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

"The Idea Factory"
is a fascinating look at the lives of some of the key men who shaped Bell Labs and created its greatest inventions. The scale of Bell Labs’ impact is truly incredible and this book does a good job of explaining the history of the institution and what factors contributed to its remarkable output. Gertner also explores the relationship between Bell Labs and the government - including some secret military work that Bell Labs did for the government (including helping set up the NSA) in a sort of tacit deal to allow them to maintain their monopoly. Incredible stuff.

Some of my favorite quotes below

With the exception of Mervin Kelly, the eldest of the group, they were sometimes considered members of a band of Bell Labs revolutionaries known as the Young Turks. What bound them was a shared belief in the nearly sacred mission of Bell Laboratories and the importance of technological innovation.

Bill Gates once said of the invention of the transistor, “My first stop on any time-travel expedition would be Bell Labs in December 1947.”

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.

Almost from the day the Bell System was created, when Alexander Graham Bell became engaged in a multiyear litigation with an inventor named Elisha Gray over who actually deserved the patent to the telephone, the Bell company was known to be ferociously litigious. In its later battles with independent phone companies, however, it would often move beyond battles in the courtroom and resort to sabotaging competitors’ phone lines and stealthily taking over their equipment suppliers.

... an amplifier known as the audion that had been brought to AT&T in 1912 by an independent, Yale-trained inventor named Lee De Forest… Soon to be known as the vacuum tube, it and its descendants would revolutionize twentieth-century communications.

In the Willis-Graham Act of 1921, the U.S. Congress formally exempted the telephone business from federal antitrust laws… On January 1, 1925, AT&T officially created Bell Telephone Laboratories as a stand-alone company.

“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. Its gross revenues of more than one billion dollars a year are surpassed by the incomes of few governments of the world. The System comprises over 200 vassal corporations. Through some 140 companies it controls between 80 and 90 percent of local telephone service and 98 percent of the long-distance telephone wires of the United States.” The Bell System owned the wires involved in certain aspects of radio transmission, Danielian added, and had become involved in a host of other pursuits, such as equipment for motion pictures. Its needs for raw materials added up to “hundreds of millions of dollars” annually; its deposits in banks involved “almost a third of the active banks in the United States”; its investors numbered nearly a million. It was also, not incidentally, the largest employer in the United States.

And 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.” [One of Shewhart’s disciples was W. Edwards Deming, who brought quality control to Japan’s automobile industry.]

At Kelly’s request, Shockley and Jim Fisk... figured out how to make a nuclear reactor. The men tried to patent the idea, but met with resistance from the government and the patent courts. As Fisk would recall, the reason was that the physicists Enrico Fermi and Leo Szilard “had essentially the same idea and probably at about the same time. We may have been earlier, they may have been earlier, I don’t know. I don’t think that anybody will ever know.

In the first few years after Pearl Harbor, in fact, Bell Labs took on nearly a thousand different projects for the military—everything from tank radio sets to communications systems for pilots wearing oxygen masks to enciphering machines for scrambling secret messages—leading Kelly to expand his staff by several thousand. The Labs actually doubled its size from about forty-six hundred before the war to nine thousand during it.

THE DEVELOPMENT WORK on magnetrons—the work that preceded their manufacture—was done in concert at MIT and Bell Labs. At MIT, an ad hoc group of scientists and engineers, eventually numbering several thousand, worked in a secure campus building with blacked-out windows known as the Rad Lab.

One of Morton’s disciples, a Bell Labs development scientist named Eugene Gordon, points out that there were two corollaries to Morton’s view of innovation: The first is that if you haven’t manufactured the new thing in substantial quantities, you have not innovated; the second is that if you haven’t found a market to sell the product, you have not innovated.

Shannon suggested it was most useful to calculate a message’s information content and rate in a term that he suggested engineers call “bits” — a word that had never before appeared in print with this meaning. Shannon had borrowed it from his Bell Labs math colleague John Tukey as an abbreviation of “binary digits.”

All the error-correcting codes were meant to ensure that the information on the receiving end was exactly or very close to the message that left the transmission end. Even fifty years later, this idea would leave many engineers slack-jawed. “To make the chance of error as small as you wish?” Robert Fano, a friend and colleague of Shannon’s, later pointed out. “How he got that insight, how he even came to believe such a thing, I don’t know.” All modern communications engineering, from cell phone transmissions to compact discs and deep space communications, is based upon this insight.

And yet Kelly would say at one point, “With all the needed emphasis on leadership, organization and teamwork, the individual has remained supreme—of paramount importance. It is in the mind of a single person that creative ideas and concepts are born.” There was an essential truth to this, too — John Bardeen suddenly suggesting to the solid-state group that they should consider working on the hard-to-penetrate surface states on semiconductors, for instance. Or Shockley, mad with envy, sitting in his Chicago hotel room and laying the groundwork for the junction transistor.

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.

With Shannon’s startling ideas on information, it was one of the rare moments in history, an academic would later point out, “where somebody founded a field, stated all the major results, and proved most of them all pretty much at once.” Eventually, mathematicians would debate not whether Shannon was ahead of his contemporaries. They would debate whether he was twenty, or thirty, or fifty years ahead.

Shannon’s first paper on the subject—the one from which Scientific American adapted an article—happened to be the first paper ever written on chess programming.

“You get paid for the seven and a half hours a day you put in here,” Kelly often told new Bell Labs employees in his speech to them on their first day, “but you get your raises and promotions on what you do in the other sixteen and a half hours.”

Why was an office in the White House so unappealing to Kelly? For one thing, he was already immensely influential at the highest military and policy levels. The tightening alignment between a handful of the largest American corporations and the armed forces—“the huge industrial and military machinery of defense,” as President Dwight D. Eisenhower would call it when he left office a decade later—had already become an enormous business for AT&T, which entrusted its Bell Laboratories and manufacturing divisions at Western Electric to design and manufacture a vast array of secret equipment for the Army, Navy, and Air Force. Most of the industrial work orders related to radar and communications equipment; these were considered vital for national defense.

[Kelly] wanted to limit the Labs’ military contracts so that they would not get in the way of its communications business, yet he harbored no apparent qualms about such endeavors... all were potentially useful in keeping at bay the antitrust regulators, who still sought to break up the Bell System. The military work could easily be construed as part of the implicit pact between the phone company and the government that allowed it a monopoly.

Kelly would often point out that the Labs workforce — including PhDs, lab technicians, and clerical staff — by the early 1950s totaled around nine thousand. Only 20 percent of those nine thousand worked in basic and applied research, however. Another 20 percent worked on military matters. Meanwhile, the rest of the Labs’ scientists and engineers — the majority — toiled on the never-ending job of planning and developing the system.

In 1956, Fisk responded to Eisenhower’s request to set up a separate commission to figure out how to gather better information about the Soviet Union by suggesting Baker for the assignment. “There was the presumption that the Soviets had become undecipherable, that we would not have enough warning to respond defensively to their threats,” Baker recalled. The result was the Ad Hoc Task Force for the Application of Communications Analysis for National and International Security, otherwise known as the Baker Committee. The committee’s conclusions would be directed to the then five-year-old National Security Agency, a new unit within the Department of Defense charged with securing the country’s information networks and deciphering foreign intelligence. NSA’s very existence was then considered a national secret. So Baker was organizing a committee that did not officially exist to write a top secret report about how to improve an organization that didn’t officially exist either.

In his history of the NSA, James Bamford described the Baker Report as recommending “a Manhattan Project–like effort to push the USA well ahead of the Soviet Union and all other nations” through the application of information-age tools. Bamford also noted that one of the committee’s enduring legacies was its recommendation that the U.S. intelligence networks establish “a close yet secret alliance with America’s academic and industrial communities.”

“the eminence grise of Republican science,” as the British magazine New Scientist described him — Baker served as a member of the President’s Foreign Intelligence Advisory Board (PFIAB), a group that examined the operations of the CIA and other intelligence agencies. As part of his PFIAB work, he helped found in 1960 the National Reconnaissance Office, a government organization charged with planning, building, launching, and maintaining America’s spy satellites. The NRO remained secret for its entire first decade.

By the start of the 1960s Baker was engaged in a willfully obscure second career, much like the one Mervin Kelly had formerly conducted, a career that ran not sequentially like some men’s — a stint in government following a stint in business, or vice versa — but in parallel, so that Baker’s various jobs in Washington and his job at Bell Labs intersected in quiet and complex and multifarious ways. Baker could bring innovations in communications to the government’s attention almost instantly.

But in just a few years’ time, the integrated circuit would represent something new for Bell Labs: a moment when a hugely important advance in solid-state engineering, though built upon the scientific discoveries at the Labs, had occurred elsewhere. Such a development perhaps suggested that the landscape of competitiveness in American electronics, something that Mervin Kelly had written about in the closing days of World War II, was now very much a reality.

But to an innovator, being early is not necessarily different from being wrong.

It was Engel’s understanding that to get ahead at Bell Labs, “you were supposed to work on more than you were asked to work on.” It was necessary, in other words, not only to do your assigned work but to devote 20 or 30 percent of your time to another project.

Pierce later remarked that one thing about Kelly impressed him above all else... 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.

All during 1966 and 1967, Shockley urged the National Academy of Sciences, the organization of America’s most distinguished scientists, to focus more deeply on the question of how heredity affects intelligence. In April 1968, at a meeting of the academy, Shockley charged that the country’s leading thinkers were showing a “lack of responsibility and courage” by not examining correlations of race and intelligence.

“I don’t know how history is taught here in Japan,” he told the audience when he traveled there in 1985 to give an acceptance speech, “but in the United States in my college days, most of the time was spent on the study of political leaders and wars — Caesars, Napoleons, and Hitlers. I think this is totally wrong. The important people and events of history are the thinkers and innovators, the Darwins, Newtons, Beethovens whose work continues to grow in influence in a positive fashion.” [Claude Shannon]

“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.

In 1995, Forrester remarked that “science and technology is now a production line. If you want a new idea, you hire some people, give them a budget, and have fairly good odds of getting what you asked for. It’s like building refrigerators.”

“What does the Schon scandal mean?” an interviewer from the New York Times asked a young physicist named Paul Ginsparg. “The demise of Bell Labs by becoming corporate,” Ginsparg replied.

Finding an aspect of modern life that doesn’t incorporate some strand of Bell Labs’ DNA would be difficult. The transistors, lasers, quality assurance methods, and information technologies have been incorporated into computers, communications, medical surgery tools, factory productivity methods, digital photography, defense weaponry, and a list of industries and devices and processes almost too long to name. Scores of Bell Labs veterans have meanwhile taken jobs in technology companies such as Google and Microsoft; even more have gone into academia, following Shannon’s and Shockley’s example, and passed along their ideas to the next generation.

“The history of modernization is in essence a history of scientific and technological progress,” Wen Jiabao, the premier of China, said recently. “Scientific discovery and technological inventions have brought about new civilizations, modern industries, and the rise and fall of nations.”

“While only four percent of the [U.S.] work force is composed of scientists and engineers,” the National Academy report points out, “this group disproportionately creates jobs for the other 96 percent.”

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. But the Silicon Valley process that Kleiner helped develop was a different innovation model from Bell Labs. It was not a factory of ideas; it was a geography of ideas. It was not one concentrated and powerful machine; it was the meshing of many interlocking small parts grouped physically near enough to one another so as to make an equally powerful machine.

The value of the old Bell Labs was its patience in searching out new and fundamental ideas, and its ability to use its immense engineering staff to develop and perfect those ideas.

“You may find a lot of controversy over how Bell Labs managed people,” John Mayo, the former Bell Labs president, says. “But keep in mind, I don’t think those managers saw it that way. They saw it as: How do you manage ideas? And that’s very different from managing people.

Pierce, to put it simply, was asking himself: What about Bell Labs’ formula was timeless? In his 1997 list, he thought it boiled down to four things: 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.

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. 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).

For instance, a 2008 study titled “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. Clearly, at least in regard to innovation, capitalism is more deeply intertwined with government than many of us realize.

Perhaps information technology, then, is the wrong place to look for a new Bell Labs. We might do better to poke around in other parts of the economy. One place to consider is a complex of buildings set amid a 689-acre campus some thirty miles north of Washington, D.C. Known as Janelia Farm, the campus serves as an elite research center for the Howard Hughes Medical Institute. Janelia opened in 2006 with the intent of attacking the most basic biomedical research problems; it is patterned after Bell Labs and backed by a multibillion-dollar endowment. The primary goal is to understand consciousness and how the human brain processes information, but the approach to innovation is familiar: a close, interdisciplinary exchange of ideas between the world’s brightest science researchers, all of whom are given ample funding and tremendous freedom.