6 Lessons on Innovation From the History of the Barcode
Invention is not innovation. Producing something new that creates value for an enterprise in the marketplace may involve invention -; such as conceiving an idea that you could patent -; but innovation always requires more than that.
Just ask the inventors of the barcode. Patented in 1952, the barcode as we know it today was an innovation almost 50 years in the making. No one made any real money from it until 1974, and its full commercial potential wasn’t realized until the late ’90s.
If you consider the sequence of events necessary for the barcode to achieve ubiquity, some obvious insights emerge. Among them: A new idea generates many kinds of opportunities for innovation as it travels toward marketplace success, and the first mover on that road may be the least well-positioned in the end. Companies that don’t “invent” anything can innovate smartly in countless ways.
Here, we chart the barcode’s history and draw six business lessons from it.
A Philadelphia supermarket executive asks the dean of the Drexel Institute of Technology to research a means of capturing product data at checkout. A graduate student named Bernard Silver overhears the conversation. He enlists a colleague, N. Joseph Woodland, to solve the problem. Woodland leaves Drexel to devote himself to the cause.
One day, while living in Miami with his grandfather, Woodland has a breakthrough at the beach. “I poked my four fingers into the sand and for whatever reason pulled my hand toward me and drew four lines. I said, ‘Golly! Now I have four lines, and they could be wide lines and narrow lines instead of dots and dashes.’” Morse code expressed visually.
On October 7, Woodland and Silver receive U.S. Patent 2,612,994. The diagram is a bull’s eye with a pattern of thick and thin bands. Later that year, Woodland and Silver sell their patent to Philco for $15,000.
LESSON 1: TAKE THE MONEY
$15,000 may seem like a drop in the bucket, considering the ultimate significance of the invention. But “the first scanner that could read barcodes, and thus make their invention commercially feasible, wasn’t introduced until 1974, long after their patent had expired,” notes Edward Tenner, author of Why Things Bite Back and Our Own Devices, on Bloomberg.com. So, taking the $15,000 was a prudent choice.
On August 23, IBM scientist Hans Peter Luhn receives U.S. Patent 2,950,048 for the Luhn algorithm, a software code that catches common errors in scanning the numerical sequences used in credit cards and government IDs.
Dutch mathematician Jacobus Verhoeff develops the Verhoeff algorithm, another (and more sophisticated) code essential to error detection. In November, John F. Keidel, on behalf of General Atronics, receives U.S. Patent 3,479,519 for a barcode-reading scanner.
LESSON 2: INVEST IN ALGORITHMS
If your organization’s next innovation involves the capture or use of real-time data, you’d better cook up an algorithm to optimize it -; or make sure that one already exists. Otherwise, you might be producing a film in a world without projectors. “The unsung heroes of the barcode are the people who developed the computer algorithms that sharply reduce the number of errors from transposed digits,” Tenner told Build.
Logicon writes the Universal Grocery Products Identification Code. Monarch Marking is the first American company to produce barcode equipment featuring UGPIC for retail use. A British company, Plessey Telecommunications, is the first to make equipment featuring UGPIC for industrial use.
LESSON 3: INNOVATE WITHIN AN EXISTING ECOSYSTEM
Examples of innovations that came before they had an ecosystem to nourish them are legion: Philips Electronics pioneered HDTV in the mid-’80s, but high-definition cameras hadn’t arrived. Sony developed its first e-reader in 1990, but books weren’t yet digitized. When Woodland and Silver received their patent, digital scanners didn’t exist; retailers weren’t ready to be customers.
Alan Haberman, CEO of the New England supermarket chain First National Stores, chairs the industry committee that chooses the UPC barcode over other contenders (“circles, bull’s-eyes and seemingly random agglomerations of dots,” reports the New York Times). It resembles the black-and-white rectangle we all know today. The design was developed by IBM engineer George J. Laurer. Providing input on the project was none other than the original inventor: Woodland himself, who had taken a job at IBM back in 1951. He stayed there until his retirement in 1987.
On June 26, at a Marsh Supermarket in Ohio, Clyde Dawson buys a 10-pack (50 sticks) of Wrigley’s Juicy Fruit gum for 67 cents. Cashier Sharon Buchanan makes the first UPC scan. That pack of gum today is on display at the Smithsonian.
LESSON 4: BE THE STANDARDIZER
Sometimes, innovations need “what might be called a standardization entrepreneur,” Tenner writes. “If the great majority of retailers and manufacturers couldn’t agree on a standard format, multiple codes for different vendors would have become a packaging nightmare.” This is the role Haberman played. Woodland and Silver wrote the gospel of the barcode, but it was Haberman who spread it -; more than 20 years later.
1994 The Toyota subsidiary Denso invents the quick response code to enable the rapid scanning of components in the manufacturing process. Today, QR codes can be scanned with smartphones. The phone’s browser visits a web page embedded in the pattern of the two-dimensional code. 1995 Amazon.com launches on July 16. By October, it has its first day of selling more than 100 books. Founder Jeff Bezos chooses books as the first product category because of the barcode. “Thanks to the International Standard Book Number (ISBN) made possible by the barcode, books were the largest category of coded product in the world,” Tenner writes.
LESSON 5: DON'T LET A LACK OF EXPERTISE LIMIT YOU.
Bezos’s background was in computer science and hedge funds, not books. “Books were a coldly rational choice,” write Larry Downes and Paul F. Nunes in Harvard Business Review. “E-commerce was the natural solution for a fragmented market with an enormous number of SKUs; a small, shippable product; and a stable supply chain served by a few dominant middlemen.”
1995-2000 Barcode scanners become affordable for mom and pop stores and public libraries. This, says Tenner, helped libraries adopt electronic inventory and circulation systems, assigning their own barcodes rather than using publishers’ ISBNs. All of which led to the still-further integration of barcodes in our culture. 2001-2010 The growth of e-readers and Amazon lead to a boom in self-publishing. The number of ISBN codes issued annually begins to jump drastically, beginning in 2007.
LESSON 6: KEEP AN APPARENTLY STALLED INNOVATION IN VIEW.
Even if the ecosystem isn’t ripe for your invention, “keep it alive in institutional memory and [periodically] review whether there might be some unexpected use for it,” Tenner says. Amazon’s Kindle came out in 2007, some 15 years after Sony’s first e-reader saw the light of day. The ecosystem -; high-speed connectivity, mobile devices, downloadable content, and simpatico publishers -; had arrived.
2011 On June 12, Haberman passes away at age 81. “The proof that [UPC] is successful,” he told the Associated Press in 1999, “is that everybody takes it for granted.” 2012 On Dec. 9, Joseph Woodland, inventor of the barcode, dies at age 91.