Texas Instruments: Where Does Innovation Come From?

Many great innovators have heard these words — “It’s not possible…”

In their early stages, ideas for new products or services can seem like fantasies. Skeptical minds judge them on the basis of what exists now, rather than what can or will exist in the near future. They seem impossible.

Daniel Decker, author and leadership consultant, explains this reaction on his blog,

“They [doubters] put you in a box based on what you’ve done before. You’re not capable of what you haven’t already achieved, they think... no one will ever pay you for what they have no idea you can do. It’s not even on their radar.”

When innovation is the goal, our true potential is reached when we begin targeting the "impossible," when we start reaching for solutions that are not yet on the cultural radar. This visionary mindset helped Pat Haggerty create one of the most quietly influential companies of all-time. 

Haggerty's Open-Minded Vision

Pat Haggerty was a business man, an engineer, and the co-founder of Texas Instruments (TI) — a Dallas-based company that specializes in semiconductors and electronics, including the graphing calculators that for years were a staple of every high-school student's backpack. But when Haggerty took over as Executive Vice President of Texas Instruments in 1952, the company was not known for its work in electronics. Regardless, Haggerty had a vision.

According to Walter Isaacson's inspiring book The Innovators,

"Haggerty had served in the Navy's Bureau of Aeronautics and [he] had become convinced that electronics were about to transform all aspects of life." 

And he wanted Texas Instruments to be at the head of this revolution. How would they get there? A concept called open innovation.

Open Innovation

At its core, open innovation is the understanding that solutions exist outside of your company and do not always have to arise from within. Haggerty knew that TI was new to the market and that great technology already existed elsewhere. Why not use it to build his own company's influence? In a 1964 interview explored in an article on INDP Center's blog, Haggerty explained it this way, 

"The sum total of exploratory R&D done in other industrial organizations, research institutes, and universities is so much greater than our own organization can perform that it seems almost inevitable that most of our strategy programs must evolve from exploratory research done outside.” 

Haggerty realized the high cost and limited scope of his internal Research & Development efforts, recognized that solutions existed elsewhere, and used these to reinvent Texas Instruments as a company.

At the time, Bell Labs — the company that held the patent on transistors (the building block for most current electronics) — was licensing its patents for $25,000. After an extended battle that stemmed from Bell's belief that Texas Instruments was not "competent enough to compete in the field," the patent license was granted. At the time, transistors were mainly used in complex, expensive military technologies. Haggerty urged his engineers to bring this complex technology to a larger market, and immediately went to work finding everyday applications for it.

Isaacson notes, 

"He developed a [Steve] Jobs-like knack for conjuring up devices that consumers did not yet know they needed but would soon find indispensable."

Within months, TI's team of engineers had created a newer version of a transistor that used germanium instead of silicon and could therefore be sold for less than $3 — some $12 less than the models the military was buying. Now, he had to take it to market. 

Re-Invigorating an Existing Product

Haggerty took an existing technology, developed outside of his own organization, and improved upon it by making it cheaper and more widely applicable. Next, it was time to apply this new technology to a new market. He wanted transistors to become a part of every American's life, So by the end of the year, Haggerty and his team used their new, affordable transistors to create a small pocket radio. 

The radio, no bigger than a size of an index card, was scoffed at by some of the big radio companies. Their concern? Consumers weren't asking for this product. However, as Isaacson notes, this changed quickly, 

"It [the pocket radio] quickly became an object of consumer desire and teenage obsession... Within a year, 100,000 had been sold, making it one of the most popular new products in history."

Haggerty's new product would only continue to grow. Just as he did when first acquiring the patent for the existing transistor, other companies began looking to apply TI's innovations to their products — the largest and most influential being IBM, which ordered its engineers to begin putting them inside all their computers, beginning a partnership that continues to this day.

All of Haggerty's innovation success began because he was open-minded. He understood that great solutions to future problems existed in products that existed outside of his own company. These innovations weren't being applied in the proper ways or within the proper markets, but with Haggerty's vision behind them, they found greater potential in new markets. As innovators, not all of our focus should remain internal — we have to look out at the world around us for inspiration. The next great discovery might lie within a product or idea that already exists, just waiting for a visionary like Haggerty to give it new life.

How do you look outside your own company for inspiration? Tweet us @EidsonPartners!