the large group of physicists bumped against other departments and disciplines, too. “It’s the interaction between fundamental science and applied science, and the interface between many disciplines, that creates new ideas,” explains Herwig Kogelnik, the laser scientist. This may indeed have been Kelly’s greatest insight.

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.”15

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.

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.

And in this respect, Bell Labs’ other dimension—the ability to exhaustively develop a product and get it ready for mass manufacturing and deployment—is perhaps even more crucial. To think long-term toward the revolutionary, and to simultaneously think near-term toward manufacturing, comprises the most vital of combinations.