A woman once asked Jerry Garcia, “What do you think about somebody who spends all his money going to Grateful Dead concerts?”
Garcia’s answer: “What the hell do you think we do?”
He was quite serious.
Until the band hit the mainstream in 1987, having enough money was never guaranteed. In addition to its high staffing costs, the band spent a fortune on technology, not just off-the-shelf items but also custom-built instruments, recording equipment, and, especially, sound systems. Unlike most rock bands, the Grateful Dead wanted their shows to be not merely loud but also precise—to blow listeners away with subtlety as well as power. When they discovered they couldn’t buy such equipment, they worked to develop the technology themselves. None of this came cheap, but the band members decided that the normal way just wasn’t good enough. They innovated relentlessly, regardless of the cost, to provide the best possible experience for their customers.
To stay ahead, a business must keep reinventing itself, keep working to change things for the better. In some cases, this means borrowing best practices from other companies. But to be innovative means doing things no one else is doing, even if this means doing the seemingly impossible, and departing from convention in stunning ways to transform an industry. Take, for example, Tata Motors, the Indian auto company that decided to go back to the drawing board, challenging parts suppliers and its own engineers to rethink every component in order to cut costs and minimize weight. When challenged by Tata, the parts supplier Delphi created an instrument cluster weighing just fourteen ounces, about a third of the standard. Another supplier created an unusual single-windshield wiper to trim costs and weight further. The result was an inexpensive, fuel-efficient yet solid automobile—pointing the way toward the future of the global car market.
Unlike Tata, the Dead weren’t interested in smaller and cheaper—they tended to gravitate toward larger and more expensive. Yet they resembled Tata in one clear sense: their willingness to toss out the playbook and demand that their engineers produce something entirely new. And as with all top companies, the ultimate goal was the same: keeping customers happy. “Instead of buying yachts and Riviera condos and that sort of shit, the Dead have always poured money back into the scene in the form of sound and lights and musical instruments,” said Dan Healy, the band’s legendary soundman. And they did it for the fans: “Of all the things that we’ve done—and Lord knows we’re probably guilty of everything known—we’ve never been un-loyal to our music and our audience,” Healy said. “Even in our deepest, darkest moments, when there was probably an easier way out, we didn’t take the easy way out.”
Businesses too often fail by taking the easy way out, sticking with the tried-and-true rather than taking a leap into the unknown. To survive and grow, businesses must innovate continually, even when—especially when—that innovation carries a high risk of failure. The willingness to disrupt old habits and to take risks will make your business successful and your workers nimble and adaptable.
Grateful Dead Business Lesson 7: Innovate constantly, despite risks of failure and financial loss, in order to keep your business ahead of the curve.
When the Dead first tried to improve their amplified sound, they ran into a problem: there weren’t many equipment makers in the market. Before rock music became widespread, most amplifiers were purchased by theaters and dance halls, whose needs were very different. As Clayton Christensen explained in his pioneering book The Innovator’s Dilemma, established firms can be held captive by their current customers—they’re so comfortable serving an established market that they miss out on opportunities to pioneer a truly disruptive technology that will create new markets. This leaves a space for new players to take over.
These days, when even teenage garage bands have good sound equipment, it’s easy to forget how primitive things were when the Dead started playing in the mid-1960s. Monitors—the speakers musicians use to hear themselves—had not been invented. Smaller venues, such as the In Room, where the band had their first regular gig, had no sound systems at all, and instrument amplifiers provided the only sound. If a concert venue did have a public address system, it was designed for singers and speakers, not electric instruments. Drummers generally weren’t amplified at all. Singers plugged their mikes into an instrument amp and did their best to sing as loudly as they were playing. Mixing was crude at best—the volumes of the various instrument amps were adjusted to create some sort of balance. Such technology could be adequate, if barely, at small clubs, but at larger venues, especially those with high ceilings, the situation was ugly.
The Dead’s own amps sufficed for their earliest pizza parlor gigs in 1965, but their exploding fan base pushed them into larger venues. At dance halls and theaters, they were dismayed by the low quality of the sound they were offering their fans. “The thing to do, obviously, when you play in a big hall, is to make it so that you can hear everything everywhere,” Garcia told an interviewer during this period. But when they took the obvious step and cranked up the volume, they lost definition. “It’s more important that it be clear than loud,” Garcia said, adding, “It would be nice if it were both loud and clear.”
The first person to take charge of the Dead’s efforts to be “loud and clear” was Owsley “Bear” Stanley, the Acid King of California. Bear was the grandson of a former U.S. senator and governor from Kentucky, but he was also an amateur chemist who had turned himself into one of the world’s major producers of high-quality LSD. He fell in love with the Dead, but he thought the available musical technology was holding them back. “In the days of Bach, the highest, most technologically superb things that were being built were the great organs. Music was the height of technology,” Bear recalled. In the 1960s, though, America was “building rockets that could deliver atomic bombs to destroy entire cities, and musicians were playing on something that looked like it was built in a garage in the 1930s…. Nobody seemed to care. I figured it was worth caring about.”
In the 1960s, rock music carried enormous social significance, providing the rituals for a newly created youth culture, but the technology wasn’t up to snuff. Bear’s reference to Bach and organs may sound overblown, but he was onto something true: the technology hadn’t caught up to the culture. A decade later, in the 1970s, the Sony Walkman would capture a technological moment focused on fitness and private experience. But the ’60s was about communal experience, about shared sound, about music so loud it frightened the old people. What Bear saw was a space available for innovation. What Bear had recognized, in his offbeat way, was a tremendous gap in the market. So he worked to fill it.
Pursuing his goal of a sound system that was transparent, clear, undistorted, and very loud, Bear bankrolled the Dead’s experiments in musical technology. He had some background in electronics, but what he really offered was a commitment to perfection. The same quality that made him an expert LSD chemist allowed him to build some pioneering amplification equipment. With the help of a young electronics genius named Tim Scully, he began to look into ways of developing a good sound system that could hold up to the bashing about that came from being carried from van to stage and back again many times a week. At first they tried to work with Altec Lansing, a major player in the industry, to develop a more powerful system, but they were unresponsive. Bear recalled an Altec rep saying, “We’re not interested. Besides, we sell all the speakers we make anyway. Get lost!” This is the classic innovator’s dilemma: an establishment player hampered by commitments to current clients.
Rebuffed by the PA industry’s biggest companies, Bear and Scully set out to build a system of their own. Urged on by Bear, Scully used his electronics knowledge to create a rudimentary central preamp and mixing system. This central mixing box created a number of new opportunities: first, Bear began recording stereo tapes of the band’s performances (a fact that would be crucial to the band’s recording legacy); second, it allowed the band to use monitors, so they could hear themselves play more accurately and make appropriate adjustments; finally, the box had a preamp for each instrument, which allowed for more precise mixing.
The system was a technological marvel, and produced some of the cleanest, most powerful sound of any rock ’n’ roll band. Unfortunately, it tended to break. Not infrequently the band would be ready to play, only to find Bear on the floor fiddling with equipment. At a benefit for the Hell’s Angels, Bear was still soldering well past the scheduled start time, “and there were these six-foot Hell’s Angels coming up and saying, ‘Uh, you think you could play some music?’ ” musical colleague John Dawson recalled. “We were saying, ‘Bear, come on. Get this goddamn thing fixed.’ ” After a disastrous trip to California in the summer of 1966, the band gave Bear’s system the heave-ho. He sold it off and gave the money to the band to buy some regular old Fender amps.
It was a retreat, of sorts, but the experiment was not in vain. Bear inspired the band to think about “the inadequacy of the prevailing live sound systems of the day, while pointing at possibilities for improving the state of the art,” according to Dead expert Blair Jackson. And this is the reason for technological innovation. You might fail, but you get a clearer vision of the future.
As the sixties turned into the seventies, the Dead’s audience was growing, and they needed to play bigger venues to satisfy demand for tickets. Those bigger venues, of course, demanded bigger and better sound systems. In 1968 the band had hooked up with a recording expert named Ron Wickersham, who had been working for Ampex, a maker of high-end recording and mixing equipment. Rather than becoming a Dead employee, Wickersham founded a company called Alembic, which for years would have the Dead as its main customer. Bear had already modified most of the band’s instruments, and Alembic took over that work, designing guitars and basses to the musicians’ specifications. It also took on the band’s sound systems, modified the existing components, and then created new ones from scratch—stage boxes, cabinets, horns, monitors, cables.
In 1972 Wickersham decided to address the issue of poor sound at large venues by creating a “PA Consulting Committee,” whose members included Wickersham, Bear, and soundman Dan Healy. A recording studio expert, Healy had been with the band for several years, and he would become a mainstay at the band’s mixing boards for more than two decades. Wickersham, Healy, and Bear would become the core of the band’s sound system brain trust. “The Dead kept playing bigger and bigger venues, and the house or rented sound systems kept sounding worse and worse,” said Wickersham. “So we tried to break it all down and address every area we could, because it wasn’t like there was a single thing wrong with the instruments, microphones or recording gear, the live PA, and all that. It was a constant fight to try to get every detail better.”
Like Tata Motors, the Dead had to start from scratch. Sound systems for electric music were extraordinarily complex and little understood, so this wasn’t an undertaking that could be done piecemeal. Moreover, the Dead instituted a classic team approach to innovation, with more than a half dozen people contributing ideas. As Wickersham explained, “We were fiercely critical of what was there, and we drove to improve it, together.” The existing scientific knowledge about amplified music dated to Bell Labs in the 1920s and ’30s, and it wasn’t good enough. “Technology had to change,” Healy said. And since no one else was making it, “it became a matter of us developing the technology ourselves.”
Alembic, with guidance from Bear and Healy, began building a vast array of equipment for the band, everything from a new type of microphone to a new PA array to heavily modified instruments. And Bear was a stickler for detail. “Everything that went on in the sound system had to be paid attention to,” Wickersham said. “He was hypercritical about building mic cables, how to coil up the mic cables; every detail. You respected every piece of gear.” Like every great innovator, Bear understood that the smallest, least glamorous component could be a key to an entire system.
Such attention to detail was crucial in the enormous system they created, which came to be known as the Wall of Sound. The problems it needed to address were enormous. Indoors, the bass sounds bounced around the walls and interfered with subsequent notes; outdoors, the bass spread into the sky and disappeared. If you ran more than one instrument through the same speakers, you got distortion. The Wall of Sound was designed to fix these problems and more. It consisted of 604 speakers drawing 26,400 watts of power from 55 amplifiers of 600 watts. But it wasn’t simply a matter of size. Each instrument had its own column of speakers, with a cluster in the center of the stage for vocals. There were nine separate channels, which means each vocal and instrument had its own feed, thus eliminating distortion. The Dead’s newsletter explained the system to fans: “No two musical ‘voices’ go through the same system. Thus the vocals, piano, drums, lead guitar, rhythm guitar, and bass each have their own channel of amplification. This separation is designed to produce an undistorted sound.” The system could deliver quality sound a quarter of a mile away—crucial for outdoor and stadium shows.
The mockumentary This Is Spinal Tap contains the famous joke about amps being “turned up to eleven.” The Wall of Sound was so powerful that it was rarely turned past two. As Healy put it, “You could get it amazingly loud, and it was amazingly clean.” The band finally could achieve the sound Garcia had dreamed about back in 1967—“loud and clear.”
The Wall of Sound also allowed the band to fulfill its mission of perfect harmony with the audience. Because the Wall acted as its own monitor system, there was no need for the usual barrier of speakers at the front of the stage to allow band members to hear what they were playing. With the speakers behind the band, the musicians heard exactly what the audience was hearing. They were, as Owsley described it, “embedded in that sound field.” This meant the musicians could hear and control every element of the concert. They were their own sound mixers, which blended perfectly with the band’s philosophy. For years Lesh and Owsley had discussed what they called microcosm and macrocosm, the world of the stage and the world of the audience. The goal was to blend those two seamlessly into one. “All the control of what’s going to the audience should be fully in the hands of the performing artists themselves,” Owsley later explained. Here, then, was a perfect technology, allowing the worker to do his job in the best way possible.
There was just one problem: it was utterly impractical.
The result of eight years of experimentation, the Wall of Sound cost an estimated $350,000 to develop, an enormous sum in those days. And while manufacturing companies spread out their R&D expenses over the run of the product, the Dead were inventing, from scratch, a one-off system. They couldn’t recapture their expenses by selling versions to other people. Adding to the expense were the logistics. There were, in fact, two Walls of Sound. It took two days to install and test the Wall at each venue, so the only way to mount a normal tour was to have one system in use while the other was being trucked to the next city. When the Wall first went on tour in May 1974, the Grateful Dead hit the road with four trucks, six band members, ten people for crew and sound, four more for lights, seven for stages and trucking, and three for management. The convoy traveled far, to Iowa, Montana, British Columbia, and to standard spots on the coasts and in the Midwest and South. It even traveled to seven shows in Europe.
Overhead rose to $100,000 a month, which meant the band was struggling to break even. “We had pretty much roped ourselves into an unworkable situation,” Bob Weir explained. “Every time we played somewhere we lost money, but we had to keep on working just to pay everybody who was on salary…. Millions and millions of dollars went into that. It wasn’t any fun after a while, not having enough time to really get loose and get creative, having to stay on the road all the time. So we decided that we had to knock it off.”
After ending their touring in the fall of 1974, the Dead went on hiatus for eighteen months. The Wall of Sound was broken up—some parts kept by the band, some sold, most of it given away to other bands in need. Its legacy, though, would live on. As strategic improvisers, the Dead would learn from this expensive mistake.
The band members spent their year-and-a-half hiatus in 1975–76 recuperating, writing music, and recording. The layoff reminded them how much they loved touring, so they resumed in a pared-back style. They rented their sound systems—more modest affairs, but still with excellent quality. They combined two rented systems that mimicked the performance of the Wall at a much lower price. After renting from Bill Graham’s production company for a while, in 1978 the Dead switched over to the major East Coast company Clair Brothers, famous for their quality equipment. Upon testing the rented equipment, though, Healy discovered that nearly a third of the speakers were improperly maintained, producing subpar sound. Clair Brothers, embarrassed, made sure they did better quality control after that. And the Dead’s deep experience with building their own sound systems paid another dividend: the ability to evaluate the equipment they rented.
By the 1980s the band’s equipment included a harmonic analyzer (priced at $30,000 and created by NASA to test the strength of metals), steel-jacketed NASA surplus cables, and 144 Meyer Sound Lab loudspeakers. By the 1990s they had a $3.5-million computer-assisted sound system. More impressive than the equipment, though, was the technical knowledge devoted to improving the sound. Before a tour, they collected architectural drawings of each venue and scanned them into the architectural design program AutoCAD, using the software to design the perfect configuration of speakers to match the shape of the hall. The software would spit out a blueprint for the crew, and when they got to the venue, they’d have a perfectly tailored plan for creating a sound system. After the tour, they’d do a postmortem on each performance, store up the information on aspects of each venue, and apply the lessons the next time they played there. Because weather can affect sound at outdoor shows, Healy tracked atmospheric conditions and adjusted the system to compensate. At the end of the tour, each piece of equipment was dismantled, cleaned, tested, and repaired—a month-long process after each tour.
Through the end of their careers, the Dead were famous for offering one of the greatest sonic experiences in rock ’n’ roll, and much of that was a legacy of the Wall of Sound. By building their own system from scratch, Bear, Healy, and others advanced the state of the art and gained the knowledge necessary to get crystalline sound from whatever system they were using.
In nearly everything they did, the Grateful Dead were concerned above all with the authenticity of their music and the experience they gave their fans. When the band’s popularity pushed them into larger venues, both of those values were at stake: because existing audio technology wasn’t up to the task, the music and the audience experience suffered, so they chose to invest, and to invest big.
The Wall of Sound was the most dramatic, expensive, and forward-looking of the Dead’s technological innovations, but it was far from the only one. Consider, for example, Lesh’s Alembicized Guild Starfire bass, also known as “The Godfather” and “Big Brown,” which had a quadraphonic pickup (with a dedicated channel for each string) and fourteen knobs that controlled bandwidth, frequency response, resonance, and filtering. Or his Mission Control bass, which featured improved electronics and cost in the neighborhood of $30,000—and that’s in 1973 dollars. It was innovations like these that allowed the band’s instruments to be as loud and clear—not to mention weird—as the sound system.
What’s more, the Dead kept their fans in the loop, explaining exactly what they were doing. In a 1974 Deadhead newsletter, the band revealed that eighteen cents of every “Grateful Dead Dollar” was spent on equipment purchases and maintenance, explaining that “the physics of sound projection dictate that any given increase in the size of a hall requires exponential rate of increase in equipment capability to reach everyone in the hall with quality at volume.” In other words, it was all about the fans, and the Dead really meant that.
The Wall of Sound offered a quantum leap in sound technology, and it showed an extraordinary devotion to their fans and to their art. “I still consider it the best large-venue live sound performance system that has ever existed,” Bear said. The Wall “did what it was supposed to do,” Healy said. “It completely scrapped and rewrote the rules.”
For comparison, we might look at another failed but influential venture, the NeXT Computer developed by Steve Jobs after he was forced to resign from Apple. A computer aimed at the university and business markets, NeXT sold only about fifty thousand units. Its approach to computing, however—relying on object-oriented programming and graphical user interfaces—proved highly influential in the development of future operating systems from Apple and other software makers.
Also, the experience Jobs gained at NeXT proved invaluable when he returned to Apple and once again upended the computer industry. In designing the iPad, Apple’s revolutionary touch-screen tablet, the company was dissatisfied with the available processors, which serve as the guts of the device. Unwilling to partner with a chip supplier such as Intel, Apple decided to develop its own multifunction chip, known as the A4. By doing so, it was able to make the iPad both very speedy and very frugal with power—an ideal combination for its customers. With its iPad chip, Apple hit a home run on its first swing. The Dead were not so lucky, and perhaps not so savvy (after all, they were a band and not a technology company). What matters, though, is that they were willing to keep trying, to keep investing, to keep innovating.
The Dead had an extraordinary appetite for risk. “We were so fortunate that we had the Dead,” Wickersham, of Alembic, said of the Dead’s investment in the Wall of Sound. “It wouldn’t have happened without them. They were always willing to spend the money.” Healy illustrated the band’s attitude toward technology investment by telling a story about a show at Stanford University where he was testing pricey new high-frequency drivers. “Something went wrong and I turned it on and it just fried all these things in about two seconds. It was like fifteen thousand dollars, whoops, out the window,” he explained. But it didn’t worry the Dead. “All they did was pick me up and say, ‘Go for it again,’ ” Healy said. “When you’re in the process of cultivating new information and you’re charting territories yet uncharted, there’s no guarantee that it’s going to be safe. It’s probably just as well, because you have to be really serious to get there.”
“Charting territories yet uncharted”: that’s what the Dead did, in technology as in music. A few spectacular shipwrecks were inevitable, but the band always rebuilt and kept exploring. This willingness to take big risks, to win some and lose some and then move on to the next challenge, is crucial to strategic improvisation—and especially to bold innovation.