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by
Safi Bahcall
Both Bush and Vail understood intuitively decades ago what is repeatedly being rediscovered today. Efficiency systems such as Six Sigma or Total Quality Management might help franchise projects, but they will suffocate artists.
The trap for most groups, however, is that soldiers naturally favor soldiers and artists naturally favor artists.
My original studs and fighters post!!
As mentioned earlier, in the chain of creating a breakthrough, the transfer between the two sides is the weakest link. Scientists may pay little attention to soldiers or marketers. Soldiers and suits may dismiss the babble of nerds.
"data science" today
Not every phone operator has to be a champion innovator. Sometimes you just need them to answer the phone.
As we will see, failing to understand the surprising fragility of the loonshot—assuming that the best ideas will blast through barriers, fueled by the power of their brilliance—can be a very expensive mistake.
At the time, heart disease was believed to be an inevitable result of aging, with no known cause or treatment.
1944
After a few drinks, Kitano confided that his chickens would make a nice dish of yakitori when his research project ended the following month. It occurred to Endo that hens might have high blood cholesterol, since their eggs have so much of it. Higher starting levels of cholesterol could make the effects of his drug easier to detect. So Endo convinced Kitano to curb his appetite, temporarily, and test mevastatin on some spare hens.
Much later, scientists learned that rats have mostly HDL (“good cholesterol”) circulating in their blood, and very little LDL, the “bad cholesterol” that contributes to heart disease. Which means that rats are a poor choice for evaluating statins,
Risks of this type of death can never be fully eliminated—negative results don’t come with a neon sign that lights up “your idea is flawed” or “your test is flawed.”
On the creative side, inventors (artists) often believe that their work should speak for itself. Most find any kind of promotion distasteful. On the business side, line managers (soldiers) don’t see the need for someone who doesn’t make or sell stuff—for someone whose job is simply to promote an idea internally.
In 1978, when it deregulated the airline industry, Congress created the business world’s equivalent of a solar eclipse: a rare-event experiment.
Democrat president! (carter)
For fifty years, the federal government had regulated where airlines could fly and what they could charge, down to the tiniest details: the price of a cocktail, the rental cost of a movie headset.
Pan Am, for nearly its entire existence, was Juan Terry Trippe, just like American Airlines, for eighteen years, was Robert Lloyd Crandall.
Both hated deregulation, when it finally arrived in 1978. This is Bob Crandall at the US Senate hearings, explaining his views to the economists and lawyers in the room: “You f—king academic eggheads! You’re going to wreck this industry!”
No one will be making a TV series about airline reservation systems. Deregulation, however, created a special situation that briefly blocked the bright light of Juan Trippe–style changes and favored the dim glow of Bob Crandall–style changes. Deregulation created an S-type moment.
In exchange, the B-scale, market-rate costs allowed him to expand, buying more planes. The expansion meant more jobs and promotion opportunities, which the unions liked. The expansion lowered American’s average labor costs to a breakeven point where the benefits of being big, with more reach, could make up for the startups’ lower costs but smaller reach.
Although American was not the first to develop a computerized reservation system, it developed the most functional one, which listed all fares, and then gave that system, Sabre, to travel agents all over the country.
But the most crucial advantage from Sabre surprised Crandall and his team. They were soon flooded with data no one had ever seen before: years of bookings, as one analyst noted, “from which American could deduce how many days in advance vacationers tended to book to San Juan, how many days in advance business travelers booked to Detroit, in May as opposed to September, on Tuesday as opposed to Friday.”
Other airlines quickly copied those ideas. But the behind-the-scenes, unglamorous, locked-in distribution channel from Sabre and the yield-management techniques from Big Data were almost impossible to copy, for many years. Those changes saved American.
Lloyd’s of London would not offer odds on his flight because the risk was too great.
Lindbergh
P-type loonshots feed a growing franchise, which feeds more P-type loonshots. And as the momentum builds, so does the tunnel vision: keep turning the wheel, faster and faster.
Trippe began with plans to cross the Atlantic, the most lucrative air route. A million passengers and 75 million pounds of cargo traveled the 10-day ocean voyage by steamship each year. The volume dwarfed Pan Am’s Latin America business.
When Trippe announced publicly that Pan Am would fly to China, two members of the Pan Am board of directors resigned, convinced that Trippe was leading the airline to tragedy.
A few phone calls and letters from Trippe resulted in a presidential executive order. Within months, the Navy was assisting Pan Am in building an air base on Wake Island and, soon after, on two other deserted American territories west of Hawaii: Midway and Guam. The three islands completed the stepping stones for a viable flight path between mainland US and Asia.
A New York Times editorial stated that Goddard “seems to lack the knowledge ladled out daily in high schools,” namely that of Newton’s law on action and reaction, which made rocket flight impossible. (Forty-nine years later, the day after the successful launch of the Apollo 11 rocket to the moon, the paper issued a retraction. It announced that rockets did not in fact violate the laws of physics and that “the Times regrets the error.”)
In April 1945, a month before Germany surrendered, FDR died. Resistance to Lindbergh in official circles disappeared, and the Navy called him to Washington.
Just as Thiel and Howery dug into the demise of Friendster and came up with a contrarian view on social networks, Trippe and Lindbergh came up with a contrarian view on jet airliners.
Let’s call it the Moses Trap: When ideas advance only at the pleasure of a holy leader—rather than the balanced exchange of ideas and feedback between soldiers in the field and creatives at the bench selecting loonshots on merit—that is exactly when teams and companies get trapped.
Land had his first deal. Sailors, pilots, skiers, and other outdoorsmen soon snapped up the new “polarized” sunglasses, Polaroid’s first big hit.
Kennedy cataloged famous collections and advised museums in New York, Boston, and San Francisco. Cities in Italy hired him to restore old monuments (when the Allies began their invasion of Italy in World War II, the US bomber command turned to Kennedy for a list of monuments to avoid).
That same day, at a special session for the press, Land snapped a self-portrait from the neck up with the new camera. He peeled the print and held it next to his face. At eight by ten inches, it was nearly life size.
First selfie?
The technology created not only new art but also new markets. Couples realized their prints would not be seen by technicians at developer labs. And so was born what Polaroid delicately called “intimacy” pictures.
The documents reveal a top-secret, high-stakes drama centered on imaging technology. Well before the first astronomers began using CCDs, before the first commercial CCD cameras, and before Sony and Kodak even began thinking about a consumer market, one person convinced the president of the United States, over the unanimous opposition of his senior military and political advisors, to invest in digital spy satellites. That person was Edwin H. Land.
In 1954, Land proposed to Eisenhower the idea of a one-man aircraft with a powerful camera that would fly high and fast. He helped select the camera technology (Itek, Kodak) and the aircraft (Lockheed) for what became the world’s first spy plane—the U-2.
The familiar story of the decline of industry Goliaths begins with decades of success, after which the proud old company grows stale. It loses its hunger.
Each of those visionary leaders created a brilliant loonshot nursery; they achieved Bush-Vail rule #1: phase separation. But they remained judge and jury of new ideas. Unlike Bush and Vail, who saw their role as gardeners tending to the touch and balance between loonshots and franchises, encouraging transfer and exchange, those three master P-type innovators saw themselves as Moses, raising their staffs, anointing the chosen loonshot.
Land and his management team dismissed digital because for 30 years they had made money from selling film: their cameras generated much less income than their instant-print cartridges.
When asked if Microsoft would create software for the new machine, Bill Gates answered: “Develop for it? I’ll piss on it.” He dismissed the technology (“anybody can write Sony a check”) and the sleek, all-black design (“if you want black, I’ll get you a can of paint”).
NeXT
Loving your loonshot and franchise groups equally, however, requires overcoming natural preferences. Artists tend to favor artists. Soldiers tend to favor soldiers.
He called it the Macintosh project. Jobs and others at Apple tried to terminate the project, so Raskin encouraged them to visit Xerox PARC and see for themselves. They did and were converted. Eventually Jobs shoved Raskin aside and took over the project.
Academic disciplines tend to flower on different campuses at different times, like flash mobs. In the 1970s, a mob of young computer graphics pioneers flashed on the campus of the University of Utah: Jim Clark, who would go on to create Silicon Graphics; Nolan Bushnell, who would start Atari; John Warnock, who would create Adobe; and Alan Kay, who would help create the first graphics-enabled personal computer, the Alto, at Xerox.
Smith suggested “Pixer,” for pixel + laser. A colleague in the graphics group suggested something more high-tech, like radar, or astronomical, like quasar or pulsar. They converged on the Pixar Image Computer, which was soon called simply the PIC.
“The movie business turns out to be a minuscule market compared to others we now find ourselves involved with,” Lucas said.
Pixar
Toward the end of 1985, after nearly two dozen firms (including Disney) had passed, the president of Lucas’s studio, Doug Norby, decided he would shut down the computer group at the end of the year if they couldn’t find a buyer.
Jobs needed to convince not only Lucas’s studio chief to sell the group to him at a reasonable price, but also Catmull and Smith to continue the project, working for him. By then, Jobs had started NeXT. He told Catmull and Smith that they could run their own show. They could stay in Marin County, a few hours north of Jobs and NeXT. Catmull would be the CEO. Catmull and Smith, who were out of options at that point, agreed. Norby accepted Jobs’s lowball offer to buy the whole unit. And so Jobs became the principal investor, and largest shareholder, of the Lucasfilm Computer Division, which was
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In the world of biotech, struggling startups often try to buy time by selling tools and services to their much larger, richer cousins, the big pharmas. The goal is to survive long enough for the internal team to create a product—a strikingly original drug candidate. And that’s exactly what Pixar did in the world of film.
Inventors or creatives championing loonshots are often tempted to ridicule franchises—as Steve Jobs 1.0 did with the “bozos” developing Apple II follow-ons. But both sides need each other. Without the certainties of franchises, the high failure rates of loonshots would bankrupt companies and industries.
Without fresh loonshots, franchise developers would shrivel and die. If we want more Junos and Slumdog Millionaires, we need the next Avengers and Transformers. If we want better drugs for cancer and Alzheimer’s, we need the next statin.
During the 1970s, engineers at PARC invented the first graphics-enabled personal computer (the Alto), the first visual-based word processor, the first laser printer, the first local networking system (ethernet), the first object-oriented programming language, and a half dozen other firsts. It was an incredible run. But none of those breakthroughs was commercialized by Xerox.
Smith didn’t intend to call that underlying force in markets an invisible hand. He used the phrase only three times, across all his writings, ambiguously and inconsistently. (The first time, he used it as a sarcastic put-down of superstitious beliefs, a “mildly ironic joke.”)
