Innovation is the spark of capitalism. To celebrate our 85th anniversary, we have selected 85 business breakthroughs that have changed our lives in a profound way since Forbes started publishing. We also highlight 15 more that promise to do the same in the future.
Our past and future picks are a provocative and comprehensive challenge to anyone who thinks the age of prosperity is behind us. But, as always, we value your views. Post them to our 85th Anniversary discussion forum.
Finally, try the When Was That Invented? quiz and see how you do against other readers.
What are the greatest breakthroughs of the last four score and five years? A collection of people, products, services and companies that have changed our lives in a profound way. This is not a list of the greatest business minds–that’s why you won’t find Bill Gates on it. It is not a roster of the deserving (Gandhi) or the powerful (Stalin) or the biggest empire builders (Kaiser). It is a history of lightbulbs that went off and changed the world. The transistor gave rise to a trillion-dollar piece of the economy and a potent deflationary force. The pill altered human behavior; the polio vaccine and protease inhibitors altered life spans; the discount brokerage changed our capital markets.
When U.S. Rubber introduced Keds, the first mass-marketed rubber-soled sneaker, the company used the reigning color scheme for men’s leather shoes: black soles and brown canvas uppers. Keds remained a big seller until the late 1960s, when sneakers got a face-lift from University of Oregon track coach Bill Bowerman, whose waffle-soled running shoe would form the foundation of Nike and trigger an explosion in the athletic shoe business.
1923 Business Management
Long before Steven Covey and Tom Peters, Alfred P. Sloan (1875-1966) created modern corporate management as he rescued an ailing General Motors and made it the most powerful corporation in the world. He reinvented governance with an independent board of directors and executive and finance committees–a balance of power that has slipped lately. He decentralized decision-making for divisions that met financial benchmarks, a style widely imitated.
1923 Multiplane Camera
With his brother Roy, Walt Disney (1901-1966) turned a small animated cartoon shop into an entertainment epic, first with silent Mickey Mouse strips, next with feature films (Fantasia, Cinderella, Peter Pan), then with theme parks, his playgrounds of fantasy. Though Disney will always be remembered for characters like Goofy and Donald Duck, his biggest contribution to filmmaking was developing the multiplane camera. Traditional animation stacked cells on top of each other, giving little sense of depth. The multiplane camera got around that by placing each cell at a different level, allowing elements of a scene to move independently, giving them more realistic dimension. Moviegoers first experienced the magic with Snow White and the Seven Dwarfs in 1937.
1924 Frozen Food
1924 Mutual Fund
1925 Bell Telephone Laboratories
1926 Rocket Engine
After working in field hospitals during World War I, Alexander Fleming (1881-1955) struggled to find a cure for the infections that killed more soldiers than bullets did. He came up empty–until one day, cleaning up his cluttered lab and sifting through old petri dishes, he discovered that a mold killed staph bacteria. Penicillin landed him a Nobel Prize in 1945.
1929 Synthetic Rubber
1930 Jet Engine
1933 Frequency Modulation
1934 Value Investing
1935 United Auto Workers
1937 Blood Bank
1937 Pulse-Code Modulation
1939 Automatic Transmission
1942 Electronic Digital Computer
1945 Nuclear Power
1947 Cellular Phone
1947 Microwave Oven
1947 Instant Photos
1948 LP long player
1949 Magnetic Core Memory
1950 Diners Club Card
1951 The Pill to prevent ovolation
1952 Thorazine to reduce shock suffered after anesthesia
1952 The Conglomerate
Seeking protection from the business cycles of the textile industry, Royal Little considered diversifying into nonrelated businesses in the 1920s. But it wasn’t until the early 1950s that the ailing textile business made the idea a necessity. Little’s Textron would go on to acquire 70 companies, including Bell Aircraft and golf cart maker E-Z-Go, becoming a template for modern conglomerates like GE, ITT and Tyco. The form survives, despite a crash in conglomerate stocks in the 1970s and the recent travails of Tyco.
1952 Holiday Inn
1954 Polio Vaccine
1955 Fast Food
Though he had a nice business selling commercial milkshake machines, Ray Kroc (1902-1984) figured he’d make more money flipping burgers. In 1955 he opened his first McDonald’s in Des Plaines, Ill. The Golden Arches changed the American landscape, doing to restaurants what Kemmons Wilson did to hotels: making them predictable. The franchise concept caught on, and Kroc went national with just a dollop of capital.
1956 Containerized Shipping
Trucking magnate Malcolm McLean (1913-2001) tired of the slow speed of transporting cargo across country and overseas. Adapting a truck-trailer design to railcars and ship cargo holds allowed quick loading. The first containerized cargo ship set sail from New Jersey in 1956–spawning a new industry that set a precedent for the likes of FedEx.
1956 Disk Drive
1956 Fiber Optics
1956 Ampex VRX-1000 for analogue video tape recording
1958 Implantable Pacemaker
1959 Three-Point Seat Belt
1959 Integrated Circuit
1962 Telstar I satellite telecomunication
1962 Point-of-Sales Data
Former J.C. Penney management trainee Sam Walton (1918-1992) opened his first Wal-Mart in Rogers, Ark. Four decades later the retailer has sales of $238 billion and 4,300 stores. He married a genius for efficient distribution and inventory with point-of-sales databases. In the mid-1980s Wal-Mart began sharing store-by-store sales info with vendors so they could tweak product lines–and let Wal-Mart leverage better prices from its biggest suppliers. If Walton were alive today, he’d be the richest man in the world.
1964 Mainframe Family
IBM’s System/360 product line was the first that consisted of a family of commercial computers using a common program language, so that customers moving up the scale in computer power could take their software with them. The creator of the 360 line, Gene M. Amdahl, left Big Blue to create a mainframe competitor in 1970. He later went on to found three additional computer companies.
Long before he became a presidential election spoiler, Ralph Nader was America’s chief corporate scold. His Unsafe at Any Speed targeted GM’s Chevy Corvair. The book influenced Congress to pass the National Traffic and Motor Vehicle Safety Act in 1966. Perhaps more important, it provided a template for “activists” looking to target corporations for a variety of ills–real or perceived–and bolstered the market for plaintiff lawyers.
1969 ATM Automated Teller Machine
Bankers talked about automated cash dispensers for years, but Donald Wetzel, a former minor league baseball player and IBM salesman, gets credit for the first working model. The vice president of product planning at Docutel, then an automated baggage-handling equipment maker, installed the first ATM at a Long Island branch of Chemical Bank. The first machines were offline, but today some 1.1 million units are linked together across the globe. Wetzel left Docutel to start his own companies that sold banking equipment like vault doors.
1969 Charge-Coupled Device
1969 The Internet
Who knew that the military-industrial complex would become the midwife for Web porn? Designed to let scientists working for the U.S. military communicate via computer, the Arpanet started small, connecting terminals at Stanford and UCLA. The National Science Foundation later took the technology and created a network that could handle greater traffic; it still helps support the Internet today. As it became less military and more commercial, the Arpanet morphed into the Internet.
1970 Compact Disc
1970 Relational Database
Oxford-trained mathematician Edgar F. (Ted) Codd developed the concept of the relational database while working as an IBM researcher in 1970. Earlier computer databases had fields of data arranged in a rigid way; Codd’s notion was that disparate data sets could be combined by linking fields they have in common (say, a customer number). Codd clashed with his bosses at IBM, who were pushing a more primitive system. But the relational database is now standard–and the basis for Larry Ellison’s Oracle fortune.
1971 Answering Machine
1972 Computed Tomography Imaging
1972 Ethernet to describe the system of wires and microchips that allow computers linked locally to talk to one another
1972 UNIX/C Programming
Nolan Bushnell (b. 1943) gave geeks another reason to stay indoors by introducing Pong, a crude electronic tennis game, which was later miniaturized for the home. Bushnell’s Atari dominated the videogame market, but he eventually sold out and started the Chuck E. Cheese’s pizza parlor chain. The game brand he created is more visible today on hipster T shirts than on TV screens. But the industry he started, now dominated by Sony and Microsoft, generates more money in the U.S. than the movie business gets at the box office.
1973 Discount Brokerage
It’s unlikely taxi drivers would have turned into day traders had it not been for Charles Schwab (b.1937). He positioned his company as the anti-Wall Street firm, dumping all the trappings of a typical brokerage house–the commissions, front-end loads, markups and fees–in exchange for simple, low-priced, per-trade fees. Today his San Francisco-based outfit serves 8 million investors who control $800 billion in assets.
1974 Catalytic Converter
1974 Index Fund, a basket of stocks made up of the 500 largest companies.
1976 Personal Computer Chic
Apple cofounders Steven P. Jobs (b. 1955) and Stephen Wozniak (b. 1950) helped usher in the era of the PC by making their machines accessible and cool–as desirable, in their way, as sports cars. But because Apple never made a serious stab at the business market, it has always been a shrimp compared with larger outfits. Those same competitors, though, were always ready to adopt Apple’s innovations in user-friendly design and clever marketing. Wozniak retired in 1985; Jobs was forced out of the company in 1985, but returned in 1997 to lead Apple’s latest incarnations.
1976 Recombinant DNA
Robert Swanson, then a 29-year-old venture capitalist, teamed up with University of California, SanFrancisco professor Herbert Boyer to commercialize Boyer’s breakthroughs in “recombinant DNA” technology–splicing together strands of DNA to whip up marvels like human insulin for diabetics, growth hormones for children and antibodies for cancer patients. The two founded Genentech, the first in a wave of biotech companies. It went public in 1980, raising $35 million. Swanson died in 1999. Today his $17 billion (market cap) company does $2.2 billion in sales.
1977 Cash Management Accounts
After a meeting with members of the Stanford Research Institute, Merrill Lynch chief financial officer Thomas Chrystie came up with the idea of an all-in-one account that included check-writing, money-market benefits, a Visa card and brokerage services. The idea was slow to take off, and Merrill nearly abandoned it. But it eventually became copied to the point of ubiquity, giving inspiration to those who harbored dreams of creating megabanks.
1977 Original-Issue Junk Bonds. Michael Milken opened up the capital markets to fledgling firms by putting together a $30 million bond issue for a small oil company called Texas International. The bait for investors: a high yield of 11.5%.
1984 Liquid Crystal Displays
1984 Customized Mass Retail
Michael Dell got into the disintermediation business–bypassing distributors–during his freshman year at the University of Texas at Austin. He bought overstocked IBM PCs at cost from local dealers, then sold them to consumers at 10% below list. He dropped out of school that year, and started selling his own homemade versions of the computers for $795–built to customer specs. Now Dell dominates the PC market, posting $31 billion in annual sales. More impressive, his customized retail strategy, once an anomaly in the computer business, is now standard practice. That’s good news for customers and for the mass distributors who parcel out the machines, but worrisome for conventional retail outlets.
It took more than 35 years for scientists at Merck to conjure up Mevacor, the first widely used drug that reduced cholesterol. The pill worked by blocking an enzyme from creating mevalonic acid, thwarting the liver’s production of cholesterol. Under Chief Executive P. Roy Vagelos, Merck researchers developed Zocor, a second generation of the drug, and proved that it, as well as other cholesterol-lowering drugs, reduced the risk of heart attack. Zocor sales jumped in 1995 when the FDA approved it as a product to prevent heart disease in patients who already suffered a heart attack.
Ray Fuller, a researcher at Eli Lilly, developed a drug that blocks serotonin, a neurotransmitter thought to cause depression. Today Prozac is the world’s most widely prescribed antidepressant, with over 40 million users in 90 countries. The pill also challenged traditional concepts of psychology and identity, igniting a debate between enthusiastic advocates and those who believe that mental states are too complex to be treated like a common virus.
1991 World Wide Web
Software consultant Tim Berners-Lee developed Enquire, a program that linked documents from various computers around the world, effectively granting a visa to the masses to travel through cyberspace. Marc Andreessen brought further order in 1993 by creating Mosaic, a program that allowed people to view pictures as well as well as words. Two years later, Netscape: a point-and-click browser that made surfing an indoor sport, and ushered in the era of high-flying Internet public stock offerings. Yeah, and you think it hasn’t changed the world forever?
1995 Protease Inhibitors
In December pharmaceutical company Hoffmann-La Roche received approval for Invirase, the first protease inhibitor for patients suffering from HIV. The new class of drug disabled the protease enzyme from duplicating the HIV virus in cells, offering the first glimmer of hope for an AIDS cure after nearly two decades of searching. Years later doctors used the drug as part of a triple cocktail that includes AZT. When taken, the cocktail virtually wipes out signs of the HIV virus in most patients.
1995 Internet Business
Lured by the promise of a new business paradigm, Jeffrey Bezos started selling books online at Amazon.com, and Pierre Omidyar launched Ebay, an online marketplace. Hundreds of other entrepreneurs followed suit, selling everything from bicycles to bubble gum. Most flamed out, often in spectacular style, but Amazon and Ebay endured.
Working in Pfizer’s Sandwich, England office, researchers Peter Ellis and Nick Terrett noticed an uplifting, if unintended, side effect in test patients taking sildenafil citrate, a drug being developed to treat angina. They patented Viagra, making erectile dysfunction part of the national conversation and Bob Dole an unlikely celebrity spokesman. Approved by the FDA in March 1998, 3 million prescriptions were filled in the first three months. Since then some 16 million men have taken the drug and an average of nine tablets are dispensed every second. Sales to date: $5.8 billion. Viagra imitators and drugs for female sexual dysfunction are in the works.
2000 Automated Sequencing Machine
Using 300 high-speed DNA-sequencing machines, gene guru J. Craig Venter stunned the scientific world when his company, Celera Genomics, deciphered the entire human genetic code in just over two years and with a research budget of $270 million (it took Uncle Sam 13 years and $2.5 billion). By studying the genetic variations among humans, scientists will be better able to diagnose and ultimately cure diseases like diabetes and schizophrenia.
What will the next 85 years bring?
The last century has seen only a few major display innovations, among them the move from black-and-white monitors to color and the introduction of flat, liquid crystal displays to replace cathode ray tubes. If Richard Friend’s discovery lives up to its promise, the LCD will someday be tossed aside in favor of the OLED–organic light-emitting display.
OLED could open new areas of art or, more prosaically, lead to a new kind of camouflage bodysuits, even constantly updated newspapers that look and feel like the original thing. “One always falls into the trap of going into the straight-replacement mode,” he says. “But with a revolutionary technology you should not simply map it on to existing products. Not if you are an optimist.”