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 / Spring 2005 / Issue 38(originally published by Booz & Company)


Suits to the Rescue

The most creative member of an R&D team may be its accountant.

Illustration by Lars Leetaru
In the popular psychology of business, the modern company is cloven. There’s the organization’s creative right brain — the restless, ragtag collection of product developers, researchers, marketers, and technologists who dream big dreams and think in the future tense. And then there’s the rational left brain — the financial analysts, accountants, and controllers who crunch the numbers and balance the books, their vision reaching only so far as the end of the current quarter. The former are innovation’s freewheeling champions; the latter are its risk-fearing enemies.

It’s a tidy little dichotomy, but it’s all wrong. It ignores the fact that business innovation is less a matter of invention than of synthesis. The greatest breakthroughs are made by those with the broadest perspectives and the deepest knowledge — the ones who not only can see the potential in a new technology or design but also understand the economics of production and distribution, the dynamics of supply and demand, the motivations of competitors, and the needs and caprices of consumers. And that capacity — what might be called, a little clumsily, analytical creativity — is much more likely to be found among the suits than the turtlenecks.

These thoughts are inspired by the new book They Made America (Little, Brown and Company, 2004), a grand tour of the world-shaping business innovations of the last 250 years, by Harold Evans, the renowned journalist (and former strategy+business columnist). Sir Harold tells, among many other instructive tales, the little-known story of Samuel Insull. A starched English bean counter who became Thomas Edison’s most indispensable partner, Insull took care of all the business details that Edison couldn’t be bothered with — the financing, the operations, the hirings and firings, the mergers. With a deft combination of discipline and daring, he sowed the seeds of what is now one of the world’s very largest companies, General Electric.

But Insull’s greatest achievement came after he left Edison’s employ and, in 1892, journeyed from New York to Chicago to become the president of a tiny electricity producer. The move baffled Insull’s associates. How could he give up the helm of Edison’s empire in order to lead Chicago Edison, an unaffiliated backwater company with three little generators and a paltry 5,000 customers?

But Insull saw something the rest missed — something that would not only lead to the creation of one of the most dominant businesses America has ever seen, but also change the lives of nearly every citizen in the land.

Lighting Many Bulbs
When Insull went to Chicago, electricity was very much a luxury good. Produced in small, coal-fired power plants scattered through big cities, electricity, by virtue of its high cost, was used only by prosperous companies and rich citizens. Even the wealthiest burghers couldn’t afford to turn on the juice for long. They outfitted their chandeliers to run on both electricity and gas. When guests arrived, they switched on the lightbulbs; when guests departed, they cut the current and went back to burning the much cheaper gas flames. No one in the electricity business saw any alternative to this arrangement — or even the need for an alternative.

No one, that is, except Insull. Having studied both the technology and the economics of electricity generation, he was the first to realize that electricity could be a cheap, mass-market product. The cost could be driven down by centralizing production in large generating plants and distributing the power to far-flung customers via alternating current rather than the traditional but less transportable direct current. Taking a huge risk in pursuing his vision, Insull installed a massive 5,000-kilowatt turbine, the first of its kind, in a new Chicago plant.

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