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Business Impact

Customers as Innovators

Michael Schrage reviews A Nation Transformed by Information edited by Alfred D. Chandler Jr. and James W. Cortada and Systems, Experts and Computers edited by Agatha C. Hughes and Thomas P. Hughes

A peculiar asymmetry warps most histories of technological innovation. The innovators are treated as visionary heroes, while the users and consumers of the innovations are treated as a faceless marketplace that finally grasped the importance of the proffered invention.

Everybody knows about Apple Computer’s Wozniak and Jobs. Yet who’s written the profiles of Apple’s first thousand customers? Yes, Intel’s Noyce, Hoff and Faggin pioneered the microprocessor. But who were the early adopters that gave Intel insight into what that chip could really do? Dan Bricklin and Bob Frankston revolutionized personal computing software with the invention of VisiCalc. But who knows what 50 financial services firms first transformed themselves by using that software spreadsheet in unexpected ways?

Of course, these innovations today would be described as brilliant failures had they failed to catch on. But since it’s seemingly so much easier to describe the achievements and personalities of the innovators than the character and risks taken by the innovation adopters, history is accordingly skewed.

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That’s why A Nation Transformed by Information and Systems, Experts and Computers represent a healthy change of historical perspective and pace. These university press anthologies are filled with details-some pieces excruciatingly so-of how, in fact, innovation is the relentless co-evolutionary synthesis of innovator and adopter. Indeed, one could make a very powerful case that, at the earliest stages of a new technology or technique, the brilliant customer is at least as important as the brilliant innovator.

For example, the story of Samuel F. B. Morse’s telegraph is fairly well known. How the railways and the postal service ultimately adopted telegraphy in their own infrastructures is not. In fact, according to historian Richard R. John’s essay in A Nation Transformed, the railways were initially quite slow to use the telegraph to coordinate their operations. Ultimately, to speed things up, Western Union and telegraphy cut sweetheart deals with the railroads, thus ensuring for the telegraph companies not only a major customer but an infrastructure of their own. The rights-of-way of railroads and telecommunications thus coevolved.

Chandler and Cortada’s ANation Transformed is chock-full of the stories of such relationships. Chandler, the minence grise of business historians,does a superb job of finding the common themes in this dense survey of America’s information/innovation landscape.

The chapter by JoAnne Yates, on business adoption of information technology during the industrial age, is particularly good. As technology became a battleground between the Tayloresque “scientific management” school and the Mayoesque “human relations” managerial movement, distinctions between “back office” management and “customer touch” began to be instantiated in hardware and office designs. What you find is the clear sense that customers were even more innovative than vendors. Indeed, the notion that persistent innovators finally persuaded recalcitrant markets to adopt their wares is more mythical than historical. Many customers in many market segments drove innovation as much as they procured it.

Unfortunately, many of the nine historical chapters in A Nation Transformed do little more than synthesize (albeit comprehensively) the tales of media technology aborning in America. There’s grand sweep but little boldness. The core thesis, however, that America has always been an “information nation” as much as an agricultural or industrial one is not unimportant. Moreover, the fact that our Founding Fathers put intellectual property (IP) rights directly into the Constitution-both to protect inventors and explicitly promote innovation-is stunning.

America’s preeminence as an information innovator reflects the intellectual origins of a Constitution which calls for an IP regime that “promotes the useful arts.” To that extent, this book is far stronger when reviewing the origins of America’s “information innovation” culture than it is when covering the more contemporary Internet past. Those latter chapters are similarly comprehensive, but they’re better as reference than food for thought. Still, these historians have effectively cataloged the interrelationships that spawn ongoing innovation.

Far more provocative is Systems, Experts and Computers, which grew out of a 1996 conference, given by MIT’s Dibner Institute, on the history of operations research and systems engineering after World War II. Systems engineering has long been the bailiwick of Thomas P. Hughes, whose Networks of Power (Softshell, 1993), on utility systems worldwide, is a classic and whose more recent Rescuing Prometheus (Vintage, 2000) seeks to position systems engineering
as a robustly reliable managerial discipline.

While Hughes’ optimism may not withstand scrutiny, this collection of essays surely does. Almost without exception, the presentations here have something to say-and say it in a way that should give today’s innovation managers serious pause. Virtually every essay talks about the difficult interface between engineer and client. Virtually every essay addresses the cultural aspects of innovation design and implementation as much as technical issues.

David A. Hounshell’s “The Medium Is the Message, or How Context Matters: The Rand Corporation Builds an Economics of Innovation” offers a fascinating study of how a gang of operations researchers and economists attempted to quantify the effectiveness of defense R&D. The characters here range from future Nobel laureate economist Ken Arrow to pioneering “learning curves” researcher Armen Alchian. This chapter is a historical tour de force that any manager who cares about formal analysis of innovation will find strikingly relevant.

Similarly, Erik P. Rau’s history of operations research (OR) by the U.S. military during World War II is revelatory in how innovation champion Vannevar Bush sought to quash its influence. In stark contrast to the British, where Blackett’s Circus (named for OR pioneer P. M. S. Blackett) and similar boffins used the
mathematical techniques of OR to deploy radar, bombers and convoys more cost-effectively, Bush-who ran the U.S. Office of Scientific Research and Development (OSRD) and oversaw the development of both radar and the atomic bomb-actively resisted it. He understood that OR inherently required a level of operational collaboration between scientists and the military. That wasn’t the kind of collaboration Bush felt was best for either the command or the R&D community. So he tried to block it every step of the way. As Rau writes:

“For Bush, OR posed a threat to the OSRD, in part, because it could divert technical expertise away from research and development. OR also did not fit well into OSRD’s mission as Bush envisioned it. But the boundary between makers and users of new weapons, which the OSRD represented, would cause much discussionas Americans gained experience in OR.”

Ultimately, Bush lost this fight, one of the few bureaucratic battles he would lose in the war. But the overarching point is key: The role of OR as a collaborative medium to accelerate the flow of innovation to the field became more important over time. The techniques enlarged the conceptual bandwidth between the makers and users of weapons and systems.

David A. Mindell’s essay on radar and system integration, Donald MacKenzie’s overview of systems design philosophy in software development, and Paul N. Edwards’ tale of the rise of global systems models are just a few of the other excellent essays in this anthology.

The common denominator? How organizations adopt the tools, techniques and technologies of systems engineering to their own internal markets. This anthology takes history and injects it with a cultural sensibility. What are the organizational imperatives that give a systems approach power? Or inherently undermine its

To the extent such questions are answered, this is a collection of case studies as much as historical essays. Yes, the authors each have their systems axe to grind. But, no, that sharpening doesn’t cut away at the sinews of the core ideas. If you want to appreciate why Boston’s “Big Dig” has overwhelming problems-indeed, if you want to appreciate why the deregulation of electricity generates even more controversy than it does power-you will find useful and actionable insights in this thoughtful collection.

Mark Twain once observed that history doesn’t repeat itself, it rhymes. In the pages of Systems, Experts and Computers, you sense that tomorrow’s systems engineering innovations will find their echoes.

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