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

by Safi Bahcall

this is contrary to the commonly-held notion that culture change needs to happen first and inevitably slow and difficult.

stake is about project outcomes while rank is about promotion and sometimes politics.

Vail similarly stayed out of the details of the technical program. Both Bush and Vail saw their jobs as managing the touch and the balance between loonshots and franchises

between scientists exploring the bizarre and soldiers assembling munitions; between the blue-sky research of Bell Labs and the daily grind of telephone operations.

In the real world, ideas are ridiculed, experiments fail, budgets are cut, and good people are fired for stupid reasons. Companies fall apart and their best projects remain buried, sometimes forever. The

Three Deaths tells the honest history, as opposed to the revisionist history, of nearly every important breakthrough I’m aware of or have personally experienced (the Three often stretches to Four, Five, or Ten).

The need to nurture and protect fragile loonshots so they can survive those stumbles and setbacks, whether self-inflicted or caused by others, is the centra...

For three decades, there was a roughly seven-year cycle between deaths and spectacular rebirths of Folkman’s idea.

Folkman would say, “You can tell a leader by counting the number of arrows in his ass.”

People may think of Endo and Folkman as great inventors, but arguably their greatest skill was investigating failure. They learned to separate False Fails from true fails.

Create project champions Fragile projects need strong hands.

A loonshots idea need a stronger leader who can help survive the three deaths and learn lessons during the journey.

“With the persistence of a door-to-door salesman,” Parsons took the idea to every head of desk in the Navy and made the case, putting his career at risk. Parsons reenergized the scientists at the naval lab—inspiring Taylor to assign the first engineer dedicated to the project (Robert Page, who made the critical breakthrough of using a pulsed rather than continuous signal)—and he convinced top military brass to stand up and fight for the project. He prodded and poked until the sleeping bear woke.

LSC: Listen to the Suck with Curiosity

Let’s call a surprising breakthrough in product—a technology that was widely dismissed before ultimately triumphing—a P-type loonshot.

With P-type loonshots, people say, “There’s no way that could ever work” or “There’s no way that will ever catch on.” And then it does.

Let’s call a surprising breakthrough in strategy—a new way of doing business, or a new application of an existing product, which involves no new technologies—an S-type loonshot.

Deaths from P-type loonshots tend to be quick and dramatic. A flashy new technology appears (streaming video), it quickly displaces what came before (rentals), champions emerge (Netflix, Amazon), and the old guard crumbles (Blockbuster). Deaths from S-type loonshots tend to be more gradual and less obvious.

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.

In Italy, for 30 years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland, they had brotherly love, they had 500 years of democracy and peace—and what did that produce? The cuckoo clock.

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

a too-strong holy leader is also bad.

Land answered with what became one of the most famous lines of his life: “‘The only thing that matters is the bottom line’? What a presumptuous thing to say. The bottom line’s in heaven.”

they had made money from selling film: their cameras generated much less income than their instant-print cartridges. With digital, there was no film. “There’s no way that can make any money,” they said. Land dismissed the new technology because he didn’t look for the hidden S-type loonshots: all the ways digital could enable new streams of income. In other words, just like Juan Trippe, he leaned on his strong side—P-type loonshots—and didn’t watch his weak side: S-type loonshots.

The principle applies broadly. You can analyze why an investment went south. The company’s balance sheet was too weak, for example. That’s outcome mindset. But you will gain much more from analyzing the process by which you arrived at the decision to invest. What’s on your diligence list? How do you go through that list? Did something distract you or cause you to overlook or ignore that item on the list? What should you change about what’s on your list or how you conduct your analyses or how you draw your conclusions—the process behind the decision to invest—to ensure that mistake won’t happen again? That’s system mindset.

The weakest teams don’t analyze failures at all. They just keep going. That’s zero strategy. 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.

Evaluating decisions and outcomes separately is equally important in the opposite case: bad decisions may occasionally result in good outcomes.

this is extremely important to protect good ideas and good decisions from a bad outcome (caused by many other factors - unlucky or learnable lessons)

At Pixar, Catmull probed both systems and processes, after both wins and stumbles. How should the feedback process, for example, be adjusted so a director is given the most valuable possible input, in a form most likely to be well received? Artists tend to hate feedback from suits or marketers or anyone outside their species, but they welcome it from thoughtful peers. So at Pixar, every director receives private feedback on their project from an advisory group of other directors—and, in turn, serves on similar groups for other directors.

On those occasions he was invited to help near-finished films, Jobs would preface his remarks: “I’m not a filmmaker. You can ignore everything I say.” Jobs had learned to mind the system, not manage the project.

Relinquishing control of a creative project and trusting in the inventor or artist or any other loonshot champion is not the same as relinquishing attention to detail.

James Phinney Baxter did half a century earlier, reflecting on the success of Bush’s system in turning the course of World War II: “If a miracle had been accomplished anywhere along the line,” Baxter wrote, “it was in the field of organization, where conditions had been created under which success was more likely to be achieved in time.”

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

Neither efficient markets nor invisible hands are fundamental laws. They are both emergent properties.

One of the things that distinguishes an emergent property like the flow of liquids from a fundamental law—like quantum mechanics or gravity, for example—is that an emergent property can suddenly change. With a small shift in temperature, liquids suddenly change into solids. That sudden shift from one emergent behavior to another is exactly what we mean by a phase transition.

Phase transitions are triggered when small shifts in system properties—for example, density or temperature—cause the balance between those two forces to change.

As team size crosses a “magic number,” the balance of incentives shifts from encouraging a focus on loonshots to a focus on careers.

The solid-to-liquid transitions described above—both the marbles and real solids—fall within a category called symmetry-breaking transitions. A

The sudden change in traffic flow falls within a second category of phase transition called a dynamic instability.

According to these models, as a forest gets dangerously close to a phase transition, to erupting, the frequency of fires should take a specific form. The frequency should vary in inverse proportion to size:

That pattern, called a power law, is a surprising prediction—a mathematical clue that a forest is on the verge of erupting.

Physicists love fat tails. Random systems with no hidden connections, like coin tosses, have thin tails. They’re kind of boring. Fat tails signal interesting dynamics in a network.

The common pattern was a clue, but not definitive evidence of percolating clusters: groups that form and dissolve, merge or fragment, in an endless cycle. There are many possible explanations of power laws (although very few that naturally come with an exponent of 2.5). Johnson needed stronger evidence.

Extrapolating from the model of fires in a forest, Johnson and his team could then predict when those control parameters would cross a critical threshold and the network would erupt. In other words, when an attack was imminent.

third strategy is to increase the fragmentation rate—the rate at which clusters dissolve. The goal is to back a terror network away from the contagion transition, just as prescribed burns back a forest away from its contagion transition.

Extrapolating his straight line from primate brains to human brains, he found that the optimal human group size, if this hypothesis were true, would be an interesting number: 150.

Dismissing the loonshot in favor of the franchise project is the rational choice.

In this case, sounding smart in meetings or trying to get your boss’s job is irrelevant. What matters is the survival of the loonshot: coming together to rescue it from its Three Deaths, to carry it to glory. Uniting to support the loonshot project is the rational choice.

“Hard” equity like stock options or bonuses, as mentioned earlier, is not the only kind of equity. People are motivated by more than just take-home pay: a passion for a higher purpose, the desire to be recognized and appreciated, the ambition to grow one’s skills. The hard and the soft are not mutually exclusive. They are complementary.

Promotions happen so rarely that it’s not worth spending any time politicking.

The third design parameter is equity fraction, which we will write as E. Equity ties your pay directly to the quality of your work. If you make a better coffee machine, the company may sell more coffee machines, so the value of your equity grows.