What is Safi Bahcall’s Loonshots about? What is the key message to take away from the book?
In his book Loonshots, Safi Bahcall argues that innovations as wide-ranging and world-changing as radar, insulin, and computer animation all share a similar trajectory: They began as flawed, incredibly fragile ideas. They were repeatedly shot down or ignored, and if not for a lot of luck and persistence, they would never have made it. Bahcall’s big idea is that it’s possible to deliberately and systematically nurture loonshots.
Below is a brief overview of Loonshots by Safi Bahcall.
The 2 Types of Loonshots
In his book Loonshots, Bahcall explains that loonshots come in two varieties: product loonshots and strategy loonshots.
Product loonshots are new inventions or new technologies. For example, Karl Benz’s Patent-Motorwagen is a product innovation. Though others had experimented with self-propelled carriages before, Benz engineered what is generally considered the first practical modern automobile.
Strategy loonshots are new ways of doing business or of tackling a problem. For instance, Ford’s assembly-line production of the Model-T is a strategic innovation. Henry Ford invented neither cars nor the conveyor belt. But by combining the two to massively cut production times and manpower, he created a way to mass produce cars that were consistent and, crucially, affordable to the general public.
Bahcall stresses the importance of paying attention to both types of loonshots. Both types are capable of upending an industry (or creating an entirely new industry). As we’ll see later in this guide, if you focus on only one type of loonshot, you might develop a blindspot that lets a competitor overtake you.
(Shortform note: Product and strategy innovations might not always be as distinct as Bahcall makes them sound. For example, one of the case studies Bahcall uses is the invention and evolution of radar. Radar is a product innovation that goes hand-in-hand with the strategic innovations it directly enables (such as allowing the RAF to detect incoming German raids and allocate fighters and other resources where they were most needed at that moment). For that matter, we could even say that Bahcall’s loonshot rules, if effective, are a strategic innovation that could be used to create product innovations.)
Loonshots Are Fragile
A key characteristic of loonshots is their fragility. Bahcall points out that loonshots die multiple deaths before finally succeeding. Bahcall calls this the “three deaths” (though he notes there may be more than three) and says this cycle can go on for years, even decades. (Shortform note: Bahcall’s description of the three deaths reflects the widely accepted observation that failure is a crucial part of the creative process and an unavoidable element of any business. In Designing Your Life, Bill Burnett and Dave Evans recommend becoming immune to failure, by which they mean that you should try to fail more often, because doing so requires taking creative risks that you can learn from.)
To illustrate the typical early stages of loonshot development, Bahcall gives the example of Akira Endo, who discovered statins, a class of drug that prevents heart attacks and strokes by lowering blood cholesterol. Endo’s idea died three times before its ultimate success:
- Endo’s ideas were initially rejected because previously developed cholesterol-lowering drugs were more harmful than helpful.
- When Endo first tested his drug on rats, it had no effect. He eventually discovered that rats have naturally low levels of bad cholesterol. When Endo tried the same drug on chickens (which have higher levels of bad cholesterol), it worked.
- Endo’s research was finally shut down after a study appeared to show that statins caused cancer in dogs.
Meanwhile, Bahcall says, pharmaceutical company Merck borrowed Endo’s research to create their own statin, and when the dog study proved to be flawed, they marketed one of the most successful pharmaceuticals in history.
(Shortform note: Merck’s opportunism and its ensuing success with statins demonstrate what Adam Grant calls the First-Mover Disadvantage. In Originals, Grant argues that it’s not always best to be the first one to come up with a new idea. By waiting to see what others do, you can then improve on their work and avoid some of their early mistakes. Grant also says that sometimes the world is not ready for an idea when it first comes about, and by waiting, you might actually strike at the best moment, which seems to have been the case for Merck.)
In Endo’s case, none of these deaths reflected an actual problem with his idea. But other times, there are good reasons why loonshots fail at first. Bahcall points out that loonshots tend to begin life with a lot of flaws, and that early-stage loonshots often look very different from the final, successful ideas that they become.
To demonstrate the growing pains that many loonshots go through, Bahcall gives the example of Dr. No, the first James Bond movie. The original script featured an evil monkey as the villain. Studios found this idea silly, and the script was rewritten before the movie went into production.
(Shortform note: It’s not always easy to tell which aspects of an idea are flaws and which aren’t. As Bahcall notes, the big studios rejected the monkey, but they also argued that American audiences would never go for a British hero, and they hated the then-unknown actor proposed for the lead role—that actor, of course, was Sean Connery. With the benefit of hindsight, it’s easy to see that they were right about the monkey and wrong about the rest. But at the time, could anyone have predicted 24 Bond sequels (as of 2022) or a movie-star career for Connery? Prediction is hard, a fact that makes it even harder to assess early-stage loonshots.)
Loonshots Require Persistence and Patience
Because loonshots are fragile, especially in their early stages, Bahcall emphasizes the importance of not giving up on them. As noted above, loonshots usually start off with flaws, and you should expect early failures.
Moreover, he points out that not all deaths are true deaths. Endo’s rat trials failed not because the drug was flawed, but because the test was flawed. (Shortform note: Plus, some deaths have nothing to do with the idea’s merit. The medical establishment was shortsighted in rejecting Endo’s ideas out of hand, and the big studios were wrong in their predictions about Bond’s commercial appeal.)
Loonshots Evolve Into Franchises
Another important characteristic of loonshots is that they are distinct from what Bahcall calls franchises. A loonshot is an innovative new idea. A franchise is the steady, reliable growth and incremental improvement of an established idea. Bahcall gives the example of film franchises, and we can also think of fast food franchises. When an organization is in the franchise phase, it iterates on an established product and follows a predetermined business plan.
Bahcall points out that a loonshot can evolve into a franchise. This happens when a business begins with an original creative idea (the loonshot) which eventually solidifies into a consistent business plan, development cycle, and so on (the franchise phase). To return to the example of Ford, after the strategic innovation of assembly line methods, the company shifted to the franchise phase, focusing on consistent production cycles and gradual development of their vehicles rather than constant dramatic innovation.
(Shortform note: Sometimes franchising is the innovation. When the McDonald brothers applied assembly-line principles to food preparation, they created a strategic innovation: fast food. When businessman Ray Kroc realized that he could mass produce the mass-produced food, he partnered with the McDonald brothers and added a few more strategic innovations to create a franchise that took over the world.)
A final, crucial observation Bahcall makes is that both loonshots and franchises can exist within the same organization. He argues that by following his four rules, an organization can remain innovative at any size. (Shortform note: In contrast, it’s practically a business cliché that startups and small companies are nimble and innovative whereas big companies are steady but inflexible. That’s why so many business books focus on how to break a new idea into the mainstream or how to keep innovating once you’ve grown.)
(Shortform note: In Great by Choice, Jim Collins points out that not all industries are equally reliant on innovation and that sometimes focusing on franchise excellence might be a business’s best bet. As we’ll see below, Bahcall wouldn’t disagree with the importance of franchises (his first rule recommends supporting innovation and implementation equally), but all the same, his book certainly seems to suggest that every organization should aspire to grow its own loonshots. Perhaps this apparent preference for innovation is biased by Bahcall’s background in biotechnology—an industry that Collins describes as high-innovation.)
Nurturing Loonshots: Rules 1-3
Bahcall’s core idea is a set of four rules for protecting and kindling loonshots and for sustaining innovation as a company grows. Bahcall calls these the Bush-Vail rules because he derives them from the examples of Vannevar Bush, creator and head of the US’s Office of Scientific Research and Development (OSRD) during World War II, and Theodore Vail, president of AT&T from 1885-1889 and 1907-1919. To keep things simple, this guide will just refer to Bush while describing the rules.
(Shortform note: We’ve added a fifth rule to Bahcall’s four and included it at the end of this guide. This fifth rule is based on an idea Bahcall develops separately from his four rules. We think it’s important enough to loonshot success to be considered an additional rule.)
Bahcall’s first three rules are geared toward nurturing innovations and helping grow them into finished products. We’ll explore those rules as a group before moving on to rule four, which is more concerned with maintaining innovation as an organization grows.
(Shortform note: Bahcall’s first three rules, in particular, overlap with a lot of other literature on strategy and innovation. Throughout this section, we’ll flesh out Bahcall’s recommendations by connecting them with ideas that cover the same ground.)
Rule 1: Separate Innovators and Implementers
In order to protect loonshots when they are in their early, vulnerable stages, Bahcall suggests dividing the people in charge of developing ideas from the people responsible for putting those ideas into practice. Bahcall explains that in the case of the OSRD, Bush knew that the military itself was (and needed to be) rigidly structured and that this structure would tend to quash new ideas. His solution was to assemble a group of scientists and engineers to work independently.
(Shortform note: Ed Catmull, co-founder of Pixar, also stresses the importance of sheltering creative ideas while they are new. Catmull says that creative ideas are messy and incomplete when they start out and that leaders should focus on the ideas’ strengths rather than their weaknesses.)
Part of the reason to separate innovators and implementers is that to function effectively, each group requires a different set of tools, techniques, and group dynamics. Bahcall notes that Bush’s scientific team could not do their creative work if they were subjected to military structure or oversight. They needed to be able to take creative risks without fear of failure or censure. (Shortform note: Likewise, because some people are good at innovation and others are good at implementation, entrepreneur and startup adviser Eric Ries suggests moving projects from one team to another over their life cycles rather than keeping the same team with a product throughout.)
At the same time, in the middle of a war, the military needed to be free to focus on structure, strategy, and logistics, not on coming up with new ideas. Separating the groups protected the loonshot ideas when they were in their fragile infancy, and this separation also insulated the military from any failures or mistakes the scientists made. (Shortform note: Ries and Jim Collins similarly suggest that companies sandbox their innovation teams to prevent damage to the main business, or else innovate in small doses to make sure that new ideas are beneficial before fully implementing them.)
Bahcall also points out that Bush deeply respected both the scientists and the military and argues that all organizations should value their innovation teams and implementation teams equally. (Shortform note: Pixar’s Catmull also stresses the need for balance, pointing out that if you let any one team or department get everything they want, you are likely to damage your product when, for example, the creative team blows its budget or the marketing team waters down the product.)
Rule 2: Encourage Innovators and Implementers to Talk
Bahcall points out that in order for innovation to be worthwhile, it needs to have a practical application. But when you separate innovation from implementation, you run the risk that your innovative group might lose touch with the practical implications of their work. Therefore, Bahcall says you must maintain a constant dialogue between innovators and implementers.
(Shortform note: Marty Cagan explores this idea in more detail in his discussion of the four risks a company must assess when developing a new product. In Inspired, he says that a successful product needs to: have a clear market value, be understandable to users, be feasible to produce, and fit into a business’s larger strategy. As we’ll see, the mutual exchange Bahcall suggests revolves around these risks.)
Bahcall points out that during World War II, as a general rule, the military was hesitant to try new technologies. Therefore, one of Bush’s jobs as head of OSRD was to sell the military on the benefits of his team’s creations and push them to try new things. (Shortform note: In Cagan’s terms, Bush needed to convince military leaders that his new technologies had a clear purpose and benefit to their soldiers and that the technologies would advance the US’s tactical and strategic goals).
On the other hand, Bush also had to bring feedback from the military to his innovation team. For example, when pilots tried the first versions of in-aircraft radar, they found them too complicated to use during combat—ease of use during a dogfight hadn’t occurred to the engineers in the labs. With the pilots’ feedback, OSRD’s innovators developed more user-friendly displays and controls which the pilots then adopted. (Shortform note: In Cagan’s terms, even after OSRD’s engineers found a feasible way to build radar small enough to fit in an airplane, in-aircraft radar was not a viable product until they made it more understandable to its intended users.)
One of the takeaways from Bahcall’s first two rules is that loonshots need champions. A loonshot champion is someone who passionately believes in the idea and promotes it to outsiders; this person needs to be able to liaise between the idea’s creator(s) and the people who have a practical stake in implementing the idea. In the case of the OSRD, Bush served as a project champion.
Bahcall notes that it’s rare that the person who originates an idea is also the right person to champion it. He suggests that organizations should specifically appoint and train project champions.
Rule 3: Focus on Process, Not Outcome
As we’ve seen, loonshots are fragile, and you should expect them to fail often. Because early failures are inevitable, Bahcall says it’s crucial to focus on your processes rather than your outcomes.
In particular, Bahcall stresses the importance of analyzing your decision-making. If you try something and it fails, Bahcall says that you should ask yourself how you decided on that action in the first place. He suggests doing the same when you succeed. This practice helps you determine whether you’re making good decisions, and it also helps you sort out whether your results (good or bad) are due to the quality of your ideas or due to luck. (Shortform note: Similarly, Pixar’s Catmull suggests that you follow up every project with a postmortem. Doing so lets you reflect on what you’ve learned and plan your next steps, and it also helps clear the lines of communication between teams, which will help with future implementation of Bahcall’s Rule 2.)
How to Learn From Failures
Bahcall says that when a loonshot fails, you should probe into why it failed and determine whether you can learn anything to improve the idea and try again. He also says that it’s important not to be defensive or dejected, but instead to ask as many questions as you can about your rejections and failures. For example, Endo persisted by looking into why his rat trial failed instead of assuming his drug didn’t work. Likewise, when pilots didn’t use the first in-aircraft radar systems, Bush asked why instead of giving up on the idea (or insisting that pilots adopt a technology that didn’t work for them).
Rule 4: Balance Stake and Rank
Whereas the first three rules all have to do with nurturing innovation, Rule 4 is about how to maintain innovation as a company grows. As noted earlier, once loonshots are successful, they tend to evolve into franchises, replacing all-new innovation with incremental improvement. But Bahcall argues that if you pay close attention to the relative weight that stake and rank have in your organization, you can balance growth with continued innovation. We’ll explain what stake and rank are and how to manage them, but first, we’ll look briefly at the theory behind Bahcall’s ideas.
(Shortform note: Maintaining innovation is only one concern for organizations as they grow. In Start With Why, Simon Sinek points out that growth can cause an organization to forget about the purpose that brought it success in the first place. But even if innovation isn’t your central purpose, the principles Bahcall outlines might help you keep your eyes on whatever it is about your organization that really matters to you.)
Phases of an Organization
One of the central ideas in Loonshots is the notion that organizations operate in different phases, a concept Bahcall borrows from his background in physics. Matter can exist in one of several different phases—the basic ones are solid, liquid, gas, and plasma. Bahcall says that groups also exist in phases that are tied partly to group size.
He makes an analogy to traffic jams: When a road reaches a critical mass of traffic traveling at a certain speed, spontaneous traffic jams become a certainty. The system snaps from free-flowing to jammed. Bahcall argues that the principle of group phase dynamics explains why organizations tend to leave innovation behind as they grow: Once an organization reaches a certain size, it changes from the loonshot phase to the franchise phase.
(Shortform note: Bahcall relates these ideas to what he calls the “magic number.” He uses several anecdotes and a mathematical formula to suggest that an organization changes phases when it hits a specific number of members (150). His explanation of this number is somewhat confusing and the evidence for it (by his own admission) is questionable. More importantly, his only point in introducing the magic number is to argue that you can raise that number, which is really just a more complicated way of saying that you can maintain innovation as your organization grows. Therefore, we’ve left out the details of Bahcall’s magic number theory and focused instead on his suggestions for maintaining innovation.)
The good news, Bahcall says, is that system phase changes are dictated by control parameters—and size is only one of these. In the case of traffic, the main parameters are the number of cars and their average speed. That means you can prevent jams by reducing the number of cars or by lowering the speed limit and introducing stoplights. By extension, Bahcall argues that by manipulating the parameters that control organizational behavior, you can maintain innovation even as your organization grows.
Stake and Rank Control Organizational Behavior
Bahcall argues that besides group size, the two main factors that control organizational behavior are stake and rank. He says that these are the two motivating forces in any organization and that they are in constant competition with each other. According to Bahcall, when the importance of rank outweighs the importance of stake, the organization snaps into the franchise phase.
Bahcall notes that in a small, new, innovative business, everyone has a high stake in the organization’s success, and their rank relative to each other is not that important as compared to their stake in the business’s success or failure. Once the business is established and heading into the franchise phase, rank (which comes with promotions, job titles, better salary and benefits, and so on) becomes more important.
(Shortform note: Throughout this section, we’ll also be looking at organizational politics. Bahcall sees organizational politics as a byproduct of the franchise phase and seems to regard them as the generally undesirable opposite of project work, by which he means both innovative development and a general focus on the quality of your work.)
Therefore, Bahcall says, the key to keeping an organization innovative as it grows is managing the relationship between stake and rank. He identifies four key factors that go into this balance:
1) Salary step-up: How much more money you earn for a promotion. The more money conferred by higher rank, the more incentive you have to engage in politics rather than innovation.
2) Span of control: How many direct reports each manager has (the lower this number, the more managers there are relative to the size of the organization). The more managerial positions exist (the smaller the span), the greater your incentive to work your way up the ladder rather than focusing on innovation or quality.
3) Equity fraction: How much your pay is tied to the quality of your work, how much the quality of your work affects the overall success of the company, and how much that overall success is reflected in your compensation. The less equity you have in the company, the less incentive you have to innovate and the more incentive you have to politic your way into better compensation.
4) Organizational fitness: A parameter that measures how well the company matches workers’ skills to projects and how important politicking is at the company. High fitness means that the company assigns workers to projects they are skilled at and places little importance on politics. Low fitness means companies give workers projects they are ill-equipped to handle and allow politics to dominate the workplace. In a low-fitness organization, you have little incentive to do excellent work or to focus on innovation.
Balancing Stake and Rank
Now that we understand the variables that affect the magic number equation, we can look at ways to manipulate those variables to sustain innovation as an organization grows. Bahcall offers the following suggestions for adjusting the balance between stake and rank:
Use Rank Carefully
Bahcall points out that you can directly control the influence of rank if you choose the correct spans (number of direct reports per manager) for each part of your organization. Bahcall explains that loonshot groups do best with large spans (fewer managers). That’s because large spans encourage creativity rather than control. Bahcall also notes that the fewer managerial positions there are, the less anyone cares about rank and the more peers are likely to help each other with projects rather than competing with each other for promotions. Plus, he says, creative people will be surrounded mostly by their peers, and that’s whose opinions and input they respect most. (Shortform note: Also, the fewer managers there are, the less micromanaged the creatives in your organization will feel.)
On the other hand, franchise groups do better with smaller spans (more managers). As Bahcall explains, smaller spans encourage control and consistency, which are more desirable than creativity in the franchise phase. You don’t want military officers or soldiers experimenting with new tactics or new technologies in the middle of a battle, and you don’t want an established company completely changing its products or its business strategy on a whim.
(Shortform note: Along with span of control, it’s also worth considering how centralized or decentralized control is in the organization. In Turn the Ship Around, L. David Marquet promotes a leader-leader model in place of a traditional leader-follower model. Even in a rigid military rank structure (Marquet’s book is based on his tenure as a naval submarine captain), Marquet shows that it’s possible to decentralize control in order to promote better and more flexible decision-making at all levels. Techniques for doing so include managers letting supervisees make their own decisions rather than jumping in, and asking employees to take responsibility for their own work rather than monitoring their every move from the top down.)
Maximize Project-Skill Fit
In addition to thinking about how you manage your teams, you should also pay attention to how you assign team members to projects. Bahcall points out that employees who are underskilled for a project stand little chance of success. They are likely to be frustrated, unhappy, and to get fired when their project fails. On the other hand, employees who are overskilled will do a good job quickly, then get bored and have little left to do but play politics.
Bahcall recommends aiming for an ideal balance in which employees are challenged, but have a high chance of success. He says management should intervene proactively if the fit is bad. He believes it’s worth spending money to get project-skill fit right, because your projects will do better, your employees will be happier, and talented candidates will want to work for you.
Use Smart Incentives
A final way to raise the magic number is to craft incentives that promote the sorts of behaviors you want. Bahcall warns against large step-ups in salary or in hard equity (stock options and the like). He argues that large step-ups encourage people to focus more on promotions (and any related politicking and backstabbing) than on their projects. Bahcall says this problem is especially pervasive at middle management, where it is hardest to evaluate performance and where, with the wrong incentives, the best way to improve your position is to lobby for promotion rather than doing your best project work.
Instead, Bahcall suggests that it’s better to use soft equity: Put people in positions where they are motivated by earning respect and recognition from their peers, not just by earning more money. Bahcall says this goes hand in hand with giving people autonomy and visibility, so that the pressure is on to do a good job rather than to network and self-promote.
(Shortform note: Patrick Lencioni offers a few more suggestions for creating soft equity, such as creating public goals and standards and rewarding teams rather than individuals for meeting these goals. Doing so, he says, creates public accountability and team spirit and discourages individualistic behavior.)
Likewise, Bahcall points out the need to recognize and avoid perverse incentives—incentives that sound good but actually encourage unwanted behavior. He recommends hiring a specialist to be in charge of incentives (a chief incentives officer). His reasoning is that good incentives are a strategic challenge and require considerable thought and innovation in their own right. (Shortform note: Literature gives us one example of perverse incentives: 19th-century novelists like Alexandre Dumas were often paid by the word or by the line, which encouraged extremely long books (to maximize word count) and long dialogue exchanges of one or two words at a time (to maximize line count).
Traps that Kill Companies
If you’re trying to build an organization around loonshot ideas, Bahcall’s rules can help—but only if you follow them carefully. Bahcall points out that if you aren’t careful in how you apply the rules, you can fall into one of several traps.
Bahcall warns that sometimes, proponents of product loonshots focus on only the newest, biggest, best products or technological innovations and thereby become blind to the innovative strategies that allow seemingly-lesser competitors to outdo them.
For a dramatic example of blindspots in action, we can look at the US’s fortunes in the wars that followed World War II. World War II, as Bahcall notes, was in part a war of technological innovation, a race for the newest, best airplanes, tanks, and armaments. The US got good at this game, thanks to the OSRD, and have continued to develop powerful military technologies ever since. But in Vietnam, they encountered for the first time a new strategic innovation in the form of guerrilla warfare against a nebulous opponent rather than open combat against a regular standing army. They were unprepared for this new strategic paradigm, and no amount of technological superiority could carry the day.
(Shortform note: Blindspots can afflict strategic innovators as well. Blockbuster built their business not around a product, but around the service of video rental. Eventually, they fell prey first to a strategic innovation (Netflix’s mail-order service) and then to a product innovation (streaming video, which, ironically, they helped develop.))
The Moses Trap
Bahcall argues that a company can run into trouble when it is led by a strong visionary who dictates the exact course of innovation. Bahcall likens such leaders to Moses since they lead their organizations through sheer force of will and vision. In cases like this, the company achieves the first rule (separate innovators and implementers) but fails at the second (foster dynamic exchange between the two groups). In effect, the company becomes so enamored of its technology that it doesn’t think enough about how that technology will be implemented.
Bahcall gives the example of Edwin Land at Polaroid. Bahcall says that Land loved film technology and kept Polaroid focused exclusively on developing new film cameras even when magnetic tape (VCRs and camcorders) and digital cameras entered the market. Bahcall points out that Land did this even though he knew that digital technology was viable, having previously developed and championed digital imaging for US intelligence satellites. Unfortunately for Polaroid, the newer technologies were cheaper and more convenient for users, and other companies soon undercut Polaroid’s market.
(Shortform note: Adam Grant points out a different kind of Moses trap that happens when people with previous success in one domain get overconfident in their abilities to predict success in other domains, like when Steve Jobs, Jeff Bezos, and John Doerr all got behind the Segway, which ultimately flopped.)
Bahcall says that Polaroid’s missteps also highlight the fact that leaders should manage the exchange between innovators and implementers rather than managing any specific technology. Land got too personally invested in film technology and didn’t stop to ask whether it was still the best technology in the marketplace.
(Shortform note: Simon Sinek suggests that you can help avoid falling into this kind of trap by staying focused on why your organization does what it does. In Bahcall’s terms, asking why forces you to place innovation in dialogue with implementation. Asking why might also help you avoid blindspots. For example, if Land had focused on Polaroid’s why (providing people with affordable and convenient imaging technology) instead of the what or how (film-based cameras), he might have capitalized on his background in digital imaging to get into the digital camera market early.)
The PARC Trap
The other thing that can happen if an organization achieves separation without exchange is that loonshots can be kept so separate that the innovative ideas never make it to implementation and instead die in the lab. Bahcall calls this the PARC trap, after Xerox’s former research division. PARC developed a whole host of innovations that Xerox never brought to market, but which went on to shape modern computing.
(Shortform note: Xerox’s short-sighted neglect of PARC is well-known, and shows that sometimes companies simply fail to capitalize on good ideas. But as Christensen points out, big businesses also face some legitimate obstacles when it comes to adopting new innovations. For example, a business might have a hard time marketing new products to different customers, or new innovations might not fit into a company’s business plan—not to mention its manufacturing setup.)
Shortform Bonus Rule 5: Build a Critical Mass:
Separate from his four rules, Bahcall introduces the idea of critical mass as a final component needed for sustainable loonshot development. To explain the idea of critical mass—and how it benefits both innovators and implementers—let’s return one last time to our example of the drug industry as a symbiosis between biotech startups and pharmaceutical giants. As this industry demonstrates, critical mass has two aspects:
One, you need enough loonshots to have a reasonable chance of success. A small percentage of loonshots work out. Those investing in them need to invest in a large number of loonshots to hedge their bets against failure. This is one way that a phase-separated company—or industry—benefits both sides. The ongoing success and stability of the franchise side funds the experimentation of the loonshot side. (Shortform note: Nassim Nicholas Taleb makes a similar point when he recommends investing in good people rather than in good ideas. Because loonshots are so unpredictable, it’s hard to know in advance what a good idea even is. Plus, as Taleb argues, trying to dictate the course of a loonshot only limits its potential.)
Two, for people working in the loonshot side of things, you want enough loonshot factories that if something goes wrong, there are other places around where you can continue your work. If your biotech startup folds, or if it rejects your drug idea, the idea can survive if it has somewhere else to go. Bahcall gives the example of scientific innovation in imperial China versus in early modern Europe. When an idea or project was shut down by the emperor, it had nowhere to go and died for good. When an idea was shut down by one royal patron in Europe, the inventor or scientist could seek patronage elsewhere and continue the work.
(Shortform note: This kind of safety net can also encourage innovators to build up a critical mass of new ideas, since they won’t have to worry about what will happen if any one idea fails. If your loonshots have only one outlet (whether that’s the Chinese emperor, a rigid parent company like Xerox, or a Moses-type boss like Edwin Land), you’ll either have to restrict your innovation to ideas you know will be approved or else risk wasting time and energy and maybe losing your job. But if you work for a company with a good loonshot factory (like Pixar) or in the loonshot side of a divided industry (like pharmaceuticals), you’re freer to explore even the looniest of ideas knowing that some missteps here and there are expected and even welcomed as a byproduct of innovation.)
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Here's what you'll find in our full Loonshots summary :
- How some of the world's biggest inventions started as "loonshots," or crazy ideas
- The four rules for nurturing a loonshot
- How organizations can keep innovating no matter how big they grow