Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries

by Safi Bahcall

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.

In 2004, a handful of excited Nokia engineers created a new kind of phone: internet-ready, with a big color touchscreen display and a high-resolution camera. They proposed another crazy idea to go along with the phone: an online app store. The leadership team—the same widely admired, cover-story leadership team—shot down both projects. Three years later, the engineers saw their crazy ideas materialize on a stage in San Francisco. Steve Jobs unveiled the iPhone. Five years later, Nokia was irrelevant. It sold its mobile business in 2013.

When people organize into a team, a company, or any kind of group with a mission they also create two competing forces—two forms of incentives. We can think of the two competing incentives, loosely, as stake and rank.

When groups are small, for example, everyone’s stake in the outcome of the group project is high.

As teams and companies grow larger, the stakes in outcome decrease while the perks of rank increase. When the two cross, the system snaps.

The stories illustrate a central idea: why being good at loonshots (like original films) and being good at franchises (sequels) are phases of large-group behavior—distinct and separate phases. No group can do both at the same time, because no system can be in two phases at the same time.

In the high-stakes competition between weapons and counterweapons, the weak link was not the supply of new ideas. It was the transfer of those ideas to the field.

Like a large film studio churning out sequel after sequel, the military was operating in what we might call a franchise phase.* To invent the radically new technologies necessary to defeat the Germans, however, the military would need to operate in an entirely different phase, one that offered scientists and engineers, as Bush wrote, the “independence and opportunity to explore the bizarre.”

The military and its supporters, as expected, objected. They told Bush his new group “was an end run, a grab by which a small company of scientists and engineers, acting outside established channels, got hold of the authority and money for the program of developing new weapons.” Bush’s answer: “That, in fact, is exactly what it was.”

Bush’s report, called Science: The Endless Frontier, presented to President Truman in June 1945, two months after FDR’s death, and released the following month, caused a sensation. The country had no national science policy, he declared. Philanthropy and private industry could not be relied upon to fund the basic research that is “the pacemaker of technological progress,” essential for national security, economic growth, and the fight against disease. The report outlined the architecture of a new national research system.

Bush changed national research the same way Vail changed corporate research. Both recognized that the big ideas—the breakthroughs that change the course of science, business, and history—fail many times before they succeed. Sometimes they survive through the force of exceptional skill and personality. Sometimes they survive through sheer chance. In other words, the breakthroughs that change our world are born from the marriage of genius and serendipity.

But the ones who truly succeed—the engineers of serendipity—play a more humble role. Rather than champion any individual loonshot, they create an outstanding structure for nurturing many loonshots. Rather than visionary innovators, they are careful gardeners. They ensure that both loonshots and franchises are tended well, that neither side dominates the other, and that each side nurtures and supports the other.

People responsible for developing high-risk, early-stage ideas (call them “artists”) need to be sheltered from the “soldiers” responsible for the already-successful, steady-growth part of an organization.

The goal of phase separation is to create a loonshot nursery. The nursery protects those embryonic projects. It allows caregivers to design a sheltered environment where those projects can grow, flourish, and shed their warts.

It’s easy to draw a box on an org chart and rent a new building. But the list of failed companies with shiny research labs is long. True phase separation requires custom homes to meet custom needs: separate systems tailored to the needs of each phase.

Artists working on loonshots and soldiers working on franchises have to feel equally loved.

Many companies, however, especially when faced with a crisis, try to legislate creativity and innovation everywhere (“The CEO must be the CIO—the Chief Innovation Officer!”). This usually results in chaos, the top-left quadrant.

It’s natural to assume that the inventor of an idea should also be its chief promoter and defender. But the best inventors do not necessarily make the best champions. The roles require different skills not often found in the same person.

Kennedy also contributed one more unusual idea: recruiting Smith College art history majors. Few companies hired women for technical positions in the 1940s and 1950s. Fewer still recruited art history majors and trained them. Kennedy encouraged Land to break both taboos, which became a great advantage for the company; decades before the idea became popular, both Kennedy and Land understood that diversity enhanced creativity. One of Polaroid’s most critical technology breakthroughs came from a harpsichord-playing art history graduate from Smith named Meroë Morse, who rose to lead a major research lab for Land.

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.

Like Polavision or the Boeing 747, the NeXT Cube was a beautiful, technologically remarkable, wildly expensive machine—with no customers. The new optical drives had many times the memory of magnetic drives or floppy disks. But competitors offered more convenience, more useful applications, and lower costs. The summary of Polavision—“a product that has much more scientific and aesthetic appeal than commercial significance”—applied equally well to the NeXT computer.

We can think of analyzing why a move is bad—why pawn-takes-bishop, for example, lost the game—as level 1 strategy, or outcome mindset. After a bad move costs him a game, however, Kasparov analyzes not just why the move was bad, but how he should change the decision process behind the move. In other words, how he decided on that move, in that moment, in the context of that opponent, and what that means for how he should change his decision-making and game-preparation routine in the future. Analyzing the decision process behind a move I’ll call level 2 strategy, or system mindset.

Teams with an outcome mindset, level 1, analyze why a project or strategy failed.

Teams with a system mindset, level 2, probe the decision-making process behind a failure.

The stories in part one illustrate the first three Bush-Vail rules: 1. Separate the phases • Separate your artists and soldiers • Tailor the tools to the phase • Watch your blind side: nurture both types of loonshots (product and strategy) 2. Create dynamic equilibrium • Love your artists and soldiers equally • Manage the transfer, not the technology: be a gardener, not a Moses • Appoint, and train, project champions to bridge the divide 3. Spread a system mindset • Keep asking why the organization made the choices that it did • Keep asking how the decision-making process can be improved • Identify teams with outcome mindsets, and help them adopt system mindsets

the current meaning has become widely accepted as fact: individuals acting purely out of self-interest can create complex market behaviors. Prices will adjust to demand, resources will be allocated efficiently, and so on. Shopkeepers sell, people shop, and these collective behaviors just … emerge. The same behaviors appear whether butchers sell chicken or beef, whether bakers sell cupcakes or bread. They are dynamics of the whole that don’t depend on details of the parts.

Smith's invisible hand

To understand what phase transitions tell us about nurturing loonshots more effectively, we need to know just two things about them: 1. At the heart of every phase transition is a tug-of-war between two competing forces. 2. Phase transitions are triggered when small shifts in system properties—for example, density or temperature—cause the balance between those two forces to change.

When extreme outcomes happen much more frequently than you expect, the probability distribution develops what statisticians call a “fat tail.”

In this chapter, I will show you how something similar happens inside organizations. As a group grows, the balance of incentives shifts from encouraging individuals to focus on collective goals to encouraging a focus on careers and promotion. When the size of the group exceeds a critical threshold, career interests triumph. That’s when teams will begin to dismiss loonshots and only franchise projects—the next movie sequel, the next statin, the next turn of the franchise wheel—will survive.

All of which has generated, predictably, a backlash among scientists. Dunbar anticipated one objection in his original article: extrapolating a straight-line correlation well beyond the range of the original data set is scientifically questionable.

Although China achieved critical mass (#3), it failed to ignite. It never created phase separation (#1) and dynamic equilibrium (#2). Political battles, and the emperor’s own prejudices, would regularly override the conclusions of the early “scientists.”