Haigh on Yates, _Structuring the Information Age: Life Insurance and Technology in the Twentieth Century_

[eh.net-review at eh.net]

Published by EH.NET (May 2007)

JoAnne Yates, _Structuring the Information Age: Life Insurance and 
Technology in the Twentieth Century_. Baltimore: Johns Hopkins 
University Press, 2005. x + 351 pp. $50 (hardcover), ISBN: 
0-8018-8086-6.

Reviewed for EH.NET by Thomas Haigh, School of Information Studies, 
University of Wisconsin -- Milwaukee.


In _Structuring the Information Age_, JoAnne Yates tells the story of 
the use of computers and tabulating machines within the life 
insurance industry. Beginning with a snapshot of the already-mature 
life insurance industry during the first decade of the last century, 
Yates guides us through the introduction of successive waves of 
tabulating and punched card equipment, the interaction of life 
insurance firms with early producers of tabulating and computer 
technology, and the use of three generations of electronic computers 
large and small from the 1950s to the 1970s.

This timely and important work is the first scholarly history devoted 
to the use of information technology within a single American 
industry. Much less historical attention has been devoted to the use 
of computers than to the history of computer technologies and of 
computer manufacturing firms. But the economic and social importance 
of information technology stems more from its contributions to almost 
every industry, social activity and scientific discipline than from 
the relatively tiny industry devoted to designing and building 
computers. The internal dynamics of hardware and software firms 
provide fascinating stories but are rarely more than tangentially 
related to the experiences of computer users. Recent work by scholars 
such as James Cortada (2003), Martin Campbell-Kelly (1994), Jon Agar 
(2003) and me (Haigh 2001, 2001) has begun to explore the role of 
organizations and individuals as users of information technology. 
_Structuring the Information Age_ makes a major contribution to this 
literature, establishing itself as the most important work to date on 
the use of information technology within business.

Yates tells the story of life insurance in parallel with the story of 
information technology within it. History has been defined as the 
study of change over time, but any historical work must also explain 
continuities: what didn't change and why. By focusing on a single 
industry, Yates shows successive generations of information 
technology shaping, and being shaped by, the industry's existing 
business processes, cultures and practices. Stories told from the 
viewpoint of the computer and its creators inevitably tend to produce 
tales of disruption and sudden upheaval. But, told from the viewpoint 
of a computer-using industry, this story is for the most part one of 
gradual and evolutionary change.

The first chapter, a sketch of the life insurance industry in the 
early 1900s and its origins, sets the stage for what follows. As well 
as ensuring the book is accessible to those without previous 
knowledge of the industry, it outlines a number of distinctive 
features of the life insurance business. This material supports later 
arguments that the specific course of technological development 
within the industry had a great deal to do with its history and 
culture. This was a conservative industry, heavily regulated and 
concerned with stability and efficiency rather than profit or rapid 
growth. Yet processing paperwork was its main business process, 
rather than a sideline as for a manufacturing industry, meaning that 
improvements to administrative efficiency promised a real boost to 
overall performance.

The use of tabulating machines by insurance companies from the 1890s 
onward is the subject of the next three chapters. Although a 
considerable amount has been written on the business and technical 
history of the tabulating machine industry (Campbell-Kelly 1989; 
Heide 1997), almost nothing had been published on their 
administrative application in America between their celebrated debut 
at the US Census of 1890 and their adoption on a massive scale by the 
newly established Social Security Administration circa 1935. Yates' 
work here is the deepest analysis to date of their actual use in 
business. She is the first author to analyze what I consider a 
crucial transition: from application of punched card technology 
purely within the niche field of statistical tabulation for which it 
was originally designed (in this case, actuarial work within life 
insurance) to its general use for a much broader range of routine 
administrative tasks such as payroll, billing, and account balance 
calculation. Yates identifies early operational use of the machines 
by Phoenix Mutual as early as 1910 (pp. 46-47), long before 
manufacturers had begun to target applications of this kind by adding 
hardware features to support it.

When punched card machines were modified to better support 
administrative work, Yates places users, rather than supplier firms, 
in the vanguard. As in her award winning _Business History Review_ 
paper (Yates 1993) she presents technological improvements to 
tabulating machines during the 1920s and 30s as a "co-evolution" 
between technology and use. The two most important advances during 
this era were the addition of printing capabilities and the extension 
of tabulating equipment to process letters as well as numbers. Both 
of these advances were pioneered by insurance firms, working closely 
with established suppliers and entrepreneurial innovators, sponsoring 
the development of new machines and even, in one case, purchasing a 
supplier firm.

Beginning with the 1920s, Yates pays considerable attention to the 
role of trade associations in the spread of technological practices 
within the life insurance industry. This too is an important 
contribution. While Phil Scranton and others have drawn attention to 
the historical development of industries as clusters of firms 
(Scranton 1997), business historians more often write as if each firm 
acted independently when introducing managerial, technological, and 
organizational innovations. Trade associations, in this case the Life 
Office Management Association, play a vital role in sharing 
experiences, discussing new ideas, and legitimating particular 
applications of technology. They also provide a bridge between 
managers within firms, equipment suppliers, and independent experts. 
LOMA set up formal working groups and committees to evaluate new 
technologies and formalize best practices for their use.

The second half of the book is about the computerization of the life 
insurance industry. Two chapters deal with early developments during 
the 1940s and 1950s, another with the third generation computer 
systems introduced in the 1960s and used into the 1970s, and a final 
narrative chapter presents two detailed case studies. The topics of 
these chapters mirror those already established: interactions between 
the users and producers of technology, incremental and evolutionary 
change, and the importance of trade associations in shaping 
technological adoption. The symmetry Yates achieves between her 
analyses of the punched card and computer eras captures one of her 
main insights: that user organizations experienced computer 
technology as an extension of well-established tabulating 
technologies rather than as a revolutionary break with the past. 
Indeed, this perception itself played an important role in shaping 
the ways in which computers were used and may therefore have been 
something of a self-fulfilling expectation. (While the continuities 
between the tabulating industry and the business computing industry 
have been well documented, less has been written about these 
continuities in use (Haigh 2001)).

Yates offers an extended discussion of Prudential Insurance's Edmund 
Berkeley, one of the most colorful figures in the early history of 
computing. Berkeley was exposed to early computing efforts during the 
war, and returned to the world of insurance keen to apply the power 
of these new electronic marvels to insurance work. He worked closely 
with the designers of the Univac I, and pushed Prudential into 
becoming the first firm to order a commercial computer. (The order 
was later cancelled, but by then Berkeley had already embarked on an 
idiosyncratic career as author of the first popular guide to 
computing, publisher of the first computer journal, and founding 
secretary of what grew into the main association for computer 
science.) Berkeley, it must be said, is something of an exception in 
this book, as one of the few individuals granted much personal agency 
or a life story. His story has been told before, not least by Yates 
herself (Yates 1997), but it benefits here from its context as part 
of the longer history of technological innovation in the life 
insurance history.

Subsequent discussion returns the focus to trade groups, particularly 
the Society of Actuaries, in studying and standardizing the use of 
computers. Yates discusses the strategies taken by a number of firms 
large and small, illustrating differences in the kinds of computers 
ordered, the tasks to which they were applied, and the aggressiveness 
with which companies attempted to impose new business processes along 
with the new hardware.

These chapters also include some brief discussion of the 
organizational changes around the technology: feasibility studies, 
personnel issues, and worries about technological unemployment. The 
early-1960s transition from vacuum tube computers to transistorized 
machines such as the IBM 1401 appears here as another evolutionary 
development, as does the arrival of IBM's hugely successful and 
technologically disruptive range of 360 series machines in the 
mid-1960s. While Yates follows some aspects of the story into the 
early 1970s, the narrative fizzles out without reaching any clearly 
demarcated stopping point or milestone event. Instead she shifts to 
case-study mode, recapitulating events of computer era through 
developments in two companies: New England Mutual Life and Aetna 
Life. These case studies, sourced in part from interviews with 
managers involved in events, help to bring some texture to the story 
and demonstrate the interplay of industry-wide trends with personal 
and cultural factors specific to individual firms.

Yates does an excellent job in meeting a key challenge facing anyone 
writing on the historical use of information technology: how to 
convincingly analyze technological capabilities without getting the 
book stuck in a swamp of model numbers and electronic widgets. 
Throughout the book, she provides just enough detail on the 
technological capabilities of different generations of tabulating 
machines and early computers to support her analysis of their 
business applications. As a result it should prove accessible to 
readers unstepped in the existing history of computing literature.

Stories familiar from the viewpoint of producer histories, such as 
the late-1950s success of IBM's small but flexible 650 computer, take 
on a new aspect when seen from the viewpoint of user organizations. 
Yates provides a particular service by showing how identical machines 
were used in different ways by different firms. Users play a 
particularly important role in determining the social and 
organizational impact of computer technologies because of the huge 
flexibility of the underlying hardware and the consequent importance 
of software. Insurance companies wrote their own application programs 
and applied the machines to different areas of the business. Some 
aimed to consolidate processes, while others mimicked the existing 
paper-based procedures. While no individual user could exert the same 
influence over computer hardware in the 1960s that Berkeley enjoyed 
in the 1940s, the importance of software meant that individual firms 
continued to exercise an enormous amount of control over the 
functioning and organizational impact of their own computers. The 
success of the popular '62 CFO package introduced by IBM for smaller 
firms showed that even companies using the same application software 
package could achieve very different results. In what may be the 
first historical analysis of the user community of a single mainframe 
software package, Yates finds that firms used the package in 
different ways, with some rewriting it to create their own versions. 
She demonstrates that software packages played an important role 
within the life insurance industry a good decade before the 
independent packaged software industry was established in the early 
1970s. (For more on this issue, including discussion of an earlier 
paper by Yates on the topic (Yates 1995), see Haigh (2002).) It 
remains unclear whether the insurance industry was unique in this 
respect, or if an equally close examination of other industries will 
reveal similar examples of early software standards.

Yates' methodologies and sensibilities are unmistakably those of 
business history rather than economic history. One fascinating aspect 
of the story summarized here is the willingness, indeed the 
eagerness, of hundreds of companies to order computers long before 
their economic viability had been established. Yates places less 
emphasis than I do on the symbolic value of computerization as an 
emblem of modernity, which I believe rapidly led to a situation in 
which no self-respecting firm could afford not to place an order for 
a computer. Did the sometimes frenzied investments made in computer 
technology during the 1950s, 60s and 70s ever pay off? Yates doesn't 
know for sure, but neither does anyone else -- including the people 
who ordered the computers. But unlike other historians who have 
tackled the business use of computer technology, she did make a 
concerted effort to find some solid data on the topic. Numbers are 
crunched, industry averages calculated, and estimates made of the 
percentage of insurance premiums consumed by administrative overhead. 
The result: no clear link between computerization and efficiency 
within individual firms or within the industry as a whole. (This 
mirrors the findings of Paul Strassman (1997) and other observers of 
the so-called "productivity paradox" during the 1980s and early 
1990s.) Believers in the strategic importance of computing might 
object that this focus on clerical cost reduction obscures what were 
often called the "intangible" benefits of flexibility, better 
managerial decision making, new products or services made possible by 
automation, and so on. But these benefits appear only rarely in the 
book, and Yates shows in several of the case studies that firms 
attempting to make more aggressive use of computer technology to 
integrate their operations or provide real-time interactive access to 
information tended to run into insurmountable technical obstacles 
during the 1950s and 60s.

Like most historians, Yates devotes little explicit discussion to 
methodological or theoretical questions. This is an observation of 
disciplinary norms rather than a criticism, and her narrative moves 
smoothly and convincingly throughout. She relies largely on archival 
sources, meaning that her evidence is rich but must face the same 
question as any business history based largely on case studies: how 
representative are these firms of the general population of 
institutions of the same kind? As mentioned previously, Yates goes a 
long way toward answering this question by exploring sources from a 
second kind of institution: trade associations. This gives a glimpse 
at the kinds of questions preoccupying administrative managers within 
life insurance firms at different points in time and of the stories 
they were telling each other about the power of technologies and 
systematization.

The one overt appearance of theory in the book is her invocation (pp. 
4-5) of Anthony Giddens' structuration theory as an underpinning 
justification for her approach and as the source of the book's title. 
(Wanda Orlikowski, a collaborator of Yates on earlier work, is well 
known for applying structuration theory to the use of technologies 
within organizations.) Structuration theory aims to reconcile the 
freedom of individual action with the power and persistence of social 
structure. Its central insight is that social structures of all kinds 
constrain and guide individual actions, but are themselves constantly 
reproduced and minutely shifted by those actions. Though the 
potential relevance of this metatheory to the mutual shaping of 
institutions and practices is clear, Yates never explicitly comes 
back to it in the body of the work or in its conclusions to show more 
directly how it shaped her analysis and findings. As a theory of 
everything, structuration runs the risk being applicable to any 
situation without necessarily providing the observer with specific 
guidance on how to analyze its particulars.

Yates might have found a more directly related body of theory within 
the literature on "The New Institutionalism in Organizational 
Analysis" associated with Paul DiMaggio and Walter Powell (1991). As 
they argue in the introduction to this volume, the New 
Institutionalist approach has many parallels with structuration 
theory, but has the benefit of being directly concerned with the 
evolution of organizational form. Certainly Yates' findings seem to 
support their central concept of institutional isomorphism: the idea 
that organizations within a field (in this case the life insurance 
industry) tend to grow alike in terms of organizational structure, 
culture, and practices. Powell and DiMaggio offer a useful set of 
mechanisms to explain this process: regulation and other external 
pressure, imitation, and most relevantly here, creation of shared 
cultural norms within professional communities.

Yates has discussed her methodological goals for the project more 
thoroughly in a companion essay, published recently in _Enterprise 
and Society_ (2006). She argues that, while historians of technology 
have been talking about the social construction of technology and the 
importance of users for more than two decades, their conception of 
the user has almost always been that of an individual consumer. Yates 
insists instead on the importance of thinking of organizations as 
users of technology, an idea she refers to there as "broadening the 
demand-side turn." She reports some resistance to this idea from 
historians of technology, captured in her recorded surprise at being 
asked by such an historian why there were no users in her narrative. 
Having been immersed in the business-school environment in which the 
idea of user-firms is well established, she wonders in turn why the 
unnamed historian insisted on focusing on individual people involved 
with computer technology (whom she would characterize as computer 
operators) when the relevant decisions were made by "an organization 
made up of many individuals with different roles and interactions" 
(Yates 2006, p. 434).

This observation crystallizes the strengths and limitations of 
_Structuring the Information Age_ more clearly than any single 
statement within the book itself. Yates' primary concern is with 
organizations as users of technology, and therefore she has written a 
story in which firms are the main actors: firms learn, firms make 
decisions, firms investigate technologies, and firms create and 
administer computer applications. But to ascribe such actions to a 
firm is as much of a simplification as to ascribe it to an 
individual. This is especially true in the case of software. Most 
computer application systems during the period Yates discusses were 
specified, designed and coded by computer staff within "user" firms, 
using hardware and software tools provided by vendors such as IBM. 
 From the point of view of an IBM sales representative, both the 
insurance firm and its computer department are users and consumers of 
technology. But from the point of view of the programmers inside the 
firm, and their internal customers, the data processing department 
was a producer of IT systems. Whether a firm appears to be a user or 
producer of technology depends on where one stands.

Since firms are made of people, Yates inevitably addresses the 
actions of individuals, such as Berkeley. Issues of organizational 
politics and personal conflict appear at various points within the 
case studies, but are not really taken up in her broader analysis. 
The "roles and interactions" within the firms, which Yates rightly 
draws attention to, surface sometimes within her case studies but are 
not generalized into her overall conclusions. "Personnel issues" are 
dealt with only briefly, and presented (for example on pp. 161-67, 
181-82) primarily to discuss the challenges of reassuring workers the 
computers would not eliminate their jobs and relocating any displaced 
clerks.

Yates thus downplays something that looms large in my own 
interpretation of these events: the emergence of new groups of 
technical and professional specialists within corporate society, each 
with their own identity and interests (Haigh 2003). Though Yates has 
a great deal to say about the evolution of the life insurance firm as 
an institution and its relationship to technology, she has almost 
nothing to say about the organization, management or culture of the 
new departments of data processing that accreted, deep inside life 
insurance firms, around the new machines. Machine operators, systems 
analysts, computer programmers, corporate accountants and middle 
managers matter a great deal as classes and communities within the 
corporate world, even if their individual agency is tightly 
constrained. (After all, the structuration theory Yates references in 
her title aims to show how ordinary people can shift social 
structures even as they reenact them.)

Studying occupational subcultures within the corporation provides an 
intermediate level of analysis, between firms and individuals, in 
which to explore the creation of new institutions within firms, such 
as the data processing department, and the emergence of new 
occupational groups such as the systems analyst, computer operator, 
or computer programmer. From Berkeley onward, actuaries, clerks and 
managers who joined projects to study or implement computer systems 
often found their careers taking unexpected detours into the new 
world of data processing. Indeed, the very study groups and industry 
associations she chronicles must have played an important role in 
establishing new identities and communities around the intersection 
of computers and life insurance. A culture of computer enthusiasm 
created a heterogeneous alliance devoted to the installation and 
expansion of computer systems. Yates' predisposition to view 
technological adoption as the result of rational decision making by 
the firm as a whole may obscure the importance of these communities 
of computer enthusiasts within and between firms in pushing the new 
technology forward.

Today, American businesses employ more than ten million IT workers, 
and senior managers rely on computer specialists to create and 
oversee the systems that run every aspect of their firms' core 
operations. Only teams of highly specialized technical staff can 
understand, still less modify, the behavior of these systems. We take 
this for granted today, but in the 1950s and 60s it represented an 
important shift in managerial society. As Yates showed in her earlier 
book, _Control through Communication_ (1989), progressive American 
managers from the 1890s onward had embraced the personal mastery of 
new technologies such as graphs, written procedures, organizational 
charts and filing systems as symbols of modern management expertise. 
With computerization, however, detailed knowledge of administrative 
technologies was inevitably separated from general managers to create 
a new class of specialists. Yates mentions that some managers 
distrusted magnetic tape because, unlike punched cards, it contained 
no visible mark of the data within. But she does not further address 
the cultural or structural consequences of this shift of power within 
the managerial ranks.

Many computer personnel came to identify more closely with the "data 
processing profession" than with banking or insurance. The new ranks 
of technology managers and specialists, mediating between the 
practices and cultures of business and those of the computer room, 
faced a set of conflicts and challenges familiar to anyone who has 
leafed through a book of Dilbert cartoons. Managers complained about 
the perceived lack of loyalty of the computer staff, whose primary 
identity often formed around machines or skills rather than a 
particular organization or even industry. Identities and practices 
were knitted together across a range of industries by organizations 
such as the Data Processing Management Association and trade 
publications such as _Datamation_ and _Business Automation_. This 
highlights one of the inevitable limitations of a single industry 
study. While the organization, identity and practices of data 
processing departments appear to have been quite stable across 
industries, Yates tells the story of information technology use 
within the life insurance industry as a self-contained narrative. 
Until similar studies are produced of other industries we will not 
know which characteristics of computer use here were exceptional and 
which merely mirrored broader trends. James W. Cortada (2003, 2006) 
has already published the first two in a projected three volume 
series of books surveying computer use in a series of industries, 
providing a complementary perspective.

These comments reflect a subject area so rich than no single study 
could begin to exhaust its potential. As historians come to grips 
with the business history of the end of the last century and the 
beginning of this one there will be few industry historians who can 
avoid the topic. Likewise, historians of technology dealing with the 
past half century will find rich pickings in the history of business 
administration and its systems. A flood of books describing 
information technology use in different industries will sooner or 
later appear, and their authors will find _Structuring the 
Information Age_ an invaluable guide and model. The book is a 
significant landmark within the history of computing literature. I 
hope Yates succeeds in her stated aim of convincing historians that 
businesses can be creative users of technologies. We would all 
benefit if it can also serve what must have been an implicit aim: to 
remind business school faculty that history explains a great deal 
about how technology does and doesn't work when applied within an 
industry.

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