What are loonshots? How can organizations cultivate a culture where innovative ideas thrive?
Loonshots are innovative ideas that change the world (e.g., insulin, radar, computer animation). Initially, loonshots are dismissed as crazy and overly ambitious. For this reason, loonshots almost don’t make it. In his book Loonshots, Safi Bahcall argues that organizations can deliberately cultivate these kinds of ideas. He presents four rules for nurturing loonshots and explains how organizations can keep innovating no matter how big they grow.
Let’s explore Bahcall’s four rules for generating loonshots.
In Loonshots, Safi Bahcall presents 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.
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.
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.
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.
|How to Be a Loonshot Champion|
Bahcall doesn’t go into a lot of detail about who loonshot champions should be or how they should approach their jobs. To understand what such a champion might look like in a business setting, we can look to Marty Cagan’s description of a product manager.
Cagan explains that a product manager needs to understand the intersection between technological innovation, the market for that innovation, and how the innovation and its market fit into the company’s business plan. He says that a product manager should be smart, curious, creative, persistent, and collaborative. The product manager needs to be willing to advocate for the creative team’s ideas, and in order to do so, he or she needs a basic understanding both of the technology in question and of how the business works.
In the OSRD, Bush fit this definition of a product manager well. He had a solid grasp of the technologies his team was developing as well as a clear idea about the military’s practical needs. Moreover, he had a good rapport with scientists and generals alike, which meant he was in a position both to advocate for his team’s ideas and to provide practical feedback about what would and wouldn’t be useful on the ground.
Rule 3: Focus on Process, Not Outcome
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.)
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.
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.
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.
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.
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Like what you just read? Read the rest of the world's best book summary and analysis of Safi Bahcall's "Loonshots" at Shortform .
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