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The First Business Computer: a Case Study in User-Driven Innovation

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The First Business Computer: a Case Study in User-Driven Innovation Frank Land The first business computer: a case study in user-driven innovation Article (Accepted version) (Refereed) Original citation: Land, Frank (2000) The first business computer: a case study in user-driven innovation. IEEE annals of the history of computing, 22 (3). pp. 16-26. ISSN 1058-6180 DOI: 10.1109/85.859523 © 2000 IEEE This version available at: http://eprints.lse.ac.uk/19150/ Available in LSE Research Online: September 2012 LSE has developed LSE Research Online so that users may access research output of the School. Copyright © and Moral Rights for the papers on this site are retained by the individual authors and/or other copyright owners. Users may download and/or print one copy of any article(s) in LSE Research Online to facilitate their private study or for non-commercial research. You may not engage in further distribution of the material or use it for any profit-making activities or any commercial gain. You may freely distribute the URL (http://eprints.lse.ac.uk) of the LSE Research Online website. This document is the author’s final manuscript accepted version of the journal article, incorporating any revisions agreed during the peer review process. Some differences between this version and the published version may remain. You are advised to consult the publisher’s version if you wish to cite from it. The First Business Computer: A Case Study in User-Driven Innovation Frank Land London School of Economics Nearly half a century ago the world’s first business computer application was rolled out. The host for the application was a British catering and food-manufacturing company, which had developed and built its own computer, designed for business data processing. The author traces the endeavor’s history and presents an analysis of how and why the company—J. Lyons—was in a natural position to take on the challenge, the precursor of the information revolution we see today. The final years of the 20th century mark the company achieved precedence in a field where fifty-year history of the “invention” of elec- it might be expected that high-technology tronic computing. Although the United States equipment manufacturers would be expected is now the greatest and most influential user of to lead. In the second stage, some theoretical computer technology, and has and continues frameworks derived from recent research into to produce great innovators, many advances company culture and corporate success are had their source in Europe. Today Europeans examined to see if they throw further light on continue to play an important role in the evo- the case. lution of computing. One of the most interesting innovations to The case study come first from Europe was the application of This study takes the case of J. Lyons to the computers to automating business and admin- point where the company decided to design istrative procedures and solving business prob- and build their own computer in 1949. (Much lems. Today, business data processing (or of the material in this case study, including management information services as it’s often most of the quotations, are taken from Bird,3 called in the US) in all its forms, ranging from and Caminer et al.4) transaction processing and decision support to desktop publishing and e-mail, has become the Company background largest single use for computing technology. J. Lyons was founded in the late 19th cen- The use of computers is pervasive in all kinds tury by the successful tobacconists Salmon and of businesses and administrations. Gluckstein. The company name is derived from One of the first uses of computers in the a relative of the founders because, at the time, business area came from a British food manu- Salmon and Gluckstein were not confident that facturing and catering company, J. Lyons and they would make a success of the new enter- Company, and dates back to 1949.1 The case is prise and did not want their own names asso- of particular interest because this innovative ciated with a risky venture. use of computers was driven by an organization Salmon and Gluckstein formed the compa- that had no prior experience in electronics, yet ny in 1887 to fill a gap in the catering market. they built and applied to their business one of They had noted that catering facilities at exhi- the earliest stored-program computers, the LEO bitions and trade shows were often of a very I. Truly a case of user-driven innovation. poor standard. They thought there would be a This article sets out, by means of a case market for affordable, quality food combined study and an analysis of the case, to describe with some entertainment at the many shows how J. Lyons came to design and build the and exhibitions held in locations throughout world’s first business computer.1-5 The analysis the country. The provision of catering facilities is carried out in two stages. In the first, features for short duration exhibitions required metic- of the case are selected that might provide a ulous planning both in the sense of controlling pragmatic explanation of how a food business the operation with its highly-peaked activities 16 IEEE Annals of the History of Computing 1058-6180/00/$10.00 © 2000 IEEE so as to provide the quality demanded by the ees such as George Booth, the company secre- public and at the same time to maintain tight tary—recognized that progress could only be control of costs. maintained if the company hired people of Thus J. Lyons management from their earli- high academic standing. In 1923 they hired est days developed a culture of seeking the John Simmons direct from Cambridge univer- most effective ways of controlling their busi- sity (where he had been a Wrangler, the term ness. The company expanded rapidly from suc- Cambridge used for the highest performers in cess at catering for special events, very much a the mathematics degree, and where he had niche market, to becoming one of the most earned a first class honors degree in mathe- important and respected food companies in the matics) to join the company as a management UK. In the 1940s and 1950s J. Lyons was one of trainee and statistician. the most successful businesses in the UK with In an interview1 with Chris Evans at the its products, services, and establishments— Science Museum about 1970 Simmons Lyons Tea, Lyons Cakes, Lyons Ice Cream, the explained: catering services provided at great national events such as the Buckingham Palace Royal In fact I was engaged to try to build up a system Garden parties and the Wimbledon tennis of information for the management of the com- championships, and the Teashops and Corner pany which would be superior, more sensible, Houses (large, popular, but stylish London than just depending upon the profit and loss restaurants)—being household names. account and such like. … in this respect the com- From its beginnings the company embraced pany was already ahead. a culture of self-sufficiency. It built or acquired through purchase the capability to provide the Simmons rose rapidly in the management goods and services needed for the core business hierarchy and was responsible for introducing a of catering. It became a vertically integrated number of far reaching changes in practice and company, with its own engineering works in organization. These changes were designed designing and building machinery needed by to cope with the growth of the business and to the factories, body shops that built the compa- achieve the control necessary for the mainte- ny’s transport fleet, laboratories engaged in nance of profits. Simmons ensured that the food research, and laundries washing the com- company kept up a continuous striving for pany’s dirty linen. Of course, where the com- improving practice and, in doing this, intro- pany identified suppliers capable of meeting duced many innovations in particular to the Lyons’ exacting standards they were used, but management support services. This enabled the company ensured that such suppliers main- management to keep their business under con- tained laid down standards. stant cost effective review. Nevertheless, the culture of self-sufficiency In the early 1930s Simmons set up the led to a belief by management that there was Systems Research Office whose function was to little the company could not do as well or bet- review existing systems; trawl the world for bet- ter than any outsider. Wartime experience ter way of supporting management activities; enhanced that confidence. Some of the Lyons and invent, test, and implement improve- factories had been converted to the making of ments. The Systems Research Office, working munitions and company management prided with line managers, produced a stream of busi- itself on their efficient conversion that put the ness process innovations from the time of its company on a wartime footing. establishment. Examples include the notion Lyons had built its success on quality prod- that sales representatives, each having a cus- ucts and services sold to a mass market. Selling tomer group of many small retailers, would not to a competitive mass market required tight only be responsible for selling to their own cus- control over costs and margins and a sensitive tomer group but would also be totally respon- response to customer preferences and market sible for the accounting, credit, and payment movements. Given the very large number of functions. These functions were conventional- daily transactions—counted in tens of ly carried out at arms length by a separate thousands—with an average very low value and accounting office. The introduction of “travel- a profit margin per transaction of a fraction of er covered credit” was a radical business process a penny, the company could progress only by a innovation, which increased efficiency and the constant striving for value adding innovation.
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