Loonshots

1. Loonshots: Nurturing crazy ideas that can change the world

"The most important breakthroughs come from loonshots, widely dismissed ideas whose champions are often written off as unhinged."

Loonshots are fragile. They are the neglected, often ridiculed ideas that have the potential to transform industries and change the world. These breakthroughs face numerous challenges:

• Skepticism and rejection from peers and experts
• Limited resources and support
• Multiple setbacks and failures before success

Examples of loonshots:

• Statins: Initially dismissed as ineffective, now the most widely prescribed drugs for heart disease
• Radar: Ignored by the military for years, played a crucial role in World War II
• James Bond films: Rejected by major studios, became one of the most successful movie franchises

To nurture loonshots, organizations must create environments that protect and support these fragile ideas through their long, dark tunnels of skepticism and uncertainty.

2. The Bush-Vail Rules: Separating phases and maintaining balance

"Separate your artists and soldiers."

Phase separation is crucial for innovation. Organizations should create distinct groups for:

• Loonshot nurseries: Teams focused on developing high-risk, early-stage ideas
• Franchise groups: Teams responsible for managing and growing existing successful products or services

Dynamic equilibrium ensures a balanced exchange between these groups:

• Maintain equal love and respect for both artists (loonshot champions) and soldiers (franchise managers)
• Facilitate seamless transfer of ideas and feedback between groups
• Appoint and train project champions to bridge the divide

By following these rules, organizations can create an environment where both radical innovation and steady growth can coexist and thrive.

3. False Fails: Recognizing and overcoming deceptive setbacks

"Mind the False Fail."

False Fails are misleading negative results that can derail promising projects. They occur when:

• Experiments are flawed or poorly designed
• Initial data is misinterpreted
• The wrong metrics are used to evaluate success

Overcoming False Fails requires:

• Careful investigation of failures
• Persistence in the face of setbacks
• Willingness to challenge conventional wisdom

Examples of False Fails:

• Statins failing in rat studies but succeeding in humans
• Early social networks like Friendster being dismissed as a fad

By recognizing and pushing through False Fails, innovators can rescue potentially groundbreaking ideas from premature abandonment.

4. P-type vs. S-type loonshots: Products and strategies that transform industries

"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."

P-type loonshots are breakthrough products or technologies:

• Often involve new scientific discoveries or engineering feats
• Examples: Transistors, jet engines, instant photography

S-type loonshots are innovative strategies or business models:

• Involve new ways of doing business or applying existing technologies
• Examples: Walmart's rural store strategy, Southwest Airlines' point-to-point model

Both types of loonshots can transform industries, but they require different nurturing approaches:

• P-type: Focus on technical development and overcoming engineering challenges
• S-type: Emphasize market testing and refining business models

Organizations should strive to nurture both types of loonshots to maintain a competitive edge and drive innovation across multiple fronts.

5. The Moses Trap: Avoiding the pitfalls of visionary leadership

"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."

The Moses Trap occurs when:

• A visionary leader becomes the sole judge of loonshots
• The organization becomes overly dependent on one person's vision
• Balanced feedback and idea exchange are suppressed

Dangers of the Moses Trap:

• Overlooking promising ideas that don't align with the leader's vision
• Pursuing flawed projects due to the leader's emotional attachment
• Stifling innovation and creativity within the organization

Examples of the Moses Trap:

• Edwin Land's obsession with Polavision at Polaroid
• Steve Jobs' initial failure with NeXT computers

To avoid the Moses Trap, leaders must create systems that encourage diverse input, balanced feedback, and merit-based selection of ideas, rather than relying solely on their own judgment.

6. The Magic Number: Understanding organizational dynamics

"When group size crosses a magic number, incentives shift toward favoring a focus on careers: the politics of promotion."

The Magic Number concept explains why organizations often become less innovative as they grow larger. Key factors include:

• Management span: Number of direct reports per manager
• Equity fraction: Portion of compensation tied to company success
• Organizational fitness: Ratio of project-skill fit to return on politics

As organizations grow beyond their magic number:

• Career advancement becomes more important than project success
• Politics and bureaucracy increase
• Innovation and risk-taking decrease

Strategies to raise the magic number:

• Reduce return on politics by making promotion decisions more objective
• Increase equity stakes to align individual and company interests
• Improve project-skill fit through better talent management

By understanding and manipulating these factors, organizations can maintain their innovative edge even as they grow larger.

7. Structure over culture: Designing systems for innovation

"The essence of a sound military organization is that it should be tight. But a tight organization does not lend itself to innovations."

Organizational structure is more critical than culture in fostering innovation:

• Culture is often vague and difficult to change
• Structure provides concrete rules and incentives that shape behavior

Key structural elements for innovation:

• Separate loonshot and franchise groups
• Create systems for balanced feedback and idea exchange
• Design incentives that reward both innovation and execution

Examples of effective structures:

• Vannevar Bush's OSRD during World War II
• Bell Labs' research division under Mervin Kelly

By focusing on structure rather than culture, organizations can create sustainable environments for both breakthrough innovations and steady growth.

8. Escaping the Moses Trap: Strategies for sustainable innovation

"Spread a system mindset."

To escape the Moses Trap and foster sustainable innovation, organizations should:

1. Reduce return on politics:

• Make lobbying for promotions difficult
• Implement independent assessment of performance

2. Use soft equity:

• Leverage non-financial rewards like peer recognition
• Create opportunities for autonomy and mastery

3. Increase project-skill fit:

• Invest in talent management and development
• Match employees with projects that leverage their strengths

4. Fix the middle:

• Address perverse incentives for middle managers
• Shift focus from promotions to project outcomes

5. Fine-tune management spans:

• Widen spans in loonshot groups to encourage experimentation
• Narrow spans in franchise groups for tighter control

By implementing these strategies, organizations can create environments that consistently nurture breakthrough ideas while maintaining operational excellence.

9. The Mother of All Loonshots: How the scientific method revolutionized the world

"The idea that truth could be revealed to anyone was radical. Subversive. Its champions were often dismissed as unhinged."

The scientific method is arguably the most important loonshot in history:

• Challenged centuries of dogma and authority-based knowledge
• Introduced the concept of universal laws discoverable through experiment
• Sparked the Scientific Revolution and subsequent industrial transformations

Key figures in the development of the scientific method:

• Copernicus: Proposed a sun-centered model of the solar system
• Kepler: Discovered laws of planetary motion through careful observation
• Galileo: Pioneered experimental approach to physics
• Newton: Unified terrestrial and celestial mechanics

The scientific method's impact:

• Enabled rapid technological progress
• Transformed economies and societies
• Shifted global power dynamics

Understanding the history of this mother of all loonshots provides insights into how transformative ideas emerge and spread, offering lessons for nurturing future breakthroughs that can change the world.

Last updated: August 9, 2024