Technology and Change: The New Heraclitus

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ology and ~ # a n ~ e impact of invention and innovation on merican social and economic development

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DONALD A. .SCHON

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Books by Donald A. Schon D I S P L A C E M E N T O F CONCEPTS ( 1963 TECHNOLOGY A N D CHANGE The New Heraclitus ( 1967)

Technology and Change THE

NEW

HERACLITUS

D O N A L D A. S C H O N

A D E L T A BOOK

A DELTA BOOK

Published by Dell Publishing Co., Inc. 750 Third Avenue, New York, N.Y. 10017 Copyright 0 1967 by Donald A. Schon All rights reserved Delta @ TM 75118, Dell Publishing Co., Inc. Reprinted by arrangement with Delacorte Press Originally published as a Seymour Lawrence Book-Delacorte Press Second Printing Manufactured in the United States of America

To my wife

CONTENTS

Preface Introduction CHAPTER I. CHAPTER

The Process of Invention

11.

Innovation, Uncertainty and Risk Ambivalence Toward Innovation

CHAPTER I I I . CHAPTER

IV.

C H A P T E R V. CHAPTER V I .

The Drama of Corporate Innovation

Models for Change Technological Change in U S . Industry

C H A P T E R VII.

C H A P T E R VIII.

The National Climate for Technological Znnovation An Ethic of Change

Appendix: Examples of Technological Change in the Textile, Machine Tool and Building Industries Notes Bibliography

PREFACE

THISBOOK is the by-product of two different kinds of experience. From 1957 to 1963 I worked at Arthur D. Little, Inc., an industrial research firm in Cambridge, Massachusetts. I was concerned with specific product-development projects, with the efforts of industrial firms to engage more effectively in technological innovation, and with studies of technological change in Government and industry. From 1963 to 1966 I was with the United States Department of Commerce as director of the Institute for Applied Technology in the National Bureau of Standards. Here we attempted in various ways to encourage the introduction of new technology into Government and civilian industry and to provide a basis for Federal policy favorable to technological innovation. Neither Arthur D. Little, Inc., nor the National Bureau of Standards bears any responsibility for what is said in the following pages, but both have provided vantage points from which to examine the process of technological change, and in both organiix

x

Preface

zations I have learned from certain individuals a great deal which is reflected in this book. I am particularly indebted to John Eberhard and Dr. Herbert Holloman, in the Department of Commerce, and to David Gleicher and Sherman Kingsbury of Arthur D. Little, Inc. My indebtedness to Dr. Raymond Hainer, of Arthur D. Little, Inc., is of a different order. His ideas are so closely woven into the book that specific acknowledgments are impossible. If Dr. Hainer were to write, this indebtedness would be apparent to all. But, with few exceptions, Dr. Hainer is a teacher in the oral, not the written, tradition, to whom St. Thomas's dictum applies.

. . . The more excellent the teacher, the more excellent his manner of teaching ought to be. . . . For which reason even among the pagans, Pythagoras and Socrates, who were most excellent teachers, did not want to write anything. -ST. THOMAS AQUINAS,Summa Theologica, Part I11

INTRODUCTION

. . . what is, is uncreated and unperishable, for it is entire, immovable and without end. It was not in the past nor shall it be, since it is now, all at once, continuous; for what creation wilt thou seek for it? how and whence did it grow? . . . So coming into being is extinguished and perishing unimaginable. -PARMENIDES(347) Upon those that step into the same rivers different and different waters flow. . . . It scatters and . . . gathers . . . it comes together and flows away . . . approaches and departs. All things are in process and nothing stays still. . . . You could not step twice into the same river. -HERACLITUS (217, 218) And you could not step even once into the same river. -CRATYLUS T W OAPPROACHES to stability and change have been dominant in the history of human thought. Their prototypes go back to Greek philosophers who lived before Socrates, Parmenides and Herac1itus.l For Parmenides, stability was the only reality; being was continuous, changeless, one; change, in the form of creation

xii

Introduction

or passing away, was inherently contradictory and therefore illusory. For Heraclitus, change, in the form of the striving of opposites, was the only reality, and stability was illusory; the river image, improved by the later philosopher Cratylus, was the model for existence. Throughout the development of Western society there have been conflict and oscillation between these two world views. Essentially we have wanted to see human action as occurring against a background of stability: stable physical laws, stable institutions, stable values. Over and over again we have struggled to establish, once and for all, how things really are; to create institutions which will endure; to formulate values which will hold not only for us but for all men at all times. But experience keeps imposing on us the pews that what appeared to be stable is actually fleeting. No sooner is anything called changeless than it proceeds to change. The drive to stability forces us to ignore the change that is occurring now and to deny or explain away the change that has occurred. Hence our present attitude toward change is essentially the view of Parmenides. We conceive of our institutions-nations, religions, business organizations, industries-as enduring. Change of values is seen as deviance, undependability, flightiness. Values a r e presumed to be firm and constant. To the extent that we admit historical change, we see it according to the model of progresssteady change occurring within a stable framework of value. Similarly, our concepts of human identity-occupational, regional, professional-rest on the assumption of a continuing stable state. Even character we see as the ability to retain values and norms formed early in life. Yet institutions, laws, actions, occupations, professions and even our concept of character can be seen, after the fact, to have changed; it is only that we are somehow protected from awareness of these changes while they are occurring. And we are all historical revisionists. Magically, we forget the earlier institutions,

Introduction

xiii

laws and values, and the assumptions of stability that surrounded them. Now we see them as precursors of the new stability. The long time spans of fundamental change aid us in this reconstruction. Since the turn of the century, however, it has become increasingly difficult to sustain this form of self-deception. The Parmenidean attitude toward change suffers as the rate of change increases. Too much has happened to laws, views of the world, values and institutions within the span of one man's life. Too much is happening within ten years of his life. The principal source of the difficulty is in the process of technological innovation and in the many forms of social change which have accompanied it and resulted from it and which now, as technological change has become institutionalized, cause it. We in the United States, besieged by the continual introduction of new products and processes into our lives, have been quick to accept technological change as a permanent part of our society and as a form of progress. With technological change, we have grown used to technological innovation as a continuing task of established organizations. We have accepted "research and development" as a budget item, an occupational category, a way of life and an inseparable part of industrial and Government institutions. These ideas are well on their way to becoming part of what John Galbraith has called our conventional wisdom. But we have accepted technological change as though it were not destructive of the Parmenidean view. We accept it as an instrument. It is what established institutions do in order to achieve stable social objectives. We use it to do what we wish to do, and we remain the same throughout. But, as we are learning, technological innovation belongs to us less than we belong to it. It has demands and effects of its own on the nature and structure of corporations, industries, Government-industry relations and the values and norms that make up our idea of ourselves and of progress. We do not remain the same throughout. The awareness

xiv

Introduction

forced on us by the increasing rate of technological and social change pertains not only to our tools but to us. In order to cope with it, we require a new, Heraclitan view which allows us to confront our inability to step into the same river twice-or even once. In working toward such a view, we must begin with the notion of technological innovation itself. According to well-established principle, when we accept an idea which was once controversial, we like to forget its origins. We prefer to think of it as eternal. But the idea of technological innovation as an integral part of corporate activity is only about fifty years old. The concepts of "science" and "invention," as we know them, date from the sixteenth and seventeenth centuries. The concept of organized scientific research is derived from the German universities of the nineteenth century. Organized invention seems to have come into being with Edison, around the turn of the century. And fifty years ago the notion that established corporations should hire scientists and engineers and undertake systematic inquiry into their own products, materials and processes, with the aim of improving existing products and processes and developing new ones-the idea of industrial research-was a strange one. It is one thing for a craftsman to improve his craft. It is one thing to establish a business on the basis of an invention made by an independent inventor. It is quite another thing for an organization to undertake regular and systematic investigations which will obsolete its current products and methods of production and cause it to change in ways it is bound to find uncomfortable if not downright disastrous. It is one thing for businessmen to exploit for business the results of scientific research. It is quite another thing for business to establish a permanent living arrangement with science, and for scientists, technologists and businessmen, with their very different value systems, to enter into a kind of symbiosis quite unknown before the twentieth century.

Introduction

xv

A phenomenon as unlikely as this is bound to have a variety of causes, official and unofficial. In fact, technological innovation as organized effort appeals to a variety of interests. From the point of view of the nation as a whole, we have come to regard the development of new weapons and counterweapons as a continuing part of national defense and an organized scientific and technological enterprise of the first magnitude. The Manhattan project stands as the great symbol of this effort, along with radar, the proximity fuze and many other developments of World War 11. As the distinction between war and peace has blurred, we no longer regard weapons development as a wartime activity. Rockets, missiles, satellites and still newer technologies of war must be perfected as counters to the continuing efforts of our enemies. In the current debate over disarmament, hardly anyone questions the need for a continuing effort in military research and development. Technological innovation is essential, as well, to holding up our end in what appears to be a proliferating set of international contests, related to military applications but by no means limited to them. The Space Race, the supersonic transport and even the Olympic games are cases in point. These contests are matters of national prestige. They are National Adventures. Winning them is both a symbol of national strength and pre-eminence and a sign of national readiness for battle. In these contests skill and energy in technological innovation have all but replaced the traditional virtues of personal courage and manliness. On still another level it is part of the new conventional wisdom that technological innovation is essential to economic growth and that economic growth-as expresed by rate of increase in Gross National Product-is a sign of national economic strength and vitality. New products create new markets. New processes reduce the cost of existing products, or permit improved products to be produced without increase in cost, thereby extending markets. When confronted with the economic problems of depressed

mi

Introduction

areas, like Appalachia, our national thoughts turn almost automatically to research as a means to the development of new industries. One of our responses to the problem of the balance-ofpayments is to think of technological innovation as a way of improving our export/import ratio and fighting off the inroads of foreign competition. Whole industries, when threatened by other industries or by their counterparts in foreign countries, turn to technological innovation. Industries like leather, brick and textiles organize promotional campaigns to "Buy American" or "Buy Leather" and to instigate legislation favorable to their interests, but they also form research associations to improve their products, reduce their costs and create new markets. Effort at technological innovation is one of their responses to threat. For individual corporations technological innovation has come increasingly to be recognized as a principal-if not the principal -instrument in intercorporate competition. The corporation is seen as a miniature nation: its weapons are products and processes, its battlefield is the market place, its enemies are the corporations with which it competes. Behind its walls it produces weapons and counterweapons, strategies and counterstrategies. On its own level it recapitulates the national belief that technological innovation is essential to the waging of this war, which is the very lifeblood of the firm. This view, which is by now almost universal in American industry, has swept across industries in waves over, roughly, the last fifty years. What was at first true only of the chemical and petrochemical industries is now accepted doctrine in all but a few industries which have yet to undergo their research cycle. For individuals, at various levels and stations within the corporation, technological innovation has become a major task and a main road to upward movement. Creativity, for the scientist, engineer and marketing man, and generalship in innovation for the

introduction

xvii

manager, now rank with such traditional corporate virtues as loyalty, steadfastness and financial shrewdness. Increasingly, performance in the corporation has to do, in one way or another, with invention and innovation. On all these levels of concern with technological innovation, official interests are by no means identical with practice. The nation, industry, firm or individual is not innovative because it favors innovation. According to Galbraith, official talk about innovation stands in innovation's place. As we will be seeing later on, the sources of resistance to technological innovation, at all levels, are enormous. But, again at all levels, the problems concerning innovation are usually defined in terms of getting on with it. Technological innovation is something we strive toward, stimulate, create a climate for, adapt to. Naturally the problems are formulated differently at each level. At the level of the individual the problem is "how to become more creative" or "how to give inherent creativity more chance to express itself." At the level of the corporation the problem is how to "have more ships at sea," how to "get more out of research," how to "manage innovation" more effectively. For a whole industry the problems have to do with "encouraging innovation in individual firms" or with "becoming more effective in joint technological effort." For the nation as a whole the problems have to do with -creating a climate in which industrial technological innovation will flourish; -encouraging industrial growth, based on innovation, in the regions, particularly the depressed regions, of the country; -finding ways to help industry meet the challenges of foreign competition and markets; -coping more effectively with the consequences of technological innovation-the dislocations produced by it; -increasing national effectiveness in technological innovation essential to defense and other international contests.

xviii

Introduction

In the following chapters we will try to understand something of the process and problems of technological innovation in the industrial corporation, in industries and in American society as a whole. At each level of analysis, we will find, well embedded in the conventional wisdom, a rational Parmenidean view whose function is to place technological change within a stable state: -a -a

rational view of invention as an orderly, plannable process; rational view of innovation as a manageable function of the firm; -a view of technological change as occurring within welldefined industrial boundaries; -a view of technological change in society as part of a Technological Program, extending in orderly progress from the eighteenth century to the present time. But we will also find aspects of the process of technological change which resist these rational models. These include: -the nonrationality of invention; -the nature of innovation as a process of converting uncertainty to risk; -the pattern of interindustry invasion and its consequences; -the undermining of the values of the Technological Program. The analysis will bear on invention and innovation within the corporation, on a national climate for innovation and on our way of confronting the consequences of technological change. Accordingly, this book addresses itself first to the process of invention, then to technical innovation in industrial corporations, to patterns of technological change in industry, and finally to the consequences of technological change for our social objectives and norms. This book is principally about American industry. Insofar as it is concerned with technological innovation, however, it could

Introduction

xix

have focused on other social systems-medicine, for example, or agriculture-whose patterns of innovation have much in common with those of industry. And in its concern with the disruption of the stable state and the need for values for the process of change, it could have centered on other institutions-the family, universities or Government, for example-which share these patterns and

needs with industry. The choice of industry as the central theme reflects my own experience. But my effort will be to present the dynamics of industrial change as a metaphor for change in our society as a whole.

Technology and Change

T h e Process of Invention

WE ARE G O I N G to be talking about invention and ought, by rights, to begin with a definition. But "invention," like "innovation," "research," "development" and "design," is one of a family of terms already well established in the vocabularies of those concerned with technological change. During the last fifty years the waves of new technology produced by our industrial revolutions1 have pushed these words into prominence. Their meanings are vague, ambiguous and conflicting and so full of Tar Baby issues that we cannot define them without getting stuck. I would like to use "invention" to mean the process of bringing new technology into being, or again, the new technology created in the process. "Technology" will mean any tool or technique, any product or process, any physical equipment or method of doing or making, by which human capability is extended. "Innovation" will mean the process of bringing invention into use, and "diffusion," the spread of its use beyond the first instance. But these familiar usages carry problems with them. "Invention" clings to "inventor." And "inventor" carries with it the pic-

2

Technology and Change

ture of the Lone Inventor, the embattled, lonely pioneer. This image has two faces: the Romantic Hero, like Edison, Goodyear, Morse or Ford; and the Crackpot, producer of Rube Goldberg contraptions. Accordingly, inventors and inventions are things to be honored or scorned. To choose to speak of invention sounds like taking up the cause of inventors. To have used "research and "development"-both respectable corporate terms-would have sounded like championing corporate technology at the expense of individual effort. I want simply to talk about bringing new technology into being, regardless of who does it or how it is done. There are similar traps in choosing to speak of "invention" rather than "discovery." People tend to make a sharp distinction between these terms. A man "discovers" a law of physics as he "discovers" a new continent; the law, like the continent, antedates its discovery. On the other hand, a man "makes," or invents, a new tool; he first conceives of it and then brings it into being. The attempt to distinguish sharply between these terms is part of a long-standing debate between partisans of "invention" and "applied science" over ways of arriving at new technology. "Invention" conveys the image of blind Edisonian trial and error. "Applied science" conveys the image of the methodical application of discovered laws of nature. This apparently simple distinction quickly founders, however. A man makes theories as well as invention^.^ He conceives theories and brings them into being. We no longer think of them as embedded, like continents, in Nature. And invention depends on discovery of laws and effects. An inventor works by searching through experiment for the smallest manifestation of the effect he wants to produce, learning the conditions' of the effect, and then reproducing it on a larger scale. This interaction between making and discovering is one of the principal features of invention. Moreover, invention and innovation shade into one another. It is impossible to specify the point at which a new product or proc-

The Process of Invention

3

ess begins to be put to use. Aspects of what is required to put it to use occur as early as the first breadboard model, and it tends to change throughout the entire process of use. Invention and innovation are best understood as features of a single, continuous process rather than as steps or phases which always precede and follow one another in time. These are only a few of the issues which lie just beneath the surface of these words.3 In the pages that follow, we will establish certain features of invention, understood broadly as the creation of new technology, in order to set the stage for inquiring into the nature and problems of technological innovation.

The Rational View of Invention Phrases in common use like "the management of research and "the organization of invention" suggest the rational model of invention which thrives in the atmosphere of large organizationsthe corporation, the government bureau, the research organization. Under this model, invention is seen as the conversion of knowledge to technology. Within the last half of the present century a "knowledge industry" has developed. Research scientists and engineers are producing knowledge that has resource value for application to industrial and consumer products. Research knowledge is being created in the laboratories and experimental centers of private corporations, universities and government agencies. It seems important to the national interests that there be proper utilization made of the products of science for the benefits of society. Professional managers use industrial organizations as conversion mechanisms; they convert the essential resources of human talents, physical facilities, money and knowledge into marketable goods and services. -JOHN F. MEE, October, 1964; pp. 36-37

4

Technology and Chunge

According to this rational model, the process of invention is like other corporate activities-sales, accounting or production, for example-and like other corporate functions, lends itself to analysis, management and evaluation. Seen in this way, invention has a number of essential properties: 1. It is a goal-directed process in which you know what you are going to do before you begin to do it.

The days of research and development activities operating under ballooning budgets without sound management controls are over . . . greater productivity results when management directs efforts along lines statistically offering best chances of success toward predetermined goals. MANAGEMENT CONSULTANTS, -SOCIETY OF PROFESSIONAL November, 1963 The problem is, for example, to develop a wet-strength paper, a long-span beam, a dimensionally stable wood. The task is to achieve these objectives. Success consists in doing so within the appropriate boundaries of time and money. You also know the disciplines and technologies the invention will require. Management must first establish realistic over-all company objectives. . . . It then must select disciplines, staff the program, and develop its organization to best achieve these purposes. -JAMES BRIAN QUINNand ROBERT M. CAVANAUGH, p. 114 If you aim at a wet-strength paper, for example, you can be reasonably sure the answer will lie in chemistry and specifically in technologies associated with cellulose chemistry and resin binders. Your development team should contain these skills. The development of a new long-span beam will require structural engineering and the technology of materials like concrete and steel.

The Process of lnuention

5

The technical objective (it is assumed) determines the technologies required for invention. 2. The process is orderly. It is a series of steps toward a goal, each one paving the way for those to follow. First comes the definition of the problem, then alternative routes to its solution. You choose and test the most promising route. Figure 1 illustrates one proposed schema for the process. When new ideas are required, their generation is made into a separate phase (like "Thinking and Visualization" in Figure 1 ) . A phase of "idea generation" precedes a phase of evaluation or "idea screening," as in the refinement of an ore.' The two stages operate under different sets of rules. The first calls for creativity and imagination; the second, for critical intelligence. 3. Invention is essentially an intellectual process. While it is not cerebral, in the sense of requiring nothing but thought, paper and pencil ("dirty hands" are considered important), invention is essentially a matter of applying intelligence to the solution of problems. Intellectual resources determine the success of the project. Invention (it is assumed) differs from human relations or poetry, in which emotion and intuition play a part. The scientist or engineer is a man of practical and theoretical intelligence whose work demands the exercise of his dominant faculty. According to the picture painted here, invention is: -goal-oriented; -orderly; -a process in which it is clear, ahead of time, in which discipline or technology the answer falls; -primarily a matter of applying conscious intelligence to the solution of problems. We have presented the rational view in its pure state, unmuddied by qualifying attitudes. But it is surprising how fre-

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THINKING AND VISUALIZATION Engineers think about the design requirements, possible approaches, and visualize or imagine what the final

DEVELOPMENT O F ALTERNATIVE CONCEPTUAL DESIGNS (Feasibility Studies) s~ecifications.

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SPECIFICATION DEVELOPMENT TESTING, CONSTRUCTION AND TESTS O F MATERIALS, C O M P O N ~ N T S ,BREADBOARDS

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DRAWINGS, AND SPECIFICATIONS O F PROTOTYPES AND ULTIMATELY OF THE FIELD TEST MODEL

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FINAL PRODUCTION DESIGN, DRAWINGS AND SPECIFICATIONS

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PRODUCTION Problems arising from pilot production, regular roduct~onand use of the product g a d to redes~gnand Improvements.

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Solid lines indicate main flow of work and information

.- - - - -- -- Broken lines indicate feedback of information for corrective purposes

FIGURE1 Graphic portrayal of the system and product design process

The P~ocessof Invention

7

quently the rational view can be found in its pure state. It is an official public view. As such, it plays an important part in the organizational handling of invention and innovation, in spite of private and unofficial opinion. Those engaged in large-scale research and development efforts, such as the military and space programs of the United States Government, often hold a more extreme version of the rational view under the name of the Weapons Systems Approach. Burton Klein has described this version as follows: To ensure that no time, money, or effort will be wasted on blind alleys, almost all of the planning is done in terms of the end products that are supposed to emerge from the program-the weapon systems. Before any major project is begun, the planners painstakingly figure out what performance characteristics the weapon system is supposed to have and the technical innovations it will contain. The development program is spelled out stage by stage and then reviewed by numerous agencies within the armed services, by special committees and by the staff of the Assistant Secretary of Defense for Research and Engineering. After the program is under way, progress is monitored at every step. -BURTON KLEIN, May, 1958, p. 112 Here men try to predict and then to set up in orderly fashion the sequence of development, the inventions required and the rate at which the whole process is to occur. They prepare schedules of these steps, like the PERT diagrams designed for the Polaris missile program, in order to spell out the beginning and end of each phase of development and the areas of overlap. According to this model of the process, the planning function becomes critical; inventions simply fill the gaps in the plan. Although the Weapons Systems Approach originated among military planners, it shows signs of spreading to civilian efforts and to projects smaller in scale than the development of a missile. The rational view of invention, in mild or extreme form, must appeal to anyone confronted with the complicated task of developing new technology in an organizational setting, within severe

8

Technology and Change

boundaries of time and resources. In some circumstances it may even appear to be a necessary view. But it conflicts, in many ways, with experience.

Invention as Process To begin with, we need to recognize that invention is itself a process and a part of other processes. We say "making an invention," like "making a pie" or "making a shoe," suggesting that invention is a form of production. We do so because we take an after-the-fact view of invention, reading back onto the beginning of the process the simple goals apparent only at the end.6 So we say "Carothers invented nylon," conveying the impression that he first had it in mind to do and then did it in a fairly straightforward way. In fact, bringing new technology into being is a complex process in which goals are discovered, determined and modified along the way. Invention builds on previous invention and is always part of a larger current of technology. It takes time and requires more than one kind of technical effort. It is made up of many different subinventions. Each separate turning of a technical tick, however small, has its own process. And the process of invention continues throughout the life of any new technology. In The Rate and Direction of Inventive Activity (Princeton University Press, Princeton, 1962), Richard Nelson makes the following analysis of the development of the transistor: The transistor is a semiconductor device. The research at Bell which resulted in the invention took off from a base of knowledge about semiconductors built by several generations of scientists. . . . The element germanium is a semiconductor. So are several other elements, including silicon, and a number of compounds, such as

9

The Process of Invention

copper oxide and zinc oxide. By 1900 many scientists and experimenters with electricity knew that these metals had quite unusual properties. In particular, it was known that these materials conducted electricity although, as the name implies, not as well as conductors like metal. It also was known that the electrical resistance of these materials decreased with temperature. . . Also, it was known that these materials sometimes passed current more [p. 5541. easily in one direction than in another

.

...

Returning to our story, though by 1900 many scientists knew that the materials we now call semiconductors had interesting properties, they knew little about why. The birth of the radio industry created a practical demand for good rectifiers; [semiconductors] became widely used. But, in large part because the vacuum tube rectifier was better understood and hence the direction of possible improvement more clearly indicated, the semiconductor rectifier declined in importance relative to the vacuum tube during the twenties and early thirties. . .

.

During the thirties research workers in the field of radio waves and communications turned their interest to higher frequencies. The ordinary vacuum tube performed poorly at these higher frequencies and attention returned to crystal detectors and hence to research on semiconductors . . . [p. 5561. Nelson goes on to describe improvements in semiconductor production and in semiconductor science. He calls attention to the discovery of positive and negative semiconductors, and notices the prewar interest in semiconductor amplifiers and the gradual building of semiconductor theory. To one who is not a physical scientist, it is interesting that by the mid-1930's a well-known article, Wilson's [A. H. Wilson], contained most of the essential ingredients for a rather complete understanding of semiconductors, but that almost all scientists missed some of the essential points . . . [p. 5571. The effect of the background Nelson sketches here is to make the invention of the transistor appear as one in a long series of inventions and related discoveries, a capping invention that took

10

Technology and Change

up and united threads of technology and theory which had long been present. The story of the transistor is similar, in these respects, to the stories of other less celebrated inventions. Corfam, for example, Du Pont's synthetic leather, burst on the consuming public a few years ago as a sudden new product but represented more than ten years of Du Pont research and many more years of analogous effort by other companies, all aimed at producing fiber-reinforced plastic films with the critical properties of leather. Corfam's genealogy would show a relation to synthetic rubber films, to clothbacked vinyl sheets, to perforated plastics designed to "breathe," and to many other similar products. In fact, it came out of Du Pont's Fabrics and Finishes Division, which had invented and used many of these related materials. No process of invention has a clear beginning. Every invention clings tightly to the threads of work preceding it. After the fact, we wonder, as Nelson did, why the invention was not made long before; it seems to have been so obviously implicit in its antecedents. Neither does invention have a clear ending: a new product, for example, is never "done" when it enters the market; it undergoes continuing change until its death. We need not see these processes as a series of discrete inventions, each associated with a man. We could see them as continuous open-ended processes of development in which individuals play interconnecting roles6 None of this is to contradict, however, the room available for individual contribution and creativity. There is an "inside" and an "outside" view of invention. From the outside and after the fact, invention can be seen as the work of many interrelated contributors in which the later contributions build on past results. From the inside and before the fact-that is, for the man who is confronted with an unsolved problem of technology or with a technical situation full of some dim promise of novelty-it is by no means obvious how the past contains the solution to his problem or the invention which would draw novelty out of his situation,

The Process of lnvention

11

even though in most cases he is aware of earlier work and knows that it is in some way relevant. His new ideas then seem as new to him as those of Archimedes. His "Eureka" is as heartfelt. But his contribution is not any the less part of a long and complex social process. Moreover, each stage in the process-an individual corporate contribution like Du Pont's development of Corfam or the Bell Laboratories' development of the transistor-is itself a complex process, a series of related inventions rather than a single act. Even subinventions, like the making of the first prototype of a semiconductive amplifier, are complex. They are problem-solving processes which do not happen all at once but in characteristic patterns. Invention is, then, a continuous social process without clear beginning or end. The development of a new product or process is a series of inventions, each of which responds to the problems of earlier efforts and creates new problems requiring solution. Each subinvention has its characteristic pattern of development.

Invention as Nonrationul Process The fact that invention is a process does not in itself contradict the rational view. But attention to the processes involved in invention reveal its nonrational side. To begin with, invention often works backward. It often moves not from a clearly defined goal to the discovery of technical means but from observation of a phenomenon to exploration of a use for it. Often, invention consists in exploiting a phenomenon that pops up while someone is trying to do something else. There are a number of classic stories along this line-Becquerel's discovery of some of the uses of radiation from observation of the fogging of a photographic plate; Fleming's noticing how a bit of penicillin mold, blown in through his laboratory window, killed

Technology and Change

12

some bacterial cultures he was growing; Goodyear's discovery of the vulcanization of rubber when some rubber he was heating boiled over on the stove. These stories are legendary, and as with most stories about the origins of great inventions, their factual and mythical components have merged. But their pattern holds also for many lesser inventions: -A

new approach to reconstituted leather grew out of consideration of biochemical experiments with the swim bladders of carp. -An electrostatic recorder came from observation of the effect of electrostatic charge on water droplets. -A method for encapsulating resin catalyst suggested itself when a chemist idly mixed components used in the resin treatment of wool.

There is nothing special about these examples. Everyone who has worked directly with materials in order to develop new products or processes can supply similar examples of his own. There is a sense in which invention of this kind is accidental. Fleming could not have anticipated that the mold would fly through his window and land on a culture, killing some of it. He could not have predicted this phenomenon. But he could expect that while he was engaged in other work, some interesting phenomena would occur. And he could deliberately exploit them when they did occur. The point is not that invention is accidental but that it builds on unexpected p h e n ~ m e n a . ~ Once a process of technical development has begun, it does not usually moue in a straight line, according to plan, but takes unexpected twists and turns. The investigator must continually replot his course and set off on new tacks as his first ideas about the problem turn out to be wrong or as he encounters new phenomena which either impede

The Process of lnuention

13

or facilitate his progress. In a development task of any size, this happens not once but many times. When the investigator looks back at the end of his journey, he sees no straight line but a jagged path in which each deviation from plan represents the discovery of a new relevant variable or the addition of an important new requirement. -A

product development group undertook the development of a new fastening tool.8 The tool was to feed fine wire from a spool, cut it to size and push it flush with the surface of a wood panel, leaving little or no sign of entry. It was intended originally to fasten prefinished panels to studs, in order to eliminate the work of nail setting, hole filling, sanding and refinishing, which accounts for much of the labor cost of panel installation. The group built a preliminary model which fed fine wire into a die, cut it and forced it through a hole into the surface of the wood. The tool held the wire in its hole throughout, without allowing it to buckle. The diameter of the wire determined both the holding strength of the fastening and the difficulty of operation of the tool. In order to increase the holding strength of the wire, the surface was etched and coated. But the best coating contained fine particles of grit which abraded the edges of the holes through which the wire passed. It was necessary, then, to redesign the tool. Carbide bits and rings were inserted. In order to insure reliable operation a major simplification of design was required. There had to be fewer parts and fewer places where metal rubbed against metal. The resulting tool operated with greater reliability than the first one and grasped its wire more firmly. Because of the greater force exerted on the wire, the wire cartridge that fed wire into the tool had to be redesigned.

Technology and Change This continual shift of direction in response to new problems is a process of design. Each intervention aims at solving a problem; it aims at meeting requirements of the situation which were apparent from the beginning (fasten without a visible trace, in the example above) or which were learned along the way (resist abrasion of the tool). But nothing can be done which has only the result intended for it. Side effects are the rule. The pieces of the problem hang together, and it is usually impossible to affect one without affecting the others as well. Some designs get simpler as the process goes on, whereas others get more complicated. In the case of a mechanical invention, the invention may actually get bigger, heavier and more complicated until, in effect, it falls of its own weight. When this happens, the designer must retrace his steps. His process can be seen, after the fact, as a series of decision points, all of which taken together represent a tree of decision. The trunk of this tree is the path that led to the finally adopted solution; the branches are dead ends from which the designer had to retreat. The path that will lead to greater simplicity, as opposed to greater complication, is always clear after the fact and always obscure beforehand. For a given strategy of design there is often a central weakness, an Achilles' heel, to overcome. It is what finally reveals itself as the basic problem of the system. The designer commits himself to an approach, discovers its weakness and tries to compensate for it. Products and processes, seen from this point of view, reveal what the designer did to control what he could not eliminate. In razor blades there is an Achilles' heel in the problem of maintaining uniform sharpness and preventing corrosion. In nonwoven fabrics it is the ~roblemof obtaining in one fabric the necessary strength and drape. In thermoelectric couplings it is the quality of the solder-its reliability and resistance to breakdown. Such problems set limits to the products application and become the traditional 14

The Process of Invention

15

product-improvement problems, the well-defined problems on which everybody works. But during the process of invention itself, the inventor-designer must travel many routes and retrace his steps many times before he finally commits himself to a path and finds ways either to eliminate or to live with its weaknesses. Invention does not move in a straight line. Neither does it simply consist in defining a need and seeking means to fill it or in defining a technique and finding uses for it. In the process of invention need and technique determine one another. At the beginning, as in geometry, there is a certain "given." The given may be a need ('We must develop a cheap wet-strength paper"), or it may be a technique or phenomenon for which a commercial use is sought ("What can we do with interfacial polymerization?"). The point about the given need or phenomenon is that, because of the limits and opportunities discovered in the process of invention, it changes. -In the development of a new nonwoven fabric, the critical element turns out to be cost: the throw-away fabric must cost less than the price of a single laundering of a more permanent fabric. Economy requires the machine that produces nonwoven fabric to operate at high speeds. And the need to operate at high speed rules out certain fabric constructions. Therefore, we must find acceptable fabric constructions that lend themselves to high-speed production. -A new appliance, designed originally for a mass market, encounters problems of reliability. In order to solve them, we introduce more expensive materials. The more reliable machine, in spite of the best efforts of the engineering group, costs more than the mass market can afford. Now the machine has become a higher-priced, luxury item. It captures a smaller market but gives the company a higher margin of profit. If

16

Technology and Change it is to be a luxury machine, however, it must have certain features beyond those originally conceived for it and at very little extra cost.

In these examples, we encounter unexpected boundaries of need and technology. Neither is fully defined at the outset. Technological boundaries have market implications, and new definitions of need have implications for technology. This oscillation between need and technology characterizes the process of invention. Over time, each determines the other? According to the rational view of invention, we can identify relevant technical disciplines with certainty ahead of time. If we don't know the answer to a problem, we know at least the fields in which it will lie. But answers frequently turn up in surprising places. It is irnpressive how often, in the history of technology, invention consists in carrying techniques, in modified form, from one field to another. -The Polymer Development Corporation made its first commercial success out of a means of extruding nylon rod, a process most of the plastics industry, at the time, thought unfeasible. Their method drew on techniques for extruding metal rod which the president of the company had learned in the metals industry. Later, the company developed a sintered nylon material, using techniques similar to metal sintering. Their way of marketing these products had more in common with practices in the specialty metals industry than with plastics marketing practices of the time. -A process for drawing brass rod came out of an adaptation of candle-making technology. It consisted in drawing a brass wire first through molten brass and then through a die. -The Pillsbury Company developed its line of refrigerated cookies and rolls by adapting sausage-making techniques and machinery.

The Process of Invention

17

-An American Viscose Company chemist invented the celebrated nonnutritive food, Avicel, in the course of attempting to produce stronger rayon tire cord. -Electrical milling of steel uses a phenomenon seen as a nuisance in another industry: electric-arc pitting of metal contacts. -During World War I the Krupp Works in Germany made carbide cutting tools out of a material developed for antitank projectiles. -Guidance systems for today's missiles and rockets build on inertial guidance techniques originally invented for aircraft and shipboard gunsights. Such inventions consist in exploiting technological analogies. The pattern holds true not only for individual products and processes but for whole fields of technology. -Nonwoven fabrics carried paper chemistry and technology into textile applications. -The building industries borrowed modularity, prefabrication and on-site mass production from other industrialized production technologies. -Numerically controlled machine tools (the use of numbers on paper or magnetic tape to program and control the operation of machine tools) grew out of the aerospace industry. Throughout the history of technology, devices, like the wheel, lever, screw and balance, found their way from one field of technology to another, transforming themselves and introducing novelty as they moved. This pattern of invention by technological displacementlo is by no means eccentric. It is characteristic both of recent industrial technology and of the whole history of technolOgY.

This does not mean, of course, that it is entirely a matter of chance from which disciplines or technologies answers come, but

18

Technology and Change

that we cannot expect answers only from technologies traditionally associated with a problem. To do so would be to eliminate an important source of novelty. All of these comments have so far gone to show that: -Invention often works backward from intriguing phenomena rather than forward from well-defined objectives. -Invention is full of unanticipated twists and turns. It is a juggling of variables in response to problems and opportunities discovered along the way. -Need and technique determine one another in the course of development; neither is fully determined at the outset. -It is not always apparent ahead of time from what disciplines or technologies answers will come. In short, a great deal in the process of invention defies definition in advance. Invention, often pictured as a race, is more like exploring an unfamiliar coastline in a fog. There is nothing in this to cause surprise. If invention were wholly determinable before the fact, it would be nothing more than routine application of known techniques to familiar problems. Only the rational myth of invention makes these features of invention seem surprising.

I

I

7 -

C H A P T E R I1

1

Innovation, Uncertainty

I

and Risk

The Rational View of Innovation THERE IS

A RATIONAL view of innovation which builds on the rational view of invention spelled out in the previous chapter. According to this view, innovation is essentially similar to other major functions of a firm.It can be managed. It must be analyzed into its component parts and made subject to rational control. I t is a series of orderly steps, each of which serves to relate special efforts to corporate objectives, and each of which lends itself to effective management practice, along familiar corporate lines.

Competitive success depends to a great extent upon the fundamental company approach to new-product development and product modification. An effective new product program generally involves the following basic steps: Determine over-all company objectives and goals. Integrate all product research and marketing activity into management plans. Organize a system to facilitate getting ideas for products. Obtain, evaluate and select useful ideas and information. Design, build and test the product.

20

Technology and Change

Produce and market the product. Evaluate the product continuously. -GORDON H. WEHRLY,1958 Implicit in this approach is the notion that skilled men can anticipate and control the risks of innovation. Phrases like "the management of innovation" suggest that we can foresee and quantify the likely dangers and rewards of a technical project and weigh them against the likely risks and rewards of alternative efforts. By selecting only those projects whose benefits justify their anticipated costs, by playing risks off against one another-in short, by the whole process of justification, decision and optimization suggested above, we can (it is assumed) keep the risk of innovation within bounds. The process of decision-making associated with innovation is a process of risk-reduction. According to extreme versions of the rational view, it is a process of risk elimination. In order to reduce the risks of innovation, justification of technical effort must precede the effort itself: you do things only when you have shown them worth doing. Hence, a corporation, a government agency or a university may require lengthy proposals, subject to extensive review, before technical work can begin. A technical man may spend a great deal of time justifying his program. He does so in order to get the money to sponsor his work. Money comes when he makes the proper justification. In terms of the organizational hierarchy someone "below" makes the justification and someone "above" rejects or accepts it. Funds flow from above, ideas from below. Those below propose, those above dispose. The rational view of innovation assumes that invention is a series of orderly steps intelligently directed toward an objective spelled out in advance. It regards innovation, then, as a manageable process, like other functions of the firm, in which risks are controlled by the mechanisms of justification and review. But again, the rational view of innovation ignores or violates actual corporate experience. In the light of that experience, the

Innovation, Uncertainty and Risk

21

notion of innovation as an orderly, goal-directed, risk-reducing process must appear as a myth. The present chapter will explore some of the ways in which it is a myth, beginning with introduction of the critical notion of uncertainty.

Uncertainty and Risk Risk has its place in a calculus of probabilities. It applies to a specific course of action. The risk of an action is the likelihood that it will produce an unwanted result. Risk lends itself to quantitative expression, as when we say that the chances of failing to strike oil in a field are better than fifty-fifty or that the chances of finding a defective part in a batch are two out of a hundred.l In the framework of benefit-cost analysis, the risk of an innovation is how much we stand to lose if we fail, multiplied by the probability of failure. Uncertainty is quite another matter. A situation is uncertain when it requires action but resists analysis of risks. A gambler takes a risk in an honest game of blackjack when, knowing the odds, he calls for another card. The same gambler, unsure of the odds and of the honesty of the game, is in a situation of uncertainty. He can act, but he cannot estimate the risks or rewards of his action. Even so, he operates in a risklike situation because, at any rate, he has two well-defined alternatives-to call for another card or not to call for it. But an explorer lost in the woods, short of food and water, confronts even greater uncertainty: he must act even though relevant alternatives are undefined. He must invent what to do. He has no way of calculating with any precision the risks of action. He has only rough guidelines of skill and experience to help him. A usual model of uncertainty is this: two alternatives are presented-which shall I take? But this model presupposes a great deal of structuring, of work on the situation. A more relevant

22

Technology and Change

model consists of a man in a situation which is both unfamiliar and problematic. Action is required. But it is unclear not only whether to do this or that but what there is that might be done. The situation is like a game of chance in which not only the odds but the moves themselves are undefined. The situation can be described as one in which there is either too little information (not enough to permit decision) or too much. On the second model of uncertainty above, "too much" is more appropriate. There is more information than our theory of the situation can handle. A perceptual analogue may help (Figure 2 ) .

Here there is too much information to permit identification of the object. Elimination of a good deal of it (Figure 3) permits identification. But the knowledge of what to eliminate presupposes a theory of what there is. The formation of Gestalts or forms for the situation resolves uncertainty by wholesale elimination of certain information clues as irrelevant, and by organization of others.

Innouation, Uncertainty and Risk

23

Seen from this point of view, the function of the perceptual Gestalt or the theory is to reduce the situation to one we can handle-that is, take account of, explain and predict. All theories, according to William James, contain a penumbra of uncertainty, error and ambiguity which are irrelevant from the theory's point of view but become the basis for the next theoretical advance in the field. The great field for new discoveries is always the unclassified residuum. Round about the accredited and orderly facts of every science there ever floats a sort of dust-cloud of exceptional observations, of occurrences minute and irregular and seldom met with, which it always proves more easy to ignore than to attend to. . . . Any one will renovate his science who will steadily look after the irregular phenomena. -WILLIAM JAMES,pp. 197-98 Uncertain, unformed situations are a pervasive aspect of individual lives to which we pay understandably little conscious attention. Our entire frame of discourse is designed for formed situ-

24 Technology and Change ations-emerges, in fact, out of the forming of situations. The unformed is put aside, consciously or preconsciously, as a source of anxiety and pain.

. . . in many cases, there is an unfortunate use of selective inattention, in which one ignores things that do matter; since one has found no way of being secure about them, one excludes them from awareness as long as possible. In any case, the self-system controls, from well on in the juvenile era, the content of consciousness, as we ordinarily call it-that is, what we know we're thinking about-to a very striking extent. -HARRY STACK SULLIVAN, 1953, PP. 233-34 There are, in effect, whole repertories of devices and stratagems through which we avoid contact with uncertainty, of which some of the more obvious are: denial ("I am clear about everything!"), forgetfulness ("I cannot remember things that make me anxious"), avoidance ("I stay away from painful situations"), taboos ("Don't talk about it!"), and selective inattention ("I carefully avoid noticing what might make me uncertain"). We shall have occasion to discuss some of these in later chapters. For the moment, it is important to notice that organizations as well as individuals confront uncertain situations. The corporation, for example, may suddenly find itself with a declining market or with a new and unexpected kind of competition. It is then confronted, at least for a time, with more information than it can handle. Its experience of uncertainty is a concomitant and sign of its contact with something new. And of the various sources of novelty capable of throwing an organization into a state of uncertainty, none is more effective than technical innovation.

Uncertainty Is Inherent in Technical Innovation Men involved in technical innovation in a corporation confront a situation in which the need for action is clear, but there is both danger and opportunity, and it is by no means clear what to do.

Innovation, Uncertainty and Risk

25

This situation is painful and anxious for individuals and, in a sense, for the corporation as a whole. To be a member of a corporation in a time of corporate uncertainty is to be engulfed in waves of uncertainty and anxiety. As long as this situation obtains, the corporation cannot function effectively. The corporation is not designed for uncertainty, where there are no clear objectives to reach and no measures of accomplishment, and where it is not clear what to try to control. A corporation cannot operate in uncertainty, but it is beautifully equipped to handle risk. It is, from at least one point of view, precisely an organization designed to uncover, analyze, evaluate and operate on risks. Accordingly, the innovative work of a corporation consists in converting uncertainty to risk. This work begins with more information than can be handled and operates on this information, at lower levels of the corporation, until clear alternatives of action, together with their probable benefits and their risks, can be defined. At this point, management can play the investment game-that is, the game of deciding where to put one's bets. The game requires analysis of investment alternatives, estimating markets, costs and technical feasibility, and making investment decisions. The game is played with competitive corporations as opponents. The rewards and punishments of the game can be measured in dollars. In the process of innovation everything is done to permit decision on the basis of probable dollar costs and dollar benefits. In the process, the corporation converts the language of invention to the language of investment. Instead of talking about materials, properties, performances, experiences, experiments and phenomena, the corporation begins to talk of costs, shares of market, investment, cash flow, and dollar return. The language change accompanies a.shift upward in the level of corporate involvement. The conversion of uncertainty to risk takes varying forms depending on the kind of uncertainty to be dealt with. Technical innovation involves many different kinds of uncertainty. Some of

26

Technology and Change

these spring directly from the nonrational character of the process of invention. Others are only indirectly related to that process. We will be concerned here with uncertainties springing from determination of technical feasibility, novelty and market. One focus of uncertainty is in the question, Can it be done? Is it technically feasible? In the process of invention, as we have seen, the requirements to be met change continually in response to unexpected findings. These may at any time turn a good risk into a poor one or an indifferent idea into an idea of great promise. We can describe these changes in terms of a curve of technical difficulty. As an investigator works he may first encounter the most difficult problem and later only minor ones whose solution he knows he can attain if he works long enough. If we plot his progress in time against "difficulty" or "demands of the solution with respect to the state of the art," the picture looks like this:

The dotted line at Dl represents the state of the art. The investigator has to surpass it at B (for example, by developing a wire coating with much improved holding strength), whereas his subsequent tasks are well within the state of the art. On the other hand, there may be a number of separate peaks. In considering the development of new semiconductor materials, we would

Innomtion, Uncertainty and Risk

27

have to identify separate peaks for the development of highpurity materials and for the development of high-yield production techniques. Such curves would not be a source of major uncertainty if it were possible always to identify ahead of time the problems and their degree of difficulty. For example, small improvements in the properties of materials-raising by a few degrees the melting point of an alloy or increasing slightly the abrasion resistance of a plastic coating-may require no more than the continued application of known methods. On the other hand, achieving these small improvements may be like approaching absolute zero. The investigator may be fighting the equivalent of the basic laws of thermodynamics. For example, a group working on the development of a new type of transformer, using piezoelectric principles, worked for weeks on what it thought was a materials problem, until it was able to make the calculations necessary to show that the performance requirements for which it was striving pressed to the limits both the energy capacity of the material and its ability to accept mechanical stress. It is not always apparent, even to a skilled investigator, whether he is working on a minor problem of adjustment or a major problem of principle. He cannot place himself on the curve of technical difficulty. He may think he is here:

Technology and Change

28

when, in fact, he is here: D

Technical feasibility, therefore, often resists the kind of definition required by the investment game. It may evade definition, like a will o' the wisp, throughout the entire process of innovation. Another focus of uncertainty concerns the question of novelty: Who has done it before? or, Who is doing it now? Although the patent literature offers a great deal of information about prior invention, a search may not uncover all relevant art. Even a thorough and concentrated search may not turn up a relevant configuration which had been invented earlier for quite a different function. An apparently novel screw thread may have been used in a machine tool to fasten work to a chuck. A method for encapsulating adhesive may have been used for encapsulating solid rocket propellant. Such facts may come to light, in spite of the best efforts of the searchers, only when the patent application is processed or later when a counterclaim is filed. If someone con-

Innovation, Uncertainty and Risk

29

tests a patent, the courts often find against the alleged inventor. The attitude of the courts toward patents, the skill of the attorneys and the credibility of the witnesses may count for as much as the apparent novelty of the invention. The novelty of an invention is uncertain, both because of lack of information, in spite of best efforts, and because of the uncertainties of the judicial process. If a company undertakes a development, it can have no guarantee that its competitors are not doing similar things. Even if it knows that others are working in the same field, it cannot be sure how far they have gone. Invention is like an arms race between warring countries: The leaders ask: Do they already have it? Are they working on it? How soon will they get it? Can we afford not to have it? Should we wait until they have it and then copy it? What do we lose by being second? How much would we gain by being first? In corporate competition the same questions are relevant. There are the same difficulties in getting answers, the same temptations to espionage, the same strategies for playing out a hand in spite of uncertainties. A company may be well advised to continue its development, even with the knowledge that a competitor is working on the same problem: it may get there fist and the other may not get there at all. There are even cases on record-the development of the automatic light meter for cameras is one-where a company, spurred on by the belief that a competitor had the product, finished first and achieved a commercial success-and discovered that its competitor did not have the product after all. Who will buy the product? How large will its market be? How much of a share will it get? How long will the market last? The marketing questions have become the subject matter of a new profession and of what aspires to be a science. Without attacking the question of whether or not a marketing science is now possible-whether there are inherent uncertainties about marketing which no amount of information, ahead of time, will resolve

30 Technology and Change -we can notice that the process of answering marketing questions occurs in time and that, as in the process of invention, there are bound to be stretches of uncertainty which can only be resolved by the expenditure of time and money-if then. -Scotch tape was originally introduced for mending books. Before its actual introduction, its makers had no inkling of the huge market potential it offered. -Vinyl resins were first developed and marketed as adhesives. Their use as structural plastics was only dimly foreseen. These success stories suggest that products are vehicles for projection: what they are depends on how you see them. It is possible to see in them more or less than their makers intended. In the examples above, buyers saw in the products more than the makers had originally perceived. There is no lack of examples in which they saw less. The uncertainties of marketing are particularly apparent in the case of consumer products. A whole industry-the garment industry-rests on the concept of fashion and yearly fashion change. The process of taking orders, establishing inventories and making production schedules depends on anticipation of what the trade will want-within the lead times required for the production process. And even the most skilled practitioners regard the anticipation of fashion trends as an art, an intuitive skill, which can best be done by the seat of the pants. In many industries market trends remain obscure until the yearly trade show, and then, of course, there is no guarantee that wholesale buyers' judgments will be reflected in consumer behavior. The number of industries subject to fashions of their own goes far beyond the few-garments, cosmetics, jewelry, footwear, etc.-which are clearly seen as a fashion business. Marketing is, more than any other, the process in which there is more information than you can handle. Although you may be able to predict, in principle, the effects of single-variable changes-

Innovation, Uncertainty and Risk

price, for example,

or color-these

31

variables never act alone.

There are always many relevant variables, with multiple, interacting effects.

-A

company tried to market in California a food product which had sold well in Detroit. The result was disastrous. Why? Detroit was familiar with opaque packaging, California with clear film. In Detroit the idea of dietary snack foods was apparently acceptable; in California, it was not. Or had the product been acceptable in Detroit in spite of its dietary connotations? In Detroit the product had enjoyed decades of use; its trade-mark was well known. In California, it was relatively unknown, but the company spent hundreds of thousands of dollars promoting it. Billboards and television "spots" were used in California. Was the failure due to the inappropriateness of these media? Were there quality problems in the California plant? In theory the company could identify and test each of the variables possibly responsible for failure. In this way they might unravel and solve the problem. But there was not sufficient time. Each day, tens of thousands of dollars were slipping away. Something had to be done quickly without a clear definition of the problem.

Companies make marketing decisions under pressures of money and time, confronted with more information than they can handle. There is no sure way of learning from past experience. The situations are never identical-California is never quite Detroitand apparently trivial differences may turn out to be critical. Moreover, it costs money to find out. The introduction of a consumer product on a nationwide scale is a major enterprise. A single regional market test, with appropriate preparation and followup, may cost hundreds of thousands of dollars, and its results may not permit formulation of the national picture. Although uncertainties may be resolvable in principle, the cost of their resolution

32

Technology and Change

is high. The very process of resolving them may cost more than can be justified. To this we must add the fact, outlined above, that in the process of development, need and technology do interact. The market originally conceived for the product may be ruled out by technical limitations discovered in the process of invention. A more limited, a broader or a different market may suggest itself. In short, the product for which a market must be anticipated is not an "it" that remains constant throughout the process of development. The product changes and its possible market changes with it.2

The Cost of Innovation Throughout the process of technical innovation decisions about technical feasibility, novelty and markets, among many other factors, must be made on insufficient evidence, by individuals faced with more information than they can handle. The resolution of these uncertainties-the conversion of uncertainty to risk, which is the corporate work of innovation-takes time and money and requires justification in its own right.3 Its benefits must be balanced against its costs. The process of innovation has a cost curve, as well as a curve of difficulty, which exhibits characteristic patterns. Let us consider the development of a new metal-to-metal adhesive. It begins in the laboratory, when a chemist, working on another problem, notices an adhesive effect and reproduces it. The cost, in man hours and materials, up to this point may be in the order of $5,000 to $io,ooo. The chemist shows the adhesive to the research director, who finds it intriguing and authorizes a search of the report and patent literature, some further experimentation and a first examination of markets. This may go on for a month or two and bring the total cost to $40,000.

Innovation, Uncertainty and Risk

33

At this point, the research director feels he has something worth presenting to management. He makes the presentation and impresses management, which launches a full-scale development project. The adhesive formulation has certain disadvantages, of course. The development team makes efforts to improve it, as well as to explore variations of the chemistry involved in order to cover "all the ground." A detailed analysis of the market-in the automotive, aircraft and appliance industries-gets under way. It reveals the need for improved handling properties. At the same time, the company undertakes a thorough patent search which suggests that, although the formulation may be novel, the company must try certain formulations as well in order to cut off the possibility of later competition from an equally effective product. At the end of six months the total cost for this effort has risen to $200,000. Now the company draws up patent applications and files them. It sets up a pilot production line, which turns out to have a number of bugs in it. There are many more problems in producing large quantities of adhesive of reliable composition than in making small samples. Because of the scale of effort, modifications in the process become far more expensive than they were before. Quality control becomes a problem. Shelf life has to be examined. Use tests, which had already been conducted on a small scale, are now undertaken on a large-scale, long-term basis. Word of the development has gotten around, and it is decided to undertake a crash program in order to market the product before fall. A year and $6oo,ooo have gone by. By the time the first fuel production line has been set up, the marketing strategy has been settled, the sales force has been educated to the product, the use tests have been completed and evaluated, quality control techniques have been established, two years have elapsed and $i,2oo,ooo has been spent. Now the company can market the product even though bugs in production, reliabil-

34 Technology and Change ity and quality still crop up. The product may or may not achieve the volume anticipated for it. The company may or may not make a profit. The process described above is no longer and no more expensive than average for product and process development as they occur in medium to large firms. Some new products ( a new acoustic amplifier, for example) have been invented, developed and brought to the point of marketing for as little as $5,000. Other products-a new washing machine, a new electronic component, a color television process-may take over ten years and require between $10 and $20 millions before they are marketable. The figure of "seven years from conception to market" is frequently cited. Regardless of scale, however, the shape of the development cost curve remains relatively constant:

Time -+

Often, the first invention-the first demonstration of an effectrequires no more than a month or two and a few thousand dollars. As the company takes its first exploratory steps, the rise in the rate of expenditure is slow. As the company passes further checkpoints, the rate of expenditure increases. The total commitment grows in logarithmic fashion. Each new major commitment requires complementary commitments. Only when the product or process reaches commercialization does the curve begin to level off. Then, in many businesses (consumer cleaning products, for ex-

Innovation, Uncertainty and Risk

35

ample, or appliances), after a brief leveling o%, as the company makes major commitments to advertising, marketing and productive capacity, a step up to a new level of expenditure occurs. All of this precedes any real return to the company. The S-curve for the cost of development takes on meaning when it is put in the context of the corporate investment game and the conversion of uncertainty to risk. Despite careful efforts to establish checkpoints beyond which development will not go without adequate justification, many companies find themselves having to make investment decisions on insufficient evidence in a general climate of uncertainty. As they begin to climb the slope of the S they rather quickly reach what appears to be a point of no return: the fat is in the fire. At this point, the executive vice president can say to the president, "We have put in so much, we may as well put in a little more in order to find out whether our investment is worth while" (to which the president can always reply, "Don't throw good money after b a d ) . Occasionally, after the point of no return there comes a point where the mistake-if it is a mistake-is too big to admit. Largescale developments of the kind undertaken by supercorporations or the military may proceed for months or years beyond the point where they should have stopped because of massive comrnitments to errors too frightening to reveal. Every corporate manager has experienced the difficulties of stopping questionable development projects once they are under way. They have their own momentum. In these cases the personal commitment of the people involved in the development, the apparent logic of investment and the fear of admitting failure all combine to keep the project in motion until it falls of its own weight. These features of innovation derive greater force from our empirical knowledge that most new products and processes fail. Efforts have been made to determine rate of failure. It has been estimated variously at between 7 to 1 and 20 to I and 40 to 1, depending largely on definitions. The farther back in the process

36 Technology and Change of invention we go, the more overwhelming the rate of failure. In the absence of clear criteria of success or failure and of adequate statistics, it is not very useful to attempt a quantitative analysis. It is, at any rate, more accurate to say "Almost nothing new works," than to say "Most new developments succeed." It must be added, moreover, that a general knowledge of the tendency of new products and processes to fail is present, to varying degrees, in the minds of those who undertake their development in corporations. What we have been saying can be summarized as follows:

-The process of innovation is one of converting uncertainty to risk. Corporate work goes into tailoring the messy process of invention to a form suitable for management's investment game. Questions concerning technical feasibility, markets and novelty, among others, must be answered on insufficient evidence, by individuals confronted with more information than they can handle. The inherent uncertainty of innovation rests in no small measure on the nonrational characteristics of invention. -The process takes time and costs money. The rate at which costs pile up makes small beginnings rapidly grow to major financial commitments, all before the uncertainties of development can be resolved. The company incurs the growing danger of yielding to the momentum of its own commitment. From the point of view of corporate decision the process of innovation is essentially one of grappling with uncertainty, a process made more dangerous by growing pressures of time and money. The very resolution of uncertainties establishes commitments which make turning back more difficult, regardless of what future evidence may show. The problem of innovation within the corporation is therefore a problem of decision in the face of continuing uncertainty. A man must take leaps-not once at the beginning but many times throughout the process-in the face of uncertainty and on the

Infiouation, Uncertainty and Risk

37

of imdequate evidence. The need for such leaps of decision grows out of the uncertainty inherent in the process. A company cannot escape it by careful planning or by gathering exhaustive data. The uncertainties resist resolution ahead of time. And the process of attempting to resolve them is itself a form of commitment, which plays its role in the cost curve and has its own momentum.

Why the Rational View? In view of what has been said, we must ask why so many in industry have believed the rational myths of invention and innovation. There is more than one answer. One key to the question lies in the very nonrationality and uncertainty of invention and innovation. A man may state the rational view when he is describing a process in which he has no part, or when he is trying to tell others how to do it, or to exhort others to do it, or, again, when he is reassuring himself about it. It may function, in short, as a device. It is then an idealized, after-the-fact view of invention and innovation-invention and innovation as we would like them to be so that they can be controlled, managed, justified-rather than invention and innovation as they are. It is a view designed to calm fears, gain support or give an illusion of wisdom. This attraction of the rational view is easy to understand. Uncertainty is frightening. If the development of new products and processes is unavoidable-as it is coming to seem in a growing number of corporations-it is cold comfort that most new products fail, that invention is full of unanticipated events, that innovation is inherently uncertain and subject to a treacherous cost curve. It is far more cheering, even apparently necessary, to believe that invention and innovation are essentially rational, deliberate processes in which success is assured by intelligent effort. As

38

Technology and Change

a result, uncertainty becomes taboo, unmentionable, especially in the context of important corporate decisions. It may seem necessary then to have a clear and rational view of where we have been and where we are going and to believe that the future is essentially predictable and controllable, if only we gather the right facts and draw the right inferences from them. We suppress the surprising, uncertain, fuzzy, treacherous aspects of invention and innovation in the interest of this therapeutic view of them as clear, rational and orderly. Armed with this myth,4managers make decisions and mobilize resources. They and their subordinates must then live out the actual uncertainty of the process. But there is another answer to the question, Why the rational view?, which focuses on its partial truth and on its utility. For one thing, the rational view of invention and innovation is more nearly correct for more nearly marginal inventions. The less significant the invention, the more the process tends to be orderly and predictable. The more radical the invention, the less rationality and predictability. We can represent the universe of new products and processes by a target-like diagram (Figure 4). In the outer rings are those inventions whose acceptance requires least change. They are hardly inventions at all, in the usual sense of the term: a new cakemix flavor, a new package design, a slightly different fabric weave. These inventions require little or no change in the technology. They do not significantly advance the state of the art. They require no modification of scientific theory. production equipment can be made to handle them with only minor change. Little or no rethinking of the corporate organization or approach is required. As we move toward the center of the diagram, however, we encounter inventions like synthetic fibers, transistors, freezedrying, television. These carry with them major changes in technology; their introduction goes hand in hand with change in scientific theory. They command new concepts in marketing and new marketing organization, as well as radically different produc-

Innovation, Uncertainty and Risk

39

Tail fins for cars

tion equipment and major new investments. They force corporate organization itself to undergo major change. Between these extremes are inventions like powder metallurgy, stretch fabrics, polyethylene-coated paper and fiberglas boats. Needless to say, these assignments within the diagram are only approximate. The question of degree of novelty is complex. A technically insignificant invention, like individually packaged food products, may require major changes in marketing. A major technological invention, nylon, required surprisingly little change in textile machinery. A corporation's decision to market a product,

40

Technology and Change

new for it but old for the industry, may require major corporate reorganization. Radical novelty in any of these senses may be fraught wtih uncertainties and surprise. There is also an unusual optical effect: what looks like trivial change from afar may appear monumental close-up and from within. The decision to go national with a regional product or to market a "king-size package" may require considerable change in several corporate domains. Degree of novelty should not be confused with magnitude of effort. A relatively small development-for example, a new electronic component-may require for its acceptance major change in technology and in corporate structure. A large-scale effort, such as a new missile system, may require little more than a scaling up of proved engineering devices and principles, entailing little disruption of the technology and little organizational change. In any case, the more peripheral the development, the less change required for acceptance, the more the development tends to conform to the rational view of invention. It is also true that relatively unlimited dollars available for development tend to blur the nonrational character of invention and innovation. When, for all practical purposes, money doesn't matter-as in the case of the development of a crucial weapon in time of war-an objective can be stated at the outset and many parallel paths to its attainment undertaken. Unexpected failures, unexpected twists in the development process, can be put aside or exploited. After success has been achieved, the history of the development may be rewritten to display the straight line connecting means and end, familiar in the historical revisionism common to the field of innovation. Surprises and uncertainties may be drowned in a sea of dollars. It is, of course, disappointing when such developments are taken as models for more normal, limited industrial efforts. The Manhattan Project, which exercised such an influence on industrial research after World War 11, makes a poor model for technical innovation in industry.

Inmuation, Uncertainty and Risk But there is another sense in which belief in the rational view may be justsed. There may be utility in acting as if it were true. The process of planning, which assumes the rational view, may be useful even though plans are bound to be inadequate. The formulation of objectives for technical effort provides direction for the effort and a stimulus for action, even though the objectives will have to be modified in light of discoveries made in the process. There is utility in the formulation of such objectives, provided this flexibility is allowed and expected; otherwise, they strangle invention. There is utility in mapping out stages in the development process and identifying checkpoints along the way, even though the development plan will require radical revision. Provided that such revision is not required as a confession of failure, plans of this sort may give discipline for evaluation and direction of effort; otherwise, such plans stand in the way of invention. Planning the process of invention and innovation, which assumes the goal-directed, orderly structure of the rational view, has utility as a programing device. It is useful when treated as something from which to deviate. It is false and harmful when treated as a hard-and-fast methodology or an accurate description of the process of innovation. We must add that so strong is the attraction of the rational view, plans that begin as flexible programing devices frequently congeal as master plans or myths about the process. Planning in the flexible sense, and with it, assumption of the rational view for planning purposes, does not change the nonrational character of invention or the character of innovation as a confrontation with uncertainty requiring leaps of decision. It is, rather, a way of living with those very characteristics.

II

CHAPTER

I11

Ambivalence Toward Innovation

1.

Ambivalence

ATTITUDEST O W A R D technological innovation in American industry today are contradictory and complicated. Established firms are of two minds about it. There is, on the one hand, a conventional wisdom. The following passage, drawn from an American Management Association report, expresses an idea found in literally thousands of articles, papers and speeches delivered by American businessmen during the last fifteen or twenty years. Under the pressure of today's powerful competition, many companies will be in danger of losing their market positions almost overnight-unless they have definite, formalized programs for keeping acutely sensitive to customers' product needs; unless they have the clearly defined investment and well-organized planning required to perform product development and improvement that will satisfy all the demands of their customers. The billions of dollars industry is spending in developing new and improved products clearly indicate the need for every company to re-evaluate its present product program-to measure its progress in terms of

Ambivalence Toward lnnovation

43

what industry leaders are doing today, and what they are planning for tomorrow. . . . -COLEMAN LEE FINKEL,1958 And again,

New products, new industries and markets, new methods of making current products . . . new is a way of life with us today. Take the chemical field, for instance. In any given year, 30 to 40 per cent of sales are of products that didn't exist ten years ago. Bell and Howell estimates that more than 80 per cent of its current sales are from products that were not in existence even five years ago. And Du Pont estimates that more than half its current sales are from products developed during the past 20 years or so. -RICHARD S. REYNOLDS, JR., 1964; pp. 29-30 With their slightly hysterical tone, these passages say that American industry must engage in product innovation simply in order to keep u p with its competition. As the White Queen says in

Alice Through the Looking-Glass,

. . . here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that1 There is, on the other hand, quite a different attitude toward innovation, which cannot be inferred from what people say but from what they do. If it received expression, it would go something like this: Technical innovation is dangerous, disruptive and uncertain. It is the enemy of orderly, planned activity. It changes everything about the business we are in. It hurts. Let us talk about it, study it, praise it, espouse it-anything but do it! This may be called the unofficial view, or better still, the underground view.'

44

Technology and Change

The official attitude towed technical innovation is made up of a number of tenets: Technical innovation is essential to corporate growth and is the principle means of corporate competition. Companies must innovate at an increasing rate. New products and processes have progressively shorter life cycles. Whereas in the twenties, thirties, and forties a company could count on a product to keep its share of the market for ten to twenty years or more, a product in the fifties was and in the sixties is lucky to last five years, and in the case of some consumer product fields, six months. For these reasons a progressively larger share of corporate income comes from products introduced within the last ten years. Within the corporation the broad official approval of technical innovation extends to research as a means to innovation, to science in the service of the corporation, to personal technical creativity, to imagination in marketing advertising and sales and to creativity wherever it appears. Consumers-corporate and individual buyers of the company's product-have a dual role with respect to technical innovation. The new products must "meet their needs," as indicated in the Finkel passage quoted above. On the other hand, consumers have a responsibility to accept novelty at the rate corporations produce it, in order to satisfy corporate demands for growth and market expansion. The stake of consumers in the nation's economy demands their co-operation in this process. Technical innovation is essential to the nation as it is to the company. The nation is, in fact, a kind of supercorporation engaged in competition with other supercorporations in such fields as defense, the Space Race, the balance of payments, the Olympic games and the like. Moreover, technical innovation leads to economic g r ~ w t h . ~ The negative, underground attitude toward technical innovation has no such explicit form. Its very existence has to be inferred

Ambivalence Toward Innovation

45

from what companies do rather than from what they say. But every man engaged in technical innovation within a corporation can produce his own examples of the negative side. The following examples come from my own consulting experience: A major chemical company appointed a man to take charge of the company's efforts to develop new products away from the then-current line of business, to diversify into new areas and markets. He was a man in his fifties who had an excellent record in product development work related to the company's business. In an interview with this man I asked whether the company had ever succeeded in diversifying into a new business. Fifteen years earlier, he said, they had developed a new chemical additive. It had been a product the company used itself, so that the company was in part its own customer. We went on to discuss the product areas of interest to him now; none resembled the chemical additive he described. I asked if he was planning to go into the laboratory, find ideas, carry them out and push them forward. He said he was not. It developed, then, that this man did not have the fainest notion of doing the job he had been assigned. He felt the company was not about to let him do it; it was too risky. It was his notion that the company knew this when they put him into this role and that they did not really want the job done. Here was a mission with considerable organization around it to perform no function at all. A small company had been making foundry products since the turn of the century. It had established a reputation for high quality, built for the most part on old technology. Now, however, it was being beleaguered by competition-larger companies, foreign companies, plastics. For two years the company's managers had been exploring possible new products. What should they make in order to diversify? I talked to their new-product director, who pulled out a file drawer containing twenty-five instances of new products he had

46

Technology and Change

been working on for two years. When I asked what had happened to them, the new-product man said, "See this sheet of paper? Here are the criteria for the new products in the company. A product has to promise a gross of $~,OOO,OOO within five years, has to have a profit margin of so much, and it cannot be the sort of business where you need a line of products to get in. It can't be too far away from our present line of business. We want to use present production facilities, and it's to be sold through our present sales force." Not one of the ideas in the last two years had passed these tests. It was the product idea, and not the criteria, which was forced to give. I worked some years ago for a major producer of a natural product whose people were beginning to be concerned with the threat of synthetics. The task was to find new markets and uses for the natural product, and we discovered clues to an interesting process in which the natural product was reconstituted and adapted to a number of new uses. We found, moreover, a local company also interested in the process from the point of view of process machinery rather than that of raw material. We went back to the company producing the raw material, told them about it and found that they were excited by the possibility. The two companies got together in a joint venture. In the course of this work, the research director of the first company mentioned one day that there was someone in the laboratory, a chemist, who had been working on the material and who might know something about the process. When we went to talk to him, we discovered that he was as familiar with the literature as we, that he had had this same process idea and that he had made a number of highly promising prototype products. In short, then, if the company in question had searched the whole country, they could not have found anyone more appropriate to carry the project forward-but they hadn't known that they

Ambivalence Toward Innovation

47

had him. What we had done was to reinvent something already potentially available to the company. In the first example, the new-product man believed that his company would go through the motions of search for new products without any real intention of following through. In the second, criteria had been set up which made product innovation impossible, yet under these circumstances the company president was perfectly willing to continue the new-product effort. In the third, the company recognized potential for innovation only when it came from the outside. Clearly, in these cases, forces were operating against innovation. The spoken, official pressures for innovation as a means to growth, diversification or survival called up unspoken forces of resistance. This interaction of positive and negative forces is by no means peculiar to the few examples cited above. It is characteristic of all established corporations. There is an ambivalence toward innovation which makes all corporations, to varying degrees and in varying ways, swing back and forth between positive and negative attitudes toward change. We can understand this ambivalence in its current industrial form by examining some of the trends of the last fifty years.

2.

Research and Growth

There is scarcely a corporate report to the stockholders or a major speech by a corporation executive which does not make favorable reference to the twin ideas of research and growth. Human progress reflects directly the contributions of science and management to society. Science created the knowledge and made it available for human progress. Scientific management generated

48

Technology and Change

the management movement in the United States early in the present century. Management developed to utilize effectively the products of science for economic growth and social progress. -JOHN F. MEE, op. cit. The theories associated with these concepts have become second nature to American industry. Nevertheless, in the form in which we know them they are less than fifty years old. The concept of industrial research emerged at the turn of the century. It is only since World War I1 that we have seen the full flowering of technical innovation as a major and contributing function of the firm, on a par with other functions such as marketing, production and financial control. Similarly, growth as a major corporate goal in American industry seems to have come into existence well after 1900. The acceptance of the idea of technical innovation as essential to corporate growth is a post-World War I1 phenomenon. The two ideas have developed in concert. It is instructive to look at the curve of the U.S. Gross National Product since 1900 (Figure 5). What is apparent here is a long period of relative inactivity from about 1900 through the 1930's. During the forties and fifties a steep rise began which has continued through the present despite brief plateaus. Along with the sharp increase in growth of the GNP in the forties and fifties there was a spurt in the growth of large corporations. These were years of corporate concentration and expansion. And along with actual national and corporate growth there emerged an ideology of g r ~ w t h On . ~ both a national and a corporate level, growth has become the principal sign of success. As a sign of success, growth has a number of things to recommend it. It fits with our general admiration of bigness and power. It is measurable. Amid the many indeterminate, intangible accomplishments of life in corporate and national organizations, economic growth stands out as a concrete accomplishment that can be pointed to in no uncertain terms. Moreover, it lies within the time scale of a given administration. Within a period of a few

Ambivalence Toward Innovation

49

Billions of dollars Current prices 600

500

400

300

200

loa

years it is possible to affect the growth rate of a company or a nation. A corporate president can show, conclusively, that within his tenure sales have doubled, so many companies have been acquired, production has boomed. For the more sophisticated, growth in rate of profit or return on capital can be shown as well. But the concept of growth-a rise in the c u r v e i s central. Lacking growth, complicated explanations are necessary. With it, almost nothing need be said. It has already been remarked that corporate and national growth in our time are rate phenomena. In the forties and fifties

50

Technology and Change

our economy underwent what Rostov refers to as a "take-off'-a steep rise from a relative plateau. And with the change in rate came a change in ideas. A combany that grew only with the population came to be regarded as stagnant. It was no longer sufficient in management to provide reliable stewardship. Growth and, even more so, growth in the rate of growth became necessary conditions for success. In order to permit scope for these ambitions, and in order to allow corporations and their leaders room to prove themselves by the accepted criteria, the economy had to be regarded as indefinitely expandable. The concept of industrial research appeared as a new and strange idea in the early years of this century. By and large, companies became involved in industrial research in three sequential stages, which we will call the Research Cycle. In the first, or craft, stage, technology is regarded as the private property of a few individuals. It is empirical and intuitive. It comes only through lifelong experience. The sign that a man has it is his membership in the guild or its equivalent. The technology is secret and proprietary-secret, not only from company to company but from individual to individual. In the early years of the century individuals responsible for wire drawing would carry their own lubricant home with them in a bucket lest its secret be discovered by the other workers. Machinists cherished their private cutting compounds. In the craft stage, technology is, above all, nonrational. There are no general principles, no explanations of phenomena; only observation of what happens when you do this or that. Today there are still islands of craft in papermaking, textiles, leather, graphic arts, ceramics; whole companies are dependent on the real or imagined skill of a few men. Craft has not disappeared with the introduction of new technology and the scientific method. In the field of plastics, for example, there are men who know how to mix catalyst and resin and time the mixture for best results, although they cannot fully explain what they are doing. Even jet engines are tended by men

Ambioalence Toward Innovation

51

who often regard them as having personalities of their own, requiring special attention for best performance, in ways they cannot explain. New technologies are apt, in fact, to generate a fringe of craft, and with it the anthropomorphic, loving view of materials and processes characteristic of craftsmen. In the second stage, scientific analysis of production begins to replace craft. Engineering begins to replace mechanical ingenuity. Chemistry begins to replace kitchen formulations. The new scientific grasp of production pays off in increased productivity, reduced cost and better control of quality. Technical service to sales begins. But technology is still fighting its battle against craft and is still very much of a subordinate function-a service to production or a service to sales. In the third stage, technology comes into its own. The company has extended and consolidated its scientific grasp of production and quality control. It begins to undertake research into the materials and processes related to its field without being sure where that research will lead. Work is done toward the development of new products and processes to replace those in existence. Research and development is no longer a service to production or to sales. It has its own independent organizational status, symbolized by a corporate vice president for R & D. Its results may threaten, rather than support, current sales and production practice. The company becomes accustomed to investing a certain percentage of its sales in research, which is accepted as a major corporate function. The research cycle outlines simplified steps in a complicated process-the growth and acceptance of the research idea in industry. The cycle did not move uniformly through all of American industry at once. It moved, in waves, through one area of industry and then through another. The chemical and petrochemical industries began their cycle in the early years of the century. The chemical industry was then a new industry, built in large measure on the chemistry-particu-

52

Technology and Change

lady the German chemistry-of the middle and late nineteenth century. The research idea began about the same time in the growing electrical industry. It spread, then, to other fields. At any given time in the last fifty years it has been possible to identify those industries in the third stage, those in the second and those still in the first. In our own time, the chemical and petrochemical industries, and those (like pharmaceuticals) closely related to chemistry; the electronic industry; the aerospace and nuclear industries; and to some extent the primary metals industries-can be located in the third stage. Others, like the automotive industry, are still for the most part in the second. And still others, like the building, textile and leather industries, are in process of transition from the craft stage. Of course, even within industry categories, progress through the research cycle is uneven. Ten per cent of an industry may be much more advanced than the rest. The research idea was becoming well established in American industry by World War 11. But World War I1 gave it new impetus and new models of operation. It provided clearly defined technical goals, imbued with life-and-death urgency. It created new demands for productive capacity, giving incentive to the development of new equipment and the replacement of old. In radar, in the proximity fuze, in the V-2's and, above all, in the atomic bomb, it gave examples of unprecedented technological accomplishment. And in organizations like the Office of Scientific Research and Development and the Manhattan Project, it gave models of large-scale, deliberate, organized research and development. Following World War 11, in the period of apparently unlimited demand of the late forties and early fifties, American industry-in a few ~rivilegedsectors-took up the model of large-scale science. It accepted in principle, even where it did not in practice, the idea of the practical utility of scientific work undertaken at first without clear immediate profit-oriented objectives, and the idea of

Ambivalence Toward Innovation

53

massive, organized

technological programs on the model of the Manhattan Project. In the fifties, with Sputnik-a large-scale demonstration that "the competitor had the product"-the research idea, in industry and more particularly this time in Government, went through another period of "take-off." The American reaction to Sputnik raised to a high point acceptance of the idea that scientific activity undertaken on a large scale will produce useful results, that research and development must become permanent independent functions of Government and corporations and that essentially any technological goal can be achieved with sufficient organized effort and investment. Sputnik also heightened American concern with technical manpower and technical information. Along with these beliefs came a set of values for the new problem of handling or managing scientific and technical activity within the corporation. The fifties saw a proliferation of articles, books and speeches about this topic and a diversity of corporate styles for solving the problem. In essence, this diversity of views and practices centered around two dominant models. According to the first, Hire a good man and leave him alone. The scientific function is sui generis. Good men, under first-rate technical guidance, will uncover new knowledge from which corporate profit can later be made. In the interim, corporate peering over the shoulder will simply retard progress. In the fifties this view was popular with scientists and with corporate executives influenced by after-the-fact accounts of the scientific exploits of World War 11. It led to the establishment of central corporate research laboratories headed by Great Men of science who were left, essentially, to their own devices. It is, in effect, a theory of scientific laissez-faire coupled with a theory of the Great Man.

Technology and Change

54

The second model dealt with the process of technical innovation as a whole and saw it as essentially similar in character to other major functions of the firm and, like them, subject to rational management. It was, in effect, the rational view of innovation outlined in Chapter 11. The two antithetical models vied for popularity and influence during the flowering of the idea of industrial research. They were alternate means of linking research to growth. The patterns and ideologies of corporate growth and industrial research have complemented one another. The concept of industrial research rose with our swelling economy. Research came to be seen as the instrument of growth, and growth as the occasion for and object of research. The two ideas have become, in effect, the twin pillars of a new corporate faith. Corporate executives who used to say that corporations must achieve soundness through probity, conscientiousness and hardheadedness now state routinely that corporations must grow through research. But in the late fifties and early sixties there were signs of change. American companies well advanced in their own research cycles have undergone what may be called a wave of scepticism, disillusionment or realism about the research function. Whereas many of them began the decade building on the models of World War 11, determined to "get research and set up central research divisions headed by outstanding scientists, by 1960 most such companies were in the midst of reactions which can be described as follows: -It

is not enough simply to hire good men and leave them alone. The product of a laboratory handled in this way is apt to consist primarily of scientificpapers. -Effective technical research makes demands on the corporation, and on corporate management, which had not been foreseen.

Ambivalence Toward Innovation

55

-The job of finding ways to put research and new technology in the service of corporate goals is a serious and difficult one. It may require modification of corporate goals, and of the very style of the corporation, to enable it to make effective use of the results of research. In reaction, some companies have eliminated their central research divisions. Others have reduced their research budgets - and concentrated on technical targets close to the day-to-day operations of the business. Still others have set about examining the problem of the relation between corporate and technical activities and goals, with the aim of developing new models of corporate effort. The wave of reaction is not merely against certain models of corporate research. Part of the reaction is due to a new understanding of the demands and uncertainties produced by the need to exploit the results of research. In extreme cases, as we will be seeing, research-which had been idealized at the outset-ends up as the scapegoat. These symptoms can be observed in the Federal Government, as well, but at a lag. After the headlong plunge into Governmentsupported research which followed Sputnik, the Congress has begun to ask questions about the use of research results and the problem of getting economic benefit from investment in re~ e a r c h Its . ~ questions are similar to those asked by advanced industry over the last decade. American industry's attitudes toward growth and research are changing slowly. As domestic markets have become saturated, as foreign industrial concerns have begun to provide more vigorous competition for foreign markets, and as large, established companies have become more sophisticated in the experience of investment in research and development, there has been some shift away from the conventional wisdom with respect to growth and research. Of course, the shift has not been complete. It would still

56

Technology and Change

be unhealthy for the president of a large corporation to come out against technical innovation as a means to corporate growth. It must also be added that many segments of industry are only now beginning their move into the third stage of the research cycle. For many companies, the shift has been not away from commitment to technical innovation but away from an uncritical acceptance of research as a means to growth, and toward a more serious concern with the problems of adapting technical effort to corporate objectives. But these preliminary shifts in the conventional wisdom have made it more nearly possible within companies to speak of the forces of resistance to technical innovation which, in the early and middle fifties, had gone underground.

3. Resistance t o Innovation For the forces that resist technical innovation we have such designations as "obstacles," "inertia," "foot-dragging" and "resistance to change." These designations succeed in conveying the impression that resistance to innovation is entirely negative. The talk about resistance to innovation tends to come from within the framework of official approval of innovation. It suggests, moreover, that the resistance is somehow mechanical (inertia, footdragging, sand-in-the-gears) and can be removed by mechanical means (motivation, lubrication). But resistance to innovation is central to the working of the corporation. And it is by no means an externally imposed obstacle to the good and natural processes of the firm. Because of the strength of the official approval of innovation, disapproval of it tends to be inadequately expressed. It is usually presented as the bad thing that others do. As a result, it tends to go underground, where it is safer and more effective, more fatal to efforts at change and more resistant to attack.

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57

The corporate society. In order to begin to understand resistance to innovation in the corporation, we need to look at the corporation as a society, analogous to other societies in churches, governments, communities, armies, hospitals, camps and countries. Then, given the nature of invention and innovation, resistance seems natural. To say that a company is a society is to say, first, that it is not simply a place to work and earn a living but a setting in which people live, fully as important for the quality of their lives as the home to which they return at the end of the working day. It provides objectives, formal and informal rules, values, punishments and rewards, styles of personal behavior and a language of its own and manages to maintain these characteristics in something like a stable state, even though its members may frequently change. Like other societies a corporation has certain objectives that are open and explicit ("to make money!," "to grow!," "to return a profit to the shareholders!") and others, nonetheless real, which may remain unstated ("to provide a safe birth for loyal employees," "to dominate the town," "to keep the family name clean," "to humble our principal competitor"). It provides values for its members and even an approximate rank ordering of values. In certain corporate societies the highly valued characteristics may be loyalty to the corporation, moral dependability, conscientiousness. In other corporations these characteristics may be of low value; importance may be attached instead to aggressiveness, manipulative ability, shrewdness, willingness to encounter and overcome the extracorporate world. Corporate rules may be formal and explicit ("Working hours are from 8:30 to s:oo," "Each employee must be responsible for his defined accountability," "Corporate secrets are to be strictly kept") or they may be powerful but unstated ("Top management's commands are to be obeyed without question," "It is permissible to take liberties with formal rules if you have made a

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recognized contribution to the firm," "Special deference is to be paid to members of the owning family"). The rules of the corporation gain their force from formal and informal punishments and rewards, which vary in kind from society to society. For recognized contribution there are promotions, advancements in salary, freedom to do interesting work; and there are also freer and more intimate contacts with management, respect of one's peers, greater license in imposing commands on others. For violation of the rules there are obstacles to promotion, demotions in grade and title; and there may also be refusals of privileges (travel, attendance at meetings, use of corporate facilities) and the disapproval or contempt of superiors, peers or subordinates. The corporation attracts, teaches, and propagates certain formal and informal patterns of behavior, often in such a way as to establish recognizable corporate personality types. The management group of one large corporation is called informally "the deacons of the church." A large midwestern concern consists almost entirely of white, Anglo-Saxon, Protestant men of rural midwestern background, who are frank, conscientious, churchgoing and strong in their identification as "country boys." The corporation develops a language for the peculiarities of its own business (the production materials may consist of "slubs," "nibs," "pickers"; the major customer may be "our friends across the water"), for relations between people and for behavior shared with other societies (working toward an objective may be "working against a goal"; sales may be "launching a barrage"). The corporation, like other ~ocieties,~ makes demands on its members, but it also provides them with a great deal in return. In addition to formal and informal rewards for work and contribution, it gives its members a sense of self, an identity. It does this not only by making it possible for them to say "I am a Ford man" or "I am a General Electric engineer," but by establishing certain

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corporate roles, sets of expectations for the kinds of people who will fill those roles and means by which the roles can be learned.

. . . expected activity in the organization implies a conception of the actor and an organization can therefore be viewed as a place for generating assumptions about identity. In crossing the threshold of the establishment, the individual takes on the obligation to be alive to the situation, to be properly oriented and aligned in it. In participating in an activity in the establishment, he takes on the obligation to involve himself at the moment in the activity. Through this orientation and engagement of attention and effort, he visibly establishes his attitude to the establishment and to its implied conceptions of himself. To engage in a particular activity in the prescribed spirit is to accept being a particular kind of person who dwells in a particular kind of world. -ERVING GOFFMAN, 1961, p. 186 To help in the establishment of identities for corporate members, the corporation provides role models, individuals whose behavior stands as an ideal for a certain kind of corporate role, complete with patterns of behavior toward outsiders and insiders, superiors and subordinates, near and distant colleagues. To a far greater extent than is generally realized, the corporate society, as it shapes the identities of its members, draws on resources of emotional energy. It provides a setting for emotional involvement by constructing an organizational stage on which individuals can play out their own life dramas, brought by them to the corporation from their previous lives in work, school and family. This repertory of dramas includes the dramas of Revolt Against Injustice, Loyalty Under Fire, Sacrifice, Redemption, Comradeship and, most significantly, Making Good. The drama of Making Good is central to the broader society of which the corporate society is a part, and through it the corporation achieves much of its hold on the emotional lives of its members. The props of the drama may be soap, cigarettes, drugs, potato chips, lubricants, fasteners, product campaigns or cost-reduction programs,

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and all are invested with the emotional capital brought to them by the participants. The small significance of these vehicles to outsiders is totally disproportionate to their meaning in the dramas of success and failure within the corporation. In many respects, the corporate society shares functions with the noncorporate societies of church, army or family. But it has other attributes derived specifically from the fact that it is a society designed to accomplish work (as opposed, for example, to hospitals, monasteries, prisons or families). It is a working society which provides a setting for individual career dramas, tied to performance in work, and a political hierarchy designed for control. Tom Burns has described the operation of these three contextswork, career, politics-as aspects of the corporate society. Business enterprises are co-operative systems assembled out of the usable attributes of people. They are also places in which people compete for advancement. Similarly, members of a business concern are at one and the same time co-operators in a common enterprise and rival for the material and intangible rewards of successful competition with each other. The hierarchic order of rank and power, realized in the organization chart that prevails in all organizations, is both a control system and a career ladder. -TOM BURNS,1965, P. 5 Still further, the corporate society takes a special form because of its linkage to industrial work. The corporation is a society which accomplishes work through division of labor-a proposition now so much taken for granted that it is surprising to think it once represented a discovery. In the modern industrial corporation, division of labor has been carried to great lengths. Not only are there broadly separate functions tied to classes of individuals-marketing, production, finance, law, accounting, technology, management-but within each of these there are many subdivisions, any one of which may constitute a career. This functionalism rests on the clear description of the varied, interrelated tasks that make up the corporation's work.

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The "job description" is a statement of task meant to be independent of the individual who fills the job. Individuals become "personnel" or "manpower" in relation to such job descriptions. The stability and discreteness of these tasks, which are seen as essential to the corporation's efficiency, give rise to the formation of many subsocieties, each made up of individuals concentrated on a set of shared tasks and each, increasingly, tied to a specialized kind of training and professional status. Thus, there are within the large modern corporation little societies of marketing men, production men, quality control men, comptrollers, organization specialists and, of course, the elite society of top management. Each, as we will be seeing, tends to develop its own view of the corporation, its own values and objectives, its own language and its own jealous sense of its prerogatives. In the twentieth century we have become increasingly aware of the tendency of this industrial functionalism to take on the characteristics of the production process itself. Not only is the complex work of the corporation divided into many discrete tasks performed by discrete individuals, but there has been a strong tendency to make these tasks consist of simple, uniform, repeatable elements capable of at least partial mechanization. Marshall McLuhan finds the roots of this tendency, and of the mass production process which fathered it, in the uniform, repeatable characteristics of the printed word: Repeatability is the core of the mechanical principle that has dominated our world, especially since the Gutenberg technology. The message of the print and of typography is primarily that of repeatability. With typography, the principle of movable type introduced the means of mechanizing any handicraft by the process of segmenting and fragmenting an integral action. -MCLUHAN, 1964 But long ago Thorstein Veblen pointed out the growing power of the production model, and specifically of the machine, for the

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organization of all industrial work and for the structure of the corporate organization itself.

. . . the modern industrial system at large bears the character of a comprehensive, balanced, mechanical process. In order for an efficient working of this industrial process at large, the various constituent sub-processes must work in due coordination throughout the whole. . . . -VEBLEN, 1958, P. 14

Veblen would have been interested in the recent proliferation of mechanical metaphors for industrial work, in phrases like "big wheel," "spark plugs," "making the wheels go round," "putting on the brakes," "cranking up the machine" and "sitting in the driver's seat." Seen from this point of view, the current interest in the programing and computerization of industrial functions previously performed by human beings appears as the extension of a much older tendency to form industrial work on the model of machine work. The process as a whole depends on the reduction of industrial tasks, insofar as possible, to series of simple, uniform, repeatable and predictable steps. Seen from still a different point of view-the view from the top--the corporate society is designed to allow management to play the investment game described in Chapter 11. From this point of view, all subordinate corporate functions serve either to present top management with investment opportunities for analysis or to carry out the investment decisions top management has made. Corporate success and failure are defined in terms of the outcomes of the investment game, and the individual career ladder gets its meaning from its relation to the game. The game, in turn, is played with other corporations in a context that is often more warlike than gamelike. The corporate society sets itself toward other corporations much as a nation sets itself toward other nations. We have already seen how much a company in competition with other companies is like a nation at

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war with other nations, with new products, sales strategies and the like playing the role of weapons. The process and problems of technical innovation in a corporate society are, in this sense, directly analogous to the process and problems of technical innovation toward the military functions of a nation. Being a member of a corporate society is therefore like being in a country in a state of war. There are those in the front lines and those in the rear, there is generalship, there are casualties, and there are communiqu4s from the field of battle. Threats to the corporate society. The corporate society, like all societies, is in a state of dynamic conservatism. It strives for survival, stability and continuity. It is active in its efforts to achieve its objectives and to maintain its society-its structure, functions, values, language and style of operation. "Inertia" is wholly inadequate as a way of describing this dynamism, for inertia suggests passive resistance to change whereas, in reality, the corporate society-like all societies and like biological organisms-is actively striving to maintain itself. Its life is a constant response to threats either to its survival or to its identity. In this it is like homeostatic systems, as described by Walter Cannon, and like the self-system as described by Harry Stack Sullivan : In an open system, such as our bodies represent, compounded of unstable material and subjected continually to disturbing conditions, constancy is in itself evidence that agencies are acting, or ready to act, to maintain this constancy. If a state remains steady it does so because any tendency towards change is automatically met by increased effectiveness of the factor or factors which resist the change. The regulating system which determines a homeostatic state may comprise a number of cooperating factors brought into action at the same time or successively.

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When a factor is known which can shift a homeostatic state in one direction it is reasonable to look for automatic control of that factor or factors having an opposing effect. -CANNON, 1963, pp. 299-300

. . . the anti-anxiety system which is called the self-system-the system involved in the maintenance of felt interpersonal security . . . (p. 1089) The self-system thus is an organization of educative experience called into being by the necessity to omit or to minimize incidents of anxiety. -SULLIVAN,1953, p. 165 Threats to the corporate society may be external or internal. External threats come from competitors (who cut prices, improve product or service quality, reduce costs or introduce new products), from Government (which imposes unfavorable regulations) or from customers (who change preferences, tire of products or make excessive demands). Corporations tend to be well armed to cope with such threats; it is precisely their business to cope with them. Internal threats come from staff who revolt against management directives, who fight with one another rather than with the competitive firms or who seek to displace those in power. While these threats may be serious and occasionally fatal, it is again part of the business of management to cope with them, and the business is one that management tends to understand. The deepest internal threats, however, affect the central operations, structure and identity of the firm. And nothing is better equipped to do this than the process of technological innovation. Technological innovation attacks the corporate society at all levels. The corporate society is built to function on the model of the production process-that is to say, in a manner that is rational, orderly, uniform and predictable. But invention and innovation

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are nonrational processes that resist control. They are precisely what cannot be managed, and in spite of the best efforts of the proponents of the rational view to harness them with mechanisms and to marshal1 them in orderly array, they keep popping out of the mold, dismaying those who attempt to control them, even when they succeed. -Unexpected success is no less destructive of the rational view of corporate activity than is unexpected failure. When the addition of carbon black turns out to increase the strength of rubber; when the book-mending tape turns out to have a multiplicity of unexpected consumer uses; when the new plastic, designed for a cheaper molding process, turns out to perform well in a completely different application-the corporate manager can only react with a wry smile. In ways he did not understand, and was unable to state before the fact, things have gone well; but what has he learned that will prepare him to cope with the next time? Corporate behavior is based on regular, orderly, linear, predictable processes-the extension of the industrial manufacturing process itself. How is it to absorb invention? If invention can appear to the manager as a random process, innovation can appear to him as a kind of con game. Caught in the peculiar cost curve of innovation, he may become committed to a mistake which resists detection before the fact and refuses to lend itself to a straightforward playing of the investment game. The corporate society is built on the principle of functionalism which requires, for effective operation, that each separate corporate function remain relatively constant over time. Accordingly, each subsociety arrayed around a function strives to maintain a constant framework for operation. It wants to do predictable jobs under predictable circumstances. But technological innovation requires change-and often unpredictable change-in virtually

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every major corporate function. The more radical the innovation (in the sense of the target diagram in Chapter 11), the more functional change it threatens. In most consumer companies the dominant function is marketing. The company is tied to its sales force, its distribution channels, its brand names, its consumer franchise. When technological innovation threatens these resources, the company resists it with the full force of present success: -The research department of an appliance company developed a new means of preserving foods. It would have replaced conventional refrigerators. The sales department laughed the idea out of court. They already had 30 per cent of the refrigerator market: how could this new principle do anything but hurt their position? Their distributors were sold on the current line, understood the product, knew how to sell it. Why upset them? Millions had been invested in establishing the firm name in refrigerators: why undercut that investment? In industries like paper, chemicals, lumber, metals and automobiles, production is King. The whole company revolves around the manufacturing process. Success is measured in terms of percentage of utilized production capacity: at 75 per cent of capacity the company is at a normal state; at 80 per cent, good times; at 70 per cent, disaster. The problem in such companies is to keep the machines busy. -In every manufacturing company there is a thick-set, crewcut, grey-haired, bespectacled, lantern-jawed guy who says, Nol He looks at a new idea and asks, Will it use more of our phthalic anhydride? Will it keep the bag machine busy? Will it take up our surplus caustic? If it will do none of these things, it is impractical and dangerous. If, far from employing the excess capacity of machines, the new idea would cause those machines to be replaced, then it is subver-

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sive and essentially unthinkable. It is simply "not our business." In the case of inventions near the center of the target diagram, the disruptions threatened affect several levels of the company at once. Consider the replacement of a natural material by a synthetic:

-The established technology will be rendered obsolete. Men who have built up craft skills over decades will suddenly find their skills irrelevant to the new problems. Production will change from batch processing of materials to a continuous chemical process. New means of controlling product quality, production scheduling and inventory will have to be devised. The far greater productive capacity of the new machines will require new marketing concepts: the old volumes will no longer be adequate. l;may binecessary to double or triple the volume of sales, at lower prices, in order to keep the company's net profit constant. New accounting methods will be required. The very strategy of sales will have to change. Product quality will no longer have the same meaning. New salesmen, and new forms of technical service to sales, will be required. The business, and hence the nature of the corporation, will no longer be the same. Not the least of the effects of technological innovation is on top management itself. For top management the cumulative effects of all these changes may be overwhelming. If the president came up through the business and draws his confidence from his intimate knowledge of the details of the present operation, technological innovation may throw him onto completely unfamiliar ground. He understood the old business; he does not understand the new one. How can he manage if he does not understand the business he is in? Where is he to draw the resources of experience he needs in order to trust his own judgments? Is he to become completely

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dependent on the proponents of the new product or process? He is faced with a crisis of both self-confidence and trust in others. Innovation threatens also the hierarchy of power and prestige on which the corporation's system of control is built, for its political structure is tied to an established technology. Radical shift in technology disrupts the structure. Elting Morison, in an elegant study, examines this process as it occurred in the U.S. Navy. He studies the Navy's resistance to the introduction of continuous-aim firing. In Theodore Roosevelt's time, this new way of keeping guns trained on an enemy ship, even when both ships were in motion, had been combat-tested with spectacular results. Nevertheless, the Navy Department rejected the new technology. Morison's analysis of this rejection is as follows: The Navy is not only an armed force-it is a society. In the forty years following the Civil War, this society had been forced to accommodate itself to a series of technological changes. . . . These changes wrought extraordinary changes in ship design, and therefore in the concepts of how ships were to be used; that is, in fleet tactics and even in naval strategy. . . . To these numerous innovations, producing as they did a spreading disorder throughout a service with heavy commitments to formal organization, the Navy responded with grudging pain. It is wrong to assume, as civilians frequently do, that this blind reaction to technological change springs exclusively from some causeless Bourbon distemper that invades the military mind. There is a sounder and more attractive base. The opposition, where it occurs, of the soldier and sailor to such change springs from the normal human instinct to protect oneself and more especially one's way of life. Military organizations are societies built around and upon the prevailing weapons systems. Intuitively and quite correctly the military man feels that a change in weapons portends a change in the arrangements of his society. The point holds good for industrial technology and industrial organization, as well. -The shift to individualized machine drives, to standard lubricants, and to engineered materials, has all but eliminated the role of the

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traditional machinist and changed the character of the machine tool industry. -The introduction of on-site mass production techniques and prefabricated components has begun to take the craft out of building technology and to replace the small-time contractor with the entrepreneur of the building industry. -The new mechanical-chemical technology of agriculture has replaced the family farm by the large industrialized farm, and created a national problem of agricultural adjustment which has lasted for well over thirty years. Morison goes on to summarize his case history as follows: I. The essential idea for change occurred in part by chance, but in an environment that contained all the essential elements for change, and to a mind prepared to recognize the possibility of change. 2. The basic elements-the gun, gear and sight-were put in the environment by other men-men interested in designing machinery to serve different purposes or simply interested in the instrument themselves. 3. These elements were brought into successful combination by minds not interested in the instruments themselves, but in what they could do with them. . . . They may also, not so consciously, have been interested in the implied revolt that is present in the support of all change. . . . 4. He [Sims] and his colleagues were opposed on this occasion by men who were apparently moved by three considerations: honest disbelief in the dramatic but substantiated claims of the new process, protection of the existing devices and instruments with which they identified themselves, and maintenance of the existing society with which they were identified. 5. The deadlock between those who sought change and those who sought to retain things as they were was broken only by an appeal to superior force--a force removed from and unidentified with the mores, conventions, devices of the society.

Morison concludes: We are not yet emotionally an adaptive society, though we try systematically to develop forces that tend to make us one. We en-

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Technology and Change courage the search for new inventions; we keep the mind stimulated, bright, and free to seek out fresh means of transport, communication, and energy; yet we remain, in part, appalled by the consequences of our ingenuity and, too frequently, try to find security through the shoring-up of ancient and irrelevant conventions; the extension of purely physical safeguards, or the delivery of decisions we ourselves should make into the keeping of superior authority like the state. -MORISON, 1950

Underlying all these threats is the threat innovation imposes on corporate society by forcing confrontation with uncertainty. We have seen in the previous chapter the primary uncertainties inherent in the process of innovation itself. We have seen in this chapter how innovation threatens change in the functions and political structure of the firm, creating a kind of secondary uncertainty by undermining the bases on which the corporate society is prepared to respond. In situations of uncertainty the traditional responses of the corporate society are inappropriate. Increase in sales effort, reduction in prices, economy moves, crackdown on staff, change of management-none of these makes sense (although many may be tried) if the company's situation contains more information than it can handle. In brief, technological innovation disrupts the stable state of corporate society. It affronts, on every level, that society's vigorous and continuing efforts to stay as it is. In Marshall McLuhan's words : That each new method of transporting commodity or information should have come into existence in a bitter competitive battle against previously existing devices is not surprising. Each innovation is not only commercially disrupting, but socially and psychologically corroding, as well. -MCLUHAN, 1964, p. 250

Response to threat. To this onslaught, the corporate society responds in a variety of ways. Some of the more evident are these: I t rejects the effort at innovation. It puts down the idea, fires or

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demotes the men associated with it and makes its further discussion taboo. Many corporate pasts are littered with discarded efforts of this sort; begun, then stopped and relegated to corporate limbo, they come to light only inadvertently or with patient digging. It allows the effort to continue but isolates it from the rest of the corporation. In this way, research projects or whole research departments may function in a vacuum, cut off from the contacts with the corporation essential to their coming to reality. It contains the threat, allowing it to proceed but on a level so much reduced that the innovation is always far short of critical mass. It seeks to convert the threat to an activity acceptable within the corporate society. Efforts at radical innovation become product improvements or service to production or sales, which can be carried on without disrupting effect. These are straightforwardly negative responses. But the corporation cannot respond to innovation in an exclusively negative way. As we have seen, the corporation believes itself committed to technological innovation as an instrument for achieving corporate objectives. Innovation is something the corporate society must both espouse and resist. It may succeed in this by following a variety of strategies proper to those in conflict: It may compartmentalize innovation, permitting it to occur in one part of its business while preventing it from occurring in others. It may oscillate between support and resistance, confusing corporate members by an on-again, off-again approach to change. It may resist innovation while not appearing to do so, while in fact proclaiming the official doctrine of innovation. As in the three examples cited earlier, the corporation may encourage the development of new product ideas only to find consistently that none of them meets the stringent criteria laid down in advance (just as a

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mother may want her son to get married but never approves of the girls he brings home); or it may foster a research effort, only to reject or ignore its results. To the extent that the corporation engages in the enterprise of technological innovation, it must somehow cope with the uncertainty inherent in the process. It must foster the process while resisting, or protecting itself from, elements essential to the process. The company's way of protecting itself against uncertainty may be by selective inattention, in which uncertainty is selectively screened from perception; by making uncertainty taboo; or by the creation of corporate mythology. Myths are ways of simplifying and structuring situations more complicated than we can handle. They tend to cluster around events of great significance or danger-birth and death, for example. Corporate myths, like the myths of other cultures, are highly selective views of life, taken to be true without question and held as projective models for life in the culture. They relieve anxiety. They permit action where decisive action seems to be required. From the inside they appear as powerful, condensed truths, reflecting unspoken feelings about matters of great moment. Characteristically, no one feels the need to verify them. A company, like other societies, produces myths of origin, of the "early days" and of the Founder. It produces "life myths" such as the myths of corporate war, complete with images of the enemy, the moral basis of the struggle and the rewards of victory. And it produces myths designed to cope with the uncertainty, ambiguity and danger of technological innovation. Myths which have grown up to serve this need are the rational myth of innovation and the related myth of the Great Man. The rational myth, as we have seen, restructures processes of invention and innovation, presenting them as though seen after the fact in the spirit of the production process itself. Out of disorderly, uncertain, random processes, it makes something orderly and sequential, subject to familiar techniques of management. The myth of

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the Great Man shifts the burden of uncertainty to a single individual-the Boss, conceived as omniscient-who disposes of the ideas proposed from below. In a sense, these myths reimpose one another. The emphasis of the rational myth on antecedent justification and review presupposes a being at the top capable of evaluating proposed innovations. When the corporate society lives by these myths, innovation is impossible. The myths serve both to appear to free the process of innovation from the uncertainty inherent in it and to provide effective, though unspoken, resistance in the very act of granting official approval. These strategies do not usually represent a conscious pose or a management deception. They are responses of corporate society as a whole to two requirements which are equally legitimate, even necessary, but unfortunately in conflict with one another. The society of a corporation attempts to maintain a stable state. This effort is not inertia but conservative dynamism. The various forms of corporate resistance to change which reflect themselves as obstacles to technological innovation are processes of conservation essential to the survival of any social or biological organism. Active conservatism is the natural state of organisms. It is nonsense to require companirs to throw off this old-fashioned habit. But it is the crisis of modern industrial corporations that they are also required to undertake technical change destructive of their stable states in order to survive. It is this paradox which makes them vulnerable, accounts for their ambivalence to innovation and forces them to adopt new forms and styles of change. It must be apparent that these statements about industrial corporations hold, in only slightly altered form, for other societies of our time and, indeed, for our society as a whole. We have already had occasion to notice the analogy between the corporation and the nation: they are both political organizations confronted with the dilemmas of technical change. We might have spoken, as well, about the Church, the university and the scientific community.

Technology and Change Each feels the requirements for an increasing rate of innovation which, in turn, affronts its conservative dynamism. This ambivalence, shared by the corporation with other changing societies, provides the stage for the drama of corporate innovation. 74

I/

The Drama of Corporate

/I

Innovation

1.

An Allegory of the Corporation

ONCE,T H I R T Y T O a hundred years ago, there was a little man. He had an idea, or he became the champion and supporter of someone with an idea. Perhaps the idea had to do with a new way to produce saccharine, or with air brakes or safety fasteners or a new way of forming metal. He was determined to build a business around the idea. He became the idea's entrepreneur. If he did not already have money, he had to get money. He borrowed it. He found supporters. And he worried about meeting installments on the loan. He had to learn about finance. He had to figure out how the product was to be sold, and, probably, he had to sell it himself. He had to solve the problems of making the product for a price. Sometimes he solved these problems in his own basement. He became acquainted, intimately and at first hand, with finance, sales, technology and production. He held these things in his head and worked them out. And he began to make and sell his product. People bought it. He was able to expand, hire more people and move to a new building to accommodate the staff and equip-

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ment he needed. He added to his line of products and formed divisions around these products. He began to buy up his competitors. He participated in the upward movement of the economy. He brought forth further new divisions and hired more people. His divisions brought forth divisions. He was now a national company; his salesmen spanned the continent. And two things had happened to him: -He could no longer do everything or keep everything in his head. -He could no longer serve as the entrepreneur of each new idea. He had his hands full. The business had become very big and very complicated. It threatened to get out of hand. It needed management, co-ordination, administration, at the very top. The little man had to hold the reins while others pulled the load, for there was more to do than he could handle. He became an administrator. The responsibilities and information he used to hold in his hands and his head were parceled out among other men. There was a division of the work, and the new men became specialists in finance, who worried about the handling of the money and paying off the loans; specialists in marketing, who worried about selling the products and finding out who would buy them; specialists in production, who worried about making the products economically and reliably; and specialists in technology, who did something the little man had probably never done-they worried about the new role of science in the business and the application of science and technology to its operations. Each of these specialists soon found that one man was not enough. The job was too big, the success was too great. New tasks were required in keeping with the new scale of effort. And so there were departments of finance, production, marketing and re-

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search. As these functions came to be recognized as separate jobs, they were elevated to the status of professions. Schools now prepared men as specialists in one of these functions. The marketing man had a degree (perhaps a Ph.D.) in marketing, the production man a degree in production, the technologist a degree in technology. At about the same time (it was now from 1950 to 1960), it became apparent that the corporation could not live forever on its original line of products. The lifetime of the products which had carried the corporation to its success and through the great rise in the economy had a foreseeable end. There were pressures to do something new. The little man at the top could feel them. Everything was different now from what he remembered. He had built the company on an idea. First the idea, then the company. Now there was a company, a huge organization, in full swing. There were people to be kept busy, equipment to be used, stockholders to be satisfied. And the new ideas had to come from within the organization while it was in full swing. The old game could not be stopped while the new one was planned. There were now two great problems: -The success of the company, and the shift of the founding entrepreneur to the role of administrator, had created a race of entrepreneurs without authority. Those to whom the entrepreneurial task had been delegated confronted the new problem of innovation from within the corporation. They had no authority to take leaps of decision on insufficient information which are essential to innovation. Instead, they could only propose upward to the boss, who disposed. -The division of labor between functional units in the corporation, and specifically the division between marketing and technology, fragmented the innovative process. Technology and need could no longer determine one another in easy interaction. Instead, the technology department and the need

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department (marketing) divided the job, each proposing for the other's disposition, each levying requirements on the other. What the founding entrepreneur had unified in his own person, the new articulated corporation broke apart. The Little Man had taken the burden of uncertainty on his own shoulders. The new corporation attempted to banish uncertainty by organizing work in lines, vertical and horizontal, across which the uncertain was not allowed to pass.

2.

Boss and Subordinate

The stress of technical innovation tests the relationship between boss and subordinate, throwing into sharp relief all the weaknesses of the propose-dispose system. The large corporation had created a race of "entrepreneurs without authority." l The entrepreneurial task had been delegated to those below but not the independence to carry it out. The Little Man at the top still kept the power of final decision (it was still his company), and he passed it on to his successor. Those below proposed; those above disposed. The process of innovation still had in it all the randomness and uncertainty described in earlier chapters. Before the fact, a man still could not give complete justification. The "leaps" were still required. But in the new articulated corporation no one had both the intimate knowledge of new projects necessary for conviction and the power to take the leaps. The knowledge and conviction were below; the power, above. From the point of view of the subordinate faced with the entrepreneurial task, he was continually floating balloons to the top of the company. He would find the balloons, inflate them, let them go and wait to see whether they were shot down. Usually, as in

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the case of the small foundry cited at the beginning of Chapter 111, they were. He would then have to infer, from inspection of balloons shot down and those allowed to go up unimpeded, just what would make a new development "go" in his company. In this effort at understanding he could not take at face value what management said. Management, as we have seen, is for good reason of two minds about innovation. He might hear, "We welcome radically new ideas" and discover from his balloon-watching experience that nothing very much different from the current line would be allowed to pass. From the point of view of the boss-the Little Man faced with the new problem of judging the ideas of others-the situation was equally frustrating. When the new ideas had been his own, he had been able to develop the conviction to go forward on inadequate evidence. Now he was confronted with strange ideas, developed through processes in which he did not participate and with which, because of limitations on his time, he could not become thoroughly familiar. There were enormous pressures against going forward-the priority of what exists (which, incidentally, he had built), the fear of uncertainty, the disruptions of change, the distrust of a new generation. Because the new ideas were, after a certain point, impenetrable, the boss had to find a way of challenging and coming to trust the men who proposed them. In the last analysis, going ahead required an act of faith. All of this can be described as the propose-dispose dynamism. It characterizes not just a few "sick" companies but, to one degree or another, all established corporations. In each corporation it takes a different form, still retaining its essential characteristics. The following case histories present the dynamism in three varied forms. They are fictionalized composites of corporations encountered in consulting experience. The Gordon Company, one of the largest paint companies in firm, the country, is now three generations old, a $~OO,OOO,OOO publicly owned. A Gordon is chairman of the board, but the oper-

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ating management is free of family ties. The company has a national name and a national market. Its product line was formed, basically, twenty years ago. Its most recent new product is a line of latex-based paints specially designed for do-it-yourself use. This product did not originate in the sizable Gordon research department, however, but was purchased from a small independent firm. Mr. Robbins, the president, sees the problem in the following way: The company is highly successful now. But its success is based on innovations over ten years old. Its market is becoming more competitive. Recently, a new chemical company entered the field in a big way. In order to retain its share of market, the Gordon Company is being forced to make a greater and greater investment in merchandising and advertising. Its profit margin is dropping. What is most distressing is that there are no ships at sea-no new ideas which will be the paints of tomorrow. This should be the responsibility of the research department. But the research department has not produced. It has done an adequate job of technical service to production and sales. It has initiated an effective program of quality control. But it has not come up with new products that offer promise of being the new businesses of tomorrow. Clearly, there is a lack of creativity in research. Its men seem to be more interested in turning out technical papers than in contributing to the growth of the corporation. Somehow, it is impossible to get them seriously committed to the new-~roductjob. This is the fault of the research director. It is also, secondarily, the fault of the uncreative people on his staff. Among the research people themselves, the problem appears quite different. It is by no means clear, for example, that top management is able to recognize a new product when it sees one. The story ib told of a new line of industrial paints which had been

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developed in research. From a technical and marketing point of

view, the concept of the line was radically different from the company's present line. Samples were taken to the president, to acquaint him with the new concept. His response was to study one of the samples intently, then to remark that "it had too much white." The research people say that top management can't generalize, they can't see any farther than the model in front of their nose. How can they expect research to present them with concepts for new businesses when they don't have the vision to understand them? But from the president's point of view, the same story was seen in a different light. Mr. Robbins admits to knowing nothing about technology. He came up through sales. He knows about the paint business. Specifically, he knows how to market paint. He built his own reputation on the marketing of the latex-based product. How is he to judge what the research people bring him? He can't be expected to form a valid technical judgment. Basically, he must depend on them for that. But he can challenge the research men themselves. He can test their confidence and firmness in their own technical decisions. He admits to having said, "Too much white." But when he did, research took the sample back and removed some of the white. How is he to build confidence in his people when they go soft and retreat in the face of his challenges? How can he be expected to trust their judgments when they won't stand firm. But to the research people, all of this appears still different. The company is noted for strong management; it still bears the paternalistic stamp of family control. It has a style in which it is not good form to fight with the boss. You do your job, listen to the criticisms and carry out management's orders. If the boss says there is to much white, you take some out-regardless of what your own opinions may be.

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The boss and his subordinates in research were caught in a vicious circle in which the boss's challenges-issued in order to test men, as a substitute for technical understanding-were taken to indicate narrow vision. The yielding response to those challenges, made because of what was regarded as proper behavior in the company, convinced the boss of the softness of the research position. On that basis, he could not give his commitment to the new paints. In the absence of that commitment, and of apparent understanding of new ideas, the research people felt they had no audience for their views. The resulting lack of performance convinced the boss that research needed more creativity.

The Straightway Company is a large, successful producer of machine tools. The company has spent eight years and as many millions of dollars in the development of a new transfer machine. Now, after all this effort, it is still very much in doubt whether the concept of the machine is valid, whether the machine can gain the market that had been anticipated for it, whether it is reliable and technically sound. A number of market studies have been conducted, but the results of the earlier studies have been ignored by the key men involved-Herb (the manager of the transfer machine division), Paul (the technical vice president), the head of sales, and the others. Instead, these men talk about their own reactions and those of their employees who have used the machine. A consultant proposes that the need is not for more information but for work on the conflicts among management that are holding up decision on the machine. In the course of the group work that follows, the following points emerge: -Of all the men involved only Herb has a commitment to the machine. It is his baby and he is determined to see it work. -The others see the machine as a failure, with Herb holding the bag. The work now going on is a salvage operation.

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-The machine cannot be abandoned. Too much money has been spent on it, and the company's reputation is too much involved. In sessions with the others, Herb fights for the machine. He paints a picture of the market that will make the machine feasible and delays certain decision points (like cost estimates) as long as he can. In all of this the president of the corporation remains in the background. He does not participate in the meetings. He has little direct involvement with the program. But there are indications that his influence is powerful, nonetheless. Gradually, over several months, the nature of this influence is revealed. The president had taken a fancy to the notion of this new machine. His enthusiasm has brought it into the company. But he needed someone to take responsibility for the machine, and the someone turned out to be Herb. Herb became the president's 'boy." The machine was handed to him-not for evaluation but to make it work. It is assumed that technical feasibility, market and the like had been intuitively established at the beginning. In this transaction the president had not been coercive. He is generally regarded as a fine, fatherly man. But he is someone you could not let down. The president's style is, as General Georges Doriot once put it, "to take someone I trust, someone who likes me, and to tell him I am up against it." It turns out, moreover, that the transfer machine is not an isolated case. There have been half a dozen others, most of which have ended as expensive failures. The president gets enthusiastic about an idea; he induces a key man to make the idea his own and take full responsibility for it, on the basis of personal loyalty and the hope of heroic success. The commitment to the new development is very great, as is the money spent on it, because failure is

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unthinkable. Several men have been martyrs to such developments and, as a result, have either left the company or retired to a sort of company limbo. In the case of the transfer machine, it is possible to define a limited market for the machine as a high-priced item at the top of the line. Understood in this way, the machine justifies the dollars that have to be spent to make it reliable. It can be seen as a prestige product that adds to the company's reputation and position. But it is definitely not the new machine tool which would revolutionize the business and make a hero of its proponent. It is possible to observe here how an entire company adapts to the style of behavior of one man at the top. The president of the company is wealthy in his own right and has taken over a business which already holds a large share of the market in its field. It is not enough for him to run the company well and to effect modest growth. The president's success, as he sees it, is to make a radical change in the business. He wants to be responsible for new and exciting innovations in his field. It is said of him, "Some presidents keep horses; others keep women; ours has research." The president's style is to seize on ideas and then to establish relationships of personal loyalty in which individuals, lower down, become committed to these ideas which they will not let fail because they will not let him down. The company could be divided into those who are willing to be selected for sbch a role and those who are not. Each proponent, within his own suborganization, adopts a similar style. He puts great pressure on his subordinates to realize the idea at all costs. He asks total commitment. Others, in other parts of the company, will go through the motions of support while trying to avoid being tarred by ideas they regard as doomed to failure. Most of the energy available in the company for innovationmost of the "free energy"-is taken up in this way. In research it is generally felt that an idea has little chance of success unless it catches the president's fancy. But it is not clear what the basis of

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this attachment is, except that it involves a difference from the current product. This makes for a lack of available ideas and a general sense of lack of direction in research.

The McKinrwy Company began when its president, Oliver, as a young man, peddled cosmetics from store to store. Oliver did well at selling, bought out his supplier and went into business for himself. He surrounded himself with a small, competent staff. He expanded his territory and began buying out his competitors. He took over poorly managed plants and put his own stamp of efficiency on them. In fifteen years he built his business into a $20million operation. At that point, Oliver came to the end of possible acquisitions in his field. He still felt the need to grow, however. It is his ambition to become a major national company, to "go national" in a big way. He feels the only way left to do this is through the development of new products. But new products means conceiving new ideas, developing them, finding ways to merchandise them and risking substantial sums of money on new pilot plants and eventually on new production lines. This is all new to Oliver, who has made his mark with essentially one product, one way of manufacturing, one way of selling, and who has become master of this process. Confronted with novelty, he seeks outside help. In the first consulting session with the McKinney Company, the consultant meets three members of Oliver's management teamhis sales manager, production manager and technical director. The sales and production men are old-timers who came into the business at the beginning with Oliver. The technical director is a man in his early forties who joined the company ten years ago as a technician. The consultant joins the McKinney company in a program of day-long new-product sessions, to be held about once a month, in which product ideas are to be gathered and evaluated and devel-

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opment programs are to be plotted and checked. The consultant, Oliver and his management team sit in on these sessions. One of the first issues has to do with a new product currently being market-tested. It appeared promising at first but is disappointing now. Oliver is angry about it. He says that he recommended against it but "let the boys have their fling." Their failure provokes him to utter a phrase we will hear often in subsequent meetings: "Good ideas come from the top." After the first session, a definite pattern begins to come clear. An idea is at issue. Sometimes it is brought in by Oliver, sometimes by the consultant, sometimes by Woody, the technical director. Oliver explains it, or asks for an explanation, and waits for comment. Harold, the production man, keeps silent. He offers a comment only if the subject is close to production; then he sometimes offers a rapid-fire calculation of production costs or an analysis of special problems of production. He keeps clear of giving commitment to an idea. Ed, the sales manager, is voluble and enthusiastic. But in the clutch he is all but impossible to pin down. Oliver pushes for him in one place, and he turns up somewhere else. If he is forced to produce an opinion, that opinion is highly conservative. Ordinarily, his volubility yields no opinion at all. Woody is another story. He is willing to commit himself and often finds himself identified with product ideas which he proposes or presents to the group. It soon becomes apparent, moreover, that he is held responsible for a number of past new-product failures. He had failed technically, or had been slow or had been deficient in judgment. Woody's position in the group is special; he is clearly a boy among men. But he has made useful contributions, so he is kept on, in spite of his product failures. Typically a meeting will end when Oliver, after eliciting opinions, makes a firm decision of his own-one which frequently involves, in the development stages, further work for Woody.

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By and large, this process is not effective. In spite of the company's over-all success, its new product activity is slow and indecisive, marred by repeated failures and cautious, often halfhearted new attempts. Oliver is eager for procedures, rules and mechanisms for resolving these problems and is somewhat disappointed when his consultants refuse to provide them. In the McKinney company, each success or failure is attributed to an individual. It is, in the final analysis, one man's work. A success demands a hero. A failure demands a scapegoat. Naturally, everyone wishes to become a hero and, even more strongly, to avoid becoming a scapegoat. The president cannot be wrong. He is regarded, essentially, as omniscient. After the fact, it is always recognized that he correctly calls the turn-no matter which way the turn goes. This is Oliver's position, but his staff maintains it, as well. In the light of these two axioms, the happenings of the new product meetings make sense. Because a new product effort is, on several fronts, a plunge into the unknown, every new product effort means a possible failure. Every possible failure requires a scapegoat. The scapegoat has to be someone other than Oliver, and for the most part, Oliver's staff tries, in their various ways, to make sure the load will not fall on them. Ed is fleet-footed and hard to find. Harold is taciturn and narrowly expert. Only Woody is regularly vulnerable. He has the scapegoat's role thrust upon him and in some ways seems to collaborate by taking it on. He can be counted on to express a sheepish opinion, to undertake the work and eventually to admit to the blame. Once the scapegoat's role is established, the group can proceed with the project. It is clear who will be blamed. Assuming the scapegoat's role does not mean Woody will be fired. On the contrary, the role is a necessary one. The slowness between meetings, the diffidence during meetings, are attempts by the others to make sure responsibility for possible failure is

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clearly located. Then, if the product fails, Woody is there. If the product succeeds, Oliver's judgment is justified. Each new case adds evidence to the claim that "good ideas come from the top." Each of these case histories emphasizes different features of the underlying theme and helps make that theme explicit. The demand for technical innovation stresses the relationship between boss (in these examples, the president) and subordinate. The boss drives toward technical innovation. He sees it as required for growth (the McKinney Company), safety (the Gordon Company) or personal success (the Straightway Company). But he does not engage in the process himself. He delegates it to others. In a general way, his role is to set the process in motion and then to serve as judge of success or failure and to exercise ultimate authority. He may play that role in different ways, however. He may hold himself aloof from the process, acting only as a judge at the end (the Gordon Company). He may insist that "good ideas come from the top," though he takes no responsibility for failure (the McKinney Company). Or he may espouse an idea, fully formed, and assign responsibility for it to a subordinate (the Straightway Company). In all these examples, even that of the Straightway Company, the process of innovation is one in which subordinates propose, upward, to the boss. (In the Straightway example, the boss "plants" an idea below, which comes back to him later for disposition. ) These propose-dispose examples have a number of features in common: 1. As pointed out in Chapter 11, the situation itself is inherently uncertain. The process of development has a good deal of randomness in it. There is more information than can be handled. Some factors essential to intelligent decision remain unknowable within the limits of time and money. The probabilities are on the side of failure. 2. There is a division of labor with respect to failure. The boss

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participates in the Myth of Omniscience. Within the company (though, perhaps, not in the board of directors, the stockholders or the business community) he is free from blame. But he is judge of the success or failure of subordinates and assigns praise or blame to them. 3. In case of failure someone is to blame. It is never that the situation is inherently uncertain or that events beyond control occurred, but that someone has failed. This has the quality of an axiom. It derives its strength from the Myth of Rationality: if the process of innovation is essentially rational, with the information necessary for decision available, personal culpability becomes the only explanation for failure. 4. Technical innovation within the company, then, becomes a drama of Success and Failure for those below. The drama is a sort of contest, with the boss as judge. Out of the drama come heroes and scapegoats. The whole dynamism works only because the drive for success and the terror of failure are so deeply embedded in the company. Each man, on entering the company, becomes a participant in a drama of Success and Failure. 5. The dynamism creates isolation. In his role of omniscient judge, the boss becomes isolated from his subordinates. He cannot get close to them if he is required to sit in judgment on them. The subordinates, in turn, becomt: isolated from one another in their efforts to make sure that "the blame doesn't fall on me." 6. The net effect of the dynamism is to protect the company from uncertainty. It converts a situation inherently uncertain for the company as a whole into a situation, taken as though it were determinate, in which men wrestle with the problem in hope of success and in terror of failure. If the effort fails, that failure does not mean that the company is at sea. It signifies the guilt or incompetence of one man who can be eliminated (leaving the company competent and free of guilt) or, by an act of clemency, given another chance. As the corporation converts uncertainty to risk, it converts dread of uncertainty to dread of failure.

90 Technology and Change The dynamism, begun at the top, propagates to all levels of the company, in all subsequent boss-subordinate relationships. The president's relation to his lieutenants serves as a model for the company. From one point of view, this pattern converts the company's free uncertainty into useful work. From another point of view, it indicates a preference for determinacy, rationality and personal guilt, as against confrontation with the uncertainty facing the corporate society as a whole. We would rather suffer and compete under the injustice of our bosses than expose ourselves to bossless uncertainty. All of this undercuts the company's ability to innovate. The propose-dispose relation between boss and subordinate creates entrepreneurs without authority-men who have the task of bringing new developments into being but not the authority to take the necessary early leaps on insufficient evidence. In order to justify investment, the subordinate must bring his ideas before the boss before they have proved themselves, and at that early stage he can never adequately defend them. The isolation created by the propose-dispose dynamism deprives the men in the company of a basis for going ahead. Faced with uncertainty, danger and the need to perform, a man seeks and gains strength from others. He needs the security of strong relationships with others in order to face the insecurity of risking his neck while confronted with more information than he can handle. Success and failure in the company appear as matters of life and death. The subordinate may know that, if he fails, he can find another job. But once in the thick of the struggle, he cannot really believe in a life outside the corporation. His dependence on others, as a source of interpersonal security, is not unlike the feelings of a man in a combat bomber crew or an infantry squad. The isolation induced by the propose-dispose dynamism cuts him off from this resource. Similarly, the dynamism does not, at the early stages, permit a corporate commitment to product innovation. The subordinate,

The Drama of Corporate innovation

when he has taken on the job, performs under the eyes of

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the others. He is engaged in the enterprise; they are not. If he represents technology in the company, the idea in question is the technical department's idea. The others observe and offer their services. Their resources are not fully available. The same is true, to an even greater extent, of the boss. Although he may be the company's most skillful entrepreneur, he is not engaged in the crucial first stages of the game. Instead, he is limited to the role of spectator and judge. The boss and subordinate see the dynamism in different ways. The boss has the problem of getting things going without being able to do them himself. He suffers from his isolation in that he cannot really be sure what is going on in the corporation. Most often, he is unable to judge the technical quality of what is presented to him. He must find ways to test the soundness of the proposer rather than the validity of his ideas. He must find a basis for trusting him. Like the president of the McKinney Company, he may take refuge in the notion that "good ideas come from the top." Like the president of the Gordon Company, he may see the problem as one of lack of creativity in research. Like the president of the Straightway Company, he may attach himself to specific ideas and find individuals within the firm, on the basis of personal loyalty, to take on commitment to the entrepreneurial job. From the point of view of the subordinate-particularly the subordinate in research-the situation appears quite different. It may seem to him that he receives inadequate co-operation from others in the company and insufficient support from the top. He may find that top management does not really understand what it wants when it asks for innovation, or that it does not have enough imagination to see the potential in new ideas. He may believe that he has been unfairly charged with full responsibility for an idea he did not originate. Both parties tend to look for individuals on whom to lay the blame. Both tend to look for mechanisms to correct the situation.

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Both accept the rationality of the process, the pattern of success and failure with omniscience at the top and personal culpability below, and the propose-dispose relationship between boss and subordinate.

3. Marketing and Technology The process of invention requires mutual determination of need and technology. But in the large, articulated corporation, the job of determining technology has been separated, by specialization of function, from the job of determining need. There are now departments of marketing and technology. Each specializes in its job. Each has developed a profession around its job. Each tends to be willing to answer only the questions that fall within its professional specialty: to do otherwise would be nonprofessional. As a result, it is difficult to locate commitment to innovation. Each department says to the other, "Give me what you have done and I'll tell you whether or not it is feasible from the point of view of my specialty." Professionalism serves as a barrier to co-operative inquiry and as a defense against blame from the top for failure. But since questions of need cannot be answered without assumptions about technology, and vice-versa, each department finds itself performing as an amateur in the professional specialty of the other.

Marketing. Unlike science and technology, marketing is a corporate function aspiring toward a profession. Its professional status is incomplete. What is now generally called "marketing" grew out of sales and is in some firms still called sales. But in the fifties there was superimposed on sales the concept of market research. Selling the product came to include the effort to find out, ahead of time, who would buy it. This began to happen as, in some product areas,

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demand for the obvious needs became saturated. Only for a short while, after World War 11, was it sufficient to say, "Here's what they need; how can we make it?'It became important to ask, 'What do they need?" and then, "What will they buy?" Out of the saturated market came the concept of market research, in the sense of market "science," in imitation of physical science. The market researcher, by his own lights, develops theories of what people will buy, by the use of statistical techniques and the techniques of "social science"; the salesman then "applies" his findings, as the engineer is supposed to "apply" the ideas of the physicist. But from the point of view of the salesman of a generation ago, many of whom continue as vice presidents for sales, the picture is quite different. Their attitude toward market research is rather like the attitude of production toward central research: it's all right if we can afford it, but it is, essentially, a frill. There is a rational model of marketing as there is a rational model of the whole process of technical innovation. According to this model, it is the function of the marketing department to provide information about markets for management decision. Technology provides the relevant technical information. Marketing, using similar techniques of inquiry, provides information about likely future sales. With these inputs, among others, management decides. It is implicit in this model that the role of marketing is the professional role of providing evaluated information. Unfortunately, much to the chagrin of marketing men, this information is often not believed. As in the case of the Straightway* Company, market research is apt to receive no attention at all. Instead, managers persist in giving credence to the opinions of their wives and friends, or in listening to the indications of their "gut." "Mother-in-law research" is more than a phrase. In spite of the availability of new techniques of market analysis and of the efforts of marketing to establish itself as a science, top management continues to a surprising extent to trust its own direct

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human contacts and to distrust the carefully displayed and statistically analyzed numbers provided by market research. The "why" of this throws light on the nature of market analysis and on the role of marketing within a corporation. Product innovation, according to one very common version of the rational model, occurs when established human needs are filled in new ways or when new human needs are discovered. One function of market research, according to the model, is to discover these new needs. But there is something peculiar about the idea of identifying new, unfilled needs. Consider the problem of identifying new transportation needs in the days of the horse and buggy and suppose a market-research group to be confronted with the task. Through interviews and questionnaires they might discover a variety of irritations and dissatisfactions shared by users of horses and buggies. People might express the need for longerwearing horseshoes, for horses that ran longer on a given ration of feed, for more comfortable buggies or saddles, and the like. But they would hardly express the need for automobiles. This is not to say that someone might not invent the idea of a horseless carriage in the course of thinking about transportation-only that the idea, if it occurred, would be an invention. It would have to be invented, through the exercise of ingenuity, not revealed as matter of fact. And similarly, the "need for the object of the idea could not be said to pre-exist the manufacture of automobiles. Before the actual presence of automobiles on the market, people could not be expected to indicate a need for them. It would be more accurate to say that the introduction of automobiles created that need. Confronted with a ~erceiveddifference between what they had and what they might have, people could express a "need" for what they might have. Without that contrast, they could only express dissatisfaction with what they had. As a result, "market research," if it sticks to the facts of expressed attitudes and preferences, reveals "needs" for relatively minor improvements of what is available-a soft detergent, a rust-

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free car, and the like. To the extent that more than minor improvement is desired, invention is required. And invention foregoes the apparent certainty or even the objectivity claimed by market research. From this point of view, "the discovery of unfilled needs" is a deception. It falsely offers the promise of novelty, somehow objectively attained, without invention. There are "objective" surveys of customer attitudes and preferences, but they do not provide a basis for significant product innovation. There are marketing inventions, but they cannot lay claim to a basis in "objectively discovered customer response." The marketing man must choose between his professionally objective role and his ability to come up with something new. The situation of a company that has developed something new and untried before that something has had an opportunity to "create a need" is one of great complexity in which the company is confronted by more information than it can handle. Suppose the product in question is a new kind of snack food. Its marketing success will depend on a variety of factors that include its flavor; its freshness; its packaging; the rigor with which product quality is maintained over time and from region to region; the status of the trade name under which it is marketed; its shape; the state of the market for snack foods at the time it is introduced; the merchandising devices used to get it into supermarkets; the appeal of the advertising campaign that accompanies it; its price; the raw materials that go into it; its product name, the shelf-position it gets in the market; the ability of the company to fill orders fully and quickly. This is a very incomplete list. It covers only some of the factors that have turned out to be important in many cases. New instances have a habit of turning up new relevant factors. Moreover, each variable is questionable. There are always limits to the company's ability to infer customer response to a value of the variable on the basis of past experience. Past experience is never applicable. If "miniatures" were popular a year or two ago,

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they may have lived out their cycle of popularity by the time the new product is introduced. If clear packaging was effective with the last new product introduced, it may be ineffective with the shape of the next one. An appeal to "diet" products or to 'low fat" in one region of the country may fall completely flat in another. A combination of flavors that has great appeal to a low-price market in the Southwest may seem strange and unpleasant in the Northeast. There are more relevant variables than can be taken into account. They act in a changing market situation. It is never possible to be sure whether a given market effect is due to one variable or to that one in special combination with others. Market tests, which attempt to experiment with consumer response to various configurations of variables, are always different in critical ways from the real market experience. They are small in comparison to the real thing. They are special because of regional variables, because of lack of variability in production lots, because of unfamiliarity, etc. They are bound to be incomplete. If completeness were theoretically possible, it would be economically unfeasible. Failure in a market test is often indicative. Success is always inconclusive. For all these reasons there is bound to be a gap between what market research can objectively state about a new product, or even a minor variation on an old one, and an assertion about the product's future success or failure. It is not that some useful observations and predictions cannot be made, but that they are always short of what is required for action. In order to act, management must assume more than can be said with objectivity and with reasonable certainty by market research. To the extent, then, that market research is intent on sustaining its professional status, in imitation of the apparent professional objectivity of technology, it can neither invent nor make the required assertions about the future success or failure of products. It

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can only say, in effect, "This is what, with our best techniques, we were able to discover." The rest is left to management. And the rest is often a great deal. Management's response is often to press marketing for a commitment which can only be made by shifting from professional certainty to something approaching the intuitive wisdom of experience. If, in the interest of its professional safety and status, marketing fails to make the leap, it often pays the price of nonbelief or, even worse, of being ignored. For the company in which this happens, reliance may come to be played on the rather private intuitions of management. In the end, the marketing reports are left in a corner of the desk, and the decision to "go" or not is made on quite a different basis. To the extent that it does not use the findings of its market research, the company may make its decisions in relative isolation from the market. Science and technology. Scientists and technologists in industry are members of two cultures but not in the sense recently used by C. P. Snow.2 When, at a cocktail party, a technical man in industry is asked, "What do you do?" he may answer in terms of his company or his profession. He may say, "I work for the General Electric Company" or, "I am a physical chemist." The nature of his answer will say a great deal about the man. Scientists and engineers in industry are always members of a culture within a culture. Although a man lives in the General Electric Company, he also lives in the cross-cutting community of his technical specialty and in the still broader community of science or engineering. As a member of the technical community he shares school ties, participates in meetings, reads shared literature and, most importantly, shares a system of values. This system of values relates to a methodology which has become a way of life. Central to it is the paramount importance of discovering the truth about the way things work and, coupled

Technology and Change with this, faith that this discovery can be made. Each technical man is a member of a team, continuous through time and overlapping among generations, charged with this discovery. Each man makes his own contribution to it and is judged, after the fact, by its importance to the developing theory. What is accepted as a contribution depends on many criteria, one of the most important of which is "objectivity." Objectivity here means at least two things-first, reproducibility from investigator to investigator (any other competent investigator, if he performs your experiment, should be able to obtain your results); and second, the idea that "a negative result is as good as a positive one" (since the aim of inquiry is to discover the truth, an experiment may be as valuable for destroying a hypothesis as for confirming it). So much is shared by the entire technical community. These values are learned along with the laws of mechanics and the critical tables. But the community is far from homogeneous. Within it are many important social divisions which are reflected in values as well as methodology. One of the most important of these is the division between scientists and technologists. This division is represented, at the extremes, by two types of models of behavior. The types are seldom perfectly realized, but there is no question of their existence as norms. The scientist identifies himself with the pursuit of knowledge, the development of true theory. As a scientist he has little or no concern for what the theory is good for. Its applications are important only insofar as they lead to further theory. Solution of practical problems by the application of theory, where the process does not lead to further theory, is at best an intriguing diversion or a necessary evil. Results are judged by the beauty of the inquiry, their precision, their generality and their importance to the body of theory in which they fit. At the other pole, there is the model of the good engineer. He is the practical man who does things, makes things work. He uses skills and knowledge of the mechanisms of things in order to 98

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build, to put together, to solve problems. He is apt to mistrust theory per se. He asks what things are good for. He judges his colleagues by their accomplishments, the concrete things-buildings, machines, systems-they have made. Each of these models has its own social system. Each has its hierarchy of status which, by and large, excludes the other. Men like Von Neuman, who moved back and forth across the borders, tend to be dismissed as exceptions even though the history of science is full of such exceptions. While the difference in type described above are facts, as are the competition as well as co-operation between scientists and technologists, it is also a fact that scientific theory and technology have interacted historically and continue to interact so closely that they must be regarded as parts of the same current of change. Theories of the solid state and the development of solid state devices, theories of protein structure and the development of new medical practice, are as closely linked as Greek science and craft or as seventeenth-century machines and seventeenth-century physics. When the young scientist or engineer leaves school and enters industry, he is in fact entering a foreign culture. It is in terms of this problem that the situation of the technical man in industry should be considered. Whether he has been trained as scientist or engineer, but more particularly if he has been trained as a scientist, he leaves a stronghold of the scientific value system to enter a fortress of the business culture engaged in a war that has meaning primarily in that culture. His contact in graduate school is for the most part with professors who are themselves carriers of scientific culture and with students who share, at least for a time, in that culture. He becomes attracted to a specific line of technical work, acquires a long discipline to enable him to undertake it, undergoes an initiation into the scientific community through which he wins his wings on scientific grounds and by scientific standards--only to

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find himself a member of a scientific colony in an essentially alien culture. He has learned to value what he does by its contribution to scientific theory. Now he must get used to the idea that it must contribute to something which, sooner or later, is to show a profit. He has learned to consider a negative result as good as a positive one and must now face business management's attitude toward project failures. He has learned that technical results stand on their own feet, buttressed only by the evidence of experiment and theory, and he must now live in a society in which financial considerations and the politics of the corporation make a major difference to action. Faced with these facts, he may respond in a number of ways. He may retreat from the threats of the industrial world and seek protection in a scientific shell which becomes, in effect, a replica of his graduate school environment. He moves only within his scientific subgroup. He accepts work only within his narrow specialty. His output is scientific papers. He feels no responsibility for the application of his results; that is the company's problem. At the extreme, he may insist on continuing the line of research he began in his graduate work and feel that the company has an obligation to make that possible. At the other extreme, he may attempt to adapt to the new culture. In this case, he becomes as much as possible like the businessmen with whom he works. He justifies his work on the basis of its contribution to profit. He may outdo the comptroller in his use of charts and graphs to show how investment in research will be turned into financial benefit. He sees research as an instrument of corporate activity and has no difficulty in accepting the fact that "the corporation is in business to make money." Ultimately, he may withdraw from research altogether and turn to marketing, production or the administration of technical activity. Or, as he becomes aware of the value system of his new environment and its conflict with his view of the world and of himself,

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he may try to find some middle way. He will look for projects technically interesting and within his capability which, on some basis, make sense for the corporation as well. He confronts the possible irrelevance of his hard-learned specialty and seeks ways of branching out to areas of importance from the corporate view. He becomes acquainted with concepts of cost and investment without abandoning the values of science. He foresees the possible obsolescence of his skills and looks for ways of retooling to meet new challenges. But this adaptation is made more difficult for him by the fact that the scientific culture is what David Gleicher calls "a culture with a hook." In graduate school the young scientist learns that real scientific achievement is the province of a very small elite. Of hundreds who compete, only one or two may contribute to "the important breakthrough and find reward in admission to the inner circles of the scientific community, the respect of his peers, an important university teaching post. The others are doomed to be second-rate. This is not an accident but is inherent in the very nature of the scientific community and of the long process of admission to it. There is room at the top for a very few who are able to be seen as the top just because there are others below them. Moreover, placement in the pyramid is usually determined very early in a young man's scientific career, frequently in graduate school. To the elite go the best teaching and research positions. To the others, go the less important teaching positions and positions in industry and Government. This, at any rate, is the way it tends to be seen from within the scientific community. For these reasons, a young scientist in industry is apt to regard himself as, at best, a competent second-rater. While he is imbued with scientific values, he cannot regard himself as a first-rate scientist. The effect on him, paradoxically, may be to make him even more insistent on the prerogatives of science: freedom to undertake "pure research," judgment only on the basis of scientific ac-

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complishment as understood by his peers, continuity of inquiry uninterrupted by corporate needs. Or it may induce him, convinced of his own second-rateness, to limit himself to technical work of routine competence. He may say to himself, in effect, "If I am a second-rater, I will stick to second-rate work." For all these reasons, the position of the young scientist in industry is apt to be difficult. If he does not find himself in one of the few companies which have, over the last decade or so, allowed young men essentially to continue their graduate research work, he will be forced to make some transitional adaptation to the business values of the corporation. This adaptation will, in one of the ways mentioned above, challenge the scientific identity he has so far constructed for himself. In his anxiety over this period of transition, the young scientist will cling very tenaciously to the idea of himself as a professional. As a professional, he is a member of a society that cuts across the corporation, and his status within the professional society is not dependent on his status within the corporation. It is another string to his bow. His professionalism also gives him a special status within the corporation, a shield from the direct threats of the bosssubordinate relation, a special claim to be believed and respected, and a claim to an "objectivity" that lets him deliver opinions and findings regardless of their impact on the corporation. "I have made my analysis and this is what I find." The signs of professional status-the degree, the language and manners of science, contacts with the professional peer group-assume great importance and become the core of the young scientist's response to his newly discovered conflict with business values. In this conflict the corporate research director is the man in the middle. From the point of view of management he is the man responsible for putting technology to corporate use. From the point of view of his scientists he is the champion of the scientific value system in the corporation. Somehow he must negotiate both

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hurdles without becoming ineffectual in the eyes of management

or a traitor in the eyes of the scientists. He may attempt to play this role in the diplomatic style, as a Talleyrand of the research laboratory; he may identify himself squarely with management or squarely with his scientists; he may for the sake of a safer and more clearly defined position accept a second-rate corporate status which requires him to do simply what he is told; or, like some of the research directors who are perceived after the fact to have been Great Men-Whitney at G.E. comes to mind-he may find ways of motivating his technical men to address themselves to a practical objective, usually through personal appeal, and shield those men from the demands of management.

Marketing and technology. So far, we have been looking at marketing and technology as independent functions and units within the firm. But, in fact, they interact, or fail to interact, in a way essential to technical innovation. The nature of this interaction when it occurs can best be made clear through examples. -A

large, well-established firm in the consumer products field has been for years among the top two or three in the business. But its success has been based not on leading the field but on effective counterpunching. When a competitor brings out a new product, this company is able to move in quickly with another like it. Because of its assured distribution, its name, advertising, and merchandising ability, it is usually able to capture a good share of the market. It maintains a sizable research department and spends at least as much in technology as its nearest competitors. Nevertheless, its technical efforts somehow fail to lead to commercial products. A recent case in point had to do with the development of a new cleaning powder. The idea for the product had originated with the marketing

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department. They wanted a powder that would be good for a wider range of stains, including cigarette and rust. Otherwise, the powder was to cost no more than the then-present entry and be at least as efficient in other respects. All of this was spelled out in a product meeting, attended by the brand manager and members of the market research and technology departments. These product requirements were reduced to writing, and technology was given the ball. In the development department a project team was formed. A series of new formulations was identified with the aim of effectiveness against cigarette stains and rust. The formulations were tested against standard stain samples. Typically, the process of development was devious rather than straightforward. Among the first ten formulations tested, one was found to be relatively effective against the new stains.

But there were problems about the new agents added to gain this effectiveness. They tended to oxidize. Antioxidants were added.

These tended to reduce somewhat the effectiveness of the agents. Moreover, there were concerns about odor. Stronger abrasives were added to complement the chemical effectiveness of the new agents, and new odorants were added as well. At this point, for some reason, it was discovered that the formulation's effectiveness against rust stains disappeared about a week after the formulation was first prepared. An

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unexpected reaction was found to be going on. It could be prevented by substitution of two of the components.

Now the formulation was felt to be ready for consun: test. It was effective against rust and cigarette stains as well as against all stains affected by the firm's existing entry. Its odor was acceptable and its shelflife was good. Six months had elapsed. The product was given over to market research for test. In its consumer test, market research gave the new powder to forty women and let them use it over a two-week period. At the end of that time, they interviewed the women and asked them to fill out questionnaires about the product. At the next product meeting, the market research representative said, "Research has done it again. Nobody's willing to accept a purple cleaning powder!" Color had not been identified initially as a relevant product variable. Research had not been sensitive to color as a problem. They had had their hands full trying to juggle other variables they knew to be relevant. And market research did not reveal the problem until after six months of development work had elapsed. Market research functioned here as gatekeeper. After the initial identification of the objective, and after technology had produced a candidate, they served to keep it back or let it go. After the first statement of objectives they did not contribute to the product. They had put in their order. But, where the product in question is of any complexity at all, the first statement of objectives is bound to fall short of a complete description of relevant product variables. You cannot, at the

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beginning, say everything about a product that will be relevant to its success or failure from the point of view of consumer response. In fact, many relevant variables do not appear to be relevant until the product violates them. The point is both logical and psychological: -In the real world, it is impossible to provide an exhaustive description of the characteristics of a thing which determine its success or failure, its approval or disapproval, its popularity or unpopularity. -Often we do not become aware of a feature of something essential to our approval of or preference for it until that feature changes or disappears.

As a consequence, as long as market research keeps to stating product objectives and then playing gatekeeper, technology is left to make decisions which will be bound to have an effect on consumer response without the benefit of market research. A second case illustrates a variant of the problem.

-A

large industrial chemical company has both a sizable research and development department and a sizable marketing section. The relationship between these two departments, as far as product development is concerned, suggests a kind of seesaw. During and just after World War 11, research and development brought more new chemicals into being than they knew what to do with. These came as by-products of war research and as an outgrowth of major new developments in chemistry which had been made not long before. In those days new chemicals were given to marketing people, who were instructed to sell them. The technology came first. The technical people could then, more or less, wash their hands of the product. The marketing people faced the uncertainty of the commercial new-product effort. Could they find adequate

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TECHNOLOGY FIRST! Technology

uses for it? Would the market be large enough, given the cost picture? It was their problem. In the middle and late 1950's the situation changed. New chemicals were no longer coming in such profusion from the research and development department. The company no longer assumed it was the duty of the marketing department to sell what technology came up with. Instead, the company had begun to operate on the assumption that technical resources should be addressed to needs uncovered through market research. The marketing department examined various businesses related to the company's product line-catalysts, fertilizers, plastics, food-and identified "needs" for product or process improvements which required new chemicals. These needs were spelled out as completely as possible and passed on to the research and development department. It was their problem, then, to come up with new chemicals that met the needs. The second state of the seesaw is more nearly like the situation of the consumer products company described in case (1). The second state-in which technology performs to requirements generated out of Marketing-is characteristic of many companies. In both states, however, the relationship between marketing and technology is unfortunate. Either marketing produces require-

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NEED FIRST: Marketing

Uncertainty ments, fully formed, for new technology and leaves the "technical problem" to the professional in that field, without taking into account how many covert marketing inventions and decisions will have to be made in that process; or technology gives marketing a new product, developed without reference to customer response, and marketing is required to find ways to sell it. In this attempt, marketing uncovers problems that could be treated as technicalinadequacies in the product, changes which might endure capture a new market-but it cannot get work done on these problems if it has been handed the task of finding markets for what has been given. In each case, there is a "given" from one department which is made the basis of the task of the other. Each is held to its professional territory. Each sets requirements for the other. Or again, each disposes of what the other proposes. As in the case of the boss-subordinate relationship, proposedispose is a wasteful process. In fact, technical work cannot be done without marketing consequences and marketing assumptions. And marketing work raises problems that may fruitfully be treated as technical ones. As a result, marketing men engage in amateur technology, and technologists, in amateur market research. Neither can use the resources of the other for invention before professional critique is applied. This is particularly the

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case since each party has a tendency-understandable in view of the distortions of the boss-subordinate relation-to push uncertainty off onto the other and lay him open to blame for failure. As we have seen earlier, technical innovation requires both marketing and technological invention as well as marketing and technological critique. The two are so closely related that there cannot be work in one area without assumptions and consequences that bear on the other. Product characteristics and market characteristics mutually determine one another. After the fact, marketing failure can be read as technical failure. Technical failure can be read as marketing failure. The division of labor between marketing and technology, and especially the professionalization of that division, attempts to create a work situation in which each group makes true, safe statements within its professional territory. But since uncertainty is inherent in technical innovation, the result is that marketing and technology attempt to put themselves in the role of providing "givens" for the other, judging the output of the other by their own professional criteria and leaving the other with the major burden of uncertainty. As a result the first forces the second into doing, in an amateur way, what the first could and should be doing. Each is deprived of the resources of the other where he needs them. All of this precludes the collaborative marketing-technical invention required in technological innovation-the kind of invention the old-time entrepreneur often performed himself.

4. A Summary of the Problems The poblerns of technological innovation so far discussed come out of a view of the corporation as a society and of technological innovation as a process. Technological innovation is inherently uncertain and treacher-

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ous. It demands invention with respect to human need as well as technology. The corporate work of invention attempts to convert certainty to risk. But a proposed innovation can never be satisfactorily justified before the fact, and requires leaps of decision. The corporation is a society, composed of many subcultures, which seeks to hold itself together. It is a vehicle for work as well as for the exercise of power and subordination. Its survival depends on its ability to protect the individuals within it from uncertainty. The current problems of technological innovation within the established firm come primarily from two causes: -Technological innovation has come to be a regular, necessary function of the firm. -The firm has outgrown the structure of its rise to maturity. It is no longer centered around an individual entrepreneur who undertakes innovation, shoulders uncertainties, and cuts Instead, it is a large, across all major functions of the h. complicated structure in which: -The entrepreneurial function has been delegated to lowerlevel entrepreneurs without authority who must propose new ideas for disposition by the boss. -There is a rigid division of labor between those concerned with need (marketing) and those concerned with technique ( technology ). -Uncertainty, which is at the heart of technical innovation, is taboo. To protect itself from uncertainty, the corporation has constructed a family of myths of innovation, of which the most important is the myth of rationality. As a result the process of innovation becomes a series of propose-dispose relationships across vertical and horizontal barriers within the corporation. Entrepreneurs without authority cannot take the necessary

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leaps; their justifications before the fact always turn out to be in-

adequate. Both boss and subordinate operate in ignorance--one, in ignorance of the facts, opportunities, and problems of the innovative process; the other, in ignorance of the considerations which will be governing in making decisions. The two have little basis for establishing relations of trust on which, alone, forward movement could occur. The artificial division between marketing and technology prevents the real work of invention. Fear of failure and professionalism isolate the two functions from each other. Each proposes ideas for the other's disposition or seeks to leave the other with full burden of uncertainty. In this environment the corporation minimizes innovation. The strategies it has developed to control uncertainty increase the probability of failure.

Models for Change

WE H A V E L O O K E D at the process of technological innovation in companies and have noticed a series of problems depending on the social system of the company and on the process of innovation itself. The form in which these problems appear is a function of the times-of the state of evolution of companies and industries and of the concept of industrial research. For some time now, it has been possible to observe companies struggling with these problems and seeking new ways of producing technological innovation regularly and deliberately from within the firm. Industrial experience since 1945 presents a range of experimental answers. These take the form of: -shifts in corporate assumptions about innovation; -the emergence of new roles and new forms of activity within the corporation; -shifts in what it means to be a company; -a shift in the ability of a company to examine its own processes, to confront its taboos, and to undertake deliberate change in its social system. 112

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We are in a time of transition. Out of it there seems to be emerging a new ideology of innovation, a set of new corporate forms, and new styles of corporate behavior.

Assumptions about Innovation From the turn of the century until about 1 ~ 8 the , concept of industrial research, and with it the concept of technological innovation as a means to growth, were seeking to establish themselves. After World War I1 they succeeded in doing so. It became fashionable and, indeed, essential for the leader of a large corporation to proclaim his allegiance to research and innovation. As we have seen, this official view often carried with it official attitudes of a quite contradictory kind. As we have seen, too, the company's inability to express and work openly on its resistance to innovation was itself an impediment to innovation. Between 1950 and 1960 this new conventional wisdom began to be challenged. There is now, in many research-oriented firms, a growing sophistication about technological innovation. It says, in effect: -Corporate growth is not the only relevant sign of corporate success. This has been recognized particularly in corporations which exist in very nearly saturated markets. -Technological innovation is only one route to growth. It may not be the most effective. It is no longer possible to avoid noticing "counterpunching" firms who wait until a new process or product has been developed or marketed and then move in either through purchase or through a closely competitive development. These firms often make up in fleet-footedness and marketing skill what they lack in invention.

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-Scientific research is only one route to technological innovation. Invention or engineering, without a base in science or, at any rate, without a corporate base in science, can be as effective. Na'ive faith in corporate growth and research as a means to growth may be wearing out. Among the drug companies, for example, there are a number whose research departments are devoted primarily to technological intelligence and then to imitating and improving what others have developed. The profit margins and growth rates of these firms do not suffer in comparison to others. In the consumer products field, most technical effort is devoted to minor product change or to quick imitation of live items developed by competitors. The profitability of those firms seems to vary more with the effectiveness of their marketing and market research than with their technology. Among the automotive firms there has been very little utilized research-in the sense in which Bell Labs or Du Pont understands research. Most of the auto maker's effort has gone into styling change, engineering improvement, increased productivity, and again, marketing. Their ability to grow and to maintain a respectable rate of profit does not seem to have suffered. For many firms who have over the last decade halfheartedly, and therefore unsuccessfully, supported a technical effort aimed at innovation, a new scepticism about innovation may represent a step in the right direction. It brings official company policy into line with the realities of company behavior. They can now say "We do what we say we do." Nevertheless, pressures for innovation continue. These pressures come from the competitive innovations of other firms and other industries-innovations which do not easily lend themselves to imitation. They come from the ambitions of a powerful corporate leader committed to innovation. Or they come, in more than

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a few companies, from an unwillingness always to enter the market on a me-too basis.

New Corporate Roles

The problems of innovation experienced by the established firm, and especially the problems of boss and subordinate, have created their own antidote. In answer to "entrepreneurs without authority," the corporation has invented the product champion. The product champion identifies himself with a new development and pushes it upward and outward, using all the weapons a t his command, against the funded resistance of the organization. He functions as an entrepreneur within the organization, and since he does not have official authority to take unnecessary risks, he usurps that authority. He may or may not have made the original invention, but in either case he identifies himself with it and pre-empts it. Its success or failure becomes his responsibility and his preoccupation. Since the risks he takes are great, he puts his job in the organization (and often his standing in the social system of which the organization is a part) on the line. Here, as in many other areas, the military serves as a large mirror for industry. Despite the enormous legitimate and illegitimate sources of resistance to change in the military, occasional radical inventions do find acceptance and come into being. Developments like McLean's Sidewinder missile and Rickover's atomic submarine do not fit the rational pattern of an orderly presentation of promising technical ideas to official judges, favorable objective evaluation and then orderly marshaling of technical resources for development. These histories look more like crusades or military campaigns, with overtones of fifth-column activity and guerrilla warfare. They present clear illustrations of four major themes. I. At the outset, the idea encounters sharper resistance.

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Like Goddard's work on rockets, Whittle's work on the jet engine, and virtually every other significant military technical development, the Sidewinder and the atomic submarine at first met indifference and in some cases active resistance from military officials. These innovations appeared to run counter to the most sensible and established technical commitments. They looked expensive and unfeasible. They were, therefore, considered through established channels and rejected. 2. The idea requires active and vigorous promotion. In spite of the myth that valid technical ideas do not need internal sales, it is characteristic of successful technical innovation within the military that a new idea requires and receives active promotion. Often, as in Morison's description of the introduction of continuous-aim firing, there is a division of labor into invention and promotion. In that instance, the inventor was not equa1Iy talented as a promoter, and so a second figure emerged who was able to carry the fight for its introduction and development into the highest Navy circles. In our own time, Admiral Rickover's skill in defending and promoting his ideas is legendary. Techniques for promoting new technical ideas are a matter of serious concern, even at the highest military levels, as shown by the use of outside publication and appeal to Congress. 3. For the introduction, promotion and development of these ideas, their proponents make use of the informal, rather than the official, military system. In the early stages of development, when the idea was still in its infancy, the Sidewinder was funded not through official contracts from any of the Navy bureaus but from the small sums detoured from official programs. Only when enough work had been done to show the strength of the idea did it fall into official contract channels. The use of such "bootlegged research funds is only one example of the use of the informal military network. In many instances ideas now under development or test were submitted originally through personal contacts; in the matter of technical

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development, particularly across departmental lines, a network of

good

personal contacts is a cherished resource. The buffering function of the official screening offices virtually forces such a network into existence. 4. Typically, one man emerges as champion of the idea. Many people do know of Goddard, Whittle, Rickover and McLean. But in the case of less-famous developments-for example, the Navy's "Ribbon in the Sky" and the introduction of frangible bullet-firing as a training method in World War 11-individuals also emerged as champions. There is nothing incidental or exceptional about this. Where radical innovation is concerned, the emergence of a champion is required. Given the underground resistance to change described earlier, the new idea either finds a champion or dies. Essentially, the champion must be a man willing to put himself on the line for an idea of doubtful success. He is willing to fail. But he is capable of using any and every means of informal sales and pressure in order to succeed. No ordinary involvement with a new idea provides the energy required to cope with the indifference and resistance that major technical change provokes. It is characteristic of champions of new developments that they identify with the idea as their own, and with its promotion as a cause, to a degree that goes far beyond the requirements of their job. In fact, many display heroic persistence and courage. For a number of them the price of failure is professional suicide, and a few become martyrs to the championed idea. All these themes are to be found in commercial organizations as well as in the military. At IBM, according to Arthur K. Watson: The disk memory unit, the heart of today's random access computer, is not the logical outcome of a decision made by IBM management. It was developed in one of our laboratories as a bootleg project---over the stem warning from management that the project had to be dropped because of budget difficulties. A handful of men

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Similarly, Avicel-the cellulose-based nonnutritive food-was championed within the American Viscose Company by Dr. Andrew Battista. K-Cel, Kimberly-Clark's most successful nonwoven product, was championed over a ten-year period by Harlan Hershey. Sometimes, paradoxically, the champion is to be found at the top of the organization. For over a decade, against the resistance of those below and those above, David Sarnoff at RCA championed color television. It must be added, of course, that the product champion is sometimes, perhaps often, wrong. Companies other than RCA had competitive color television systems and their own champions -and failed. A large petrochemical company, spurred from within by one man, brought a radically new chemical process plant into being and failed resoundingly. But such failures do not negate the validity and importance of the product champion or of the pattern of innovation through product champions. The principal point is that there is in American industry and in the military a pattern of innovation through the product champion, and that this pattern has come into being because of the problems we have discussed under the heading of entrepreneurs without authority. -Technological innovation requires leaps that cannot be justified before the fact by those charged with the task. So, there comes into being a man who takes the burden of risk on his shoulders without formal justification. -The formal chain of command, with its screening mechanisms for evaluating ideas and allocating resources, is wedded to the major commitments of the firm and treats radical innova-

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tion as a threat. The product champion ignores the formal organizational system and goes underground, bootlegging his project and often keeping it secret until its performance appears undeniable. -The split between marketing and technology sets up potential innovations for failure. The product champion builds marketing, or technology, informally into his team-or substitutes his own intuitions for the missing component. -The rational myth denies the need for internal sales and promotion. The product champion turns publicist and promoter on the Q.T. The product champion is a creation of the age of large organizations and of the special problems of innovation which have become so noticeable in the last decade or two. He is a man of strong will, attracted to risk, set against the established order, with great energy and capacity to invite and withstand disapproval. Fifty years ago he would have started his own firm. He may still do so. But in a mature economy, full of large and powerful firms, he is more likely to find himself in a position where he can and must work from within. In many, if not most, instances of radical technological change, he is to be found at the heart of things. Still, his emergence is a very infrequent event. The mere existence of product champions in corporations is not an adequate solution to the problems of technical innovation in corporations.

New Corporate Forms The most significant recent change in corporate structure, from the point of view of technological innovation, is in effect an institutionalizatisn of the role of the product champion. It is an effort on the part of a growing number of corporations to provide a

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corporate umbrella for the formation of new small firms based on new technology. The larger firm attempts to identify ideas which promise new businesses where these are apart from the main business of the firm. It seeks men who are willing to be identified with such ideas to carry them forward, with relative autonomy, as new businesses. These will operate as independent profit centers within the larger firm. The men are product champions made legitimate and nurtured by the firm as a deliberate means to diversification and growth. This pattern is an outgrowth, as well, of what might be called the R 81 D-based company. As, replacing craft, the research idea entered the industrial scene as service to production, the company's first effort was to understand and regularize its production process. Gradually, after World War 11, research gained the status of an independent entity within many firms. There came into being research departments, research directors and, with them, the problems of research policy. It became necessary to spell out the boundaries of the research task and to point out the ways in which research effort was to be made consistent with corporate goals. Characteristically, however, research has tended to yield unexpected results. Companies in the food business find themselves in possession of new devices for extruding plastics. Paper companies develop new textile fibers. Electrical firms give birth to new techniques of powder metallurgy. And in these cases, thinking in terms of existing marketing and production facilities and of the '%usiness we're in," companies often find no way to capitalize on their unexpected results. On the other hand, results from projects within the business of the firm may never materialize at all. Firms which have profited most from research have tended to be flexible and adaptive in their ability to commercialize unexpected technical blessings. A firm like QM is perhaps the most famous example. It began with sandpaper, moved into commercial coatings, marketed Scotch Tape and then moved in rapid suc-

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cession to magnetic tape, cleaning products and games, among many other products. Nearly all its new businesses have built on the output of its central development program. But in each case, a new management group has been formed (often from the technical and marketing people first associated with the development) and a new business launched as a division of the company, with great autonomy. As a result, the corporate structure looks less like this :

and more like this :

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3M is a group of relatively independent small firms surrounding a central bank and development facility. The histories of AMF, Brunswick and Borg Warner represent variations on this theme. Companies like Carborundum, Whirlpool and Union Carbide, among others, are experimenting with this approach to utilization of their own research results. The advantage of this approach is that it permits commercial exploitation of developments which do not fall within the existing corporate scheme or which threaten established departments. The resulting corporate form-a loose confederation of businesses only peripherally related to one another in their technology and linked to a central bank and development facility-is the form of the R & D-based company. It is the form corporations assume when their research policy becomes: "Make money from the promising results of R & D." This pattern of entrepreneurship is closely tied to the projectteam approach. The new business matures in most instances out of a technical-marketing-business group which has, for some months or years, been pursuing a line of development. It permits the members of this group to move forward with their productcapitalizing on their store of energy and commitment. It subjects them, then, to the discipline of performance as a profit center. It rewards product champions with a business of their own. In a sense, it represents an effort on the part of the established firm to re-establish within the large corporate framework the verve and style of the little man who founded the company.

Deliberate Change from Within The pattern of the R & D-based company is a way of circumventing the problems of innovation in an established firm. It does not solve them. It outflanks them. By a loosening of the concept of "the business we're in," the management allows itself to form new

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business entities and spares itself the task of making the existing organization more nearly capable of technological innovation. But it is not always possible in this way to start fresh. Often, for a variety of reasons-competitive threat is perhaps the major one -the old business must change. But how is it possible deliberately, from within, to change in

the direction of innovation? The conventional wisdom provides two clear, although contradictory, answers. The first depends on the assumption that People Cannot Change. Since people cannot change, an organization, left to its own resources, cannot change either. Change is possible only when agents of change are brought in from the outside. Moreover, since "an organization reflects the competence of its leader," a new man must be brought in at the top. The recipe for innovation then becomes, Bring in a new leader! In companies where the task of innovation has been delegated to research, the receipt is, Bring in a new research director! Something very much like this line of thinking helps to account for the high rate of turnover among research directors in many large U.S. companies between 1950 and 1960. The second answer is mechanistic. It assumes that lack of technique is all that stands between an organization and greater capacity for innovation. A reorganization, the introduction of a new idea-screening system, a new "mechanism" for producing ideas (brainstorming, for example), a new "co-ordinator" for product innovation-any of these might do the trick. None of them threatens fundamental change. The organization can adopt them as it might adopt a new accounting system or PERT or a new sampling scheme for quality control. Even though these answers contradict one another, they rest on a common view of an organization's resistance to innovation. They treat resistance to innovation as "inertia." If an organization's resistance to change is in the nature of iner-

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tia, it can be overcome by the exercise of force-a new "engine" at the top or a new mechanism which allows internal forces to act more effectively. A new man can "get things moving'; a new mechanism can "take the bugs out." But if there is one thing that comes out of our discussions to date, it is that resistance to innovation is not merely inertial. Resistance to innovation is in the nature of an active, complex dynamism which strives to keep things as they are. We saw in the McKinney Company, for example, how top management, sales, production, and research-as-scapegoat combined to maintain the fiction that good ideas only come from the top. We saw in Morison's example of the introduction of continuous-aim firing how technology and social systems are intertwined in such a way that a threatened change in technology will bring retaliation by the social system. In a more generalized form, the existence in established firms of entrepreneurs without authority and the current state of relations between boss and subordinate over issues of innovation tend actively to keep innovation from happening. This active, dynamic character of resistance to innovation is by no means limited to companies. In the next chapter, we will be seeing similar patterns in whole industries. Psychiatrists find similar dynamisms in resistance to change in individual personalities. Economists find them in the problems of "underdeveloped regions : These barriers [that bar the way to development] . . . are a series of "vicious circles within vicious circles and of interlocking vicious circles": Poor people have poor health and low energy; low energy results in low productivity: which keeps people poor. Absentee and large-scale ownership patterns demand single-crop farming, which is dependent on unstable markets, which dictate credit systems that perpetuate undesirable land-tenure patterns. . . .

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The Swedish economist Gunnar Myrdal has described these circles as a downward-spiralling cumulative process of circular causation. It can be summed up by saying: "Poverty is its own cause." . . .

vicious

Social systems strive actively to remain as they are. "Stability is a state for which a high price in energy and effort is paid. Resistance to change is not a matter of inertia but of dynamism. Given this dynamism, no mere shift in organization, no mechanism, no simple infusion of a new leader, no one-shot venture in education, is likely to produce a significant effect. The mechanism will be ignored, circumvented or put to use in maintaining the status quo ( I am reminded of a company in which a new-project accounting system, designed to force research projects to become compatible with company goals, found its actual use in masking a greater movement toward undirected research). The new leader, unless he displays unusual skills, will be swamped by the dynamism or become its instrument. Nevertheless, deliberate change from within in the direction of innovation is possible. There is no one route. On the contrary, a variety of styles are possible. But on empirical grounds-not out of a theory of what makes change possible but out of observations of the situations in which it has and has not occurred-some of the conditions of change can be stated. -Leverage

at the

top. Without commitment to change at the

top, the organization as a whole cannot move in the direction of innovation even though there may be islands of innovation, subunits of the organization, moving toward innovation to the extent that they can. In one instance, foremen in a plant were trained in human relations skills. They returned to the plant, prepared to practice their newly acquired skills. What they found was the same uncomprehending management they had found before, and they were unable to deliver on implicit promises of fair

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treatment made to the workers. The foremen's training had put them in the middle. Similarly, the managers of the division of a company may make determined steps toward innovation, bringing their own research and marketing people into a close-knit team committed to new -products, which comes to nothing when proposals are brought to a top management which does not share the same attitudes toward risk or the same style of working. In order for deliberate change toward innovation to occur, management must be reallynot only officially-committed to it. This implies, among other things, that top management recognizes its own need to change. In most organizations, problems of innovation tend to become polarized: they tend to be seen as the fault either of those on top or of those below. In fact, as we have been seeing, they are nearly always problems of a social system of which top and bottom are parts. But change in management is both necessary and catalytic. For one thing, constructive change is unlikely so long as management continues to believe the various myths which place responsibility for failure entirely elsewhere: "We need more creative men" or "Good ideas come from the top." Moreover, radical innovation is generally more threatening to top management than to anyone else: it forces them to leap into unfamiliar business situations and to abandon what seems to be safe ground. Finally, as we have noticed before, the personality of the man at the top and his way of doing business are likely to have a profound effect on the character of leadership throughout his organization. The style he adopts is apt to become the style of his submanagers and of their subordinates. In all these senses, change toward innovation requires that top management accept its own need to change. Without this leverage and support, efforts at deliberate change from within are apt to come to nothing.

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-Perception of a crisis. In individuals and organizations it is easy to underestimate the strength of the dynamisms that tend to keep things as they are. Only the strongest incentives can lead an organization to effective deliberate change. For an organization to increase significantly its capacity for innovation, it is not enough that a man or a few men-even at the top-understand that it would be advantageous for the organization to change. Something like a state of crisis must arise. The organization must come to feel that its survival, or at any rate, its survival as it has been, is threatened. Characteristically, this perception of threat comes from the outside. It may. come from the realization that foreign competition is producing better, cheaper products which are destroying markets, from the knowledge that a new, powerful company has moved into the market with a superior line or from the feeling that the corporation has no ships at sea. Once it perceives the threat, the organization must immediately interpret it as requiring a shift toward innovation. One of the characteristics of managers capable of inducing deliberate internal change toward innovation is the ability to create a sense of crisis around events that need not be interpreted in this way. Such crises have been generated, for example, around the perception that "without new products, we cannot grow further" or that "while we have a large share of the market, we have not contributed to the field in twenty years." Leverage at the top and the perception of crisis are starting conditions for change toward innovation. There are, in addition, conditions which must be met along the way. -Conflict. A state of crisis, which puts a whole organization into stress, is likely to create internal conflict. This is particularly the case when it becomes clear, to some at least, that the organization's traditional or usual response to the crisis is inadequate.

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-A

company built on a traditional line of products is declining. New products have failed to fill the gap. A conflict breaks out between the partisans of research, who see the company's lack of research-mindedness as the problem, and the old guard, who claim that research has let the company down and that what is required is a return to customeroriented development. -A strong top manager has created a crisis around the need to develop more ships at sea. An atmosphere arises in which there is sharp competition for leadership in the drive for new products: two men emerge as principal candidates and fight for the new position. -An old-line agency of Government is under attack. Members of Congress criticize it for surviving the accomplishment of its mission, for having too many employees, for being irrelevant to modern times. Within the agency, conflict breaks out between those committed to the original agency mission and those who want to see the old mission modified to suit the times; between a new management eager for change and lower ranks committed to old skills and activities. Internal conflict is the organization's response to external threat which demands change. It corresponds to deliberation and self-doubt in an individual. It lets come into play the organization's resources for coping with threat. It lets new views of the situation emerge. I cannot identify a finite number of types of conflict which organizations experience in this way. Characteristically, the establishment fights against proponents of the new way; the old guard fights the young Turks; central fights operations; those above fight those below; divisions, such as marketing and technology, fight one another, as do contestants for power. The point about such conflicts is that they are a construc-

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tive condition for change. The manner of their resolution determines the form of deliberate change. --Suficient time. Change toward innovation, like any fundamental change in people, demands sufficient time. It takes time for a perception of crisis to turn into a sense of the need for innovation. It takes time for the conflicts, stimulated by external threat, to be resolved. Moreover, time ( T ) is required for what can be called a whole cycle of change ( C ) to occur. A graph of change in an organization tends not to look like this:

Change tends not to proceed in steady increments, cumulatively. It is more apt to look like this:

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What Rostow says (in the Stages of Economic Growth) about economic growth, seems to apply to change toward innovation. There is at first a "steady state," maintained through the expenditure of energy in the form of more or less hidden dynamisms. There is a take-off point ( A ) when the process of change begins. Change proceeds, gathering strength and at an increasing rate, in a period of "take-off'' (A-B) during which it becomes self-sustaining. At a later time, ( B ) , a new steady state is reached. Such a process is usually one of a series

T

complicated by perturbations within individual change cycles.

Time is required for the take-off. If the organization's situation does not afford time for reaching a new steady state,

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the gains made may be lost. An earlier steady state will reoc-

cur. A company's cycle of change toward innovation seldom requires less than a year and usually more than two or three. Often the perception of the meaning of a crisis, or the decision to act on it, will come too late. The cycle of decline will have gone too far, markets will have been too far eroded, competition will have gained too much. The company's situation must permit it to live through the full cycle of change required. -A vision and a model. "What would we be, if we were not what we are?" When it perceives the need for an organization to become more innovative, top management is apt to experience a curious feeling of helplessness. What can it say and do to cause the change to occur? Several answers to this question come easily: -It can issue a "call to arms," exhorting the organization to strain its efforts toward innovation. It can issue policy statements to this effect. -It can set organizational goals. But these are apt to be put in the language of after-the-fact assessment of the effects of innovation: "We must double our gross sales. We must bring five new ~roductsto market. We must increase our margin of profit." -It can allocate resources to the task, by increasing research and development expenditures, for example, or by naming more new product managers. But the exhortations are apt to have a hollow ring: "The boss wants us to get more 'creative,' but what does he want us to be more creative about?" It does not help to speak of "doubling sales in five years," which says what things are to be like after the job has been done rather than how to do it. And an increase in research dollars merely shifts the burden

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to the man who has to decide how to invest them. Moreover, all these indications compete for attention with the history of the organization's actions, as perceived by those charged with the task. Corporate actions, as seen (and distorted) from below, speak louder than management's words. Management is apt to complain, at such times, that it cannot get the organization to take management seriously! And the usual exercise of punishments and rewards may simply add to the frustration of those below. Pressure to move, in the absence of a sense of direction, may send them around in circles. In order to move deliberately toward innovation, the organization must have a vision, vividly and broadly perceived, of what it can come to be. That vision is often associated with an individual, the leader. Providing that vision, in a state of need for change, may be the leader's major job. The man who develops the vision may come to fruition as leader regardless of his actual formal position in the organization. It is easier to see this in the case of nations than in the case of companies. Inspirational leaders, like Ghandi, Nehru, Wilson, De Gaulle, Kennedy and Roosevelt, are perhaps best remembered for their visions. Among industrial leaders, the best-known visionaries are of the last generation: men like Henry Ford, Westinghouse, Edison. They had visions of beginnings. It is, in some ways, more difficult to generate visions of radical change from within. When the leader is unable to generate a vision that provides a direction for change, his task is to create a situation in which such a vision can be developed-to identify the building of such a vision as a task for the organization and to get people to work on it. For a vision to become reality, models are required. It is not enough to paint a picture of what might be. There must be an instance, a concrete happening, which can be pointed

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to, afterward, as "the kind of thing we are trying to do." For the organization, it becomes "another": for 3M, "another Scotch tape," for the Department of Defense, "another Polaris." In most companies the models are far less dramatic and need not be overwhelming successes in order to serve the purpose of making the direction of change concrete for those involved.

Styles of Change Leverage at the top, a perception of crisis, sufficient time for the change cycle to occur, a concrete vision of the direction of change -these are minimal conditions for change toward innovation. Within this framework, change may proceed in a variety of styles. The initiative for change may come from below in the organization or from the outside, but in order to be effective, it must eventually engage the top. We will consider two of many possible styles of change from the top. These two differ principally in that, in the first, the leader holds a more or less detailed vision of the direction of change and attempts to impose it, powerfully, from above; while, in the second, he attempts to create the conditions for the emergence of initiative for change throughout the organization. -In the first instance the leader is characteristically a new man at the job. He may be a son who takes the business over when his father retires, a new appointee, an outsider brought in or a new man from the ranks. Rarely, he is an old leader with a new sense of mission. He has, or quickly develops, a vision of what it means for the organization to move toward innovation. He has, or proin lieutenants who share his vision and his style of operation. He tests the limits of his power and of his dependence down-

Technology and Change ward. Those he regards as educable, he teaches. Those he regards as intractable, he attempts to remove from power. He sets new activities in motion, suitable to his vision of the organization's future. In old activities, he plants individuals who represent the style of behavior he wishes to encourage. He pulls the reins in tight and exacts performance. He reorganizes, partly to accomplish new objectives, partly to shake things up. He is attempting, as nearly as possible, to make the organization an extention of his own personality and an instrument of his own vision. He creates great dependency. He becomes a kind of product champion at the top. Through his pressures for performance and the real risks he undertakes on behalf of the organization, he is able to generate a continuing sense of crisis. He does not permit uncertainty within the organization. He resolves conflicts by fiat. Disengaged or hesitant resources are quickly pulled into his field of force. He takes on himself the burden of converting uncertainty to risk. He must, of necessity, trust his own vision of the way things should go, since any uncertainty on his part creates chaos below. He tends to make more and more of the decisions himself. The size of the organization and the extent to which innovation is required in the situation tend to set limits to his effectiveness: if innovation is required in parts of the organization that lie beyond his direct control, beyond his ability to impose his vision directly in the detail required by the situation (without arbitrariness or ineffectiveness) , he must induce innovation indirectly through his relation to his subordinates. He is given, then, to a stringent requirement for innovative performance, ruthlessly enforced from above. His is the method of power, control, competition, anxiety, survival, performance. He becomes the Great Man of the organization. He galvanizes others into activity either through hate or love or, more frequently, through both.

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He solves the organization's problems of innovation by

substituting his own personality for the organization's. He generates the ideas and champions them. To the extent that his vision is effective and changes with the changing situation; to the extent that his energy and ability are equal to the scope of innovation required-he is effective. He may cause the organization to take off and break through to a new level of stability. The great problem of the style is in the dependency it creates. The Great Man is apt not to be able to tolerate men of his ability around him. He is not indestructible. If he fails, dies or for some reason leaves the organization, he creates an enormous problem of succession. He has not groomed his successors. The organization has not learned to innovate except in the sense of implementing his orders. The organization, through him, has learned only to respond dependently to a Great Man. At his demise, the organization is ready only for another Great Man. -In the second style, the leader works to enable people within the organization to learn to innovate. His vision is of change, learning, innovation from within. He does not attempt to shoulder the burden of converting uncertainty to risk; he attempts to help others learn to do this. He does not impose his ideas about substantive projects; he does not regard himself as the principal source of ideas. Instead, he attempts to build resources for innovation. To the extent that he is manipulative, he manipulates the process by which ideas come into being and turn into reality. He attempts to teach and to create models but on the level of process rather than specific accomplishment. His assumption is that it is possible, without relaxing standards of performance or deflecting attention from the work at hand, to enable people in the organization to use their own potential for innovation and to set a style in the organization for doing this.

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The style is one of: -emphasis on the interpersonal problems that stand in the way of innovation; ---challenge to the rational myths about work and organization; insistence on the relevance of feelings to the work at hand; -openness in dealing with the organization's taboos; -participation of subordinates in setting targets for accomplishment; toughness in determining whether targets have been reached. The ways in which interpersonal issues enter into problems of innovation in the established corporation need to be reintroduced here : -When the boss-subordinate problem arises in the context of new technology, it forces the question of trust, The boss, who must evaluate and decide, cannot hope to be competent about every question of new technology that is brought to his attention. He must at some point make judgments based on inadequate information, out of confidence in the man who stands up for the idea. He must therefore find a basis for establishing trust. Similarly, the subordinate who proposes must have a basis for feeling that the disposition made of his idea will not be arbitrary, that the boss's demand for innovation is real and that the risk he is asked to take will be shared. If this set of problems is not to be resolved by the exercise of power by the Great Man above or the product champion below, or dissolved by a re-evaluation of the need for innovation, it demands that boss and subordinate come together on another level, as men. This can happen only through a process of challenge, test and performance, undertaken in both directions. This is not to be confused with their getting to like each other, although that may happen as a conse-

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quence. Nor is it a matter of setting aside the obligations of their respective roles. It is a matter of establishing, within the framework of corporate obligations, emphasis on work and its requirements, and respect and demand for performance, a basis for mutual trust which will enable them to run risks with one another and jointly to run risks for the organization. -The prospect of innovation carries with it the possibility, even the likelihood, of failure. It entails uncertainty. Where both failure and uncertainty are taboo-where it is felt necessary to pretend that they do not exist-they will be avoided. The overwhelming tendency will be to push them underground and to stick as far as possible to the well-understood, the likely-to-succeed; that is to say, to the tried-andtrue. Where it is impossible to avoid uncertainty and the prospect of failure, the tendency will be to shunt them off onto somebody else. The consequences of these tendencies have been spelled out in our discussion of companies like the McKinney Company: divisions within the company will tend to draw boundaries between each other, to dispose of what others propose and to seek scapegoats. Dealing with these problems other than by the power routes requires introducing the notion of "failure through competence." It means abandoning the notion of omniscience at the top and the certainty of success if you are competent. It requires that the organization tolerate both failure and uncertainty, without becoming softheaded toward incompetence or relaxing demands for performance. Tolerance for uncertainty carries with it tolerance for experiment, which in uncertain situations is the only productive response. The leader, in this style, must help the organization acquire the concept of shared responsibility for the risk of innovation; must remove the dread of failure by recognizing,

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openly, its association with the demand for innovation; and must, in his own behavior, model tolerance of uncertainty and of willingness to change and experiment in the face of that uncertainty. The leader who wishes to confront these problems is dependent on sustained contact with the people who experience them. Where the size and complexity of the organization makes such contact impossible, he is compelled to decide who the key people are and to work on these problems with them. He must help them, then, to work similarly with their subordinates and peers. He must present this policy and, more importantly, exemplify it. The two styles we have just discussed have been presented in their pure or extreme form. In reality, they rarely appear in this form. Most leaders of organizations who undertake to resolve problems of innovation strike some compromise between the posture of the Great Man at the top and the role of the resourcebuilding educator. Still, these two styles represent major alternatives open to the leader. They are poles with respect to which his own position is defined. The first approach looks at the problem of change toward innovation as a problem in the exercise of power by a man at the top who knows where he wants to go and has a vision of what must be done. The second looks at the same problem as one of identifying and resolving the interpersonal obstacles to innovation. It focuses on the process of change rather than on implementing an established vision. The first approach moves toward the organization as an extension of the personality of a Great Man, on whom all others are dependent. The second moves toward a community of innovators, within the framework of corporate goals and requirements.

1

Technological Change in U.S. Industry

1)

WE H A V E CONSIDERED, up to this point, invention and innovation within the corporation. What we have learned through this analysis--characteristic patterns and problems of innovation within the firm, and some of the approaches to change-should have implications for technological change within a larger industrial framework. It would be surprising if patterns of innovation within the firm did not reflect themselves in broad patterns of technological change within and across large segments of industry. In spite of its problems innovation does occur and at a rate to cause widespread interest and concern. What are its sources? Where does it come from, and what are its patterns? Do the patterns and problems of technological innovation differ significantly from one industry to another? Is it as useful to speak of models for change on the level of industry as it is on the corporate level? In the studies1 from which this chapter was drawn, three industrial areas-textiles, machine tools and building-were chosen to 139

140 Technology and Change represent industries that are traditional and mature (stable in comparison to change in Gross National Product). In each industry we tried to identify technological developments of major significance which had been brought into commercial use between about 1930 and 1960. Through this analysis, answers were generated to some questions concerning source, pattern and problems of technological change. Because of the limits of the study-major industries such as chemicals, petrochemicals and primary metals were not considered, for example-these answers are very much in the nature of hypotheses. Enough material was assembled, however, to throw doubt on at least one common-sense view of technological change in industry, a view which runs as follows: -Within any given industry new technology comes primarily from the research and development efforts of firms established in the industry. The rate of technological change in the industry is therefore primarily a function of research and development investment by those firms and their skill in commercializing research results.

An "Industry" At the outset it became apparent that one of the central problems of the study would have to do with the question, "What is an industry?" We are accustomed to speak of the textile and machine tool industries, for example, as though they were fairly welldefined areas which remain substantially the same from year to year-so many companies which share a common set of functions and at least an overlapping family of products and processes. They are defined in this fashion by the Standard Industrial Classification manual and by the industrial associations themselves. Nevertheless, each of the industries studied turned out to be complex, ill-

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defined and shifting. It is not even clear that textiles, building and construction, and machine tools are industries in the same sense. In textiles, for example, several different kinds of companiesmills, fiber producers, machinery producers, garment manufacturers-are all more or less associated with the industry. But many companies traditionally associated with the industry have been moving out of it, and other companies (notably from the chemical industry) have been moving in. Identifying the industry as a set of companies, becomes difficult, since many traditionally nontextile companies have been establishing textile divisions and traditionally textile companies have been establishing nontedile divisions. The "industry" appears to be quite a different set of companies if companies filling textile functions (even though the products are paper- or plastic-based) are included. The boundaries and the nature of the industry have been in process of change. This change, moreover, turns out to be essential to innovation in the industry.

Significant Innovation A second major question was what would be meant by a significant technological innovation. Its significance would seem to depend on three criteria: I. Economic importance-the dollar volume of sales the innovation achieves and/or the money saved directly or indirectly by adopting it. The economic importance of a piece of technology is a function of its role to date, and its likely future role, in the whole changing system of technology. Enabling inventions-like the development of waterproof glues for plywood-never reach great sales volume in themselves and are never directly responsible for

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2. Technological significance. An invention is technologicalIy significant depending on the degree of change in technological practice require or permitted by its acceptance. Invention and discovery interact in complicated ways. Invention may spring from scientific discovery, and scientific discovery may occur through the attempt to explain how an invention works, as indicated in Chapter I. 3. The degree of change in capital equipment, organization, training and the like required to implement the invention in industry-and therefore, to a large extent, the cost of implementing it. This is "significance" in the sense of the target diagram shown in Chapter 11. These three criteria are independent. Technologically significant inventions-like electron beam forming, in the machine tool industry-may be of little economic importance. An economically important invention, like Sanforizing, has had relatively little technical significance. The introduction of synthetic fibers, which has been both technologically and economically significant, required surprisingly little accommodating change on the part of the textile industry. For the purposes of the study, we assembled lists of significant innovations by asking individuals knowledgeable in the industry for their views and cross-checking their answers, without first specifying the sort of significance referred to. We found considerable agreement among those interviewed concerning innovations which have been most significant for their industry during the last twenty to thirty years. On analysis, the innovations listed turned out to include, at a minimum, those which have been considered most economically significant. They varied widely as to the degree of change required for implementation. The proviso "in the last twenty to thirty years" represents a rather arbitrary limit: we decided to limit ourselves to innovations which had occurred since the early years of the Depression. It

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turns out that this period also includes what most people knowl-

edgeable in the industry consider significant innovation over the last fifty years, with a few exceptions (carbide tools and individualized machine drives, for example), which have also been included in the study. In addition, we have included some few innovations of little significance in themselves but representative of certain problems, patterns or potentials for the industry (stretch fabric and Velcro, for example). In each area, moreover, we have included families of innovations which are cumulatively significant although no one of them has much importance. These are primarily associated with increase in productivity; for in each area there has been a more or less steady stream of small process changes which have resulted over the years in significant changes in productivity. To leave them out would be to beg the question of the importance of incremental change versus innovative leaps in technology and to leave out what has been in some cases a condition of the industry's survival.

1.

The Textile Industry

Broadly, we can divide the textile industry into three major categories :

a. textile mill products-an industry which converts raw materials like cotton and synthetic fibers into yarn and then into fabric; b. the apparel industry, which purchases its product in the form of knitted or woven cloth from textile mills and converts it to a finished product ready for wholesale and retail distribution; c. textile machinery-an industry consisting of about fifty-five domestic concerns that produce textile machinery and accessories.

144 Technology and Change Wholesale and retail distributors were not considered part of the industry for the purpose of the study. Fiber producers are discussed in later sections. The textile industry, in this broad sense, is highly fragmented. The apparel industry is composed for the most part of plants with less than loo employees. Textile mills are concentrated in mediumsize firms employing between loo and 250 workers, but the increased strength of this industry lies in large, integrated mills with 500 or more employee^.^ Innovations. In the following list, the date given is the approximate date at which the innovation had become a going commercial proposition. Volume in pounds, as of 1960, represents the best estimated common denominator of economic importance we were able to assemble for these innovations. In the case of new fabric treatments, rather than new materials, these figures are high; their importance would be more accurately reflected by value added, figures we were unable to assemble within the limits of the study. VOLUME IN INNOVATION

Synthetic fibers Synthetic finishes Sanforizing Tufting Nonwovens Texturizing Foam Compacting Imitation fur Velcro Stretch fabric

1960

DATE

P O ~ D SIN

1961 1961 1957 1958

975 million billion (cotton) About 1 billion About loo million About loo million 50 million 50 million 50 million 20 million 7 million 5 million 2

In addition there is a family of process innovations affecting productivity, each of which is small in significance but which, in the aggregate, have made a great difference in output per worker.

Technological Change in U.S. Industry

145

In the Appendix there is a discussion of each of these innovations, its origins and something of its economic importance. Patterns of Innovation in the Industry. In spite of their diversity these instances of innovation form a pattern. They can be divided into four or five categories: new materials and treatments based on chemistry (fibers, finishes and foams); changes in the mechanical properties of fabrics and yarns (texturizing, Sanforizing, compacting); new ways of forming fabric (tufting, nonwovens, imitation fur); new end products (Valcro, stretch garments); new machinery associated with the above or not. With one or two exceptions the estimated volumes attained by these innovations are inversely correlated with the date of their introduction. This does not mean simply that the older innovations have had a longer time to gather momentum. It points, rather, to an order in the development of the industry. In the period immediately following World War I1 there was a major invasion of the textile industry by the chemical industry as the synthetic fibers and finishes were introduced. From the point of view of technical and economic significance these have been the major innovations of the last thirty years. In the fifties, then, came a series of innovations involving fabric, yarn and machinery. Almost all of these (except compacting and tufting) depended on the chemical innovations of the forties. The fifties were a time of minor innovation exploiting the major chemical innovations of the forties. The chemical industry was most careful to adapt itself to traditional textile processing. and its introduction of new materials required remarkably little process change on the part of the textile industry. Processing has been the anchor of the industry. Little by little, since the major chemical invasion, the textile industry has begun to make small process changes inherent in the potential of the new materials. Sources. By and large, the textile mills and the textile machinery companieshave contributed relatively small changes in prod-

Technology and Change uct and process; the cumulative effect of these small changes in process has been a major increase in productivity per man-hour. In addition, in the list above, they have made important contributions to the development of tufting, texturizing and some nonwovens. But the more significant innovations have tended to come from outside what is traditionally called the textile industry. The role of the chemical companies has already been referred to. The introduction of the new fibers and finishes (and to a lesser extent, foams and binders) has constituted a major invasion of textile markets, even though it has proceeded through the sale of fiber and resin to the textile mills. There have also been invasions of textile markets by the chemical companies in ways that bypassed the mills or made minimum use of their products. These invasions cannot be considered innovations in textile process or product, since they bypass these and are not textiles at all, but they must certainly be considered innovation in textile functions; they provide new ways of filling functions previously filled by textiles. Examples here are the inroads of plastic sheet, film and treated paper in applications like upholstery, seat and slip covers, electrical coverings, shipping sacks, industrial tape, napkins and toweling. As a result of these inroads, textile uses in industrial applications have fallen from 24 per cent of textile mill products in 1949 to 1952,to 17 per cent in 1961.The inroads of paper products alone have taken away from textile markets about 2,500,000 bales of fiber a year. In return, textile products have invaded very little of the province of other industries (Velcro fasteners and imitation fur are small exceptions). In the textile machinery field, traditional producers have made some of the changes responsible for increased productivity, as referred to above. But many of the major innovations have been made, again by machinery producers outside the textile industry -as, in the list above, machines for producing nonwoven fabrics, imitation furs, foam-fabric laminates, Velcro and compacted knit goods. Filament-winding machines for the reinforcement of plas146

Technological Change in US. Industy

147

tics have been developed by companies like Union Carbide and Brunswick and not by what is traditionally the textile industry. Moreover, in recent years, England, Japan, Germany and Denmark have been producing and exporting machines for making flat fabric which go beyond our domestic capability. It is also striking how many of the innovations listed above in-

volve the activity of independent inventors, some of whom also built new small firms on the basis of their inventions. The list of innovations of this sort must include: Sanforizing imitation fur compacting stretch garments for children Velcro Foreign manufacturers and inventors have been important in the development of: synthetic finishes certain nonwovens at least one texturizing process urethanes Velcro and many improvements in textile machinery, including a large number of automated machines. Dominance of marketing considerations. Not surprisingly, most of the innovations listed above have been directed either toward providing consumers with products of quality at lower prices (tufted carpets and imitation fur, for example) or toward improving product quality as perceived by consumers (wash-and-wear finishes, Sanforizing, compacting, stretch children's garments, etc.) But marketing and merchandising considerations have been

.

148

Technology and Change

important in another way, as well. In the apparel and household markets (the dominant markets for the industry), establishing a consumer franchise for the new products produced has been essential. It is the establishment of this franchise, symbolized by a trade-mark in most cases, which has been the principal means of protecting innovation in the industry and has made the difference between success and failure. Problems of Innovation in the Industry. The problems of innovation in the industry cannot be separated from the problem of the industry as a whole. These problems can be expressed in a series of propositions which reflect self-reinforcing trends. I. Mill profits are low. Textile mill profits declined to the point where, in 1950 to 1960, they had an average 2.4 per cent profit on sales, as against 4.1 per cent for other manufacturing corporations. Moreover, the mills realize a small percentage of the consumer dollar spent for the final textile product. 2. Textile mills make a very small investment in R & D. Textile mill expenditures for R & D have for many years averaged l o per cent of the average of what other industries spend. If technology in the industry were more advanced, if more internal innovation occurred, profits might be higher-but the industry can look at its low profits and its low share of the textile consumer dollar and maintain that it cannot afford further expenditure for R & D or that its return on the extra dollars expended would not be great enough. The large mills which have made major investments in R 81 D have not shown significantly improved profit performance even though their experiments with R & D have not been very extended to date. Textile R & D has had significant payoff in companies like Johnson and Johnson, or Bauer and Black, where there is a welldefined, well-controlled market.

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3. The textile industry is still highly fragmented. There is vertical fragmentation. To a large extent still, in the apparel field, separate companies control the steps that run from fiber producer, to yarn spinner, to mill, to converter, to garment maker, to wholesale, to retailer. Moreover, the garment producers-a critical intermediate step -are also highly fragmented. In spite of the recent growth of one or two giants (like Jonathan Logan), most plants have less than one hundred employees. These plants are below "critical size" for innovation; they cannot afford any speculative investment for change. Innovation for them is apt to be limited to design of material and cut of fabric. For major innovation in product to occur, all these steps must be covered; the innovating company must control them all--or depend on intermediates which are scattered and below critical size. 4. The textile mills are traditionally oriented to production, rather than to entrepreneurial activity. Innovation in the consumer products area requires sensing market opportunities; regarding innovation in product as a regular part of the business; establishing consumer franchise around and through the garment producers; innovating in merchandising as well as in product; modifying processing to suit the demands of innovation. But a large segment of the mills is traditionally oriented to production; that is, it sees the prime function of the mills as the production of cloth. Innovation, for it, means faster and more efficient ~roductionof cloth. It is committed to present product, to present means of production, to present capital equipment; and it is largely controlled by family-owner-managers who are committed to this concept of the business. For this controlling group, putting major emphasis on entrepreneurial activity, on merchandising, would be to stand the business on its head. These factors tend to reinforce one another. Low profits and a

150 Technology and Change low share of income from finished textile products tend to discourage investment in innovation and lack of that investment tends to keep profits down. Again, fragmentation in the industry tends to make innovation more difficult and less rewarding than it might be, and to reinforce the mills in their concentration on production; on the other hand, the traditional concentration of the mills on production tends to stand in the way of vertical integration and market- and merchandising-centered innovation. It is not surprising, in the light of these considerations, that major technical innovation has tended to originate outside what is traditionally the textile industry. All the above is in marked contrast to the behavior of the synthetic-fiber producers. The introduction of the synthetic fibers was characterized by vigorous efforts on the part of the chemical companies (notably Du Pont) to establish consumer demand and to promote product names, to establish quality control specifications for the use of the new fibers and to see that they were followed, and to instruct and work with each of the links in the textile chain concerning the technical problems to be solved in using the new fibers (it has already been remarked that these fibers were designed initially to conform as exactly as possible to existing textile equipment). When the fiber producers failed in one or more of these tasks, as in the case of one of the rubber companies who attempted to introduce a new fiber, the operation was not successful. Successful introduction of the new product required merchandising to consumers, on the one hand, and touching all of the processing bases, on the other. The chemical companies reaped the rewards of these activities in terms of ~rofitson sales. By and large, the chemical companies and not the textile mills gained significantly increased profits from the use of the new materials.

Technological Change in U.S. Industry

2.

151

The Machine Tool Industry

According to the traditional picture, machine tools are machines for forming metal to dimension. They include milling, grinding, boring, drilling, broaching, planing, and cutting machines, and lathes and forging machines; but not casting machines, rolling mills or presses, which are part of the larger metal-forming industry. The industry has been changing, but the traditional picture is the one with which we will begin. The industy is composed of many little companies, surrounding a few giants. There are over 150 members of the Machine Tool Builders Association. Of these, relatively few-including Cincinnati Milling, Warner and Swasey, American Steel Foundries, Baldwin-Lima-Hamilton, Ex-Cell-0 and Sundstrand-are large firms. Little companies, with a few hundred employees or less, make up about 20 per cent of the industry. Most of these small companies specialize in the manufacture of one narrow line of tools (boring machines, radial drilling machines, etc.). About 420 different tools are produced by the U.S. industry, 25 of which account for 75 per cent of all production.

Innovations. The list of significant technological innovations in the machine tool industry over the last roughly thirty years was collected in a manner similar to that employed in our study of the textile industry. Individuals knowledgeable in the industry-consultants to the industry, members of the technical press, members of the industry-were asked for their views on the most "significant" innovations without first defining "significant." Later, their choices were analyzed for technical and economic impact. Results fell into four major categories: 1. The many small changes in process and products which have accounted, in the aggregate, for significant increases in

152

Technology and Change

productivity per machine (though not, in this case, with corresponding increases in productivity per man-hour). 2. New ways of cutting and forming metal that are technically interesting but economically of little significance; they are ways of doing jobs that could not be done before, rather than ways of changing productivity. 3. The introduction of carbide tools and the family of innovations surrounding it, and the introduction of numerical controls. These are the two major innovations pertaining to the industry over the last thirty years. 4. Entry into machine tool markets of new materials-forming methods. Patterns of Znnovation in the Industry. Traditional machine tool companies have produced, from within, over the last thirty years many small increments of technological change-in machine design, new materials, materials-handling methods-which have accounted for important increases in productivity per machine, though this increase has been less than fully reflected in productivity per man-hour. There has been little major technological change that has also been economically significant. With a few major exceptions, innovations in metal forming, such as those originated in the aerospace industry, have not been taken up to any extent by the machine tool industry. The two major exceptions to this statement-carbide tools and the family of innovations surrounding it, and numerical controlsoriginated largely outside the traditional U.S. machine tool industry, the one from foreign technology and the other from government-supported research and development for the aerospace industry. Wars and defense programs have played a peculiarly important role in the history of innovation in this industry. Carbides and individualized drives came out of World War I and came into

Technological Change in U.S. Industry

153

their own only in World War 11. Wars and defense needs have created new demands for machines and for tools, as well as new jobs for tools to do, thereby stimulating new developments and providing opportunity for the introduction of new machines. The defense and space programs now provide both a major market for the product, a major portion of the research and development conducted in the metal-forming area and most of the major new developments in the industry-including those that have been taken up by the industry and those that have not. The role of wars and defense programs provides a special case of what has always been for this industry the crucial role of the machine tool user. Throughout its history the machine tool industry has responded to the demand of its users and has reflected the over-all growth of industry. In England in the eighteenth and nineteenth centuries new lathes were developed for the hydraulic press, new drilling machines were developed for the early steam engines. In the United States new production methods including what is now known as mass production were developed by Whitney and Colt for the manufacture of guns. Firearms, sewing machines, bicycles, locomotives and automobiles all have had major impacts on the machine tool industry, and the machines and methods of production to which they gave rise are still in use. The aerospace industry is the most recent link in this chain of influence. User industries have affected innovation not only by creating new demands but by undertaking development on their own-as the automotive industry has developed new production lines and methods around standardized machine tool parts and as the aerospace and defense industries now develop their own metal-forming methods. The machine tool industry over the last thirty years or so has been subject to two kinds of innovation by invasion. The first is represented by numerical controls and consists in the introduction of a variant of computer technology into machine tool practice by

154

Technology and Change

an industry outside the traditional machine tool industry. The second is represented by precision casting and forging and the other materials-forming methods described above and is a series of inroads into machine tool markets by nonmachine-tool companies. We can see as minor themes of innovation in this industry the important role of the setting up of new small firms (such as the Anocut Company) and the critical leverage of publicity (such as the championing of electrical machining, numerical controls and other methods by the American Machinists) on technical change in the industry.

Problems of Innovation in the Industry. Again, the industry's problems of innovation are inseparable from its problems generally, and many of these are suggested by the ways in which innovations in machine tools have and have not occurred. There is a difference, however, between the industry's view of its problems and the way its problems appear to this outsider. The industry sees its primary problems as overcapacity. It is now operating at roughly half-capacity. To this overcapacity it attributes its low profits, its inability to invest in research and development and its vulnerability to threat both from other means of metal forming and from foreign machine tool companies. To this also it attributes the fact that its top twenty companies do not present a very attractive financial picture at the present time. In turn, it sees overcapacity as having two causes: -the necessary buildup of the industry in order to handle wartime demand, with consequent overcapacity in peacetime; -the long replacement cycle of machine tools, due as much to management attitude and the competitive nature of the industry as to techniques of replacement analysis. To an outsider, the industry's problems seem to have to do with its domination by its customers. The industry has traditionally produced custom products, linking itself to the conservatism of its customers and giving itself the quality of a gigantic custom job

Techno2ogical Change in U.S. Industy

shop, with consequent low production runs,

155

high costs and low

profits. In addition, the industry is highly fragmented, composed of many small specialized companies, each below critical size for innovation. Within the industry the dominant firms are mostly old, familyowned and family-managed. The industry has a strong traditional mentality. It has been slow to lose its craft orientation and family domination and to unite as an industry (there was no industry association until 1902). It is strongly committed to: -focus on present means of production and present equipment; -a strong, short-term customer service orientation; -a picture of itself as a job shop supplying customer demand rather than as a entrepreneur initiating new production methods and devices and marketing these to industry; -indifference to research and development; -sticking together, as a private club, with hostility to stimulations to change from individuals and companies outside the industry. In short, limits to innovation within the industry have come from the industry's fragmentation, its old-line management and devotion to tradition, its circle of low profits-low investment in R & D, and most of all from its short-term dependence on user industry.

3. The Building Industry The building industry is not an industry in the sense in which the traditional textile and machine tool industries are. The assembly of groups devoted to the building tasks contains no one group of companies traditionally responsible for building as the old-line machine tool companies have been responsible for making ma-

156

Technology and Change

chine tools or the old-line textile mills have been responsible for making cloth. The building industry is made up of an estimated eighty-five thousand general building contractors; ninety-eight hundred architectural and engineering firms; materials suppliers; federal, state and local governments each with multiple controlling groups; building workers and their unions; brokers, realtors-and entrepreneurs of building enterprises and their financial backers. Of the various groups involved in the industry, no one has controlled a dominant share of the building dollar. The structure of the industry is changing, however. Professional home builders account for more housing. Large-scale builders continue to enter the residential market. Business is tending to concentrate in fewer firms, and the large firms are tending to integrate functions, as in the case of realtor-engineering-designer-builders. Technological znnovdion in Building. During the last thirty years the U.S. building industry has undergone a radical change of character. Project and corporate size has increased greatly. Equipment, materials, design and planning practices are in many ways different from those employed before the Depression. Nevertheless, while the industry as a whole has undergone major change, this change has proceeded in the small segments of the industry through many small increments. There has been no radical change, of great technical and economic significance, which is associated with a single invention or family of inventions. Nothing is to the building industry as synthetic fibers and finishes are to textiles or as numerical controls are to machine tools. In the building industry, change has been evolutionary-like the many small process changes accounting for increased productivity in machine tools and textiles-and much of the most important change cannot be described as technical at all. It has had to do, rather, with methods of managing and organizing the building process.

N

Technological Change in US. lndustry The innovations described below-generated ion as the previous lists-concern :

in the same fash-

management and organization of building materials and components power tools mechanical equipment prefabricated and off-site preparation a miscellaneowi category During the last thirty years there has been for the building industry no single technological change of major economic significance or analogous to major innovations in the other industries we have considered. Technological change has been primarily evolutionary, in small increments, significant only in the aggregate. But there has been a wave of change, so diffuse and made up of so many small parts that it can hardly be called an innovation in the usual sense at all. It might better be called the industrialization of building. As we have seen the invasion of the textile industry by the chemical industry, and of the machine tool industry by the aerospace industry, we are seeing building activity in the United States invaded by the model of industrial manufacturing. This change seems to have originated with the emergence of large-scale building contractors, both commercial and residential, with the large public works projects of the Depression, the demands for large-scale building in World War I1 and the pressures on the industry to ~rovidemass housing in the years following World War 11. Out of these events and other social processes associated with them, came entrepreneurs in building activity on the model of entrepreneurs of large-scale manufacturing processes in industry. They brought with them and stimulated adoption of a variety of managerial and production techniques-cost analysis, job analysis, time and motion study, prefabrication, on-site mass production, etc.-which boil down to treating building as a manu-

Technology and Change facturing process. It is no accident that the mass production house was one of the more striking outcomes of their efforts. As a consequence of this new appraoch to the building process, efficiency in use of labor and materials was increased, costs were lowered, speed of construction was greatly increased and product quality became subject to the same sorts of criticism leveled at other massproduced products. Along with these changes in management and methods came a series of building techniques, components and materials which adapted themselves to the concept of building as a manufacturing process-to the idea of the house or building as a product. Many of these were old inventions which had not become appropriate until the trend in question here. These included the actual movement of segments of the building operation into the factory: premanufactured houses, premanufactured components and off-site preparation of materials. New materials and components were invented, adapted or simply taken off the shelf to fit into these trends toward premanufacture: plywood, prestressed concrete, new thin-walled lightweight structures with new insulating and structural materials. Much of the building operation was moved off-site into the factory itself; on-site activity was made as much like factory work as possible. New power tools and equipment were adapted, both on-site and in-factory, to replace previous craft operations. The great appeal of many new components (gypsum board, for example, or plastic floor coverings) was the extent to which they appeared to eliminate craft-based labor on the site. Along with this major trend, which is something quite special to building, there are a number of themes familiar to us from consideration of textiles and machine tools: 158

-The invasion of a traditional activity by new materials developed by technologically advanced industries (in this case, primarily plastics, but also high-strength steel, new insulating

Technological Change in U.S. Industry materials, etc.) and new techniques

159

of design and assembly

to suit the potential of the new materials. Specific industries, like the aircraft industry, contributed much to new building activity in terms of methods of structural analysis, models of construction and specific components (such as sandwich panels ) . -The role of World War 11, stimulating needs for new materials, providing new massive building projects requiring new methods and bringing new managers into being and new models of the building process. -The role of European innovations, such as waterproof glues for plywood, prestressed concrete, hardboard and particle board and tower cranes. -The continuing importance of independent inventors and entrepreneurs.

Patterns of Innovation: A Summary We began with a set of questions about technical innovation in mature industry-that is, traditional industry, stable or declining in growth: -Where has significant innovation come from? -How has it come about? -What have been the problems about it, the obstacles to it? -What are the possible directions of change? We have looked at two industries which can be called mature on the basis of the definition, and one (the building industry) not clearly an industry, growing, but with many of the features and problems of mature industry. Out of this have come the following general themes concerning origins and patterns of significant innovation in mature industry:

160

Technology and Change 1. During the last thirty years in the three areas studied there has been very little new technology with major economic impact. 2. From companies traditionally associated with these industries, there have come, for the most part, small increments of change in product and process which have been significant only in the aggregate. In the case of change in process, this has amounted to significant increase in productivity. 3. There have been a few technical innovations of major technical and economic significance. 4. These innovations have come in clusters-a major technical change coupled with other changes required for its implementation and still other proliferations to which it has given rise. In the textile industry, we have had the development of synthetic fibers and its proliferations (such as textured yarns, stretch fabrics and Velcro). In machine tools, there have been carbide tools and the correlated development of individualized machine drives, improvements in grey iron casting, and the diamond wheels; and later, numerical controls and its varied applications to specific machine tool functions. 5. These major innovations have come primarily from outside the traditional industry. They have come: -from foreign technology; -from independent inventors; -from the startup of new small firms; -from invasion of the traditional area by technically advanced, established firms in other industries. 6. Innovation through the work of independent inventors and through the entrepreneuring of new small firms has been traditional in American industry. But the present study indicates that it is by no means limited to the distant past. In textiles, there have been, for example, shrinkpoohg, stretch fabrics, imitation fur, Velcro; in machine tools, the develop-

Technological Change in US. Industy

161

ment of electrical machining. In recent years, however, the new small firm is apt to have broken off from an established firm or laboratory. 7. The principle source of major technical chunge in mature industry, in spite of common-sense views of the matter, is innovation by inuasion. "Innovation by invasion" refers to innovation out of the flow of technology from one industry to another, a process we have seen in three different forms: a. The traditional industry borrows technology from the new one as building has borrowed from aircraft technology, even though the new industry remains apart from the traditional business. b. The new industry enters the business of the traditional industry either by supplying new components, materials or equipment (as the chemical industry supplied synthetic fibers and finishes to the textile industry) or by setting up to manufacture some version of the product of the traditional industry (as the aerospace industry has in some cases manufactured numerically controlled machine tools). c. The new industry enters a new business, providing new processes and products which displace the processes and products of the traditional industry, filling the traditional function in a new way. Leather has been partially displaced by vinyls, paper by polyethylene, and machined metal by precision casting. In the first case, the old borrows what it wants from the new. In the second the new introduces change into the old, either because of a market opportunity in the old or a need for improved product from the old. In the last case, the new displaces the old. In all three the invasion consists of a flow of technology from one industry to another. In the last two cases there is a business invasion as well.

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Technology and Change

In all three cases there is occasion for the displacement of technology from one field to another, as described in Chapter I: the invader carries the germ of technology to the invaded industry, where it develops in modified form. One or more of these types of invasion has characterized major technical change in all the mature industries considered. In textiles the basic movement of innovation over the last twenty years has been the invasion of textiles by the chemical industry and the elaboration of the potential opened up by that invasion. A principal process of technical change in the machine tool industry at the present time is the development, elaboration and diffusion of the principle of numerical controls, a product of the invasion of the machine tool by the aerospace industry. Over the last thirty years the principal wave of technical change in the building industry has been a wholesale borrowing of methods and techniques of industrial manufacturing-the industrialization of building. Building is a complicated case, since it also represents specific borrowings from the aircraft industry and specific innovations from materials suppliers in the chemical and metals industries. It is interesting, in considering this process, to notice who has been invaded by whom. In principle, an industry in process of invasion by another could be invading a third. But this has not been the case. Companies traditionally associated with textiles, building and machine tools, have not brought significant technical innovation to other industrial areas. It is the newer, more rapidly growing, more technically advanced industries that have brought new technology by invasion to the stable or declining traditional industries. For textiles, building and machine tools, the invaders have been the chemical industry, the aerospace industry and (so far as building is concerned) all industry of advanced manufacturing technique. Looking beyond these boundaries, we can speculate that the total process of technical innovation in American industry in recent years has consisted in the emergence of certain technically ad-

Technological Change in U.S. Industry

163

vanced industrial areas-chemistry (much but not all of this invasion has consisted in replacement of "natural" by "synthetic" products), the broad area of electronics, and aerospace-which have exerted pressures for change on traditional industry either by serving as technological models, by making new demands on traditional industries as suppliers or by exploiting market opportunities represented by traditional areas. Pressures for growth and expansion, as well as the interdependence of industries as sources of supply and as markets, have caused these advance waves of technology to spread out over all of industry. In the process, the meaning, as well as the boundaries of traditional companies and industries, has changed. Some industries and companies have gotten bigger at the expense of others. But, more to the point, traditional industries have changed their form. Any consideration of the textile industry would be artificial which did not include the chemical, plastics and paper industries. Consideration of the machine tool industry now must take into account the aerospace, precision casting, forging and plastics-forming industries. These industries are now complex mixtures of companies from a variety of SIC categories, some functioning as suppliers to the traditional industry, some competing with it for end-use functions and markets. "The industry" can no longer be defined as a set of companies who share certain methods of production and product-properties; it must be defined as a set of companies, interconnected as suppliers and market, committed to diverse processes and products but overlapping in the end-use functions they fill. We can talk about the "shelter" industry and the "materials forming" industry, but we cannot make the assumption of coherence, similarity and uniformity of view which we could formerly make in speaking of "builders" or "machine tool manufacturers." Similarly, companies are coming to be less devoted to a single family of ~roductsand manufacturing methods and more a diverse conglomerate of manufacturing enterprises stationed around a central staff and bank and to some ex-

164 Technology and Change tent overlapping in the markets and functions they serve. These changes are part and parcel of the process of innovation by invasion. They are also strongly reminiscent of the new corporate center -margin structures beginning to be adopted by firms as a way of profiting from R & D and institutionalizing the product champion's role. The corporate form is changing in response both to innovation by invasion and to the demands of the R & D-based company.

Problems of Innovation in Mature Industry Why have traditional industries not innovated in major ways from within? Are their problems of innovation different from the problems generic to established firms? These industries, like individual corporations, provide circular, selfreinforcing resistance to change. Some of this resistance is attributable to the fact that these industries are traditional-that is, old, full of continuity with the past and relatively untouched by the waves of change of the last fifty to sixty years. Traditional industry is -built on craft-based rather than science-based technology; -fragmented, both in the sense of containing many small firms below critical size for innovation and in the sense of dividing the work of the industry into many small steps, each under the control of separate organizations. These industries also share with many nontraditional industries the characteristic of maturity. Their growth curves have leveled off or declined in comparison to the growth of American industry overall. It has been shown by Jacob Schmookler and others that industries reach technical as well as business maturity; there is an S-shaped curve for technical innovation as well as for sales, as

/

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165

reflected by patent applications and by rate of technical change. Maturity also carried with it features of resistance to change. These include -focus on production, and on commitments to present methods and machines; -protection of these commitments by powerful social systems --of family, company, locality and industry-which would be threatened by large-scale technical change; -a lack of entrepreneurship and of entrepreneurial models. .~ low profits, These features reinforce one a n ~ t h e r Relatively characteristic of mature areas of business, lead to justification of low investment in new technology, which tends, in turn, to keep the industry on its plateau. Heavy commitment to present methods and equipment tends to reduce innovation to minor improvements, which reinforces long-term commitment to present methods. The fragmentation of the industry reduces the likelihood of major innovation, which tends to divert entrepreneurs to other activities, which reinforces the industry in its traditional orientation. The picture presented here shows certain areas of American industry, remaining traditional over the last fifty to sixty years; it shows the formation of new R & D-based industries (notably the chemical, electronics, and aerospace industries). And it then shows these new R & D-based industries invading, and thereby changing, those which have remained traditional. It does not explain why new R & D-based industries grew up as they did or why they were able to invade traditional industries. But it presents certain features of traditional industries as sources of resistance to change. These can be elaborated as follows: 1. Fragmentation. The three traditional industries studied are fragmented, in two senses. First, there are many small firms of less than critical size for innovation.

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Second, crucial steps in the industrial process are divided among organizations independent of one another. There is hardly anyone responsible for, and with control over, the whole process. The result is that change tends to be limited to what each independent operator can accomplish within his own sphere (pressuredyeing, faster winding machines, for example) and that change tends to break down when one factor in the industrial process attempts to introduce change that affects all the others (as in the case of many of the materials suppliers' attempts to influence the building industry as a whole). 2. Focus on present commitments. The commitments in question here are to present machines and methods for producing and marketing goods and, generally, to existing ways of running the business. This is more than "inertia." Not only is there strong commitment to present methods and machines, but the industry has learned to define itself in terms of these commitments-so much so that it would feel at a loss if they were abandoned. 3. Reinforcement of these commitments by strong social systems. The process referred to here is the one Elting Morison describes in connection with the introduction of continuous-aim firing into the Navy. Where technology is in question, social systems tend to build themselves around the technology, to construct a division of labor, a hierarchy and a way of living tied to the technology; and then, out of dependence on that technology, to resist any change in it. In the industries with which we have been concerned a number of distinct social systems have exerted similar effects: The social system of the company. Numerical controls obsolete many of the skills of the senior machinist, his ability to turn pieces precisely to dimension, to set up machines rapidly and precisely, etc.; premanufactured components make many of the carpenter's skills irrelevant; synthetic fibers reduce the need for skills in judg-

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ing and identifying the varying properties of natural fibers. Facts such as these account for worker resistance to much technical change and help to account, as well, for company resistance. Hierarchies of personnel, lines of dependence and much of management's sense of what the business is all about also turn on the skills and divisions of labor required by existing technology. In many companies, in the three industries considered, management is still in the hands of family-owners. The society of the family then comes into play. In many cases the family commitment is to "carry on" or to "perpetuate" rather than to introduce change. In some cases family lines of control bring into position managers incompetent to cope with the demands of change. In many cases companies and whole industries have been traditionally associated with a geographical area. Not only the economies but the social systems of towns and counties have been long dependent on certain companies within the industry. A good case could be made, for example, that the Southeast today (like New England in the past) represents a textile culture. This culture reflects the present textile business-raw materials, mills, a certain kind of labor-and is tuned to the traditional dominance of textile families. It reflects, overall, attitudes which reinforce things as they are, and change which moved to different raw materials, to different methods of manufacture requiring new skills or fewer skills, to new hierarchies within the business. The industry itself, regardless of geographical location, is a social system. In the machine tool industry, for example, the four hundred-odd members of the Machine Tool Builders Association know one another, share wide areas of agreement in views and tend to regard themselves as a tightly held private club in whose interest it is to resist outsiders, proposals for radical change, government interference and the like. The building and textile industries represent similar societies. In all three cases the formal and informal society of the industry

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is fundamentally conservative, aimed at perpetuating things as

they are rather than at initiating major change within the industry. These social systems, tied to existing technology, reinforce belief within the industry that "it cannot be done any other way" and keep out "foreign" views. They cause technical change to be seen as social threat. They are primarily committed to perpetuate rather than to change. They may become entrenched to the point where they are able to see the industry's problems as the fault of others-consumers, other industries, the government-who have not adequately supported them. 4. Lack of entrepreneurs and of entrepreneurial models. The entrepreneurial process in regard to innovation consists of sensing, in some order, market interest or need and the feasibility of developing a product suited to it, or a new process and the rewards to be gained from adopting it, and pushing the resulting project through first the company and then the world outside. The entrepreneur is a champion of product or process, fighting uphill against funded resistance to change. His incentive is apt to be not only profit but the adventure of radical change, and to these ends he is willing to take high risks both inside and outside his company. This style of work and the process to which it applies are to be contrasted with a view of business as taking and filling orders for present products. The traditional industries of this study tend to be characterized by the latter view and by individuals skilled in present processes rather than in the entrepreneurial process. For these industries the entrepreneurial models of the early days of the industry-the founding of companies through innovation-are so far in the past as to have become legends. There are few current instances of entrepreneurship to serve as models for the industry. Again, the lack of models, the lack of entrepreneurial activity and the lack of individuals skilled in entrepreneurship are self-reinforcing.

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Innovation by Invaders These sources of resistance to change are in addition to the generic problems of innovation in established firms discussed in Chapter 111. The circle of low profits and low investment in R & D; fragmentation and the problem of critical size for innovation; commitment to present methods and machines, reinforced by the social systems of the firm and the industry; lack of entrepreneurial models-these complement in established firms in traditional industries the generic problems of the articulated corporation: problems of boss, subordinate and of division of labor between marketing and technology. They add weight to the boss's disinclination to take the leaps required for innovation. They decrease the likelihood of effective product champions within the firm. Both sets of factors are consistent with-in fact, suggest-our findings about sources of innovation in traditional industries: that major technological change has tended to come from outside established firms in the industry, from independent inventors, new small firms, foreign countries and invading industries. Given the problems of innovation in established firms and in traditional industries, it is no wonder that major technological change tends to come from outside. What these factors do not explain is how major technological innovation has been able to occur among established firms in invading industries-in spite of the problems of innovation in established firms. They do not explain, for example:

-The rise of the domestic chemical and petrochemical industries, with the major technological innovations that helped to produce that rise (including the development of synthetics). -The innovations of the domestic aircraft and aerospace industry.

170 Technology and Change -The innovation-based .growth of the electronics industry. In the single field of semiconductors nearly all the major developments over a period of about twenty years came out of a single laboratory (Bell Labs) in a most successful established firm (American Telephone and Telegraph). It is true that, on close inspection, there is not quite as much to explain as there might at first seem. The role of independent inventors is surprisingly important, even in these invading industries. Frank Whittle, who contributed heavily to the development of the first jet aircraft engine, foreshadowed a post-World-War-I1 breed of highly trained independents "spun off" from university or industry laboratories. The rise of the chemical and petrochemical industries depended not inconsiderably on injections of technology from Europe, in particular, from Germany. Du Pont, often pointed to as an example of research-based industry, owes its success more to its phenomenal ability to carry out market and engineering development of inventions derived from other sources than to its own research output. IBM, the present giant of the computer field, was not the first to enter into the development of electronic computers; it waited, sticking with its older punch-card systems, until other firms had built and marketed computers and only then moved in, with great marketing and technical service resources and skills, to dominate the field. Many of the accomplishments of the aircraft and aerospace industries came out of the crisis of World War 11, the Cold War and the Space Race; many were undertaken, on government contract, in new firms or in newly established subsidiaries of old firms. Even semiconductors, which replaced vacuum tubes in many applications, were developed not by vacuum tube manufacturers but by a major communications user of electronic devices. Nevertheless, there are many instances in which established firms in U.S. industry in the last thirty years undertook major

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technological innovations. About these firms, the following points can be made: -They are science-based. Their research and development activity is not an appendage to other functions of the firm but is an integral part of it. -Their capital resources are considerable. In many cases these resources are based on Federal support. -They established, at their own beginnings, a style of researchoriented entrepreneurial activity which is still unfamiliar to most companies. It is tempting to think that established innovative firms in invading industries owe their innovativeness to their having been formed at an advanced stage of the research cycle as it applied to their own fields and to their having developed a style of researchoriented entrepreneurship consistent with that formation. Many of them undertook the developments on which their invasions are based at an early stage of corporate life, during the reign of the founding entrepreneur and before the full development of those features of corporate society which stand in the way of innovation. Nevertheless, the present study provides no basis for these hypotheses. I am aware of no thoroughgoing analysis of the innovations of the invading industries and of the firms that produced them. It is unnecessary, however, to restrict the statements of Chapters I11 and IV to established firms in traditional industries. The problems of innovation now experienced by established firms in invading industries-chemical, electronic and aerospace-enable us to state that when such firms undertake major technical innovations, it is in spite of, not in the absence of, those problems.

I

I

The National Climate for Technological Innovation

I

I

I N O U R DISCUSSION of problems of innovation and approaches to change in corporation, it was possible to identify someone responsible for change. Corporate management bears the principal, though not the only, responsibility. But when we come to industries the picture clouds. Though we speak glibly of "leaders of industry," it is difficult, if not impossible, to identify the leader of any industry. We can perhaps identify spokesmen for steel and automobiles, but these men serve for the most part to reflect the view of men in the industry, not to lead in the sense in which a corporation manager may lead. Although there are industry associations-many hundreds of themthey are loose confederations which serve as lobbies, as centers for propaganda campaigns ("Buy Leather," "Buy Wool," etc.) and occasionally for the support of research judged to be of sufficiently general and nonproprietary interest to be worthy of common support. They are not, as a rule, effective vehicles for change.l Even if it were possible to identify industries and industry lead\

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ers as agents of change, it is by no means obvious that industries are the most desirable units for initiating change. We have just seen that traditional industries, like textiles, machine tools and building, are in process of metamorphosis. It is in the very nature of technical change that industries merge, separate and take new forms. We ought not to consider change in the traditional textile industry, for example, without also taking into account the.paper and chemical industries. We have also seen how individual corporations, partly as R & D-based companies and partly through simple pressure for diversification, may function in a variety of industries. It would appear that the only sensible unit for change is industry (rather than "an industry") or, at the very least, larger aggregations of what we ordinarily call industries. But it is even more difficult to identify an agent of change for industry or for the chemical-paper-textile complex than for textiles. There is no single institution or set of institutions to turn to. There is only the whole complex of institutions: companies, industry associations at varying levels, universities, research institutes and governments-municipal, state, and federal. At each level, and in each relationship, change in the direction of innovation is possible. -Companies within an industry may come together to promote innovation for the good of the industry. -One industry may, as we have been seeing, invade another, with innovation as a consequence. -The industries, universities and research institutes of a region may come together to promote the economic development of the region. There is also the relationship between industry and the Federal Government, a relationship in some ways more important than those listed above because it is important for all segments of in-

Technology and Change dustry, not for just a few, and because change in the governmentindustry relationship may spur change elsewhere. It is appropriate to consider this relationship, moreover, because government as a set of institutions exists and is amenable to certain kinds of change; this is a relationship it may be possible to do something about. In this chapter we will consider briefly the Federal Government-industry relationship as part of a national climate for technical innovation, focusing on those issues which seem to come most directly from the patterns and problems of innovation so far discussed. 174

Government-Industry Relations: The Starting Point Observers of the relation between Government and industry in the United States and in other industrialized nations of the world are bound to be struck by the contrast. In countries like Britain, Germany, Japan and Soviet Russia, government speaks and acts as though it had a position of responsibility and leadership in the introduction of new technology in industry. To a greater or lesser degree, the institutions of those countries reflect this view. Each of these nations has a vehicle-like Britain's Department of Scientific and Industrial Research (or, more recently, its Ministry of Technology), Holland's TNO, Germany's AIF-for joint Government-industry collaboration in industrial research and development. In each of these nations a substantial part of technical innovation in the civilian economy is Government-financed and encouraged. Government's leadership in research and development in these nations usually goes along with a leading role in export-import matters, the provision of risk capital, industrial standards and codes and other issues essential to technical innovation. The situation of the building industry in France is a useful example; here Government provides financial support for a substantial

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fraction of the technical development; codes and standards develop through a Government institution; the Government provides a vehicle (the so-called AgrCment system) for testing and certifying innovations, and Government itself undertakes most of the new building. Government, in short, is a leading participant in the game of technical innovation. In the United States, on the other hand, an observer gets the impression that Government plays the role of umpire and groundskeeper while private industry plays the game. This impression is partly a matter of official view and partly a matter of observed fact. It is difficult to disentangle the two. There is a strong conventional wisdom about the appropriate and actual roles of Government and private industry which takes the form of advocacy of the Free Enterprise System. No one can have lived very long in American industry without encountering the view and without being called upon to sustain it. Men who are considered leaders of industry regularly espouse it-gain the right to speak for it, in fact, as a consequence of their leadership. Government leaders violate it at their peril. Reforms or changes are proposed in its name, never in opposition to it. But like other strong tenets of the conventional wisdom-Democracy, for example-the Free Enterprise System is a rather elastic concept and difficult to define in precise terms. In its strongest sense, Free Enterprise, applied to the problems of technical innovation, requires that all technical innovation in our society be the province of the private sector and that any initiative by Government be considered an illegitimate intrusion. Among businessmen, however, even the staunchest supporters of Free Enterprise usually require certain inputs from Government. What, exactly, is viewed as an area for appropriate Government contribution varies from group to group. There is little widespread agreement on the point. The following are examples of Government functions accepted as legitimate by some business groups :

Technology and Change -collecting and publishing statistics about the industrial process (Gross National Product, numbers of manufacturing firms, imports, etc. ) ; -exercising control of tariff and quota regulations to protect American business from certain forms of foreign competition; -employing monetary and fiscal policy to encourage economic growth and discourage depressions; -subsidizing certain industries (aircraft and maritime, for example) ; -undertaking major technical innovations, requiring great capital investment, in the public interest: for example, weapons systems and systems for national defense; the technology of space exploration; peaceful uses of atomic energy; desalinization of water and, most recently, the supersonic transport.

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The list is by no means complete. At the strong end of the Free Enterprise spectrum are those who would accept little or nothing of the above as a legitimate function (perhaps reluctantly accepting some functions as necessary 'because of the crises Government has created). At the weak end of the spectrum are those who would accept all of the above and a good deal more, excepting only Government's direct intervention in product and process development in areas where -private industry is capable of supporting the work itself. If we turn from the beliefs held by businessmen to observation of what has actually happened in the United States over the last fifty to one hundred years, we may observe the following: -Throughout our history the Federal Government has taken initiative in seeing to major technical innovation believed to be in the public interest. The line of examples includes bounties offered for certain new developments, such as aircraft; granting of land rights for the early expansion westward of the railroads; direct Federal support of the development of new transportation and communications systems (ranging

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from the telegraph to new satellite communications systems); Federal support of the development and first models of new technology which later came to play a major role in the civilian economy (for example, the development of the aircraft and computer industries and much of the electronics industry; atomic energy; numerically controlled machine tools; operations research). The Federal Government has supported programs of increase in agricultural productivity, which began with the Morrell Act in mid-nineteenth century, and culminated in the network of agricultural research and experiment stations, land grant colleges and county agents which has helped to make us the most agriculturally productive nation in the world and has created the ~ r o b l e mof agricultural surpluses. The fact is that the Federal Government has acted regularly as in the game of technical innovation when, a leading pal-ticipant under certain conditions, the public interest seemed to require it.2 It is also true that the mainstream of new products and processes in industry-the growth of the American chemical industry, for example, and the proliferation of new consumer products and methods for making- them-all occurred with little, if any, direct Federal involvement. There has been, as we have seen, at least over the last roughly fifty years, a process of technical change in American industry which has much more to do with interactions among industries than with interaction between any industry and the Federal Government. The process of competition between individual firms, and, more significantly, the process of invasion of one industry by another, has-been widely responsible for technical innovation in the civilian economy.

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The Federal Climate Starting from this array of attitudes toward Government's role in technical innovation, and this brief historical summary, we may now ask what Government's role ought to be. When we consider what has been said about problems of innovation in the corporation, it is apparent that there is one major aspect of innovation to which Government can make no direct contribution. The entrepreneurial problems of the firm, the dynamics of innovation in the corporation, are at the root of the problem. They are very much internal to the corporation. No Government policy or program can or should affect them directly. There is a very great need, at the corporate level, for education, training and experiment in the problems of innovation, but these are already the objects of considerable private effort; and what private interests do not do, in this field, it is unlikely that Government can do well. On the other hand, there is a kind of indirect Federal contribution which is very much to the point. For better or worse, the Manhattan Project and the whole wartime scientific effort provided a model for the conduct of postwar research and development in industry. TVA and military construction in World War I1 provided models of construction as a mass production process. Government's way of undertaking technical innovation for its own needs has given, and can continue to give, a powerful model of processes of innovation. In spite of the very mixed American attitudes toward Government-attitudes which treat Government as evil, just as in the time of the American Revolution-these Federal models are perhaps more influential than any others and provoke a kind of mimesis which is more effective than deliberate Federal efforts to affect corporate behavior. The provision of such models is related to a kind of national

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setting of tone which is also peculiarly a function of the Federal Government, and especially of the President. The President can convey a sense of satisfaction with the status quo, which discourages innovation. He can also convey a sense of urgency about change, an excitement about the process of innovation, and impart to private industry a sense of responsibility for constructive change which supports forces already working in the direction of innovation. When we turn from the individual corporation to the level of technical change in industry, direct, constructive Federal action seems more feasible. In principle, this action could take the form of direct Government involvement in the industrial game. It might proceed then, under the following model: Let Government, as the most powerful national institution and the one most closely associated with the public interest, take over the job of technical innovation for the nation--determining in which areas support and encouragement are required, undertaking and supporting the development of new products and processes, regardless of the competitive inclination of industry. This is, in effect, a Great Man theory of Government which gives to Government, in relation to industry, a form of power and responsibility similar to those of the corporate Great Man in relation to his subordinates. There are certain areas of public sector need, described by John Galbraith in his Affluent Society, which private industry for a variety of reasons has been unable to fill.3 Here there may be room for a new kind of direct Government involvement. A full discussion of this issue lies beyond the scope of this book, however. As far as the Great Man theory of Government might apply to innovation in areas of present private concern, it is sufficient to remark how that theory attributes to Government, on no particular grounds, greater wisdom in the choice of need and greater ability in the innovative task than are to be found in the private sector.

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But we have seen in previous chapters something of the processes of industrial change involved in large-scale innovation. It is appropriate to ask how Government, by deliberate policy and program, could create conditions favorable to those processes of change, freeing private enterprise to become more effective in innovation. Government's role here would be analogous to the role of the corporate leader in what we have described earlier as the second model of corporate change. We have seen that the principal form of innovation in mature industry is innovation by invasion. Such invasions dislocate companies, workers and regions of the country at the same time as they tend to create new jobs, new companies and new industrial regions. The economic problems of Appalachia, for example, have their roots in the displacement of coal by petroleum as a source of energy and in the introduction of automatic coalmining machinery. The economic problems of the midwestern (not the Great Lakes) states come from the displacement of the small family farm by the large industrialized farm, capable of producing well beyond current demand. The economic problems of New England are in part the problems of the traditional paper, textile, leather and shoe industries affected by the new synthetics, by foreign competition and by the economic pressure drop which has driven much of this industry south. Dislocation of workers in many industries and many regions results from the introduction of more productive equipment, including computerized equipment. Technology is by no means the only, or perhaps even the major source, of such dislocations. Market shifts, such as the shift in Federal market now being experienced in places like California and Long Island, can be severe in their effects. Shifts in other economic factors, such as labor costs and industrial concentration, can be equally powerful. In all these instances, however, our way of coping with the effects of dislocation is critical not only to the well-being of those

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affected but to the processes of change, themselves. This is true in at least two ways: -Industry is highly sensitive to public opinion, at present. A company will tend to introduce more productive methods and equipment unless it can foresee a feasible way of dealing with those affected by the change. Companies tend to defer introducing new equipment, which reduces labor content, until they can foresee a period of growth which will enable them to employ displaced workers in other jobs, permitting them to reduce their labor force by attenuation, or unless those displaced are likely to be able to find jobs elsewhere. -If our way of coping with technological dislocations is to support those hurt by the change, the effect may well be to impede technological change. Although the Federal Government has no formal plan for coping with technological dislocations, its actions tend to follow a consistent strategy. It waits for a crisis and then moves in to protect and support those who are adversely affected by change. Its protection may take a variety of forms4 It may give support through tariffs and quotas, loans and subsidies, special procurement policies, tax relief or special supporting research. In one or another of these ways, Government has responded to the problems of industries like railways, shipping, agriculture, textiles, and to the problems of small business in general. It responds to the needs of affected regions through depressed-area programs which concentrate on public works and loans to local corporations, both designed to provide local jobs for the unemployed. Until recently, its principal response to the needs of displaced workers was in the form of unemployment insurance and welfare payments. While the pros and cons of this kind of support need to be debated in each instance, it is highly likely that such a policya policy of stability-tends to stand in the way of technical inno-

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vation. By supporting invaded industry and invaded companies -where, as we have seen, invasion is a dominant pattern of technical change-Government tends to raise the cost of technical innovation. By offering a cushion to those who are threatened, it creates a climate reinforcing the disposition of traditional industry to resist innovation. Most seriously, once a policy of protective support has been initiated, it is difficult or impossible to stop. The outside threat does not disappear. The invaded industry or region does not develop independent resources, and it becomes accustomed to the helping hand. A quite different strategy in the face of threat from new technology would be that of encouraging mobility and adjustment. Such a strategy would include: -a

labor mobility policy, with an effective job information system, support to workers in moving to new positions, improved training and retraining programs and a data base suitable for judging the effectiveness of the program; -encouragement to firms threatened by new technology to diversify into more profitable areas of the economy; -assistance to depressed areas in the development of new industry based on new technology.

Such a strategy would require measures of its own effectiveness (measures which are now generally absent); a new level of adequacy in information about the dislocations produced by technical change; and an effective co-ordination of agency activities in such diverse fields as taxation, loans and subsidies, regional assistance, research and development and manpower adjustment. The key to such a policy would be the effort not to support the injured but to place them in a position to support themselves. It would offer support not to specific industries but to the process of technological change throughout the economy.

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A New Technology of Government At this point, the problem of developing a policy of industrial and worker mobility in response to the dislocations produced by technical change merges with the problem of developing a national policy climate favorable to technical change. We can look vainly for those specific Federal policies related to technical innovation while missing the point that there is scarcely any Federal policy which does not affect innovation. Federal policy provides the framework, partially obvious and partially hidden, within which the industrial game is played: -Antitrust policy may encourage competition and the continued existence of small firms with capacity for innovation, or it may have other effects adverse to innovation. -Regulatory policy (the ~ o l i c yof agencies such as the FDA, ICC, FCC, FPC and CBA) may inhibit technical innovation, encourage it or channel it in certain directions. -There are both obvious and hidden effects on technical innovations as a result of patent policy, policy on the granting of subsidies and loans, Federal support of research and development, and import-export policy as reflected in tariffs and quotas. -Federal and local standards and codes may serve to free the development of new technology, or because they are based on materials specifications derived from old technology, they may freeze technological advance. Uniform, performancebased codes encourage new solutions to technical problems; fragmented codes may raise the cost of introducing new technology to an impossible level. -Federal procurement policy may make opportunities for pilot

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attempts at new technology, or it may stamp in the use of procurement specifications based on old technology. -Federal policy related to the over-all state of the economyparticularly monetary and fiscal policy-has an enormous and well-established effect on innovation, serving to encourage or discourage expansion and investment in new equipment. Decisions to invest in new technology hinge on expectations concerning economic growth which affect levels of optimism about paying off such investment and about ability to provide opportunities for employees dislocated by new technology. In short, the Federal Government provides government for the process of technical innovation in industry in the most literal sense. Government and industry represent a closed-loop system in which the industrial process (including the process of technical change in industry) gives rise to modification of policy, which in turn affects the system. It is clear that this relationship holds. In the areas of fiscal and monetary policy it has become increasingly clear how it holds. It is nowhere near so clear in other areas of policy. Policies interact and their interaction is generally obscure. Patent policy may stimulate or inhibit technological innovation by offering more or less protection for innovation. Federal patent policy may serve either to attract industrial enterprise to an area of technology or to keep it away from an area by removing the attraction of exclusivity. Antitrust policy may stimulate innovation by permitting the continuing formation of new small f i h s based on new technology; it may, on the other hand, prevent concentration of industry essential to technological innovation in industries where high capital investment in innovation is required. Tariff and quota policy may protect a domestic industry which requires protection for its early development, or it may lull a traditional industry to sleep. Federal procurement poIicy may offer opportunity for experiment in new technology, free of regulatory restric-

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tions, or it may stamp in restrictive specifications based on old technology. In most instances the Government policy in question has as its primary goal (or, at any rate, had as its originally intended goal) quite a different set of objectives. It may have been designed to protect the public safety, to procure goods at least cost, to prevent excessive control of an industry by one company, and the like; but it nevertheless affects the process of technological innovation. In policy as in mechanical design, it is impossible to make a move which has only the effect intended for it. These side effects of Government policy may be at least as important as the originally intended effect. In some instances, they may turn out to be the principal benefits or evils of the policy. For good or for evil the effects of Government policy on technological innovation are poorly understood. We understand only in primitive terms how fiscal policy affects incentive to investment in industry. We understand far less how antitrust policy affects willingness to invest in innovation. Still less do we understand the interlocking effects of tax and antitrust policy. A tax policy aimed at encouraging investment in new capital equipment (and, consequently, at encouraging investment in new technology) may run head on into an antitrust policy administered in such a way as to discourage such investment, or a patent policy which deprives corporations of the incentive to be first among competitors in development. The single and interlocking, primary and secondary effects of Government policy on innovation are the basis of a technology of Government designed to create a climate favorable to innovation. Such a technology would have to do with the deliberate exercise of instruments of Government policy in order to give maximum freedom to industrial processes of technical innovation, or at any rate, the ability to anticipate the inhibiting effects of such policy when it is dictated by values other than technical innovation.

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Such a technology would require looking at the relation between Government and industry as though it were a complex servomechanism, much as we now look at the interaction of Government and industry through the medium of fiscal policy. Such an enterprise requires new or extended activities, which include: Sensors: means of collecting data about relevant social and economic variables, such as the structure of the unemployed population, rate of re-employment, corporate profitability and productivity, on a scale greater than the one now available. Most important, data must be made available about the effect of Federal policy and program. Government frequently has little, if any, information about the side effects of its policies on technical innovationalthough it is clear from the variety of strong and usually conflicting reactions that it has some effect-and often lacks the very feedback which would make possible the evaluation of its policies from the point of view of their main intended effects. What are the effects of tax policy on corporate capital investment? What are the effects of manpower adjustment policy on the match between workers and jobs? The difficulty of obtaining such data on a regular and trustworthy basis are enormous because of both the complexity of the system and the reluctance of industry to give up the required information. The collection of such information would be a major enterprise, comparable to the current efforts of the Census of Manufacturers and the Bureau of Labor Statistics.

Analysis: means of interpreting information in terms of a theory of the relationship between Federal action and the economy. In these matters, we are currently theory-poor. But there are encouraging beginnings in the development of models of the economy and models of the interaction of Federal policy and the economy which would enable us to anticipate more effectively the effect on the economy of a course of Federal action.

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Decision: mechanisms for rationalizing policy decisions across agency lines. Nearly all major fields of Federal policy have an effect on technical innovation in industry, and many have interacting effects which may either complement or conflict with one another. There would have to be vehicles for perceiving such relationships and for permitting reasoned co-operative policy-making where appropriate. The prospect of a technology and a style of operation which would make Government a more effective governor of the economic process, including technical innovation, is by no means pleasing to everyone. Behind it lurks the specter of a managed economy with increased Governmental control. But it is not clear that by gaining greater insight into the effects and side effects of its policies by improving the base of information in which it acts, and by co-ordinating the administration and planning of policies which may otherwise conflict, Government would thereby exercise greater control of industry. Although it may be argued that Government should abandon or reduce the control it now exercises in its regulatory, tax, antitrust or importexport policies, the fact is that in these fields it now exercises considerable control. By learning more about what it does here and resolving some of its internal conflicts Government may become more effective in creating an environment of greater freedom for innovation in private enterprise. The choice is not so much between greater and lesser control as between arbitrary and more nearly rational control. Nevertheless, this fear of control raises an issue central to the whole ~roblemof Government-industry relations concerning innovation: the issue of trust. We have lived for generations in a climate of prevailing mutual distrust between industry and Government. This distrust has its roots in our Revolutionary origins and has grown in the climate of increased Federal responsibility and regulatory control which began in the time of the New Deal. Because of it, Government and industry have tended to sleepwalk

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into new situations. Industry has accepted Federal manipulation of monetary and fiscal policy designed to assure economic growth, for example, and has moved noticeably toward an acceptance of Keynesean economic policy while continuing to enunciate the old doctrines of anti-Federalism and individualism. Establishing a basis for Government-industry trust is central to all those policies which might create a more favorable climate for innovation. It is as important to the Government-industry relationship as it is to the relationship between boss and subordinates or between marketing and technology in the firm.But, because it is a trust between institutions rather than between individuals, it is far more precarious and difficult to achieve. Confrontations between individual leaders may be necessary to it but are not sufficient. The establishment of this trust, as an objective, and of the institutional arrangements which would permit it to be sustained, ranks highest on the list of measures aimed at creating a national climate favorable to innovation.

CHAPTER V I I I

An Ethic of Change

Conventional Wisdom THEREIS A conventional wisdom about the process of technological change. According to it, change is a passage from one stable state to another. At any given time, we are aware only of stability. By selective inattention and by making the signs of change taboo, we hide from ourselves the evidence of change. But when we look back, we can see that change has occurred. We seem then to reside in a new stable state and to look back on an old one, with a mysterious leap in between. This is a kind of quantum theory of change. Under this general theory, technological change is a passage from one stable state to a better one and technology acts as an instrument for achieving certain constant social objectives. We see technological change, therefore, within a stable framework of objectives. These were well established by the eighteenth century, a century in which we began to see technology as the unquestioned instrument of social progress and to conceive what now may be called the Technological Program. But before eighteenth century, Francis Bacon had laid the foundations of the Technological Pro189

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gram with his view of science as a means of comprehending the order of nature to permit technology to control it and in this way lead to an earthly paradise in which human needs were satisfied: For man is but the servant and interpreter of nature: what he does and what he knows is only what he has observed of nature's order in fact or in thought. Beyond this he knows nothing and can do nothing. For the chain of causes cannot by any force be loosed or broken. Nor can Nature be commanded except by being obeyed and so those twin objects, human knowledge and human power, do really meet in one;-and it is from ignorance of causes that oparation fails. . . . Wherefore, Oh Father, if we labor in thy works with the sweat of our brows, thou wilt make us partake of thy vision and thy Sabbath. -E. A. BURTT,ed., pp. 22-23 Bacon saw science and technology as a means of re-establishing the dominion of man over creation: For man by the Fall fell at the same time from his state of innocency and from his dominion over creation. Both of these offices, however, can even in this life, be in some part repaired; the former by religion and faith, the latter by arts and sciences. -E. A. BURTT,ed., p. 123 While writers like Bacon laid the foundations of the Technological Program, it was not until the eighteenth century that man began to expound the idea of the steady march of mankind, through science and technology, to a kind of promised land. "We may believe," says Voltaire, "that reason and industry will always progress more and more, that the useful arts will be improved. That all of the evils which have afflicted man prejudices which are not their least scourge will gradually disappear among all those who govern nations and that philosophy universally diffused will give some consolation to human nature for the calamities which it will experience in all ages." -Quoted in J. B. BURY,pp. 149-50 And it was not until the nineteenth century that expressions of t h e Technological Program began to have a truly modern ring t o

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them. The great exhibition at London in 1851 was a landmark in this respect, as the Prince Consort pointed out: Nobody who has aid any attention to the peculiar features of our present era will doubt for a moment that we are living in a period of most wonderful transition which tends rapidly to accomplish that great end to which, indeed, all history points. The realization of the unity of mankind . . the distances which separated the different nations and parts of the globe are rapidly vanishing before the achievements of modern invention and we can traverse them with incredible ease; the languages of all nations are known and their requirements placed within the reach of everybody; thought is communicated with the rapidity and even by the power of lightning. On the other hand, the great principle of the division of labor which may be called the moving power of civilization is being extended to all branches of science, industry and art. . . . Gentlemen, the exhibition of 1851 is to give us a true test of the living picture of the point of development at which the whole of mankind has arrived in this great task in a new starting point from which all nations will be able to direct their further exertions. -Quoted in J. B. BURY, p. 330

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I n the progressive elaborations of the Technological Program, from Francis Bacon to the exhibition of 1851,l a set of objectives was set forth. -The first of these was Progress itself. W e are part of a steady march toward a better society, a promised land or afterlife to be realized on this earth, if not by us then by our posterity. In this march the generations join one another in a kind of relay race. Reason, later understood as science, manages the cumulative human resource which makes progress possible. The idea of Progress rests on a foundation of faith in reason. -The good society toward which we are marching is good not in the sense of realizing some divine ideal but good in the satisfaction it provides for the human beings who make i t up. A good society aims at human objectives such as health, comfort and elimination of hunger.

192 Technology and Change -The good society is made up of individuals, each with his own inalienable rights, each with his own capacity for happiness and his right to pursue it, with due respect for the rights of other men. The happiness and goodness of the society rests on the lives of individuals who make it up. -If men are to seek their happiness as individuals, they must be free. The free actions of individuals have become associated with the free actions of industrial firms, conceived as superindividuals, whose free competition, in the economic world of Adam Smith and later of economists like Marshall, we understand as the mechanism for harnessing technology to economic ends. -As was already perceived in the exhibition of 1851, technology leads to the unity of mankind, which means that mankind can work together to use the fruits of technology for peaceful ends. -The lives of free individuals within the good society are lives in which productive work leads to material satisfactions and to happiness. Work is both a ticket to the good things of society and a moral duty of individuals to contribute to the Technological Program. -Character then is achieved through work. It represents moral dependability, firmness in holding on to the values of the good society and a basis for individual identity. The religious roots of the values of the Technological Program have been demonstrated at length by others (particularly by Becker and T a ~ n e y )Anyone .~ who has heard an American public figure hold forth on the use of technology for human progress cannot have failed to catch the religious overtones of his language : As science has provided us with new insights into man's antecedents, so science also has unlocked for us new visions of man's possibilities. Science has given us new knowledge of matter and of

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living things, a better understanding of natural processes, new and unexpected glimpses into what we can achieve in the future. The power over nature which science is giving our generation permits us to look forward with hope toward the solution of many age-old problems, if we apply results of the scientific advance well and wisely. -LYNDONJOHNSON, February 15, 1965 To summarize, we believe, according to the conventional wisdom, in the theory of the stable state. We believe that change represents a series of transitions from one stable state to another. We believe that technology is a neutral instrument of change, and we believe in a Technological Program according to which we march steadily toward a good society whose objectives remain stable and clear throughout the march. Time is perceived under the concept of Progress, measured in terms of human satisfactions and individual freedom. Through work and the steady development of character the happiness and peace of all mankind is to be attained. This view of the Technological Program has become a part of our ideological equipment. When we speak in approving tones of a "changing society," what we mean is a society changing within this stable framework. If we talk of social change, we keep the model of technological change foremost in our minds: hence, we have "mechanisms" of social change as though we were dealing again with instruments deliberately used to achieve prior objectives within a stable framework. The question, What's technology for?, asked in the United States in 1966, will usually produce a pretty good facsimile of the Technological Program. Nevertheless, we seem in recent years to have become increasingly aware that something about the program has gone wrong. This does not mean that we speak its language any the less. On the contrary, we give it clearer and more frequent expression than ever before, but there is a growing sense of uneasiness about it. This uneasiness we sometimes attribute to the discovery that technology, as a neutral instrument, may be used for good or evil

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ends and that its by-products may outweigh in evil the good anticipated for its consequences. By now we are more than familiar with pronouncements about the violence of two world wars made more terrible by advanced technology, and we struggle with our sense of the potential for total annihilation of mankind by the Bomb. We are familiar with sermons against the pollution of air, water and land by industrial by-products and the destruction of the beauty and order of our cities and countryside by the automobile and its appendages. All of this, however, can be comprehended under the heading of "technology badly used." Its remedy appears to be a more intelligent use of technology: a more complete application of reason to the human goals of the eighteenthcentury program. Much of President Johnson's Great Society represents just such an attempt to apply technology more broadly to the meeting of human needs, particularly public needs, such as those associated with transportation, the plight of our cities and the control of pollution, and to eliminate the unwanted by-products of technological advance. While these unwanted products of technology are disturbing, they do not leave us without a clear course of action. We must simply apply more energetically and more exhaustively the kind of practical reason central to technological advance. But there is a deeper source of moral uneasiness associated with the Technological Program. It is the sense, the intuitive awareness, that technological change has been undermining the very objectives constitutive of the Good Society to which technology is supposed to lead. In all areas and at all levels of society, technological change has been eroding established identities. It has been undercutting the sense of self on which commitment to the Technological Program depends. There have been critical changes in institutions central to our society. We have discussed at some length how industrial identities are changing, through innovation by invasion and progressive

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diversification, and how the link between firms and industries is gradually coming undone. We have also seen how the structure of the corporation is changing from a pyramidal organization to a set of semi-autonomous divisions in varied industries surrounding a central bank and other central services. We have not discussed the changes universities undergo if they adapt to the pressures on them to become research institutions; the changes in military organizations consequent on introduction of new technology, the breeding of new classes of technicians, and a total disruption of traditional warfare; or the shifts in the character of the Church, under the multiple pressures of the automobile, the pull of the model of business organizations and the overwhelming challenge to spiritual values in the technological era. There are sweeping changes in our sense of personal identity based on traditional roles and functions. There has been a widespread erosion of old concepts of role and function without anything clear to replace them: -For the corporate manager there is growing need for revision of the concept of "the business I'm in" as well as shifts in the traditional "propose-dispose" relation between boss and subordinate. -For the worker within the firm, technological and market changes have tended to kill the security in occupational identity. The worker can depend less and less on retaining his occupational identity throughout his working career. He has less and less to gain from thinking of himself as "a spinner," a "loom tender" or even "a textile man." The new occupational identities, based on functions which cut across traditional industry categories, have only begun to be invented. -Within the firm, the professional is experiencing similar strains. Not only are traditional dualisms, such as the splits between marketing and technology or between engineering and economics, being challenged, but technological and mar-

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ket changes tend progressively to deprive the professional of the sense that his training fully equips him for the demands which will be made on him throughout his career. An engineer trained in high-temperature metallurgy may find that at the end of ten years he has skills no one is any longer interested in buying. Electrical engineering as it was taught fifteen years ago is already irrelevant to the electronic requirements of most advanced industry. As a consequence men are becoming less able to see their lives as a period of professional training, education and initiation followed by a steady practice of the trade or profession they have learned. The need for education and training with consequent change in occupational or professional identity is invading what used to be the stable remainders of their lives. -There are shifts in regional identity. Regions dependent on specific industries begin to loses their traditional industrial base, and men born and raised in these regions find that the place of their growing up no longer offers a way to make a living. Increased geographical mobility due to these regional changes, as well as to the increasingly national and international scope of most firms, affects the lives of both highand low-income workers. A worker is increasingly likely to change more than once in his life his home, friends and fellow workers. -There are shifts in identity associated with the developing concepts of social class and race, equal to those we have discussed, although they lie beyond the scope of this book. All in all there has been a gradual deterioration of reference points for personal identity and for sense of self. It is less and less possible to explain who I am in terms of the job I do, the profession I represent, the region of the country in which I live, the institution to which I belong or the class or race from which I come. This newly experienced difficulty in saying who I am goes

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hand in hand with an increasing confusion about where I am going. There have been increasingly serious changes in the concept of work. Work has been from the beginning essential to the Technological Program. Work, understood as the systematic application of our understanding of nature, was to be the means to the good society. For the individual, it represented a ticket to the good things of life, a means of purgation and a path to personal sglvation. Tawney, among other writers, has traced the roots of the concept of work in Calvinism. Joseph Pieper has shown how throughout the nineteenth century the concept of the worker grew, replacing the notions of craft and leisure, transposing itself through the introduction of notions of division of labor and mass production in which man came to figure progressively as an extension of the machine, and invading in progressive steps the making of industrial products, the tasks of management, education, commerce and government, until in our own time in the United States all men are able to see themselves only as workers. From this point of departure Pieper has shown the disastrous consequences of our awareness of the declining importance of work to production. This inner constraint . . . which fetter[s] us to work prompts a further question: proletarianism thus understood is perhaps a symptomatic state of mind common to all levels of society and by no means confined to the proletariat, to the worker; a general symptom that is merely found isolated in unusually acute form in the proletariat so that it might be asked whether we are not all of us proletarians and all of i s consequently ripe and ready to fall into the hands of some collective labor state and be at its disposal as functionaries. -PIEPER, 1952,P. 51

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And again: But nowadays the whole field of intellectual activity not excepting the province of philosophical culture has been overwhelmed by the modern idea of work and is at the mercy of its

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The concept of the worker depended upon the notion of division of labor and then, in turn, the notion of mass production. Its essence was that of work as mechanical input, of the worker as an extension of the machine. The threat of the worker's declining importance to production, as the capability of machines expands, stands therefore as a threat to the concept of work itself with its central importance both to the Technological Program and to our sense of individual identity. The concept of satisfaction of human need has been eroded in similar fashion. With the important exception of the abiding poor, we have become so well satisfied, to the extent that products satisfy, that it is progressively harder for industry to discover new needs for products to fill. But the requirement of expanding industrial production is essential to industrial growth, which, as we have seen, is one of the cardinal principles of corporate life. It forces companies to ever more frenetic proliferations of products, to finer and finer product differences, so that distinguishing one product from its competitor becomes more and more difficult, and to the exercise of increasing pressures on consumers to consume. This tendency reached a peak in the poor automotive years of 1958 and 1959,in what was in effect moral pressure brought to bear on the American public to fulfill its obligation as consumers to keep American industry growing. There has been an ironic reversal in the relationship between producers and consumers so that it is no longer possible to say whether producing industries exist in order to satisfy consumer needs or whether consumers, goaded by ever more persuasive advertising, exist as appendages to the system of industrial production. A sense of dissatisfaction with the state of affairs can be seen not only among intellectuals but among ordinary men and women in their lives as consumers.

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There has been a deterioration in the concept of the individual, central to the notion of the good society. On the one hand, men have come to see themselves more and more as parts of a mass market, consumers of essentially identical products, recipients of persuasive messages beamed at the millions; on the other hand, men as producers, as parts of a system of mass production, with its many models and variations in the world of the white collar worker and professional, have come to see themselves progressively as performers of simple, uniform, repetitive mechanical tasks. They are on the one hand consumers and on the other hand manpower; on the one hand fillers-out of consumer preference forms, one among statistical myriads, and on the other hand temporary fillers of jobs characterized by job descriptions which are designed precisely to avoid any hint of individuality. In cities and suburbs men are aware of themselves as occupiers of mass housing, one unit of which is essentially similar to another. They take part in mass transportation, losing themselves regularly in crowds, moving to and from work. Radio and television and other means of mass communication constantly bring home to them their role as members of mass humanity, this sense of individual replaceability and of membership in a crowd, emerging as the deadening underside of the concept of the unity of mankind. It has become, then, progressively difficult for a man to think of himself as in any way unique or irreplaceable, indeed, for him to think of himself at all except as a part of a mass system either of production, consumption, housing, transportation or communication. It has become, then, also progressively difficult for him to see himself as one of a Kingdom of Ends in a Good Society toward which technology is moving. This sense of personal salvation which pervaded the Technological Program at its inception has become very nearly impossible for most of us to imagine, never mind achieve. There has been, then, progressive disillusionment with the notion of technology as an instrument for human well-being, with

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the goal of satisfaction of human needs and with the concept of individualism in the sense required by the notion of personal salvation. Above all, there has been an erosion of the sense of personal id en tit^,^ the sense of self, essential to the whole enterprise suggested by the Technological Program. Institutions, occupations, professions, regions have progressively dissolved as a firm foundation for the sense of self. Work, which began by replacing craft, leisure and the liberal arts as a fit occupation for man has assumed what appears to be a role of declining importance. In all of this, what has become of the concept of Progress itself and of technology as the instrument of Progress? Though we speak ever more loudly and clearly of the goals of the Technological Program, their vivid meaning becomes harder for us to conceive and to relate to the realities of our lives. We cannot help but sense this deterioration in our concept of the objectives of the Technological Program-unless these objectives have become for us so empty, so ritualistic, that we are no longer aware of the presence or absence of meaning associated with the words that denote them. On still another level, technological change has done more than erode the objectives of the eighteenth-century program. It has begun to undermine the theory of the Stable State itself. It is commonplace now to speak of the increasing rate of technological change. Within business, we are used to the notion that most products now on the market did not exist ten years ago. We have seen the logarithmically climbing curves expressing the change in technological parameters such as the number of elements discovered, the propulsive force of aircraft, the strength-to-weight ratio of materials, and the like. Moreover, in however vague and confused a fashion, we cannot remain unaware of the causal chain which relates technological change to change in institutions, to change in values. A man of fifty in 1965 has seen too many changes in transportation, communication, warfare and industry to believe in the stability of technology. He has seen the progressively changing character of the cities and regions in which he lives, the occupa-

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tion or profession to which he belongs, the institutions to which he gives allegiance. Just as it is progressively confusing to him in the realm of international relations to understand continuing shifts among friends and enemies, so he cannot help but be aware of the shifts in institutions and in values conditioning his own immediate life. Technological change appears to him to be less a means to a future Stable State than it does a permanent condition of society. The rate of change in technology, institutions and objectives put before him in a single lifetime, or even a fraction of a lifetime, belies the illusion of stable objectives. He feels that the firm ground has been taken out from under him. When he reflects on the matter, he cannot help feeling that he has lost not only the old objectives but the very belief in the stability of objectives.

Reaction The loss of the myth of stability is frightening. It carries with it the fear of being in the Red Sea with no Promised Land in sight. Suddenly we are confronted with more information than we can handle. The job of objectives is to order and simplify experience by enabling us to select from it what will guide our actions. The dissolution of old objectives, coupled with a loss of the sense of a new stable state to turn to, is disorienting. Among the expressions of this fear and disorientation are the moral uneasiness and anxiety of our time, which express themselves in aimless violence, frenetic living and in a general sense of confusion and flux. How do we respond to these threats? We can persist in the strategy of selective inattention to the changes going on. Change of objectives, and uncertainty associated with change, are as much taboo in our sosiety as in the society of a corporation. We can give ritual adherence to the old objectives, systematically hiding from ourselves the ways in which they will no longer do.

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But this strategy becomes progressively untenable as the evidence of the hollowness of the old objectives, and the inadequacy of the theory of the stable state, get borne in on us. Then we may indeed perceive the change of objectives and read it as deterioration. The call, then, is to Return. The appeal of the call is that it offers comfort in the face of chaos. There is change, but it represents a relaxation of standards, a loss of the good old objectives, a deviation from the ways of our ancestors, to which we are urged to return. There is great appeal in the call. In the recent Presidential election, both candidates employed it, although Senator Goldwater, with his references to moral decay and its evidences and his backward-looking exhortations, did so more openly. The call to return gives rise to a form of sleepwalking, to use Arthur Koestler's term. Since the good society of the eighteenth-century program is, indeed, bankrupt, it cannot sustain us in the face of the problems and complexities we now face. The attempt to return to it, therefore, condemns us to a sleepwalking toward the future, of necessity leaving that future unexamined. The call to Revolt has as much appeal as the call to Return. It is an alternate response to the destruction of the myth of stability. In effect, it says that the old objectives are hollow and inadequate. There is oppression, slavery, humiliation, constraint and injustice. There is no Promised Land in sight. Revolt against these things! The call to revolt need not produce its own image of a Promised Land. It takes its image from the present against which it reacts. It gets its concreteness from the life it refuses to accept and is, in this sense, a form of conservatism. If we cannot be inattentive to change of objectives in our society and cannot accept the silent calls of return and revolt, what is left? How do we ever tolerate and stand up to change in objectives? There is a pattern of change with which we are familiar. In varying ways, the dynamics of fashion and the dynamics of growing up embody it. A woman innovates in dress or hair style or

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manner of speech or behavior. She presents herself at first as a deviant, then establishes a style, provokes imitation and eventually becomes part of a new stable state from which, in turn, it is possible to deviate. She is a front-runner; for the others it is a matter of catching up. For a child becoming an adult, in revolt against the objectives of childhood and, characteristically, of family, there is a need to seek out the next stable state and somehow in the process to preserve a sense of self and self-worth. Typically there are individuals, and groups-peers, teachers, movements in society-with which a young person identifies. He is en route to their objectives. They are front-runners and he is catching up. As he learns the new objectives, he preserves his sense of self and self-worth through identification with these people. Front-running and catching-up make a pattern of change of objectives in society. But what happens, as at present, when at a fundamental level the society itself is in process of change in objectives and there are no front-runners at hand with whom to catch up? When we are neither catching up nor in revolt, we can abandon objectives which were central for us only through an ethic governing the process of change itself. An ethic of change-which we may call a meta-ethic-provide discipline for the process of change, making possible abandonment of old positions without a loss of self. It permits us to tolerate the dizzying freedom and the surplus of information that come from abandoning old objectives. In the person of Socrates, Plato gives us a man whose life is devoted to moral inquiry, an inquiry into life, but Socrates, for whom the unexamined life is not worth living, gives his commitment only to the process of examination. The discipline of this examination, the discipline of the dialectic, furnishes an ethic of change so strong that he is willing in the end to die for it. Descartes' program of systematic doubt takes place within the framework of Method, a rigorous logic of doubt, from the implications of which Descartes then attempts to reconstruct the ante-

204 Technology and Change cedent world of beliefs and morality. A meta-ethic4-an ethic for change, for inquiry, for discovery-permits us to enter the Red Sea when there is no Promised Land in sight. The concept of an ethic of change very nearly appears as a contradiction in terms. Our norms are precisely norms for stability. We hold on to our norms and objectives, stand fast by them, keep them, and because we do, maintain a steady course which enables us to dispense with an ethic of change. Our moral heroes -Socrates excepted-are generally those who stand firm in the face of challenge: the martyrs to freedom and to God, the tough farmer willing to fight for what he believes in, the steadfast soldier, the faithful soul. We are apt to see change of objectives and norms, when it occurs, as inconstancy. And yet the problem of the development of an ethic of change now confronts individuals, organizations (companies and others) and our society as a whole. The individual asks, How shall I act when the foundations of my self (and the roots of my action) are disappearing? The company asks, How can we find our way into the future and maintain our integrity when it is no longer clear what business we are in, when the rate of technical and business change forces us to transform ourselves and the Great Man is gone? Our society asks, How are we to guide our course now that the instrument of technology has eroded our objectives and we are deprived of the illusion of a stable state toward which we are heading? An ethic of change characterizes the process of change, as opposed to its ~roduct,just as the eighteenth-century objectives characterize the state of society. An ethic of change is a set of principles for change. A meta-ethic must, in order to be effective, have reality for us. It cannot be imposed artificially from outside. We must discover it in the very process of change. In seeking a meta-ethic we suffer from the fact that society traditionally delegates the job of change to special individuals in its

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midst-to artists, poets, inventors, discoverers, therapists-and then isolates them from the rest of society in order to preserve the illusion of stability of norms and objectives. Those concerned with change of norms and objectives, or with change known to lead to such change, live in well-insulated social compartments. Inventors, discoverers and artists live apart by a convenient division of labor which enables the rest of society to maintain an illusion of stability. Society allows their products to enter, hemmed in by suitable resistances, but protects itself from their processes. The garret, the laboratory, the studio, the closed study and the hospital are the symbols of this isolation. Because of the isolation of those concerned with the process.of change, we still find change of norm and objective mysterious. We lack models to help us now that we are, as a whole, beginning to experience the need for a meta-ethic not as individuals only but as a society. The need for discovery of norms and objectives forced by technological change and its consequences finds us without norms for this process of discovery.

An Ethic of Change At this point, we return to the subject matter with which this book began; the process of invention. But we return to it now for what it has to teach us about invention of norms and objectives. We cannot assume that inventors-or artists, discoverers and therapists--can help us directly with the generation of a metaethic. These men insulate the parts of their lives in which they are principally concerned with change and may be conservatives in all parts of their lives not directly related to their occupations. Nevertheless, the relevant parts of their lives as discoverers reveal aspects of change in norms and objectives. Some of the more important, in the present context, are these:

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-the prizing of the process of discovery itself; -the prizing of the here-and-now and with it the imperative, Start from where you are!; -the priority of experiment; -the projective use of the past. The inventor becomes, in a sense, addicted to the process of discovery itself. He is excited by the new, his new; he finds tiresome the continuing presentation of what has been done. He has vivid in his imagination the sense of new energy and vitality that comes with insight and that has the quality of opening up and revealing new views together with a sense of power for exploring them. The inventor develops a taste for this experience. It breaks in on what is supposed to be or what may be supposed to be routine and well ordered. This love of the experience of uncovering something hidden before-an experience associated with delight and heightened energy-links the process of discovery and invention to processes of artistic creation and discovery. In all such instances, the search for the new-the new "for meJ'-becomes controlling. Discovery demands contact with reality-with the way things are. It demands starting from where, in fact, you are-not where you thought you were. It demands attention to what is happening now. It requires priority for the here and now. This is the priority of immediate experience. For the most part we perceive in terms of the past and in abstractions. We see through concepts. We see objects. W rarely see just this now. And if we do, we are quick to turn it into a familiar object. But the process of invention has in it a phenomenology that is different. It is a matter of turning to the process going on now. Vonnegut examining his ice crystals and droplets, Walton attentive to what happens to the paper as it is deformed, the old mechanic looking and feeling the metal as it bends, pay a very special sort of attention to what is given to them. This kind of

An Ethic of Change attention has in it something very much

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like what people have

talked about as aesthetic experience, and it is as necessary to invention as it is to aesthetic activity. As far as I am concerned, I experience a kind of terror as I am about to go to work and before the infinite possibilities offered to me, I feel that everything is permitted. If everything is permitted, best and worst, if nothing offers any resistance every effort is inconceivable. I can't base myself on anything and from then on every enterprise is in vain. . . . Nevertheless, I will not perish. I will conquer my terror and will take assurance from the notion that I have the seven notes of the scale in its chromatic intervals, its strong or weak beats are within my reach, and that I hold in this way solid and concrete elements which offer me as vast a field of experiment as this vague and vertiginous incident which has just frightened me. . . . What pulls me out of the anguish caused by unconditional freedom is that I always have the faculty of concentrating on the concrete things which are in question here and now. 1945, pp. 98-99 -IGOR STRAVINSKY, The inventor's or artist's here-and-now takes priority in another sense as well: it is the priority of what he saw, felt or experienced as against what others say or believe. It allows him to champion his findings against the entrenched opposition of others. Similarly, the priority of the here-and-now of feelings and of interpersonal happenings-"what is going on between you and me now*-gives the therapist the basis for his discoveries and permits him to pit these discoveries against the abstractions and sense of the past brought to the situation by the patient. For the inventor the need to test, and to create situations in which testing is possible, follows from the priority of the process of discovery. The priority given to experiment reflects both the need to see "what would happen if . . ." and unwillingness to accept the content of feelings or intuitions without test. It reflects both the disposition to explore and a toughness about what will be accepted.

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From the first point of view, the experimental attitude says that when confronted with uncertainty, you try things rather than fall back on accepted beliefs, on authority, or lapse into inaction. You try new approaches and, rather than accept plausible-sounding hypotheses, you ask how they can be tested, and test them. If there is no way in which they can be tested, you lose interest in them. The priority of experiment implies a discipline. Testing is impossible unless there are rules of inference for inferring the consequences of a belief, methods of measurement to determine the consequences of action, and controls during the period of testing. The inventor has a special way of using the past. In most of our lives we use the past literally. That is, we look at the present situation as an instance of rules and concepts that have been learned. Thus we are always seeing "trees," "animals," '%usiness" and "entertainment"-concepts with which we are familiar. This is precisely what precludes the possibility of invention or discovery. The inventor, with his preoccupation with the here-and-now, tends to use the past in another way: to exploit the past as a basis for analogies, to use familiar theory as a projective model for present situations. This is what I have called in another context, "Displacement of Concepts." We saw in Chapter I how technologies, disciplines, methods and theories become projective models for what is unfamiliar and troublesome in the present situation. This attitude toward the uses of the past is precisely opposite to the attitudes toward the past implicit in the strategies of "return" and "revolt," both of which require that the principles and theories of the past be taken literally in their application to the present. The priority of the process of discovery, the here-and-now, experiment and the projective use of the past underlie norms for the process of invention. What do they mean for the process of change of objectives in corporations? In what ways do they provide clues to an ethic for corporate change?

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These norms for processes of discovery and invention, when we

think of them as models for an ethic of change in the corporation, turn out to have a good deal in common with what we have already called the "second approach to deliberate corporate innovation. -We have seen the problems for innovation created by the terror of failure. But the terror of failure is the other side of the adoration of success-that is, of a Stable State, a Promised Land, supposed to come as a result of effort. A shift of emphasis from success, as a stable reward achieved, to work, contribution and discovery brings relief from the terror of failure. Such a shift, when it occurs in a corporation-for example, through a new set of leaders-passes in waves through the society of the company, releasing energy for work on real problems. ( I t is a shift of emphasis from reward and punishment to the process of work, from product to process.) -"Starting from where you are" in the corporation implies renouncing corporate myths. For example, that a company which has lost first position in the industry should recognize that fact; that a company whose reputation was founded on high-priced, high-quality merchandise and now works in a high-volume, low-priced market should act accordingly; that a company now competing with products made of many materials and from many industries should no longer think of itself as being in the business of manufacturing goods of a certain material but of filling certain functions; and, more generally, that companies should become aware of actual processes of change, as opposed to rational myths of change. This last implies recognition of the degree of randomness in the research process; the inappropriateness of a strict division of labor between "idea generation" and "idea screening"; and, in general, the gap between actual process of innovation and the rational myths of the process.

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-The priority of the here-and-now, for the corporation, refers particularly to the interpersonal here-and-now. Attention to "what is happening now, between us" is a starting point for work on problems between people in the company. Such problems are the most troubling. They have been discussed as problems of "human relations" (in the days when the problem of organization for work was apt to be confused with the problem of "making people happy") or more recently as problems of "communication." We have seen such problems between people arising at critical points between boss and subordinate and across divisions of labor in the firm. It is characteristic of such problems that they are stubborn in the face of a frontal, generalized attack. It is usually futile to exhort people to behave differently. It is usually impossible to make understandable, in a generalized way, what the problems (for example, the problems of the propose-dispose relation between marketing and technology) are. But the here-and-now is inescapable. If the boss is made immediately aware of the effect of his "disposition" of an idea on the energy of his subordinate, or if the subordinate is made immediately aware of the effect of his "softness" about an idea on the boss's confidence-that awareness is difficult or impossible to avoid. The interpersonal here-and-now is available for test. It is, for interpersonal and organizational problems, what the laboratory is to the experimentalist. Because the interpersonal here-and-now is so powerful a lever for change, it is not surprising to find that it is taboo. Reference to "what is happening between us now" is apt to provoke embarrassed silence, or, if there is power present, a sense of risk and danger. It is, nevertheless, a direct route to that sense of interpersonal security which is so important to radical innovation. In their work relationship people derive strength from the sense that they are open with each

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other about what is actually happening between them (which

they can never wholly hide from themselves in any case), as against a mutual deception concerning what ought to be, or what they would like to be, going on. -The idea of experiment in new approaches to work and to organization for work is surprisingly rare among companies. Experiment threatens "stable organization" or relationships of authority or, generally, "our view of the kind of place this is." But corporate experiment in these matters is essential where, at periods of transition, it is not clear what to do. Some of the most relevant areas of experiment, as far as innovation is concerned, have to do with delegation of authority to subordinates (particularly, authority for entrepreneurial activity); with work organized across divisional lines; with "what our business is"; and with the management of the process of evaluation of what is proposed "from below." -The acceptance and encouragement of such experiment is part of the acceptance of process in the corporation. It reflects a facing up to the illusion of stability. The theory of the Stable State, as applied to organizations, is the enemy of adaptive change. In fact, in most organizations the structure of power, the nature of the business, the organization of work-are all in process of continual change. We have seen how, in recent years, the rate of such change has been increasing. But there is a taboo against the acceptance of this change. The representative of a new order, in the corporation, feels obliged to present himself as, for all practical purposes, permanent, and to behave as though the changes he is introducing will be the last to be introduced. Those "above" and those '%elow" are, alike, afraid of instability. But the concept of "instability" acquires its power out of belief in the feasibility of the Stable State, since, according to this belief, any threat of change reflects instability. The idea

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of continuing experimental change implies not instability but adaptation to reality. In the communities of science and technology the myth of the Stable State is not absent, but it is complemented by strong commitment to experiment and to belief in the healthiness of continuing modification of scientific thought. If the scientific and technical communities were to behave in the dominant mode of corporations, they would regard each controversial experiment (such as the Michelson-Morley experiment, or the recent experiment throwing doubt on the principle of Parity) as a threat to the established order and suppress it (which, in some segments of the scientific community, and at some times for nearly all the scientific community, they do). -The use of the corporate past offers analogies to the use of familiar scientific theory as a projective model for new p r o b lems. There is, of course, a destructive use of the corporate past. It is what Dorothy Parker expressed in her dislike of the word, "another." "Hollywood," she said, "was always worried about making 'another'-another 'Gone with the Wind,' another 'High Noon.' " Similarly, companies sometimes attempt exact copies of a previous success. They refuse to pursue a new product possibility unless it appears to offer the same huge market, the same margin, as their major product success, even though that kind of market may no longer exist for anyone. There is also a contrary syndrome which can be expressed as "never another": one experience with a plastic that embrittled and shattered at low temperature may sour the company on plastics forevermore. These attitudes spring in part from a sense of inadequate understanding: "Since we don't really know why we were successful with x, we must not deviate from the formula with y." And "since we don't know why x failed last time, we must

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not repeat any part of it." But there is a sense in which the firm's successes and failures can be interrogated to provide direction for the future, just as a scientist can look at related theories which have worked or failed to work in the past. A drug company, looking for diversification, may seek out "another drug business"-understanding that its existing business can serve only as a rough model for its next one-and land on semiconductive crystals as products which (it then sees) offer high margins, require strict quality control and maintenance of "purity" and pose many of the problems the company is used to solving. A paper company, through an examination of its past successes, can come to identify its products with "disposability and the ability to throw dirt away" and help to provide guidance for new-product development. A company in process of transition has, like an individual, the problem of maintaining its identity during the processwhen it has let go of its previous picture of itself (as only a shoe manufacturer, for example) and has not yet for another one. If it operates under a Great Man, whatever it does acquires a certain unity as "what the Great Man decided to do," and others in the corporation solve their problems of identity through dependence on him, with all the rewards and dangers of that strategy. The Great Man may shoulder all the responsibility of developing an ethic of change-carrying out in his own life the priority of the process of discovery, the priority of the here-and-now, the value of experiment, the projective use of the past-leaving to the rest of the organization the illustration of stability and the predominant role of "catching up." If he does so, he protects the organization and keeps its members from their own process of discovery. But, short of the Great Man's unity, a firm's use of its past as a projective model may help to solve the problems of

214

Technology and Change identity in transition, if the firm is able to identify and use its "tradition" as a guide to the future without being enslaved by an overliteral devotion to it.

These are aspects of the ethic of corporate change. In many ways they resemble an ethic of change for all organizations. What would an ethic of change be like for American society as a whole? The late President Kennedy's New Frontier sought to convey an image of change and acceptance of change. It was less concrete in what it sought as objectives than in the values it presented for the process of change itself-discovery, boldness in exploration, selfdenial and toughness in seeking the goal. The pioneer norms preached by Kennedy were more nearly norms for crossing the desert; Johnson's Great Society attempts to be more nearly a vision of the Promised Land. The model of an ethic for the process of invention is as evocative for a change of objectives in American society as for a change of objectives in a corporation. The priority of the process of discovery asks us to accept and seek out change, as against the call to Return or Revolt. This eagerness in seeking out the new, after the change in technology, institutions and objectives of the last fifty years, affects all parts of the American society: -the Labor movement, whose old demands have been met and whose sense of being "against business" is losing vitality as a source of action, particularly because the Labor movement itself takes on more and more of the aspect of business; -the business community, whose practice has long since outstripped its ideology, leaving that ideology in question; -the agricultural community, and those who serve it, whose central function and central role in American life as carrier of norms for the society, is changing;

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-the scientists whose allegiance to the value system of science as separate from and superior to that of the rest of society has been challenged by the un-get-overable interaction between science and the social system. In each important segment of society there are individuals who sense these changes, feel threatened by them and appeal to the old objectives and norms-all the more violently when the old objectives ring hollow-in order to stop the changes under way. In each segment there are individuals who sense the changes under way and respond to the sense of excitement about the discoveries to be made. These individuals place their emphasis on process, contribution and discovery, as against the Stable States of success or failure. -In American society, myths about the old value centers of rural life, the little entrepreneur, the pioneer, the military hero, are gone in the sense we used to talk about them and act on them. Starting from where we are means starting without these myths but with the problems of self-worth and self-identity bred by the loss of "home town," "revolution," "business," "company" or "class" as a nucleus for identity. What used to be stable divisions in our community are no longer stable: -the division between education and work, and with it, the view of the young as learning and the old as established; -the division between labor and business; -the old regionalism; -the old divisions between race and race and class and class; -the division between the change-oriented outcasts (inventor, poet, therapist) and the stable society; -the division between "good creative private enterprise and "evil" controlling Government.

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Starting from where we are means starting from the realization that these changes are real, and addressing ourselves instead to the new problems that come from recognizing the divisions as obsolete: -the mutual problems of business and labor in coping with the significance for the firm of technical innovation; -the new role for the university implicit in the need of occupational skills to be organized and reorganized several times in the working life of an industrial worker or professional man; -the new regionalism which looks at economic regions, rather than states, as centers of responsibility for technical-economic development and seeks to build new business based on new technology; -the development of new forms of partnership between business and Government, in which the climate of Federal policy is designed to encourage innovation. New nuclei for identity and self-worth will come out of involvement in the process of solving such problems. New social objectives will emerge in the course of the process to replace the now empty objectives of the eighteenth-century program. A new sense of strength will grow out of involvement in the process of solving such problems, and the discovery of new views and objectives in a continuing process, as against the faith in a stable new Promised Land. The crucial form of experiment demanded by the technological, institutional and normative changes of our time is experiment in norms and objectives. The erosion of the objectives of the Technological Program leaves us with more information than we can handle and requires the attempt to create situations in which new objectives can emerge. As an example, the industrial worker has experienced a long process in which, through the labor movement, the conditions of work-its duration, safety and comfort-

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have been improved, while through the progressive division and mechanization of labor, the creative and satisfying content of industrial work has been impoverished. Work has become safer and shorter and at the same time emptier, more repetitive and more routine. We have defended several of these processes in the name of productivity, claiming that increased productivity requires increased mechanization and routinization of labor. But have we adequately tested this assumption? We have begun to speak of the need to develop alternatives of "creative leisure" in order to use the energies of the wealth-producing resources our industrial system will no longer require. But we have not yet begun to look for the new organizations of work, based on the special contributive abilities of human beings, which might maintain or increase productivity while at the same time leaving opportunity for satisfaction in the accomplishment of whole industrial tasks. Similarly, the effort within the firm to creat new businesses under the umbrella of the corporation, leaving entrepreneurial power with those to whom the entrepreneurial task has been delegated, creates the opportunity for a resurgence of the values of the Little Man in new forms. The question of national identity is as much a question for Americans as is the question of individual identity for workers and professionals. If we do not heed the call to Return to a concept of the American experiment which is no longer vital, or to Revolt against it, then we face the need to use our traditions not as literal rules but as projective models for our time. Kennedy's New Frontier was an effort in this direction. Children growing up today face a future without a Promised Land. If they are to develop a sense of themselves and of their own worth, they will have to develop an ethic of change. They will have to accept, as continuing, the changes in technology, institutions and objectives which have outmoded the Technological

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who trust themselves to the here-and-now,who start from where they are, who experiment, who seek the metaphors for the future inherent in their traditions, who permit freedom to change, seek new visions and become.

APPENDIX E X A M P L E S O F TECHNOLOGICAL C H A N G E I N T H E T E X T I L E , M A C H I N E TOOL AND BUILDING INDUSTRIES

The Textile Industry 1. S Y N T H E T I C FIBERS. Setting aside rayon, which was of much earlier origin, the story of synthetic fibers begins with the discovery of nylon, by Carothers at Du Pont in 1939. Nylon grew out of Carothers' fundamental work on polymerization. Nylon 66 was first synthesized in 1935 and was put into pilot plant operation in 1939. By 1948, Du Pont's nylon sales had grown to $120 million. Nylon was followed by Du Pont's development of Orlon Acrylic fiber, dated from 1948, and then by Dacron, in 1949, a development based on patents purchased from Imperial Chemical Industries in Britain. Nylon, Orlon and Dacron represent the three most important kinds of synthetic fiber and have been manufactured by other chemical manufacturers under different trade-marks. The synthetic fibers have both competed with natural fibers and established new markets of their own.

Although the research laboratories of Tootal-Broadhurst-Lee, Ltd., in Britain, had worked on treatment of cottons with formaldehyde resins as 2. WASH-WEAR

TREATMENTS FOR COTTONS.

219

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Technology and Change

early as 1920, resin-treated cotton fabrics came into their own for the first time in 1947. By 1950, both U.S. and British chemical companies were promoting melamine-formaldehyde resin treatment of cottons for "wash and wear." In 1958, new chemicals were introduced which "cross-link" the cotton cellulose and are fast to repeated washings. Today, over half the cotton goods finished in the United States are resin-treated or chemically crosslinked. This is in the order of two billion pounds of cotton. 3. S A N F O R I Z I N G . ''Sanforizing" is a trade-mark for a process to shrinkproof woven cotton fabrics by passing them through two belts, one driven faster than the other. Sanforizing began in World War I when men in the army first became accustomed to wearing shirts with attached collars. Cluett Peabody, manufacturer of the popular Arrow Collar, realized his firm would have to go into the shirt-manufacturing business or cease operations. Shrinkage was a serious problem and, by 1930, Cluett developed Sanforizing. All machinery for shrinkproofing cotton fabrics uses the principle developed by Cluett. Until 1949, licensees paid royalty for use of the process alone. In 1949, Cluett issued licenses for use of the trade-mark itself and initiated a standard quality control system to police the trade-mark. 4. T U F T I N G . Tufting-a pile fabric made by inserting a lace yam into a ready-made woven backing fabric-originated as a handicraft with early American colonists and was revived at the turn of the century at Dalton, Georgia. Machinery for tufting was introduced in the early 1930's and improved to the point of permitting mass production during and after World War 11. First applied to bedspreads, tufting spread in the early 1950's to carpets. Tufted carpets are produced ten to twenty times faster than the woven variety and average 25 per cent lower in cost than comparable woven goods. Today, over 80 per cent of all carpets are produced in this way.

Appendix

5.

NONWOVEN FABRICS.

22 1

Nonwoven fabrics are materials made

of textile fibers held together by a binding agent or by the fusing of thermoplastic fibers and not processed by conventional textile means. Although the art of producing fabric in this way goes back to prehistoric times, only in World War I1 did nonwovens become commercially important. Partly as a result of wartime search for new materials and methods, Carl Freudenburg, of Germany, introduced Pellon fabric in the United States in 1952 as an interlining for clothing. Nonwovens may be produced by wet and dry processes, some of them going back to patents filed as early as 1929. About loo million pounds of textile fiber, or 2 per cent of the total U.S. fiber consumption, are being consumed in nonwoven applications. Less than 50 per cent of the new industry is controlled by companies who produce conventional textiles; specialized nonwoven producers and paper companies account for the rest.

6. TEXTURIZED SYNTHETIC YARNS. "Texturizing" means changing a filament synthetic yam, increasing bulk or imparting stretch, by inserting permanent crimp, loop, coil or pearl into otherwise smooth, parallel filaments. In 1950, Alexander Smith, a leading carpet manufacturer, developed a commercial machine to crimp South American wool fibers in order to give them the desirable properties of Indian wool. In 1951, Joseph Bancroft, an outfit specializing in developing and licensing fabric finishes, purchased the license for this invention and applied it to nylon filament yams, under the trade-mark Banlon. After 5 years of development, Banlon became commercial in 1955. The Swiss Heberlein Patent Corporation developed an analogous coiling process for nylon, based on their earlier process for rayon, in 1949. In 1956, 12 million pounds of nylon yarn were texturized. By 1961, this figure had risen to over 50 million pounds.

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7. FOAM-LAMINATED FABRICS. The Curtiss-Wright Company developed in 1954 the first workable method of heat-fusing polyurethane foam (invented by Dr. Otto Bayer in Germany in the 1930's) to cloth. Reeves Brothers, a textile equipment manufacturer, took over the process and contributed, with the Scott Paper Company, to the development of a commercial method for making flexible urethane foam in large quantities. On the basis of the light weight and insulating quality of the combined product, volumes rose from insignificant quantities in 1959 to about loo million square yards in 1962. 8. S H R I N K A G E C O N T R O L FOR K N I T GOODS. This is a process and machine for mechanically compacting knitted fabric to eliminate shrinkage. Its invention in 1952rested principally on the discovery that if cloth is compacted in the direction in which it has been knitted, no compacting is necessary in the transverse direction. Richard Walton, the inventor, drew on his extensive knowledge of paper-creping methods. In 1963, about 50 million pounds of compacted fabric were consumed.

9. IMITATION F U R FABRICS. In 1950, George W. Borg, who had invented the Borg clutch, came across a knitting mill which produced buffing cloth. From the cloth he conceived the idea of a knitted pile cloth made from synthetic fibers to imitate natural furs. The innovation has had a large impact on the apparel market and attained a volume of about $50 million in 1960. lo. VELCRO. Velcro is a fastener which employs the uniform locking strengths of hundreds of tiny nylon hooks and loops to create a powerful adjustable bond. The idea was conceived and developed by a Swiss inventor, George Mestral. In 1957, a corporation was formed to promote Velcro on a worldwide basis, and by the end of 1959, 60 million yards of the fastener were being produced annually.

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11. STRETCH CHILDREN'S GARMENTS. The inventor, Walter Artzt, entered the business of producing cotton garments for children and in 1955 conceived the idea of a stretchable children's garment designed to grow with the child. The garment used synthetic stretch yarn and had extensible toes. An unusual advertising campaign was built around the name "Baby Grow," and market volume grew to $20 million by 1960. 12. P R O C E S S

CHANGES RESULTING

I N I N C R E A S E D PRODUC-

In addition to the product changes described above, there have been over the last twenty to thirty years a series of relatively small changes in textile processing which, in the aggregate, have accounted for significant improvements in productivity. These include:

TIVITY.

-long-draft spinning -faster looms -more efficient, self-correcting winding machines -continuous-dyeing system -pressure-yard dyeing -more precise control techniques and quality control devices These and similar improvements have come from the work of textile mills, machinery manufacturers and research workers and consultants, both in this country and abroad. The effect of these improvements can be gauged from the following: In 1947 textile mills produced 12.4 billion linear yards of cloth at the rate of 7.8 yards per man-hour. In 1957, textile production went down to 12.1 billion yards, but the output of cloth per man-hour increased to 11.6 yards, for a gain in productivity of 48.7 per cent over a period of ten years. Over the same period total employment in U.S. textile mills declined from 1,325,000 to l,ooo,ooo workers, for a drop of 24 per cent.

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The Machine Tool lndustry Machine tools currently on the market are, on the average, at least 50 per cent more productive than those of fifteen years ago, although productivity per machine-hour-because of short runs and problems of set-up time-does not reflect itself in equivalent productivity per man-hour. This increased productivity is due to improvement in machine design, cutting materials and materials-handling techniques. Attack on the problem of idle machine time has taken two forms: development of standardized, modular machine tools and numerical controls (to be discussed presently). PRODUCTIVITY.

MATERIALS-FORMING METHODS. New materials, new means of forming metal, changes in design and manufacturing practice, are part of a general threat to the traditional machine tool industry. These invasions stem from a variety of sources:

N E W MATERIALS A N D

-More sophisticated design has meant less metal to remove. -Mills are providing more presized stock for metal that is rolled, drawn or cast. -There is a trend toward the use of metal stampings (in fasteners, for example) as opposed to heavy machined stock. -Precision, lighter-walled castings now require less machining in applications like gears, machine parts, locks and the like. -Precision forging has taken over applications in the aerospace and automotive industries. -Plastics have come into heavy use in gears and bearings, and reinformed plastics have replaced some machined products. -Older industries on which the machine tool industry depended-shipbuilding and railroads, for example-have tended to decline. Industrial growth areas, like chemicals and

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electronics, tend to require materials extruded to shape rather than milled from solids. These innovations represent invasions of the machine tool industry in the sense in which vinyls have invaded the leather industry and polyethylene bags have invaded the paper bag industry. They have not been introduced into current processing within the industry (as synthetic fibers were introduced into textiles) but have replaced products made by traditional methods in end-use applications. In effect, from the point of view of those end uses, these innovations have stretched what we must now refer to as the industry. We must no longer speak of the machine tool but only of the materials-forming industry. THE I N T R O D U C T I O N O F C A R B I D E T O O L S A N D R E L A T E D I N N O -

Carbide tools, replacing steel tools, have became of major importance to the machine tool industry. Their great hardness permits faster removal of metal, accounting in part for the increase in cutting rates referred to earlier in this chapter. Carbides (primarily tungsten carbide) were developed originally in their machine tool applications by the Krupp works in Germany around 1927. Carbide tips had been used in German antitank projectiles in World War I. Krupp licensed the General Electric Company to produce carbide tools (forming the Carballoy Corporation), and a large antitrust suit resulted in 1927-28. Carbide tools were much talked about but not much used in the thirties. They came into their own in World War 11, entering one area of application after another, although in some areas (drills, for example) the process of adaptation is still continuing. Carbide tips brought problems in their wake. They were harder but also more brittle than steel tools and required better control of vibration and more horsepower. These needs were met in the United States by the introduction of individualized machine drives. They required new sharpening methods, which gave rise to the introduction of diamond sharpening wheels. This family of VATIONS.

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inventions, first developed in the 1920's but put to major use only in the 1940's has caused a revolution in productivity. Numerical control refers to the use of numbers, in various forms, to take the place of the operator and replace jigs and fixtures. The machine's control system accepts direction. Punched tape, cards, an operator's push buttons, point-topoint positioning, or predetermined continuous path, provide the signals that direct the movement. The first numerically controlled machines, at least in the direct line of descent which has resulted in the current widespread industrial interest, were developed under Air Force contract at the Servo Laboratory at the Massachusetts Institute of Technology in 1952-53, under the direction of Professor Parsons. Antecedents of this machine had been developed in the forties at Vannevar Bush's MIT laboratory. The Air Force contract grew, in turn, from the problems of machining complex helicopter rotors. The first numerically controlled machine was shown at the Machine Show of 1955. General Electric, Giddings and Vose, Kearney and Trecker, and others put money into the development at the MIT stage. It was taken up by the Boeing Corporation in 1960 and primarily used by the aerospace industry on govemmentsponsored projects and products. It is estimated that there are now three thousand numerically controlled machine tools in use and that within the next year or so 25 per cent of machine tool gross sales will be numerically controlled. It is generally held that numerical controls are already and potentially more significant than any other innovation in the industry in the last twenty years, both technically and economically. Their cycle of innovation and diffusion, ranging from 1954 to 1963, though far from complete, has been remarkably fast by industry standards. Numerical controls have more than one important justification. They were developed initially to do machining jobs difficult or impossible on then-present equipment. For example, numerically NUMERICAL CONTROLS.

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controlled drilling machines are capable of making boards, for rocket subassemblies, with eight hundred precisely drilled holes with a minimum of scrap and inspection time. However, the primary importance of numerical controls for the industry has to do with their ability to provide greater productivity, greater flexibility and a major reduction in set-up time. They permit program-

ing a series of short runs without the idle machine time which currently limits productivity per man-hour in the industry. It is estimated, for example, that a turret lathe currently runs effectively about 20 per cent of the time; numerically controlled turret lathes have had experience of 85-90 per cent effective operation, and one machine may "bump" one to five conventional machines. It is clear that numerical controls are already making a major impact on machine tools. It is held by many that they will also produce major changes in productivity in all industry. Programed production is held to be as important in its way as automation. For the moment, however, numerical controls are still primarily used in the aerospace industry and are only gradually moving into general commercial practice. During the past thirty years many new methods of forming metal have been introduced, replacing application of a tool to the surface of the work. Many of these have come out of military and aerospace applications. None has so far had major economic significance. NEW M E A N S O F F O R M I N G METAL.

Electrical discharge machining was developed in the U.S. by a small company in the late thirties and by the USSR in the early twenties. Today there are about one thousand such machines in operation. 2. Electrochemical machining-essentially electrochemical deplating-was developed out of university research by a small company, the Anocut Corporation of Chicago, during the Korean War. 3. Chemical milling, selective etching of metal, originated in the I.

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Technology and Change

aircraft industry and is now practiced primarily by one small machine tool company. 4. High energy rate, or explosive, forming was developed around 1955 by a small-scale producer of fan hubs in the Midwest. It was taken up by the Defense Department and developed by the Lockheed Corporation. Other more recent and exotic metal-forming methods-laserforming, plasma-gun welding, jet machining, ultrasonic machining, electron beam machining and welding, hot forming, ultrahigh-speed machining-have been developed in recent years primarily for aerospace applications.

The Building Industry ORGANIZATION. Innovations in building management and practice, stemming from large-scale Federal building projects in the Depression and World War 11, treat building as a manufacturing process, subject to cost analysis, time and motion study, production scheduling and all the other tools of modern production. They are part of what can be called the industrialization of building. They have contributed to cost reduction which amounts-in the case of school construction, for example-to 33.3 per cent over twenty years. BUILDING METHODS A N D

Plastics. In the past thirty years one new major class of materials has been introduced into the building industry: plastics. They range from polyvinyl chloride, dated from 1936, to Urethanes, whose introduction occurred around 1953. All these products have been developed by the chemical industry, many of them as synthetics for wartime use. The growth rate of plastics has been higher than that of the building industry itself. Plastics accounted for 2 per cent of the

INNOVATIONS IN BUILDING

MATERIALS.

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229

construction-materiaIs dollar in 1959, primarily replacing traditional products in applications such as flooring and walls. High-strength concrete has increased in use in recent years and has increased in strength by a factor of 4, permitting taller buildings of reinforced concrete and economies through the use of constant elements of size in design. Lightweight concrete, introduced by Stephen J. Hoyde in 1917,has permitted a reduction in building weight. Prestressed concrete, conceived in the US. by Jackson of California in 1886, was further developed by Freyssinet of France, who, in 1928, invented a reliable stress retention system for beams. In 1950 the Walnut Lane Bridge in Philadelphia constituted the first commercial U.S. application of the system. In 1959, 205 companies were producing prestressed concrete products in the United States, using about 1.2 million cubic yards of concrete. This growth represents, in part, a displacement of steel but is more directly related to rise in prefabrication. Plywood originated in the US. in 1865 when patents were issued to John Mayo, whose aim was to develop a new material for the furniture industry. Plywood was not used until World War I, and it was not until the 1930's that a reliable waterproof glue was developed, in Germany, so that plywood could be used as an exterior material. The growth of plywood has been at the expense of lumber and has far outstripped the growth rates of both lumber and the building industry. Hardboard and particle board, both reconstituted wood products, originated, respectively, at the turn of the century in Britain and in 1941 in Germany. Originated as ways of using wood waste, both have had extensive growth in Europe and in the U.S. High-strength steels are the results of war and defense demands on metal producers and seem to have entered the building industry in response to competition from materials such as reinforced concrete.

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Technology and Change

Glass,insulution and acoustic materials have undergone extensive improvements over the last thirty years and have permitted both improved building quality and more extensive use of premanufactured components. OF POWER TOOLS. These were first developed in the 1920's and, despite the opposition of building trade unions, have doubled since 1947, the earliest available figure. They have joined with prefabrication and prefinishing to make for major changes in productivity.

INTRODUCTION

M E C H A N I C A L EQUIPMENT. The increased use of mechanical equipment has been both cause and effect of change in building. The first elevators, built in 1857, made skyscrapers feasible, and skyscrapers provided elevators with market and with stimulus to improvement. Carrier developed a system of dewpoint control in 1906. Much of this development has been in response to the demands of user, designer and realtor.

IMPROVED

Substantial changes in the structural frames of building-such as those required for aircraft hangars and airports and by industry's desire for greater efficiency in the use of materials-have brought about new analytic design methods. The first thin shell was built in Germany in 1931. Sandwich panels adapted from the aircraft industry are believed to have been first made by Junkers Aircraft in Germany in the early 1930's. Much simplification of design and analysis in building stems from the aircraft industry. IMPROVED S T R U C T U R A L ANALYSIS.

A N D OFF-SITE PREPARATION. Prefabricated houses were brought to Cape Ann by the English in 1624, and the first metal prefabricated house was built in England before 1830. Story-height precast reinforced concrete panels came into use in the igzo's. But the widespread use of prefabrication and component manufacture is new to the last t-hirty years. It came in part

PREFABRICATION

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from the government's desire to stimulate the depression economy through lower-cost housing and later from war mobilization requirements. During the thirties, certain government agenciesFarm Security Administration and TVA-used prefabrication and had built twenty-six thousand structures by 1940. Resistance of materials producers and reaction to poor quality slowed down the spread of prefabrication. But premanufacture of components, such as doors, sash and trim, showed a steady rise. With the introduction of mobile homes, prefabricated houses grew from about 5 per cent of the residential market (in units) in 1950 to about 20 per cent in 1963. Ready-mix concrete, the most important example of off-site preparation of materials, originated in the U.S. in the early 1930's and had reached a volume of well over $1 billion in 1961. Other inventions of the last thirty years, less important than the above, but still worth mentioning, have to do with MISCELLANEOUS

INVENTIONS.

-prefinished products, including porcelain enamel steel, asbestos cement, aluminum and wood siding; -materials-handling improvement, such as hoists, conveyors, powered concrete buggies and, most significantly, the tower crane, imported from Europe in 1960; -the increased use of jigs and fixtures; -and the use of the computer in engineering feasibility analysis and design. One of its first applications was to the Bay of Fundy power project in the early 1950's. Since then it has spread both to civil engineering and to building design, still far short of realizing its potential for the industry.

NOTES

Introduction 1. Dr. Emmanual Mesthene has called attention to these approaches to change in a recent article, "On Understanding Change," Technology and Culture, Spring, 1965.

Chapter 1 I would distinguish three of these-the first consisting in the introduction of the factory system, based on steam power, and initiated in the British textile and machine tool industries of the eighteenth century; the second, the introduction of mass production technology, depending on standard, interchangeable parts and epitomized by the United States automotive industry of the early twentieth century; and the third, the current transformation of industry through the use of electronic information-processing technology. 2. Much of the pragmatism, positivism, and operationism of the last seventy-five years has gone to elaborate the sense in which 1.

233

Technology and Change theories must be viewed as "constructs" and evaluated on the basis of some measure of utility rather than on simple correspondence or coherence theories of truth. 3. Questions of equal importance are raised by the use in relation to invention of words like "development," "design," or 'research." Both "research" and "development," for example, are often used as though they were distinct from invention although in fact the processes which go under those names share in all the characteristics spelled out in the pages that follow. "Design" is commonly used to indicate a last, "aesthetic" phase of development, although there is an important sense in which the whole process of invention and invention is a process of design. 4. The distinction between the creative production of ideas and their critical evaluation has received emphasis in writings on the creative process, from Graham Wallas's Art of Thought to Alex Osborne's Applied Imagination. "Brainstorming," in fact, as a technique for idea production, consists in separating these functions. The idea of such a separation seems to be drawn from the metaphor of industrial production as distinct from testing or quality control. The logical separation of functions frequently gets embodied in organizations, as when those responsible for the production or proposing of ideas are separated from others responsible for their evaluation or disposition. 5. This practice is common not only among outsiders to invention but among inventors, developers and research directors after they have completed a piece of work. It is not unusual to hear a tortuous, complex and surprising process of development described as though it were logical and straightforward. This afterthe-factness pervades our view of invention. It focuses on the product of invention and reconstructs the process as a direct line to that product, whose significant characteristics may in fact have become apparent only at the end of the process. It enables us to see technology as a mass of products just as we can see science as a mass of facts. It is, in effect, a condition of the rational view. It 234

Notes suggests such models as "applied science" or "the conversion of science to technology." It suggests a Parmenidean view of science and technology. The Heraclitan view is the one we encounter when we approach science and technology as processes before particular results have been brought into being. 6. Each way of looking at the history of invention has had its champions. Schumpeter, for example, tended to see the history of technology as a history of the inventive and innovative efforts of a relatively small number of Great Men. Ogburn and Gilfillan have discounted the Great Man theory of invention as myth and see the history of technology as a series of small developments and improvements which amount cumulatively to significant technological change. In this sense, theories of the history of technology have paralleled theories of history. Late nineteenth-century Great Man theories have given way to theories which emphasize the sweep of events and the multiplicity of contributions. In similar fashion, some inventors stress the uniqueness of their contribution, in an almost mystical sense, while others refuse to recognize their inventions except as modern versions of accomplishments made many years ago. 7. The role of phenomena and what might be called the phenomenology of invention is far more extensive than can be discussed here. Intrigue with phenomena is a special characteristic of at least one important class of inventors and discoverers. In the sense meant here, phenomena are opposed to theory. It is usual to see and feel through or by means of theory, with selective inattention to what does not fit. Phenomena are always more than theory encompasses, and frequently outside or in conflict with theory. Hence, they are a source of novelty with respect to theory. The pattern of invention is frequently an interplay or oscillation between phenomena and theory. The inventor becomes intrigued with the way the metal or the droplets or the fiber behaves, returns to an attempted theoretical explanation of what he perceives (even though the theory need not be of a high order of sophistica-

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tion), then finds a new opportunity for observation. In all of this, what is observed or felt takes priority. Such intrigue with phenomena may be a constant theme running through apparently unrelated inventions. All of a man's inventions may derive, for example, from intrigue with the effect of electrostatic charge on liquids, the plasticity of fibers or nonlinear vibration. 8. This example is drawn from a product development project at Arthur D. Little, Inc. g. The relation between need and technique is, of course, analogous to the relation between end and means, and the argument presented here is analogous to the argument, usually associated with John Dewey, concerning the relativity and mutual determination of ends and means. Dewey's argument that an end, in one context, becomes a means in another, and that we do not know our ends until we have specified the means by which they are to be reached, acquires special point in relation to technology. lo. I have discussed this subject at length in Displacement of Concepts (Tavistock Press, London, 1963). There it is broadly the question of the emergence of new ideas which is at issue. I argue that only a process such as displacement-carrying familiar theory from old contexts as projective models for new situations-can stand as an alternative to theories which either deny or make a mystery of conceptual novelty. Processes of metaphor or analogy also figure significantly in Arthur Koestler's Act of Creation and The Sleepwalkers, which examine processes of scientific discovery. In fact, all of what is described here as the nonrationality of invention applies in its own way to discovery. Again, the after-the-fact view of invention or discovery may obscure the shift of disciplines and the role of analogy or displacement. Certain medical discoveries seem now clearly to have come from the field of biochemistry; but, in fact, biochemistry is a relatively recent product of certain processes of discovery. Electrical

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theory now appears as a well-defined field but, in fact, emerged in the early days of experiment with electricity from other fields, including especially the theory of liquid flow.

Chapter 11 I. The genesis of the modem concept of risk from games of chance suggests the ideal of a closed system in which the limits of probable associations are given with the structure of the game. This is in contrast to the essentially open system associated with uncertainty. 2. The market is in this sense a function of the product, but the nature of the function is never clear ahead of time and may remain unclear throughout the product's life. The properties of the product determine its market but in obscure ways. An awareness of something like this underlies the unwillingness of companies to alter a successful product: it has worked, but no one knows why. The market situation is one in which corporations would like to experiment. But there are few meaningful experiments that can be performed without changing the market situation itself, sometimes in irretrievable ways. For example, an experiment on a small population may be discarded because it is not representative, but experiment with a large population costs a great dealand may significantly affect the product's future. There are, then, inherent limitations on the company's ability to discover "the truth" about consumer response to product and to change in product. 3. The uncertainties of market are inherent not only in the structure of consumers' attitudes, which change in complex ways over time, but in the dynamic situation of the firm confronted with the need to find out. Characteristically, the problem is not simply to discover the truth but to provide a basis for decision within definite limits of time and cost. The question is never sim-

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ply "What can we find out?" but "What can we find out within these limits of inquiry?" 4. Malinowski, among others, has pointed out the role of myth as a cultural response to situations provoking anxiety and dread. Erving Goffman, in Asylums, notes the tendency of those confronted with dangerous and uncontrollable uncertainty to gamble, bet and figure odds as a device for maintaining at least the illusion of control.

Chapter 111 1. The distinction between official and unofficial, open and underground, is intended to parallel similar distinctions current in the study of organizations and social systems; for example, Erving Goffman's descriptions of the underlife of public institutions. Only in recent years have economists become interested in technological change as a component of economic growth. Inability to account for observed rates of growth on the basis of change of values of capital investment, labor or land has led to the concept of productivity increase, through technology, as an important factor in growth. It is by no means a matter of agreement among economists, however, just how much of our recent economic growth rate can be attributed to technological change or even how the measurement of this contribution is to be made. An optimistic estimate of the degree of technology-induced growth can be found in the report of the recent Commission on Automation, Technological Change and Economic Progress (February, 1966). 3. In The Stages of Economic Growth Walt Whitman Rostow attempts a generalized analysis of the dynamics of economic growth. He distinguishes not only economic stages of the process but characteristic cultural attitudes accompanying these stages.

Here then, in an impressionistic rather than an analytic way, are the stages of growth which can be distinguished once a traditional

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society begins its modernization: the transitional period when the preconditions for take-off are created generally in response to the intrusion of a foreign power, converging with certain domestic forces making for modernization; the take-off itself; the sweep into maturity generally taking up the life of about two further generations; and then, finally, if the rise of income has matched the spread of technological virtuosity . . . the diversion of the fully mature economy to the provision of durable consumers' goods and services (as well as the welfare state) for its increasingly urbanand then suburban-population. -CAMBRIDGEUNIVERSITY PRESS,1960, p. 12 Rostow points out, for example, that in the transition from takeoff to maturity

. . . the character of the leadership changes; from the buccaneering cotton-, railway-, steel-, and oil-baron to the efficient professional manager of a highly bureaucratized and differentiated machine. -Ibid., p. 72 The other cycles to be described in this book-the research cycle, for example, and the evolution of the industrial firm, parallel the progression described by Rostow. 4. See the 1964-65 hearings of the Elliott Committee of the House of Representatives; the 1965 hearings of the Miller Committee of the House, on the National Science Foundation; and the 1966 hearings of the Reuss Committee. There has been a marked change of tone from the awed, naive or contemptuous remarks of congressmen in the fifties toward and about scientists, to sharp, business-like interrogation in the sixties clearly tending toward the notion of science and technology as a subject for congressional management like defense or agriculture. The best studies of corporate societies I have so far encountered are by Tom Burns, a British sociologist at the University of Edinburgh. Burns has studied electronic firms and the British Broadcasting Corporation. Unfortunately, only a fragment of this work has been published.

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1. This phrase originated with David B. Gleicher, of Arthur D. Little, Inc. 2. The two cultures referred to here are the cultures of business and of science. Both are associated with characteristic value systems. Both trace their origins to the Protestant Reformation, or seem at least to have taken on their characteristically modern form in that period. While business and science have influenced one another since their origins (see, for example, Robert Merton's studies of seventeenth-century science), it is only within the last fifty years or so that they have been thrown together intimately and on a day-byday basis, through the in-house industrial research laboratory. The conflicts between scientists and business managers are not all attributable to quirks of personality, or to special cases of corporate politics, but are inherent in the situation of the industrial research laboratory as the first attempt to bring science and business cultures and value systems together in one organizational setting.

Chapter V I . Bernard Muller-Thym has pointed out that the shift from pyramidal to decentralized network structures may be attributed, as well, to shift in the character of the work the industrial corporation is called upon to do. The traditional industrial pyramid rests on notions of supervision and span of control, which depend, in turn, on work as a linear, fragmented, sequential process-work as it became through the first and second industrial revolutions. But with the introduction of electronic information-processing technology, the character of industrial work is changing-is tak-

Notes

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ing on something more nearly like the character of a complete information-processing task-and the pyramid as the model for supervision gives way to the network with many centers of information and control.

Much of the material of this chapter comes from a 1963 Arthur D. Little, Inc., study for the National Science Foundation, "Patterns and Problems of Innovation in American Industry." This report is available in full from the Clearinghouse for Federal Scientific and Technical Information, U.S. Department of Commerce, Washington, D. C. Each industrial area was assigned to an ADL staff member familiar with the industry who used as material his own experience with the industry, case histories from ADL's file and selected interviews with individuals knowledgeable in the industry. Study of the textile industry was assigned to Mr. Dan Singer; building and construction to Dr. Harold Webber and Mr. William Hearne; the machine tool industry to Dr. Raymond Hainer and myself. Mr. David Gleicher and Mr. Sherman Kingsbury helped in the analysis. I served as project leader and drafted the final report. 2. The data quoted here are principally from 1958. More recent data show certain changes-the increased prosperity of the industry, a continuation of the trend toward concentration-but do not significantly affect the inferences made above. 3. The self-reinforcing character of industries, considered as social systems, parallels what we saw in Chapter V as the selfreinforcing character of firms. The social systems of industries and firms are closed-loop feedback systems and, in this sense, the conservatism of a firm, the traditionalism of an industry, like "poverty," are their own cause. To look for "obstacles to change" or "roadblocks to innovation" 1.

245

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is therefore a serious mistake. We are dealing with social systems in states of dynamic conservatism. There is no particular thing, or block of activity, which resists change more than any other. Everything about the system resists change, since it is a complex of institutional and individual activities which strive to reinforce one another in maintenance of the stable state. But there are also, as we have seen, sources of internal instability and conflict and of external invasion. From the point of view of change in the direction of innovation, the problem is to devise and carry out strategies of systems change building on these resources for change.

Chapter VII I. The growth of industrial associations has usually been in response to a perceived external threat, either from competing industries, foreign or domestic, or from Government policy. In the case of some American industrial associations-the American Gas Association and the Structural Clay Tile Products Institute are examples-such threats have led to association-sponsored research and development. In Britain there is a longer and fuller history of industrial association-sponsored research, centering on the Department of Scientific and Industrial Research (DSIR), founded shortly after World War I and now part of the Ministry for Technology. The history of this effort suggests some of the potentials and limitations of industrial association research as it has been practiced to date. In general, such efforts tend to concentrate on areas such as product improvement, increase in productivity, cost reduction and better understanding of materials or processes central to the industry. Highly significant technological innovation, in the sense described above, tends not to come from this sort of activity, for reasons that have to do with ( a ) the problem of conducting research under the direction of multiple "bosses," ( b ) the desire of

Notes

243

individual firms to capture or hold secret any development of potential proprietary importance and ( c ) the unresolved marketing and entrepreneurial problems associated with commercializing research results. 2. A. Hunter Dupree has developed this point at far greater length in his Science in the Federal Government (Harvard University Press, Cambridge, Massachusetts, 1957). 3. "Failure to keep public services in minimal relation to private production and use of goods is a cause of social disorder or impairs economic performance. . . . By failing to exploit the opportunity to expand public production we are missing opportunities for enjoyment which otherwise we might have had. Presumably a community can be as well rewarded by buying better schools or better parks as by buying bigger automobiles. By concentrating on the latter rather than the former it is failing to maximize its satisfactions. As with schools in the community, so with public services over the country at large." -GALBRAITH,1958, P. 204 4. This protectivist policy coupled with the longevity of Government bureaucracies helps to account for the fact that many Government agencies now appear as institutions designed to cope with problems thirty, fifty or even seventy-five years old. Where the policy is protectivist, the Government action may help to perpetuate, if only in vestigial form, the problem it is designed to solve. The continuation of many such institutions then raises major problems for an organizational response to the need for new programs or new missions. Something of this sort underlies the problem of Government response to change, which is in many ways analogous to the industrial problems we have been discussing.

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Chapter VIII 1. Although we have quoted at some length from Bacon, he was only one among many who laid the foundations for the Technological Program. A fuller account would need to include Descartes, and other seventeenth-century Rationalists, whose development of the view of nature and society as subject in principle to rational understanding and control by the "light of natural reason,'' became basis for the new faith in Science stated by the French Encyclopedists of the eighteenth century, and still later, by the Positivism of Comte. Accounts of the development of the Technological Program can be found in Bury's Idea of Progress and in Carl Becker's Hewenly City of the 18th Century Philosophers. 2. Carl Becker, in the work cited above, pointed out that eighteenth-century beliefs in Progress, conceived as a theory of man, his future and his place in the world, were in effect a transposition of the medieval Christian theology against which these same eighteenth-century philosophers thought they were rebelling. Faith in the natural light of reason was a version of faith in the divine light in man; Progress itself was a version of salvation, conceived now in terms of the community rather than of the individual soul; and Posterity, the state toward which mankind was seen to be progressing, was a heavenly afterlife made terrestrial. 3. We have frequently touched on the question of identification with organizations, groups and social systems generally, as a basis for a sense of self and as a central theme in theories of adaptation or resistance to change. The question is far too complex for analysis in this work. Some of the ideas which would be developed in a more nearly adequate discussion are these: -A sense of security is required for change. A sense of security comes, at least in part, from membership or roles in, feeling a part

Notes

245

of, those larger groups, systems, organizations or units which provide reference, define individuals, on occasion erect protective barriers, confer prestige, and the like. But such groups and systems-business firms, regional units, the family, the home townare precisely what are tending to lose stability and identity, and hence security-giving power, in response to the changes now being forced on them. Thus, the currents of change in our society tend to undermine the bases for security which would reinforce individuals in creative response to change. What are the new bases for security? What is the role, in this sense, for professional peer groups which cut across established organizations, for shifting membership in many overlapping groups, for informal interpersonal groups? Security comes as well from the ability to identify oneself (especially to oneself) as a person who believes certain things. The Ethic of Change is intended as a response to this need. -Identification with a social system, or subsystem, also figures as a component of resistance or adaptation to technological change. Elting Morison, in the case study quoted in Chapter 111, points out: If one looks closely at this little case history, one discovers that the men involved were the victims of severely limited identifications. They were presumably all part of a society dedicated to the process of national defense, yet they persisted in aligning themselves with separate parts of that process-with the existing instruments of defense, with the existing customs of the society, or with the act of rebellion against the customs of the society. -MORISON,1950, pp. 112-13 So that the social unit with which a man identifies, and from which he seeks security, has considerable to do with his ability to accept and cope with technological change. The system's ability to change depends, then, on the forms of identification it offers to its members. The individual's ability to change depends on the security he derives from roles and alle-

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Technology and Change

giances to entities which are themselves unthreatened by the change he is called on to undertake. 4. The use of "meta-ethic" to indicate an ethic for the process of change is to be distinguished from its use in current philosophical literature to mean a theory about ethics (usually, about ethical language and its use).

BIBLIOGRAPHY

AQUINAS, THOMAS,Summu Theologica, Part 111, Taurini, Italy: Marietti, 1952. BACON,FRANCIS,The Great Instauration and The Novum Organum, as in E. A. Burtt (ed.), The English Philosophers, New York, Random House, 1939. BURNS,TOM,Unpublished paper, 1965. BURY,J. B., The Idea of Progress, New York, Dover Publications, Inc.,

1932. CANNON,WALTERB., The Wisdom of the Body, New York, W. W. Norton & Co., 1963. CARROLL,LEWIS,Alice Through the Looking-Glass, the Washington National Home Library Fomdation edition, 1932. CRATYLUS, as quoted in Kirk and Raven, op. cit. FINKEL,COLEMANLEE, Establishing a New-Product Program, New York, American Management Association, Inc., 1958. GOFFMAN, ERVING, Asylums, New York, Doubleday Anchor, 1961. GOLDSCHMIDT, "The Development of the U.S. South," Scientific American, September, 1963. HERACLITUS OF EPHESUS,On Nature, as quoted in The Presocratic Philosophers, G. S. Kirk and J. E. Raven, Cambridge University Press, 1963.

248 Technology and Change JAMES,WILLIAM,"The Powers and Limitations of Science," in The Philosophy of William James, New York, Modern Library. JOHNSON, LYNDON, Message to the Congress, February 15,1965. KLEIN,BURTON, "A Radical Proposal for R & E," Fortune, May, 1958. MCLUHAN,MARSHALL, Understanding Media: the Extensions of Man, New York, McGraw-Hill, 1964. MEE, JOHNF., "Science and Management: Human Progress Twins," Advanced Management Journal, October, 1964. MORISON,ELTING,"A Case Study of Innovation," in James Bright (ed.), Research Development and Technological Innovation, Homewood, Illinois, Richard D. Irwin, Inc., 1964. NELSON,RICHARD, "The Link Between Science and Invention: the Case of the Transistor," in The Rate and Direction of Znwntive Activity, Princeton, Princeton University Press, 1962. PARMENIDES, The W a y of Truth and the W a y of Seeming, as in G. S. Kirk and J. E. Raven, The Presocratic Philosophers, Cambridge University Press, 1963. PIEPER, JOSEPH,Leisure: the Basis of Culture, New York, MentorOmega edition, 1963. QUINN,JAMESBRIANand CAVANAUGH, ROBERTM., "Fundamental Research Can Be Planned," Harvard Business Review. REYNOLDS, RICHARDS., "Innovation and the Modem Manager," Advanced Management Journal, October, 1964. SCHON,DONALDA., project leader, "Patterns and Problems of Technical Innovation in American Industry," Arthur D. Little, Inc., report to the National Science Foundation, 1963. Society of Professional Management Consultants, News Release, November, 1963. STRAVINSKY, IGOR,Musical Poetics, Paris, La Flute de Pau, 1945. SULLIVAN, HARRYSTACK,The Interpersonal Theory of Psychiatry, New York, W. W. Norton & Co., 1953. VEBLEN,THORSTEN, The Theory of the Business Enterprise, New York, Scribner, 1923. WATSON,ARTHURK., Address to the Eighth International Congress of Accountants, New York City, September 24,1962. WEHRLY,GORDON H., "Analyzing Competitive Factors in New Product Development: Industrial Goods," in Establishing a New-Product Program, a report of the American Management Association, Inc., New York, 1958.

--Marshall McLuhan

compact book. Students 1 lems of our time-and government will read his

rovation-one of the central prob cal managers Bf business and ith real benefit. -New

York Tim*