More on this book
Community
Kindle Notes & Highlights
by
Safi Bahcall
Read between
January 3 - May 3, 2020
And then we’ll see how small changes in structure, rather than culture, can transform the behavior of groups, the same way a small change in temperature can transform rigid ice to flowing water.
1. The most important breakthroughs come from loonshots, widely dismissed ideas whose champions are often written off as crazy. 2. Large groups of people are needed to translate those breakthroughs into technologies that win wars, products that save lives, or strategies that change industries. 3. Applying the science of phase transitions to the behavior of teams, companies, or any group with a mission provides practical rules for nurturing loonshots faster and better.
“When asked what it takes to win a Nobel Prize, Crick said, ‘Oh it’s very simple. My secret had been I know what to ignore.’”
Drugs that save lives, like technologies that transform industries, often begin with lone inventors championing crazy ideas. But large groups of people are needed to translate those ideas into products that work.
My resistance to after-the-fact analyses of culture comes from being trained as a physicist. In physics, you identify clues that reveal fundamental truths. You build models and see if they can explain the world around you. And that’s what we will do in this book. We will see why structure may matter more than culture.
In every creative field, we see legendary teams suddenly, and mysteriously, turn.
When groups are small, for example, everyone’s stake in the outcome of the group project is high. At a small biotech, if the drug works, everyone will be a hero and a millionaire. If it fails, everyone will be looking for a job. The perks of rank—job titles or the increase in salary from being promoted—are small compared to those high stakes. As teams and companies grow larger, the stakes in outcome decrease while the perks of rank increase. When the two cross, the system snaps. Incentives begin encouraging behavior no one wants. Those same groups—with the same people—begin rejecting
...more
We will see how to apply a similar principle to engineer more innovative organizations. We will identify the small changes in structure, rather than culture, that can transform a rigid team.
The manufacture and assembly of planes belongs in the franchise group. The loonshot group is for developing the crazy new technologies that might go inside those planes.
A prediction market where investors could bet on the location of the next terrorist event, in order to tap into the “wisdom of crowds.” (The project was scrapped for what might be called bad taste.)
WTF?!
Former DARPA program managers or directors currently lead or have recently led research groups at Facebook, Google, Microsoft, IBM, Draper Laboratory, and MIT Lincoln Labs. This small group’s management principles have spread throughout both private industry and public research in the US, forming an extended web of DARPA.
One of the reasons that crazy projects like the Red Balloon Challenge can succeed inside DARPA is that there is no career ladder. Project managers are hired for fixed terms, typically between two and four years (their employee badges are printed with an expiration date). DARPA’s structure has eliminated the benefit of spending any time on politics, of trying to sound smart in meetings and put down your colleagues by highlighting the warts in their nutty loonshots so that you can curry favor and win promotions.
Recognition from peers is a form of intangible or soft equity. It can’t be measured through stock price or cash flows. But it can be just as strong a motivator, or even stronger, as both a carrot and a stick.
The DARPA model is extreme: reduce career politics by eliminating careers. McKinsey approaches the same goal in a less extreme way. It retains careers but invests heavily in reducing the subjectivity of promotion decisions.
creative talent responds best to feedback from other creative talent. Peers, rather than authority. Catmull designed a system for a group
A wide span encourages creatives, whether film directors or software designers or chemists, to come together and help a colleague solve a problem. A span of two, on the other hand, encourages sabotaging your peer to win a promotion.
Use soft equity: Identify and apply the nonfinancial rewards that make a big difference. For example: peer recognition, intrinsic motivators.
Widen management spans in loonshot groups (but not in franchise groups) to encourage looser controls, more experiments, and peer-to-peer problem solving.
There is no way to understand why teams and companies suddenly change from innovating well to innovating poorly just by analyzing individual behaviors in isolation. The ability to innovate well is a collective behavior. It is another example of “more is different.”
as
For a loonshot nursery to flourish—inside either a company or an industry—three conditions must be met: 1. Phase separation: separate loonshot and franchise groups 2. Dynamic equilibrium: seamless exchange between the two groups 3. Critical mass: a loonshot group large enough to ignite
The industry survives and thrives because of the web of partnerships connecting the two markets (dynamic equilibrium, #2). Without the certainties of franchises, the high failure rates of loonshots would bankrupt the industry. But franchises grow stale. Without fresh loonshots, the large Majors would disappear.
The two markets in film, connected by a web of partnerships, are examples of phase separation and dynamic equilibrium within an industry, rather than within a company. The market of hundreds of small production shops finding, funding, and developing small, crazy film projects is an example of an industry’s loonshot nursery.
The hundreds of publicly traded or privately funded biotech companies are the loonshot nursery of the biomedical world.
Both the film and the drug-discovery industries have separated into two markets—the market of the Majors, who trade in franchises, and the market of small specialists, who nurture loonshots. Those two markets are connected by a web of partnerships.
A critical role of the loonshot nursery is keeping fragile loonshots alive through failures and rejection.
The empires of China, Islam, and India were the Majors of nation-states. The simmering stew of Western European nations was, at the time, the world’s loonshot nursery for new ideas, just as the hundreds of small production shops serve as a loonshot nursery for new films, or the hundreds of small biotech companies serve as a loonshot nursery for new drugs.
In any industry other than baseball, Minors can grow up to be Majors. Disney began as a two-man shop (Walt and his brother), the tiniest of Minors. It built on the unexpected success of a mouse with big ears and a princess who befriends seven dwarfs to grow into one of the five studio Majors.
Like every industry other than baseball, in the world of nation-states, a Minor can grow up into a Major. England began as a tiny Minor, just like Disney and Amgen. Just like those two, it built on the unexpected success of a powerful loonshot—the mother of all loonshots. It rode that idea to industrialize, weaponize, and evolve into a Major, spreading its language and customs around the world.
“Luck is the residue of design.”
England established the earliest example of a successful loonshot nursery inside one country.
Loonshots flourish in loonshot nurseries, not in empires devoted to franchises. Being good at loonshots and good at franchises are phases of an organization—whether that organization is a team, a company, or a nation.
“New frontiers of the mind are before us, and if they are pioneered with the same vision, boldness, and drive with which we have waged this war we can create a fuller and more fruitful employment and a fuller and more fruitful life.”
A loonshot refers to an idea or project that most scientific or business leaders think won’t work, or if it does, it won’t matter (it won’t make money). It challenges conventional wisdom. Whether a change is “disruptive” or not, on the other hand, refers to the effects of an invention on a market.
It’s easy to point to technologies that disrupted a market in hindsight, once the leaf has landed.
Look at Amazon - online book seller turned into global behemoth that pretty much controls the retail industry
We want to design our teams, companies, and nations to nurture loonshots—in a way that maintains the delicate balance with our franchises—so that we avoid ending up like the Qianlong emperor. The one who dismissed those “strange or ingenious objects,” the same strange and ingenious objects that returned in the hands of his adversaries, years later, and doomed his empire.
(“Contrary to the predictions of the experts, books are still an effective way to spread ideas”).
Complex system A whole made of many interacting parts whose interactions follow certain rules or principles.
Control parameter A variable that can alter the state of a complex system
Dynamic equilibrium When two phases coexist in balance, continuously exchanging their parts, neither side growing or shrinking at the expense of the other.
Emergent behavior (or property) A property of the whole that cannot be defined or explained by studying the parts on their own. The behavior emerges from how those parts interact collectively rather than what they do individually.
Unlike fundamental laws, emergent behaviors can suddenly change. When monopolies or cartels appear in a market, for example, prices may no longer adjust to demand and resources may no longer be allocated efficiently.
False Fail* When a valid hypothesis yields a negative result in an experiment because of a flaw in the design of the experiment.
Franchise The subsequent iterations or updated versions of an original product or service.
Life on the edge* Life on the edge of a phase transition: when a control parameter brings a complex system to the cusp of a transition.
Loonshot* A neglected project, widely dismissed, its champion written off as unhinged.
Moonshot An ambitious and expensive goal, widely expected to have great significance.
Moses Trap* When an all-powerful leader becomes judge and jury deciding the fate of loonshots.
Phase A state of a complex system characterized by a specific set of emergent behaviors.
Phases of organization* When an organization is considered as a complex system, we can expect that system to exhibit phases and phase transitions—for instance, between a phase that encourages a focus on loonshots and a phase that encourages a focus on careers.
