Death of the Innovator?

One of the many contradictions within the ideological realm of Silicon Valley and its satellites is between a faith in decentralization and an infatuation with corporate ‘leadership’. Identifying companies by the surnames of their chief executives – Altman for OpenAI, Ellison for Oracle, Zuckerberg for Meta – has become industry parlance. In the trade press, there is a prevailing sense that these names serve as synonyms rather than metonyms, as if the individual atop the corporation is also the hinge upon which its success or failure turns. Yahoo’s botched acquisitions, security breaches and monetization challenges throughout the 2010s were indelibly associated with its CEO Marissa Mayer. The triumphant comeback of a near-bankrupt Apple in the late 1990s was attributed to Steve Jobs’s fabled boardroom coup.

CEOs did not always occupy such a privileged place in global business culture. Corporate leaders were once as anonymous to the public ‘as their secretaries, chauffeurs, and shoe-shiners’, according to the Harvard Business School professor Rakesh Khurana. In his 2002 study Searching for a Corporate Saviour: The Irrational Quest for Charismatic CEOs, Khurana describes the shifting practical and symbolic function of these figures since the late nineteenth century. The original titans of industry – the Carnegies and the Rockefellers, Henry Ford, Charles Eastman et al. – gained public notoriety for their empire-building, technical and managerial innovations, philanthropic endeavours and anti-labour agitation. They embodied a distinctly bourgeois type of Weberian charismatic authority, wherein the accumulation of wealth was seen as a divinely ordained reward for their exceptional work ethic. By the mid-twentieth century, though, this image had been transformed, as the development of corporate routines, procedures, laws and norms led to a recognizably modern form of legal or rational authority.

At this point, the tycoon was reincarnated as a capable administrator. While Khurana attributes this to the rise of tyrants like Hitler and Mussolini, which burst the ‘myth of the self-made man’, a more comprehensive explanation might draw a connection between the midcentury CEO and the formal management principles of Taylorism. Appeals to rationality and efficiency impersonalized the subjugation of labour by capital. Exploitation could no longer be personified by the corporate baron, since workplace conditions were the result of an ethically neutral, law-like system of analysis, calculation and planning. Though organized labour continued to revolt against the ‘straw boss’ of the Fordized factory, by the 1950s the growing scale of corporate operations, as well as the supersession of entrepreneurs and their heirs by shareholders and then by boards of directors and managers, helped usher in a period during which the CEO delegated much of the firm’s visible daily operations.

By the 1980s, conditions were ripe for another transformation. The effect of the Dow Jones’s five-year bull market, followed by the much longer rally of the next decade, was reflected in the fortunes of the mutual fund. After the US Congress passed the Revenue Act of 1978 – which legalized and popularized tax-deferred, defined contribution plans, or 401(k)s – money poured into these pooled investment vehicles, which meant that the capital of non-professional or ‘everyday’ investors was funnelled into a diversified range of corporate shares. This had two significant implications. It supplied a broad baseline of demand for stocks, and it encouraged a widespread emotional commitment to the overall performance of the stock market. American news outlets still devote an overwhelming amount of airtime to stock price levels; Donald Trump often seemed to peg the success of his presidency to the performance of the S&P 500, and funds that replicate that index’s performance have surged in popularity in recent decades amongst the international investment community.

This enabled the rapid expansion of the business press – with outlets like CNBC, MSNBC and Bloomberg News founded during the 1980s and 1990s, alongside many more specialized finance reporting publications – as well as the coveted new job title of ‘stock market analyst’. Business journalism narrowed its focus, emphasizing the short-term performance of individual companies, for which the stock price was a clear and readily available barometer. Naturally, as Khurana notes, this coverage was always ‘tinged with the individualistic bias of American culture’, focussing on single personalities over complex strategies. Chief among them was the CEO, the most visible embodiment of a company’s fate.

At the same time, the duties of the CEO began to skew much more heavily toward media appearances, shareholder summits, industry conferences, earnings calls, one-on-one briefings and other responsibilities under the umbrella of ‘investor relations’. The ideal corporate leader was one who commanded the attention of, and inspired confidence in, a greatly expanded field of stakeholders. Those who could do so were remunerated with skyrocketing executive earnings. Khurana charts the rise of the ‘outsider CEO’, describing the process by which the scouting for a new chief executive evolved from a bland formality – merely the next promotion for a dutiful senior employee that had climbed the rungs of the corporate ladder – into a trumpeted media spectacle.

This period also saw the revival of the mythology of the founder-entrepreneur – which, not coincidentally, occurred in tandem with the tech boom, as well as a significant rise in both the popularity of venture capital funding models and the number of firms seeking access to capital. In this environment, technology moguls needed to proclaim paradigm-shifting ambitions for their work, and sought out creative ways of narrativizing those ambitions. This was reflected in the peculiar literary genre that emerged at this time and remains on the bestseller lists today: the evangelizing business biography or autobiography. A staple of this genre, as Khurana notes, is showing how the subject achieved success despite early-life misfortune: a stutter for Chrysler’s Jack Welch, dyslexia for Cisco’s John Chambers. More recent hagiographies have continued this trend: Walter Isaacson’s study of Steve Jobs dwells on his childhood adoption and pancreatic cancer diagnosis, while Ashlee Vance’s portrait of Elon Musk explains the effects of teenage bullying and marital breakdown on this ‘real-life Tony Stark’.

Can the cult of ‘the innovator’ sustain itself in the 2020s? Consider Jobs’s presentation at MacWorld 2007, a pomp-and-circumstance ceremony during which Apple announces its upcoming products. In his keynote, Jobs listed the three new devices to be released that year – ‘an iPod with touch controls, a phone, and a breakthrough internet communications device’ – before lifting the veil to reveal that these were, in fact, the functions of one single hybrid device, the iPhone. This has become the dominant template for technological innovation: what Jason E. Smith calls the ‘twenty-first-century Swiss army knife’, in which already-existing capabilities are mixed, assimilated, adapted and subsumed into multi-functional, composite tools. The consumer gadgets of recent decades are nifty chimeras that can recombine and superficially enhance familiar technological functions. This, Smith argues, signals the systemic absence of the kind of revolutionary innovation which once transformed daily life for the general population – automobiles, railroads, electrification, telecommunication, photography and cinematography – and made major productivity gains for the greater capitalist economy.

Today, we are witnessing this innovation-as-recombination reproduce itself at the level of the firm. The death of the internal research laboratory, once epitomized by institutions such as Bell Labs or the Manhattan Project, signals an organizational strategy that Nancy Ettlinger calls ‘the openness paradigm’, in which firms downsize or eliminate in-house R&D, opting for a coordinated practice of socialized innovation characterized by the external sourcing of research, technology and skills. Like the iPhone, the twenty-first-century technology firm becomes a composite tool, a heterogeneous collection of proprietary patents and licences, contracted vendors and suppliers, autonomous divisions and teams, open-source projects and frameworks, third-party integrations and cloud providers, browser-native applications and platforms, and transferrable educational competencies gathered across a transnational corporate reservoir. Amid this flux, the CEO must project an image of unity and integrity. Yet, when the market value of a company falls, the chief executive is revealed to be just another modular unit from the repository.

Read on: Sebastian Budgen, ‘A New “Spirit of Capitalism”’, NLR 1.