Book Summary:
“Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries” by Safi Bahcall, teaches readers a surprisingly new way of thinking about group behavior and nurturing radical breakthroughs.
Safi Bahcall combines his business and science background to share dozens of entertaining historical stories about ideas that changed the world. These crazy ideas include the invention of radar, the James Bond and Star Wars franchises, the creation of Lipitor–a multibillion-dollar drug, and many more.
Just like how changing the temperature of a fridge by one degree can change water from a solid to a liquid, “Loonshots” explains how making small shifts in company structure can lead to dramatic outcomes that can alter company’s future. The book distills these insights into lessons for creatives, entrepreneurs, and visionaries everywhere.
Book Lessons:
1) Beware of false fails
“The negative result in the rat experiment was a False Fail–a result mistakenly attributed to the loonshot but actually a flaw in the test.
”
Statins (drugs that lower cholesterol levels in the blood) have generated over $300 billion in sales, and Facebook, a social media giant that has a market cap of over $500 billion are two loonshot ideas that both experienced false fails.
The first statin, mevastatin, showed no lowering of cholesterol levels during the crucial stage of testing in live animals. That is until Akira Endo, the scientist who discovered mevastatin, bumped into a colleague who worked with chickens.
It occurred to Endo that hens might have high blood cholesterol since their eggs have so much of it and convinced his colleague to give mevastatin to chickens (in secret, of course).
““The results were spectacular. Mevastatin decreased cholesterol by nearly half, triglycerides by even more, with no ill effects””
Why did the drug work on chickens but not rats?
It was later discovered that rats have very little LDL or “bad cholesterol” while chickens have both good and bad cholesterol, much like humans.
Today, statins prevent approximately half a million heart attacks and strokes each year–but the drug almost didn’t make it to market because of a false fail during testing.
Facebook had a similar experience.
In the early 2000s, Facebook was seeking venture capital while competing with several other social networks including: Classmates, Sixdegrees, Tribe, Hub Culture, aSmallWorld, and others.
Investors believed social network sites were a fad since users would abandon established sites and join new ones, such as leaving Friendster for MySpace. Several investors passed on Facebook, but investor Peter Thiel decided to dig deeper into the problem.
Thiel found that users of Friendster were leaving the site because it was constantly crashing and although the company had received advice to fix and scale their site, they ignored it. Thiel concluded that users weren’t leaving the social network because of its weak business model, but because of a software glitch.
Thiel wrote Zuckerberg a check for $500,000 and eight years later, he sold most of his stake in Facebook for roughly a billion dollars.
Both Facebook and statins were crazy loonshot ideas that experienced false starts. However, a simple adjustment resulted in two multi-billion dollar entities.
One way to overcome false starts, is to Listen to the Suck with Curiosity or LSC as the author calls it. Overcome the urge to defend and dismiss when your idea is attacked and instead investigate the failure with an open mind.
When the drug testing in rats didn’t work, Endo asked why and set about testing different ideas. Peter Thiel did the same thing and investigated into why users were leaving social networks and found a contrarian answer.
It’s hard to hear that no one likes your beautiful loonshot idea, but it can be even harder to keep asking why it isn’t working. However, that doesn’t mean you should give up.
2) Developing the ideal loonshot environment
“Rather than champion any individual loonshot, they create an outstanding structure for nurturing many loonshots. Rather than visionary innovators, they are careful gardeners.
”
The idea that long-lasting companies are built on the back of a single genius-entrepreneur, is a myth. Rather, the best companies “ensure that both loonshots and franchises are tended well, that neither side dominates the other, and that each side nurtures and supports the other” (38).
Bahcall calls these principles the Bush-Vail rules–separate the groups working on the loonshots and those working on the main business, but allow projects and feedback to travel easily between the two groups.
Start by separating the artists and soldiers
“Artists” are people responsible for developing high-risk, early stage ideas while “soldiers” are responsible for already-successful, steady-growth parts of the organization. Loonshots are often fragile in their early stages since most are seen as crazy ideas, even radar was dismissed by the military as loonshot.
Several major movie studios passed on the loonshot idea of a British spy who saves the world (James Bond) and a script titled The Adventures of Luke Starkiller (Star Wars). By separating the artists and soldiers, you will create a loonshot nursery that projects those embryonic ideas and allows the artists to grow and develop them.
Love your artists and soldiers equally
Both loonshots and franchises are important to a business’ long-term survival, which is why it is important to love both artists and soldiers. During Steve Job’s first stint at Apple, he called the loonshot group working on the Mac “pirates” while he dismissed the group working on the Apple II franchise as “regular Navy.”
Hostility between the two groups grew and resulted in several key employees leaving the company as well as a failed Mac launch. It wasn’t until Steve Jobs returned 12 years later, that he learned to love both his artists (Jony Ive) and soldiers (Tim Cook).
3) Additional rules for a loonshot environment
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).
Create dynamic equilibrium
Love your artists and soldiers equally.
Manage the transfer, not the technology: be a gardner, not a Moses.
Appoint, and train, project champions to bridge the divide.
Spread a system mindset
Keep asking why the organization made the choices it did.
Keep asking how the decision-making process can be improved.
Identify teams with outcome mindsets, and help them adopt system mindsets (149).
Reduce the return on politics
Make lobbying for compensation and promotion decisions difficult. Find ways to make those decisions less dependent on an employee’s manager and more independently assessed.
Use soft equity
Identify and apply the non-financial rewards that make a big difference. For example: peer recognition and intrinsic motivators.
Increase project-skill fit
Invest in the people and processes that will scan for a mismatch between employees’ skills and their assigned projects. Adjust roles or transfer employees between groups when mismatches are found. The goal is employees stretched neither too much nor too little by their roles.
Fix the middle
Identify and fix perverse incentives, the unintended consequences of well-intentioned rewards. Pay special attention to the dangerous middle-manager levels, the weakest point in the battle for promotion and toward incentives centered on outcomes. Celebrate results, not rank.
Bring a gun to a knife fight
Competitors in the battle for talent and loonshots may be using outmoded incentive systems. Bring in a specialist in the subtleties of the art–a chief incentive officer.
Fine-tune the spans
Widen management spans in loonsot groups (but not in franchise groups) to encourage looser controls, more experiments, and peer-to-peer problem solving (224).
Book Review:
“Loonshots” by Safi Bahcall does an excellent job explaining how small shifts in company structure can help companies nurture and develop loonshot ideas–a widely dismissed idea whose champion is written off as crazy, that leads to an important breakthrough.
One would believe a book about company structure would be dry and dull, but Bahcall made this book both entertaining and educational. The book is filled with stories about how the military dismissed the invention of radar, how a drug that lowered cholesterol was killed three times, how forest fires and terrorist networks spread, and dozens of more captivating stories.
Although “Loonshots” is an interesting and informative read, it is also for a very niche audience. I would recommend this book for CEOs and executives of medium to large size companies, scientists, military leaders and entrepreneurs. Apply the tools in this book to help your company and employees unlock their potential to create and nurture the crazy ideas that change the world.
Rating: 4/5 Stars
If you’re interested in this book, you can get it here.
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