skip to main content skip to main navigation
Summer 2012 / Issue 67 (originally published by Booz & Company)

An R&D Valhalla

A review of The Idea Factory, by Jon Gertner.

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

by Jon Gertner
Penguin Press, 2012

To those schooled in the lore of Silicon Valley, the iconic example of long-term corporate R&D is Xerox PARC, known for the mouse-driven computer so expertly plundered by Steve Jobs after a 1979 visit. But those whose sense of history extends longer than the past few decades know otherwise. The true Valhalla of corporate research in the 20th century — and a much more successful one than PARC — was AT&T’s fabled Bell Labs.

In The Idea Factory: Bell Labs and the Great Age of American Innovation, Jon Gertner, a Fast Company editor who grew up only a few hundred yards from Bell Laboratories’ vast headquarters in Murray Hill, N.J., reminds us of what has too quickly faded from the random accesses of our memories. Bell Labs, he argues, was a singular treasure that not only spawned creative breakthroughs, but advanced the art and science of innovation itself.

In fact, Silicon Valley would not even exist without the transistors and semiconductors brilliantly invented by AT&T’s cloistered geniuses. (Even the discovery that silicon was the best semiconductor was a product of the Garden State.) Other products owing their existence to Bell Labs include cell phone technology, optical fiber, satellite communications, and the laser. “Finding an aspect of modern life that doesn’t incorporate some strand of Bell Labs’ DNA would be difficult,” writes Gertner.

Focusing on people rather than products, Gertner’s history trots out a fascinating cast, beginning with the crusty Midwesterners hired by the great telephone monopoly AT&T and its sister company, Western Electric, from the University of Chicago, one of the few schools in the United States turning out accomplished physics and chemistry graduates at the beginning of the 20th century, to create the substrate for modern telecommunications. Not long after Bell Labs established itself in New York City’s West Village in 1925, its people invented a technology that revolutionized electronics: the vacuum tube. (Bell Labs, of course, persisted as a major force long enough to make that breakthrough obsolete.)

Although some of Gertner’s figures are familiar — notably William Shockley, the coinventor of the transistor, and Claude Shannon, the father of information theory — many are not. Key Bell Labs managers Mervin Kelly, John Baker, and John Pierce may not be well remembered now, but they were regarded as towering presences in their time, just as compelling (if not nearly as well compensated) as our current Internet heroes. Though clearly handicapped by not having direct access to these deceased figures, Gertner uses oral histories, memoirs, survivors’ accounts, and corporate archives to delve deep into their lives.

Gertner’s argument about innovation rests on his belief that the achievements of Bell Labs were equally dependent on its selfless culture and the individual brilliance of its employees. In a sense, the book’s title, The Idea Factory, is a misnomer. Bell Labs did not specialize in churning out ideas on an assembly line; it gave world-class thinkers the ability to identify which of their fantastic ideas might prove worthy of development. They would then begin the serious work, most often in close collaboration with equally dazzling peers.

Bell Labs frowned on self-interest. When the company took on a new worker, it presented that worker with a crisp dollar bill — for the patent rights to all future inventions. That act symbolized how from that point on, all one’s brainpower was to be devoted to the collective good. Wise managers like Kelly knew that Bell Labs would thrive on a mix of different sorts of collaborators — like a soccer team with role players at every position. There were workaholics who spent long nights in the lab, and flitterers like John Pierce, a wisp of a man whose intelligence was so omnivorous that he had no time to develop his ideas — he dropped them off to his fellow scientists like Tiffany deliveries. One casual conversation with Pierce led a co-worker to create the key component of a national system of microwave relay towers.

The most vivid illustration of the Bell Labs culture came when Shockley, who was then managing the two men who first conceived of the transistor, closeted himself for a few days to advance their work. His contribution was undeniably invaluable, and Shockley was included in the group that won a Nobel Prize. But within the laboratory, his act was seen as a cardinal transgression. His Bell Labs colleagues were appalled: A director should not muscle in on his subordinates’ breakthrough. The betrayal poisoned Shockley’s status at the company.

Gertner is clearly enamored of Bell Labs, but also understands that its existence was the by-product of a Faustian bargain. The funds that enabled it to pay scientists to do the basic research were literally monopoly money. To stave off regulation, AT&T felt compelled to widely publish its findings and share its breakthroughs in the marketplace. Even a critic like Tim Wu, whose book The Master Switch: The Rise and Fall of Information Empires (Knopf, 2010) cites the original AT&T as an archetypal monopolistic predator, concedes, “Bell Labs has been a great force for good…just the kind of phenomenon that makes one [sanguine] about the blessings of a monopoly.” But unlike Wu, Gertner seems inclined to gloss over the darker side of AT&T’s market power, and instead writes about the company’s breakup with a wistful sense of disapproval.

Gertner’s account of Bell Labs is far from comprehensive. For instance, he devotes only a couple of sentences to the Bell Labs team that invented Unix, the revolutionary computer operating system that dominates today’s technology world. But generally, he is informative, clear, and convincing as he makes the case for Bell Labs’ relevance today, in both its product legacy and style of innovation.

He also doesn’t shrink from its missteps. Oddly, the one time that Bell Labs focused on creating an actual product, as opposed to theorizing and testing a technology that yielded profound effects over a period of decades, was the Picture-phone. Unveiled with hosannas at the 1964 World’s Fair and released in 1969, the Picturephone was a hobbyhorse among company leaders. They predicted it would remake geography and “solve many social problems” (sounds a lot like the early gushing about the Internet). But by 1972, a lab director would admit “attempts to introduce it…have hardly been howling successes.”

In that sense, at least, Bell Labs was just like Xerox PARC: better at inventing stuff than selling it.

Author Profile:

  • Steven Levy is senior writer at Wired and author of In the Plex: How Google Thinks, Works, and Shapes Our Lives (Simon & Schuster, 2011), which was chosen by s+b as one of 2011’s best business books.


The business insights you need to succeed. Get s+b’s best ideas delivered to your inbox twice a week.
More PwC insights
Bold insights for bold leaders. A new series that addresses the most urgent forces facing business leaders in 2021 — and beyond. Explore the series.

Get the strategy+business newsletter delivered to your inbox