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

by Safi Bahcall

I’ve always appreciated authors who explain their points simply, right up front. So here’s the argument in brief: 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.

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.

The pattern of sudden changes in the behavior of teams and companies—of the same people suddenly behaving in very different ways—is a mystery in business and social science.

The change in behavior may be a mystery in business, but a similar pattern is the essence of a strange quirk of matter called a phase transition.

I will show you that the same holds true for teams and companies. There’s no way to analyze the behavior of any individual and explain the group. Being good at nurturing loonshots is a phase of human organization, in the same way that being liquid is a phase of matter. Being good at developing franchises (like movie sequels) is a different phase of organization, in the same way that being solid is a different phase of matter. When we understand those phases of organization, we will begin to understand not only why teams suddenly turn, but also how to control that transition, just as temperature controls the freezing of water.

Systems snap when the tide turns in a microscopic tug-of-war. Binding forces try to lock water molecules into rigid formation. Entropy, the tendency of systems to become more disordered, encourages those molecules to roam. As temperature decreases, binding forces get stronger and entropy forces get weaker. When the strengths of those two forces cross, the system snaps. Water freezes.

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.

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 loonshots.

The bad news is that phase transitions are inevitable. All liquids freeze. The good news is that understanding the forces allows us to manage the transition.

We will identify the small changes in structure, rather than culture, that can transform a rigid team.

This book is divided into three parts. Part one tells five stories of five remarkable lives.

No group can do both at the same time, because no system can be in two phases at the same time. But there’s one exception. When the water in the bathtub mentioned earlier is at exactly 32 degrees Fahrenheit, pockets of ice coexist with pools of liquid. Just below or above that temperature, the whole thing will freeze or liquefy. But right at the edge of a phase transition, two phases can coexist.

Part two describes the underlying science.

Putting these pieces together will reveal the science behind the “magic number 150”: an equation that describes when teams and companies will turn. That equation will lead us to an additional rule that shows us how to raise the magic number—a change that will make any loonshot group more powerful.

(The four rules, as well as four more personal lessons for anyone nurturing any kind of loonshot, are summarized at the end.)

A final chapter describes what we might call the mother of all loonshots. We’ll extend these ideas on the behavior of groups to the behavior of societies and nations, and see how that helps us understand the course of history: why tiny Britain, for examp...

For one of those contracts, Bush turned not to an academic scientist or to an industrial lab but to a wealthy investment banker named Alfred Lee Loomis, an expert in chess and magic tricks, who wore perfectly pressed white suits and lived a double life. By day he worked on Wall Street. On evenings and weekends, he retired to a massive stone castle forty miles away in Tuxedo Park, New York. The castle was a semisecret, private research lab, brimming with equipment built or purchased to satisfy the curiosity of its owner.

By the end of 1940, Loomis had assembled dozens of the country’s best engineers and physicists inside an anonymous building at MIT.

Eventually, Loomis group would become the RadLab and occupy several spaces including legendary Building 20 at MIT. The story of Building 20 is covered in Messy by Tim Harford (https://amzn.to/2IDSFVG) and Deep Work, by Cal Newport (https://amzn.to/2Dx9hdD).

Vail persuaded his new board of directors that to solve these problems, the company should create a quarantined group working on “fundamental” research. Like Bush, he understood the need for separating and sheltering radical ideas—the need for a department of loonshots run by loons, free to explore the bizarre. Vail put a physicist from MIT, Frank Jewett, in charge. Over the next several years, Jewett’s group worked through the science and eventually solved the problem of the fading signals. They invented the vacuum tube: the world’s first amplifier, the forerunner of all modern electronics.

Over the next 50 years, Vail’s organization—eventually called the Bell Telephone Laboratories—produced the transistor, the solar cell, the CCD chip (used inside every digital camera), the first continuously operating laser, the Unix operating system, the C programming language, and eight Nobel Prizes.

An excellent book about Bell Labs is The Idea Factory https://amzn.to/2IDJjsS

The magic of Bush and Vail was in engineering the forces of genius and serendipity to work for them rather than against them. Luck is the residue of design.

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. The structures that these gardeners create share a common set of principles. I’ll call these principles the Bush-Vail rules.

The first two rules are the ones mentioned above, the key to life at 32 Fahrenheit: separate the phases (the groups working on loonshots and on franchises) and create dynamic equilibrium (ensure that projects and feedback travel easily between the two groups). Break apart while staying connected.

1. SEPARATE TH...

Leaders of powerful franchises across every industry routinely dismiss early-stage projects by picking at their warts

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.

Ed Catmull has an excellent description of how Pixar does this in Creativity Inc. https://amzn.to/2UzWDQH

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. When 3M, for example, inventor of Post-it Notes and Scotch Tape, brought in a high priest of Six Sigma as a new CEO in 2000, innovation plunged. It didn’t recover until well after he left and a new CEO dialed back the system. The new CEO described the efficiency system as a mistake: “You can’t say … well, I’m getting behind on invention, so I’m going to schedule myself for three good ideas on Wednesday and two on Friday.” Art Fry, the retired inventor of Post-it Notes, said that his idea would never have emerged under the new approach.

2. DYNAMIC EQUILIBRIUM Love your artists and soldiers equally

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. Rather than dive deep into one or the other, they focused on the transfer between the two.

Overmanaging the transfer causes one kind of trap. Undermanaging that transfer causes another.

Early aircraft radar, for example, was practically useless; pilots ignored it. Bush made sure that pilots went back to the scientists and explained why they weren’t using it. The reason had nothing to do with the technology: pilots in the heat of battle didn’t have time to fiddle with the complicated switches on the early radar boxes. The user interface was lousy. Scientists quickly created a custom display technology—the sweeping line and moving dots now called a PPI display. Pilots started using radar.

In some cases, as with the radar-controlled fuse on artillery shells mentioned earlier, Bush acted alone when he sensed a weak link. The Army initially paid little attention to the fuse, so Bush got on a plane and flew straight to battlefield headquarters in Europe. He was received by General Walter Bedell Smith, Eisenhower’s chief of staff. “What the devil are you doing over here?” Smith asked Bush. “Don’t we have enough civilians in the theater without your joining?” “I [came] over to a dense bed of ignorance,” Bush replied, “to try to prevent the destruction of one of the best weapons of the war.” After this exchange, Bush reported, they got along swimmingly. In other cases, Bush worked closely with FDR’s secretary of war, Henry Stimson. When generals initially refused even to look at radar, Bush called Stimson. Stimson flew on an experimental plane equipped with the technology and watched as radar quickly sighted distant targets. The next day, the chiefs of both the Army and Air Force found identical notes on their desks: I’ve seen the new radar equipment. Why haven’t you?

It may be helpful to visualize these first two rules, and what follows in the next several chapters, as shown below:

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 central idea behind the systems of Bush and Vail.

Endo finally began screening fungi in April 1971. He tested just over six thousand species. In the summer of 1972, one sample lit up his system—what drug developers call a “hit.” A blue-green mold, discovered growing on rice in a grain store in Kyoto, blocked a key enzyme needed to make cholesterol. The mold was Penicillium citrinum, the same genus that produced penicillin, but a different species. Within a year, Endo extracted the molecule that lowered cholesterol. He called it ML-236B. The drug is now known as mevastatin. It is the seed—the original—from which sprang Lipitor, Zocor, Crestor, and all the other statins. The statins would grow into the most widely prescribed drug franchise in history, saving millions of lives. But first, Endo’s drug had to survive the Three Deaths.

the False Fail is common to loonshots.

Skill in investigating failure not only separates good scientists from great scientists but also good businessmen from great businessmen.

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.

But great project champions are much more than promoters. They are bilingual specialists, fluent in both artist-speak and soldier-speak, who can bring the two sides together.

"Bilingual" is a great analogy for any person who can interpret between two groups who "don't speak the same language."

On every setback or rejection I experience, which occurs often, I try to remind myself of a third lesson from the fragility of loonshots. It’s how Endo, Folkman, and Thiel got past False Fails. I think of it as Listening to the Suck with Curiosity (LSC)—overcoming the urge to defend and dismiss when attacked and instead investigating failure with an open mind.*

Where others assumed Friendster was yet another example of a social network fad, Thiel and Howery investigated more deeply why users were leaving and found a contrarian answer, in which they had confidence. Contrarian answers, with confidence, create very attractive investments.

It was from Judah that I first saw LSC in action, consistently. He would (usually) overcome the impulse to challenge his challengers when attacked. He kept an open mind and quietly investigated, with genuine interest and a desire to learn.

How does one tell the difference between persistence and stubbornness? LSC, for me, is a signal. When someone challenges the project you’ve invested years in, do you defend with anger or investigate with genuine curiosity? I find it’s when I question the least that I need to worry the most.

In this chapter and the next two, we will see a third need: the need to distinguish between two types of loonshots.

Which is why learning to nurture the more subtle S-type loonshots—not just the shiny P-type loonshots—matters. Most people, like most teams and companies, have a blind side. And the subtle is much easier to miss than the shiny. If you are a creative or an entrepreneur, learning how to be good at both types of loonshots can help you expand your idea. It can help you transform something good into something great. Google, for example, began with a new algorithm for ranking internet search results, a nice P-type loonshot. But it was the eighteenth search engine. It added several clever S-type loonshots to attract advertisers. Those S-type loonshots helped it grow into the dominant website in the world. If you are an industry challenger, learning how to be good at both can help you defeat bigger, stronger competitors, like a middleweight firing off a surprising left hook to knock out a heavyweight. And if you are an astonishingly successful innovator, if you have built a wondrous empire, you need to learn how to watch your blind side—how to spot the loonshots blazing right toward you.

Crandall believed in a philosophy he called competitive anger: “You ought to be angry at your opponent, and you ought to be angry with yourself if you don’t win.” He was called Attila the Hun, Bob the Butcher, Darth Vader, and—in case the message was still not clear—Fang (he has prominent canine teeth). On weekends, he’d go to work and leave notes on desks: “I was here. Where were you?” In a 1987 company video, he burst onto the screen in military uniform, face paint, and bandanna, carrying a plastic toy machine gun—Crando. One biographer noted his obsession with order: “If he noticed his wife’s purse sitting on the kitchen counter, he might pry it open for inspection; finding it in the same condition as any purse, he would dump it out and reorganize it, throwing away the bits of grit that had accumulated in the creases at the bottom. ‘It drives her batshit,’ he would remark with a raspy nicotine cackle.”

Trippe’s strategy of nurturing P-type loonshots and betting on bigger, faster, more—with a dash of marketing glamour—worked brilliantly. Technology improvements lowered costs, providing more money to invest in more technology improvements. Larger planes flew more customers farther, faster. That virtuous cycle continuously grew his franchise, propelling Trippe far ahead of competitors, attracting fame and celebrity, just as a similar virtuous cycle would propel leading technology companies for the rest of the century, from Polaroid to IBM and Apple. 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.

Nearly every company led by a master P-type innovator like Trippe gets shocked. Some sudden change, whether from a regulatory agency or a new competitor, stops the music. The loonshot-franchise cycle stops working. The wheel turns one too many times, and suddenly there’s a fleet of 747s that no one wants to fly. Competitors who have been nurturing their own loonshots, one or more of which fit the newly changed world, race by.

Microsoft had all of 32 employees. Intel desperately needed a cash infusion to survive. IBM soon discovered, however, that individual buyers care more about exchanging files with friends than the brand of their box. And to exchange files easily, what matters is the software and the microprocessor inside that box, not the logo of the company that assembled the box. IBM missed an S-type shift—a change in what customers care about.

Ed Catmull, from Pixar, refers to early-stage ideas for films—loonshots—as “Ugly Babies.” The language is new, but the idea goes back centuries. In 1597, the philosopher Sir Francis Bacon wrote, “As the births of living creatures are at first ill-shapen, so are all Innovations, which are the births of time.”