History of Silicon Valley, Part 1

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Bill Gates and Steve Jobs

This is part one in a series of three posts that will look at innovation and entrepreneurship through some of the historical events that lead to the foundation of Silicon Valley. 

Bill Gates once remarked, “my first stop on any time-travel expedition would be Bell Labs in December 1947.”  The Bell Labs to which Gates was referring was Bell Telephone Laboratories, Inc. the famous research arm of American Telephone & Telegraph (AT&T) that in 1947 invented the transistor.  For much of the twentieth century, Bell Labs was the most innovative scientific organization in the world, winning seven Noble Prizes and making significant breakthroughs in transistors, silicon solar cells, lasers, information theory, radio astronomy, programming (UNIX, C, and C++), etc.

Mervin Kelly, a University of Chicago educated Physicist, joined the company in 1925 as researcher and would later become President.  Kelly saw Bell Labs as an “Institute of Creative Technology” and was instrumental at cultivating a culture of innovation within the company.  While there are undoubtedly many ingredients that led to Bell Labs’ success, five in particular proved especially important: Talent, Space, Organization, Time, and Training.

Bell Labs was the Google of its day, recruiting the best minds in the country.  Kelly believed you needed a “critical mass” of talent to foster innovation.

For Mervin Kelly, space was an extension of the creative process.  He was instrumental in the design of Bell Labs’ campus in Murray Hill, NJ and purposefully created long corridors, which would ensure unplanned interactions.  Steve Jobs subscribed to the same philosophy and designed Pixar’s and Apple’s new headquarters to also promote chance encounters.  In Walter Isaacson’s biography on Jobs, Steve remarked, “There’s a temptation in our networked age to think that ideas can be developed by email and iChat.  That’s crazy.  Creativity comes from spontaneous meetings, from random discussion.  You run into someone, you ask what they are doing, you say ‘Wow,’ and soon you’re cooking up all sorts of ideas.”

Kelly believed that approaching problems from different perspectives fostered innovation and learning.  As a result, he organized researchers into multidisciplinary teams so they could tackle problems more holistically instead of remaining in their individual silos.  He also located satellite labs in plants to increase the knowledge share between research and manufacturing.  Today, the internationally renowned design and innovation firm IDEO uses this same multidisciplinary approach to foster innovation.

Mervin Kelly gave his researchers time and freedom to pursue their projects, limiting as many distractions as possible.  He removed the need for researchers to raise money and limited bureaucracy so they could focus on innovation.  Of course, AT&T’s monopoly reduced competitive threats, but Google’s “20% Time” is a good example of a modern day company investing heavily in free time innovation.

When Kelly found that engineering graduates did not possess the skills necessary to cope with modern communications challenges, he founded the Communications Development Training Program, affectionately known as “Kelly College,” in which employees would receive advance instruction in physics, chemistry and mathematics relevant to the communications field.

After retiring from Bell Labs in 1959, Mervin Kelly went on to consult with T. J. Watson, Jr. at IBM, whom I wrote about in my post, “Keeping a Company VALUEable.”  During its peak in the 1960s, Bell Labs had more than 15,000 employees, including 1,200 PhDs.  After the breakup of “Ma Bell,” Bell Labs’ innovation formula began to collapse.  The company, now owned by Alcatel-Lucent, is a shadow of its former glory, but it will forever be responsible for creating the foundation for much of the modern technological era.

For more information on Bell Labs, check out Jon Gertner’s book, The Idea Factory: Bell Labs and the Great Age of American Innovation

History of Silicon Valley, Part 2: Stanford & Shockley Semiconductor Laboratory

Photo Credit: Joi Ito (Cropped)

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  1. […] closer to his widowed mother and of course join the faculty at Stanford. Shockley had recently left Bell Labs in Murray Hill, NJ where he had worked since the mid […]

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