The Importance of Flexible Organizations

Shane Greenstein offered an historical note, observing that several decades ago Silicon Valley was known for more than just innovations in an engineering sense; it was also known for its inventiveness in the creative organizational design and for its generation of knowledge in these new organizational forms. These had not been seen before and were quite dynamic. People moved across organizational boundaries and took knowledge with them. That was one of the factors that made this industry so dynamic. He said that this might be an important source of bottlenecks and an important place to look for the creation of value and new organizational forms.

Dr. Mowery agreed with Dr. Greenstein that the new approaches to organizing and managing R&D in many of these pioneering firms are important. He suggested, however, that such structures might be even more difficult to understand and quantify than the other factors he had discussed.

Measuring the Activity of “User” Industries

Dr. Mowery also addressed Dr. Jorgenson’s point about semiconductor knowledge gaps, saying that unless we can measure the output of the “user” industries more effectively it is hard to see the contributions of the semiconductor industry. He suggested starting with the communications and consumer electronics industries, given their complexity. He added that the rest of the economy— outside the computer industry—has become “a bit of a dark planet” in terms of understanding quality improvements in their products.

The Complex Interactions of Technology and Society

Dr. Gomory said he would exercise his privilege as moderator to say he agreed with those remarks. He said that it was overly simplistic to try to describe the progress of the semiconductor industry solely in terms of whether finer lines could be etched onto semiconductors. He said that it would be equally wrong to focus on the flying height of disks. This is not a one-parameter phenomenon, he said; much more is going on.

He praised the remarks of Dr. Mowery, saying that even scientific fads had to be reproduced exactly to understand what is happening and how long the pipeline is. We understand some things, he said, that are in narrow areas, but we are also groping and are having to do things empirically.

Alluding to Adam Smith, Dr. Gomory raised the example of the pin factory, where gains arise from specialization. When an industry grows, specialization becomes possible. In the early days of software there was just one undifferentiated bundle that retrieved files. Today the part that used to retrieve files has become the whole database software industry. He compared an industry to the



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