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by
Safi Bahcall
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October 25, 2020 - January 4, 2021
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.
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.
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.
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. Between its mobile peak and exit, Nokia’s value dropped
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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.
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. Incentives begin encouraging behavior no one wants. Those same groups—with the same people—begin rejecting loonshots.
We will identify the small changes in structure, rather than culture, that can transform a rigid team.
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.
Bush’s new organization, eventually called the Office of Scientific Research and Development (OSRD), would create the opportunity Bush sought for scientists, engineers, and inventors at universities and private labs to explore the bizarre. It would be a national department of loonshots, seeding and sheltering promising but fragile ideas across the country. The group would develop the unproven technologies the military was unwilling to fund.
Bush brought the two groups together. He used his credibility as an academic to reassure scientists of their independence. But at the same time, he explained their goal was more than clever ideas. Their goal was products that worked.
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.
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.
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.
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.
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.
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.
Raskin launched the original Macintosh project and suggested some of its core ideas to Jobs. But he did not have the skills to develop those ideas into a complete system. Jobs did. Jobs was a great synthesizer.
Teams with a system mindset, level 2, probe the decision-making process behind a failure. How did we arrive at that decision? Should a different mix of people be involved, or involved in a different way? Should we change how we analyze opportunities before making similar decisions in the future? How do the incentives we have in place affect our decision-making? Should those be changed?
Evaluating decisions and outcomes separately is equally important in the opposite case: bad decisions may occasionally result in good outcomes. You may have a flawed strategy, but your opponent made an unforced error, so you won anyway. You kicked the ball weakly toward the goalkeeper, but he slipped on some mud, and you scored. Which is why probing wins, critically, is as important, if not more so, as probing losses. Failing to analyze wins can reinforce a bad process or strategy. You may not be lucky next time.
the weak link is not the supply of ideas. It is the transfer to the field. And underlying that weak link is structure—the design of the system—rather than the people or the culture.
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,
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McElroy had helped to develop the nation’s most successful consumer-product research lab. He understood that technologies buried in the lab that fail to transfer to the field, or labs that fail to respond quickly to feedback from the field, are useless. In other words, McElroy understood, and drafted into the charter for his new agency, the essence of the first two Bush-Vail rules: phase separation and dynamic equilibrium.
In 1970, much of Engelbart’s team left and joined a newly created research group, led by another former DARPA program manager, Bob Taylor. That was Xerox PARC—the birth center of much of the early personal computer industry. Taylor said he modeled that legendary research group on “the management principles developed at DARPA.”
creative talent responds best to feedback from other creative talent. Peers, rather than authority. Catmull designed a system for a group of peer film directors to regularly coalesce around a project and give its director advice—honest feedback from colleagues rather than marching orders from marketers or producers. Creatives are suspicious of those outside their faith. It’s similar in drug discovery: biologists and chemists respond best to criticism from their own kind, much less well to suggestions from MBAs.
For ten thousand years, life expectancy barely changed. Between 1800 and 2000, it doubled. From AD 1 to 1800, global population grew less than 0.1 percent a year. By the mid-twentieth century it was growing at 20 times that rate. The world’s average economic output per person was nearly constant for two thousand years—between $450 and $650, in 1990 dollars. Since 1800, it has increased by a thousand percent.
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
