Bell Labs was one of these crazy institutions that did so much, in such a short span of time, that it hardly seems like a real place.  From the transistor to the laser, radio telescopes to programming languages, the amount of innovation that came out of the place puts its modern peer institutions – from other corporate R+D departments to entire universities – to shame.  Even Silicon Valley, our paragon of innovation, is not producing the same volume of truly foundational, far-reaching innovations.  It’s worth wondering why.

I recently read The Idea Factory, a history of Bell Labs, in part to glean a notion of how this place might have achieved such outsized stature.  Certainly Bell Labs was a major employer of bright minds.  But there were no shortage of bright minds at the Harvard physics department either.  Was there some secret to its culture that explained how it employed bright people in such a productive way?  And in the course of my reading, one of the major theories I came up with was that Bell Labs provided its workers with a very rare set of incentives: to be long-term ambitious.

Bell Labs was the research arm of AT+T, a monopoly.  As such, they were in a uniquely lucrative position – and a politically tricky one.  On one hand, the company was able to reinvest its monopoly profits into research in a way that companies in competitive markets simply could not afford.  On the other hand, this privilege rested on its ability to continually persuade regulators that it was operating in the public interest.  One argument they made was that the company was very generous with the free and easy licensing of its inventions, which then benefited the country as a whole.  The example of the transistor is representative: the company licensed it freely to companies for a nominal fee, which led to its widespread adoption and incidentally led to the development of the first true Silicon Valley company, Fairchild Semiconductor.  These sorts of stories came in handy whenever Bell executives had to make the case to Congress that the monopoly should be maintained.

The mandate of Bell Labs, then, was twofold.  On the business side, it was to produce technologies that would increase AT+T’s long-run profit, and on the political side it also had to produce cool technologies that could, in the long run, justify the company’s continued existence.  What this amounted to was a mandate to produce significant results in the long term: you don’t have to hit quarterly targets, but in the long run, you should produce something ambitious.

At the same time, the Bell Labs scientists weren’t completely free to go nuts and do whatever they like, as tenured professors are in theory.  Bell Labs was still a for-profit company, and they were tasked with producing significant, interesting inventions.  If nothing came out of Bell Labs in a few months, that might be okay, but if nothing came out of in five years, it would become pretty obvious that something was going wrong, and heads would start to roll.

That very specific set of incentives – strongly caring about producing marketable inventions not by next quarter or next year, but within the decade – is likely the best possible set of goals for applied science.  On one hand, you’re free to dream big and swing for the fences.  No need to study the trendy topics that will get you grants, or worry about playing games like splitting your results into multiple papers to pad your CV.  On the other hand, you aren’t given quite enough rope to hang yourself.  You’re still expected to be pursuing something commercially valuable, not just wander off into intellectually fun blind alleys or garner prestige for prestige’s sake.  And time and time again, the scientists at Bell Labs used this unique perspective to work on ambitious projects tangentially related to communication, spend years perfecting an invention, and tossing another masterpiece into the world.

One of the best-known talks in science is “You and Your Research” by Richard Hamming, a prominent computer scientist who spent much of his career at Bell Labs.  As well as being valuable advice, the talk illuminates both the scientific culture that animated the place, as well as some of the unspoken assumptions that allowed that culture to exist.  In one telling anecdote, Hamming was persuaded by senior scientists to devote 10% of his time to “Great Thoughts Time”:

“Along those lines at some urging from John Tukey and others, I finally adopted what I called “Great Thoughts Time.” When I went to lunch Friday noon, I would only discuss great thoughts after that. By great thoughts I mean ones like: “What will be the role of computers in all of AT&T?”, “How will computers change science?”… I thought hard about where was my field going, where were the opportunities, and what were the important things to do. Let me go there so there is a chance I can do important things.”

What’s striking here is the assumption – perhaps true in academia and Google but not elsewhere – that unilaterally taking time off to do some private brainstorming that doesn’t check off any to-dos is not only feasible but in fact somewhat supported.  He expected, and faced no pushback, even in the mildest form of feeling an uneasy sense of swimming against the institutional current.  Instead, he’s actively encouraged to do so by his senior scientists!  It’s worth noting, of course, that this is “10% time,” not 20 or even 100% time – the rest of his time was still needed to do his day job.  And he does dedicate a fair amount of his talk to how to deal with resource constraints and how to persuade your boss to let you work on things you prefer.  But just as much of his talk is about how to make the most of an abundance of time – how to train your public speaking skills by giving outside talks, to work with the door open to allow interruptions and serendipity into your work, how not to get distracted playing amusing games with bureaucracy.

It’s instructive to compare the “long-term ambitious” orientation of Bell Labs to the innovative institutions we have today.  Modern research and development largely takes place in non-monopoly companies and are necessarily focused towards filling the pipeline with products that can produce results on a short time-scale.  Entrepreneurship gets a lot of headlines for being innovative, but even there, the amount of runway startups have before investors start demanding measurable traction is fairly short, on the order of one to two years – which precludes a lot of ambitious, long-term projects.  It’s notable that many of the giant technology companies of today, Facebook and Google among them, initially didn’t look like a business at all.  Indeed, they each spent several years as glorified side projects, resisting turning into a typical revenue-driven business.  Amazon, too, is arguably still in deeply in investment-and-building mode rather than trying to cash in and become a mature business.

Academia, the remaining hub of innovation, is arguably both too short-term focused and too unanchored for its own good.  On one hand, the race to getting grant funding and tenured positions is brutal on grad students and junior faculty.  Publish or perish incentivizes working on short-term projects where you can show palpable progress and papers quickly.  On the other hand, in the long run, academia is given enough rope to hang itself.  The judges of science, grant committees and referees, are drawn from scientists themselves; they’re not tethered to an external yardstick the way Bell Labs was, however loosely, tethered to the market.  And it’s therefore entirely possible, despite their best intentions, for entire disciplines, and these powerful committees in particular, to fall into fads and dogmas and become untethered to scientific realities or economic needs, and rank-and-file researchers are forced to follow suit.

If having a well-tuned planning horizon is what made Bell Labs great, then it’s dispiriting that we don’t seem to have institutions with similar planning horizons today.  The vast majority are too short-term focused, and those that are not lack the market discipline that the Bell System brought to bear, however weakly, on the Labs.  Is the answer to return to monopolistic companies?  One could certainly argue that the Bell monopoly more than paid for itself, despite any excess profits it might have made overcharging customers.  However, it is probably for good reason that “monopoly” remains a dirty word today.  In addition to the standard economic arguments against monopolies, most monopolies were not nearly as intellectually productive as Bell Labs.  More accurately, a monopoly seems to set up conditions that are necessary but not sufficient for intellectual productivity.  The most important thing to take away from this is that “long term ambitious” is a very valuable set of incentives, and if we want to replicate the successes of Bell Labs, it’s a culture we’ll have to replicate.