The Powerhouse

Steve Levine’s The Powerhouse is a fascinating story of the battery business, which we realize sounds like an oxymoron. So let’s unpack that a bit.

On the one hand, consider what your life would be like had not a fellow named John Goodenough decided to explore compounds other than those being used by most battery scientists, leading to the creation of lithium-cobalt-oxide batteries. Big deal, you say? Well, without them there are no laptops. Also no cell phones. So yeah, big deal indeed.

On the other hand, let’s step back to October of 1973, when the Yom Kippur War created a spike in energy costs, and when Johan Coetzer walked into his lab in South Africa and announced that they were going to start doing some work on energy. Which kicked off the hunt for a way to power cars that did not rely on sourcing a fuel from the most politically volatile place on the planet.

And these two incidents become the two driving forces in the battery industry over the decades that Levine covers in this excellent book – driving forces that push the industry from simply “trying to build a better mousetrap” into areas that transform and, in some respects, mangle, the industry beyond recognition.

We’ll start with the repercussions of the first one first.

Let’s say that it was your brilliance that developed the lithium-cobalt-oxide battery that has, as we pointed out, literally powered the development of the cell phone industry and the laptop industry. Now, the 2020 estimates are that smartphone sales globally were over 409 billion dollars. And laptop sales in 2017 (the most recent year we can find data for) were over 101 billion dollars. So that’s about a half a trillion dollars that your insight generated for, well, someone not named well, “you”. And why not? Shouldn’t you get a cut of that? Not from a selfish, greedy perspective (although, yeah, there’s that). But from a “I wonder what other innovations that kind of money could help me and my buddies discover” perspective.

This was the realization of the folks running the Argonne Lab outside Chicago, where John Goodenough worked and invented the thing that generated a half a trillion dollars for other folks. Argonne was, is, ostensibly the Bell Labs of the battery business. Like Bell Labs, it didn’t own what it innovated. Like Bell Labs, it’s where you went if you were the best at what you did. And like Bell Labs, it was where you went if you needed some kind of industry-changing innovation to be developed.

Like who? Well, like the car industry. Which bleeds us into the repercussions of the second thing we discussed above. After the oil crisis of the early seventies, there was no bigger prize in the battery world than the electrification of the automobile. And no bigger challenge. Because the thing about the car business that’s different from, say, the cell phone or laptop industry is that while those industries were nascent, the car business was fully formed. So you couldn’t just iterate a solution and improvements like we did with cellphones (remember how big they were in the 90s? a lot of that had to do with the battery). You needed to invent something that could go live in millions of cars from the jump. And go live with a zero percent failure rate (remember the failure rate of early cell phones? Would you want a car like that? I didn’t think so). So the challenge was huge.

But that big challenge also meant big money. The domestic auto market is worth over $600 billion. So who ever solves it earns a license to print money. And therefore, there are a lot of “who evers”.  Like who? Well, foreign governments, for one (yes, plural). But also Silicon Valley, with its access to the latest technologies, bleeding edge business models, and limitless funding resources.

Which Bell Labs never had to deal with, really. Oh and here’s one more thing: A fully formed industry of multi-billion dollar companies actively working against you. Who? Big oil. As Levine writes “Exxon Mobile did not spell it out, but if researchers somewhere made a serious advance in battery technology, a jump in performance by a factor of four or five, they could grievously undermine oil.”  

So, to recap; in The Powerhouse, we have the tale of an industry who revolutionized life because of its invention, which lead to friction about changing its fundamental business model, inviting competition from completely different disciplines, and attack from the most powerful multinational businesses on the planet.

Like we said, fascinating, right?

Balancing these two stories as they grow more complex and unwieldy is no mean feat, and Levine is to be commended for doing an admirable job of keeping them interesting, understandable, and distinct. A feat made even more complicated because Levine must also balance the evolution of the science that is at the heart of these stories. Get too technical and you run the risk of becoming an engineering textbook; ignore the science altogether, and the game-changing advances are undermined. That Levine has figured out how to strike the right balance is much to his credit and goes a long way to making the book as good as it is.

And while The Powerhouse is clearly captivating in its own right, it’s also fascinating for anyone in any industry that is undergoing change. Because it is from reading stories like this one that we learn the strategies we need to survive. Large lessons, but also small ones that can have large implications, like this one from Sun-Ho Kang who was a staff scientist at Argonne before heading to Samsung and Apple. “To be innovative, [Kang said] ‘people should first be very desperate. Otherwise they don’t need innovation.’”

Desperate enough to innovate. It was true in the battery business. It’s true in advertising. And it’s probably true in whatever you do, too.

The Powerhouse by Steve Levine was published by Viking on 2/5/2015 – order it from Amazon here or Barnes & Noble here or pick it up at your local bookseller (find one here).

Please be advised that The Agency Review is an Amazon Associate and as such earns a commission from qualifying purchases

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