On Innovation

On Innovation

When I was in high school I can remember going to visit my aunt and uncle who had previously owned a grocery store.  They had an old adding machine that fascinated me.  I would play with it for long hours.  When I got to college, as a freshman engineer I took a computer programming course and learned how to write do-loop operands using IBM punch cards that we would submit to a computer operator, who sat behind a cage and took from us boxes of punch cards to run when our turn came up.  During sophomore year I got my first look at a financial calculator.  It was the approximate size of an iPhone and it was produced by a company called Bowmar and was called the Bowmar Brain.  It was available at the monolithic retailer Sears for $110 and it could do all four major arithmetic functions and as a bonus could store and retrieve a number as well.

That was all well and good for the ‘70’s and it was clearly all a precursor for the oncoming barrage of personal computers that would start to assail us in the 1980’s and beyond.  We have all heard the stories that all of NASA’s flight operations computers combined did not have the computational power of an Apple watch, so we all understand the huge leaps and bounds we have taken thanks to Moore’s Law and the exponential improvements in computational power.

But this story is about a lowly calculator.  I know this is a story known to most financial professionals, but perhaps to few others.  In business school in 1975-76 I would argue that there was only one major concept that was drilled into us that most of still remember to this day.  That was the simple notion of the time value of money.  The mathematical concepts surrounding present value calculations were the root of all financial existence.  Present value calculations extended to annuities and perpetuities and various other machinations, but they were all rooted in the basic concepts of present value calculations.  Stock valuation (discounted cash flows) and bond math all hinged on the same basic mathematical process.  The people at Hewlett Packard in Palo Alto thought it might be a good idea to offer a financial calculator that handled all those calculations.  Thus was born the 12C calculator.

The team at HP outdid themselves.  To begin with they got radical right from the start and turned the machine from a portrait to a landscape configuration.  Then they decided to use a very unusual operation system which has been named Reverse Polish Notation (RPN) which changes the thought sequencing of which numbers and operands to put into the calculator to have it do a procedure.  I can remember when it came out (I was a young banker constantly doing financial calculations).  As strange as the physical layout and the operating system were, the financial power of the handheld machine was such that we all immediately adjusted to those quirks and began using the calculator every day, all day.

That calculator became so valuable that I owned three of them.  One stayed at home on my desk.  One was ever-present on my desk at work.  And one was always in my briefcase.  I could not live without my 12C and I know I was not alone.  To this very day, I have all three of those 12C’s in active service. It was almost a test over the years when someone asked to borrow your calculator.  If they frowned when you handed them your 12C, you knew they were not a financial professional.

Over the years, HP and others tried to improve on the 12C.  There were calculators with more programmability (using little cards) and there were standard portrait-configuration models that were offered that did everything the 12C did and more.  None of them appealed to most of us as much as the good old 12C.  With the advent of personal computers, long, extended cash flow calculations were better handled by spreadsheets (I am sure to be writing a story the impact on finance of the spreadsheet). Nonetheless, the handy 12C was always important to do one-off calculations and individual bond or mortgage calculations.

In 2006, Hewlett Packard honored the lowly 12C by issuing a Silver Anniversary Edition, one of which I proudly own.  They have even issued a Platinum version with expanded memory, faster processor and a choice of algebraic or RPN operating mode.  I’ve never bothered upgrading because I have always found the 12C to be perfect for the task.  It is very rare that in this fast-moving era of electronic and digital technology that one product can so adequately address the needs of a large class of users that they find no reason to move to a newer platform.  We are not Luddites.  We do not fear technological change.  Quite the opposite.  We have mostly embraced computer technology every step of the way and certainly see the value in the heuristic and repetitive computational value that computers give us as financial managers.  It’s just that some things simply cannot be improved on and some needs simply don’t go away.  Such is the case with the 12C and the financial calculation tasks it best handles.

I, like most people in the world, am now a smartphone and tablet user.  My weapons of choice are the Apple iPhone and Apple iPad (the new professional series one).  As we all went through the various iterations of cell phones, Personal Digital Assistants (PDA’s) and laptop/tablets, the landscape has been littered with either failed or eventually obsolete technology in these categories.  I have been pleased to see the proliferation of devices and functionality narrow down to the smartphone and tablet.  My wife has even abandoned her tablet in favor of just using a smartphone for everything.  My work and my failing eyes do not allow me to abandon my tablet, but I am quite vehement that I want those two devices to do everything I need digital devices to do (other than my home desktop, which I keep for convenience if I have big long projects to do).

I have found that on both my iPhone and iPad, one of the enduringly valuable apps I have had in the last 10 iterations of each is my 12C app.  This is a simple mimic app that looks and functions exactly like the 12C when the device is in landscape mode and acts like a 4-function version of the 12C when it is in portrait mode.  So wed to the 12C configuration and functionality am I that I almost never use the simple portrait version and usually opt for the full 12C landscape version.  The point is, very few apps even have that durability.  These need no upgrades or improvements.  They do what they do with perfection.

I am inclined to comment about the pace of change in the business world as I have seen it.  Maybe its finance, but I suspect this can be said for almost every business.  The pace of change is accelerating at a rate that is startling and makes one wonder about where it all leads to or even ends.  The ray of hope that there are certain absolutes that cannot be improved upon is given to me by my 12C and its related iPhone and iPad app.  I am a fan of innovation, but I am also a believer that innovation that stands the test of time is rare and needs to be applauded.  Bravo to the people at Hewlett Packard and bravo to the simple 12C for confirming to me what I suspected, which is that there are absolutes in life and perfection does occasionally exist.