Loonshots how to nurture the crazy ideas that win wars cure diseases and transform industries

Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries | Book Review

Every so often I come across a book that I know as I’m reading it that my perspective is changing and my horizons are broadening. “Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries” is one such book. From the outset, Safi Bahcall grabs the reader’s attention and keeps it with examples from history of what he’s going to explain, setting it up to be understood thoroughly. He talks about lessons learned in wartime as well as from Polaroid and space exploration, among other periods and events. There’s a lot I could say about this book, but to keep it simple I’ll anchor my comments to a few of the many key terms the writer discusses.

To begin, there’s the important distinction to be made between a franchise and what Bahcall refers to as a ‘loonshot.’

Franchise: The subsequent iterations or updated versions of an original product or service.

Examples provided include each new version of the iPhone and the 26th James Bond Movie. I also relate this to a phenomenon I noticed many years ago among fast food restaurants, where new items on the menu are often just reformulations of existing menu items. A prime example is the ‘KFC Famous Bowl,’ which marketing now refers to as a ‘classic.’ Ever since first time it went on sale, not long enough ago to count as a ‘classic’ by any normal measure, I’ve seen it as the company just phoning it in. Innovation is too risky, and they already have the ingredients, so they just toss it all in a bowl and sell it.

Loonshot: A neglected project, widely dismissed, its champion written off as unhinged.

A loonshot is risky, because it’s based on an idea that established ‘experts’ generally consider unfeasible and unfundable. Radar is a famous example of a technology that was roundly rejected by military brass and bureaucrats until it was almost too late. Another is statins, the first of which faced a difficult road to success and acceptance.

False Fail: When a valid hypothesis yields a negative result in an experiment because of a flaw in the design of the experiment.

Sometimes the test is the problem. When Akira Endo was testing a drug to see if it would lower cholesterol, the tests failed. He was testing on rats, which were later discovered to have low levels of LDL (aka ‘bad cholesterol’). When he tested on chickens, which have high levels of LDL, the results were spectacular. Eventually, statins resulted, and people were provided a pharmacological solution to high cholesterol. This almost didn’t happen, because Endo’s research had repeatedly faced setbacks and failures. It was only through luck and his determination to see it through that we now have this option for treatment.

Phases of organization: When an organization is considered as a complex system, we can expect that system to exhibit phases and phase transitions — for instance, between a phase that encourages a focus on loonshots and a phase that encourages a focus on careers.

This part about organizational phases was an eye-opener for me. I’ve heard various executives over the years complain about the lack of innovation in major corporations generally, and I’ve always attributed it to the size of such companies making them slow-moving. While that may still be part of it, I now see how managers at various levels act in the interest of their careers over the chance at a breakthrough success. Loonshots are often ugly babies, easily dismissed and lethal to careers if they face failure. Bahcall tells the reader about his observation that loonshots experience three deaths before possibly reaching success, which translates to three failures. Some take years, even decades to see through all the way, and many don’t come back from a single death. With them can go any respect or credibility previously accorded their backer(s), making it better to be the person who poo-poos novel ideas in meetings. In career terms, it’s the safer route.

To this and more Safi Bahcall offers a handful of solutions and strategies that can foster loonshots, but to get those you’ll just have to read the book for yourself.

How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries

MOONSHOT:

(1) The launching of a spacecraft to the moon; (2) an ambitious and expensive goal, widely expected to have great significance.

LOONSHOT:

A neglected project, widely dismissed, its champion written off as unhinged.

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#1 Most Recommended Book of the year

— Bloomberg survey of CEOs and entrepreneurs

“If The Da Vinci Code and Freakonomics had a child together, it would be called Loonshots“

— Senator Bob Kerrey

“Not to be missed by anyone who wants to understand how ideas change the world.”

— Daniel Kahneman, winner of the Nobel Prize, author of Thinking, Fast and Slow

“If The Da Vinci Code and Freakonomics had a child together, it would be called Loonshots.”

— Senator Bob Kerrey, Medal of Honor recipient, former governor of Nebraska and president of The New School

“A groundbreaking book that spans industries and time.”

— Newsweek

“An ambitious and entertaining effort … Bahcall makes the whole idea sing.”

— Financial Times

“An essential read for leaders who wish to build a creative organization.”

— Ed Catmull, Founder and CEO of Pixar, author of Creativity, Inc.

“Brilliantly explores one of the great challenges of leadership.”

— Gen. (ret.) Stanley McChrystal, former Cmdr. of US Joint Special Operations Command, author of Team of Teams

“An absolute page-turner, packed with scintillating stories of world-changing ideas.”

— David Epstein, #1 New York Times bestselling author of Range and The Sports Gene

“Wonderful … explores the beauty, quirkiness, and complexity of ideas … you need to read this book.”

— Siddhartha Mukherjee, winner of the Pulitzer Prize, author of The Emperor of All Maladies

“James Bond, Isaac Newton, Jane Austen, a world chess champion, and disappearing fish are all used to illustrate the behavior of organizations. Brilliant, funny, fascinating.”

— Jennifer Aaker, General Atlantic Professor at Stanford, author of Humor, Seriously

“Riveting stories … Bahcall’s fresh ideas and practical solutions—an unusual combination of psychology and physics—should change the way any person or team sets out to change the world.”

— Amy C. Edmondson, Professor at Harvard Business School, author of The Fearless Organization

“I inhaled Loonshots.”

— Stephanie Cohen, Chief Strategy Officer, Goldman Sachs

— Kevin Scott, Chief Technology Officer, Microsoft

“When leaders ask me, “How can we be more innovative in a time of crisis?” I give them a copy of Loonshots.”

— Kim Scott, New York Times bestselling author of Radical Candor; formerly at Google, Apple; advisor to Dropbox, Twitter

“A fantastic read for anyone who wants to unlock the power and potential of human creativity.”

— Evan Spiegel, Founder and CEO of Snap, winner of Fast Company 2020 Most Innovative Company award

First Friday Book Synopsis

«…like Cliff’s Notes on steroids…»

Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries by Safi Bahcall – My Six Lessons and Takeaways

I love it when I read a book and I feel like I am learning so much that is new to me. That’s exactly how I felt reading Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries by Safi Bahcall. I first heard of this book when I heard Krys Boyd interview the author on her Think program on KERA in Dallas. (Click here to listen to her interview). I presented my synopsis of this book at the May First Friday Book Synopsis in Dallas.

Loonshots is a science book, a history book, a business book, a genuine “you’re going to have to stretch a little” book. The author is a physicist, a business thinker, and part historian. All of that comes into play throughout this book.

I learned so much about…Vannever Bush (and Winston Churchill, and FDR, and their embracing of the need to champion technological breakthroughs); and Polaroid and Edwin Land; and Pan Am; and other “loonshots.”

So, just what is a loonshot? Here’s the argument in brief (from the book):

I also learned of the important role played by the knowledge made available in the New York Public Library. Without that library, there might not have been a Polaroid, or a Pan Am airlines.

Especially important was the transition between the Loonshot phase and the Franchise phase. The loonshot phase was when the real breakthroughs were discovered. The franchise phase was when those breakthroughs were rolled out with multiple uses and iterations..

In my synopses, I ask: What is the point? Here it is for this book: Loonshots change the world for the better. But they are opposed so very strongly. And creating a loonshot factory (“nursery”) is no easy task.

And I ask: Why is this book worth our time?

#1 – This book is a remarkable history of successful changes for the better brought about by successful loonshots. It is history worth learning.
#2 – This book is a tutorial on why it is so hard to keep a loonshot “factory” going. There are opponents; there are structural barriers.
#3 – This book is a master class on the strength of systems (over the idea of corporate culture).

• Here are a few of the “best of” my highlighted passages:

• Here are a few of my other observations from the book:

#1 – Many leaps forward require a technological breakthrough. Getting to that technological breakthrough is seriously hard work; requiring technological expertise, and dogged people skills.
#2 – The possibility of a next loonshot goes down as the size of the organization goes up.
#3 – But, this size dilemma can be offset with changes in the systems.
#4 – And, the idea for the next loonshot may be found by the “outsider,” with “outsider thinking.”
#5 – Be sure to praise both the loonshot genius and the strategy genius (and the perpetual tweaker)
#6 – And… We will never fix the traffic problem! (I threw this in as sort of an extra. But, the book does kind of explains the why…).

Loonshots deserves to be read (along with other books trying to make sense of just where breakthroughs come from). It is a fun, stimulating, and rich-with-insight book to read.

Our synopses are available to purchase from this website. Each synopsis comes with my multi-page, comprehensive handouts, along with the audio recording of my presentations. (Click here to see our newest additions). You can search for titles through the search box on the “buy synopses’ tab at the top of this page. My synopsis for Loonshots will be available soon.

Book review. Loonshots: How to nurture the crazy ideas that win wars, cure diseases, and transform industries

This book, by Safi Bahcall, is about how to nurture radical breakthroughs in science and technology.

The book draws inspiration from the innovations Vannevar Bush made possible Office of Scientific Research and Development (OSRD), created in 1941, and the innovations Theodore N. Vail enabled at Bell.

OSRD’s portfolio of accomplishments is impressive indeed. The war against Nazis is won through superiority in the field of science. The bombers’ microwave radar cut through darkness and fog to detect German U-Boats, and rendered them ineffective in a matter of weeks.

The book compiles insights from the organizational principles Bush and Vail employed as Bush-Vail rules. The main concept here is of a dynamic equilibrium, where the organization maintains well-separated and equally strong loonshot and franchise groups (phase separation) continuously exchanging projects and ideas in both directions.

Summary of the The Bush-Vail rules

Other examples in the book include: Peniciline citrium by Akira Endo, cancer drugs by Judah-Falkman, and Pan-Am’s story. All of these were very engaging stories and I didn’t know any of these before. One of my favorite quotes in the book is: «It is not a good drug unless it’s been killed by three times.»

Toward the end, the book talks about the Joseph Needham question: «Why didn’t the Scientific Revolution take place in China (or India or Ottoman Empire), despite all its advantages?»

The book attributes the emergence of the scientific method in Europe to the ripe loonshot conditions in Europe.

MAD questions

The book doesn’t take an explicit position on my question above, but as the title «Bush-Vail rules» suggests, it tries to formulate rules for nurturing the loonshot/innovation process. But what good are these rules? I am certain that they are not sufficient for producing a successful loonshot. I am not sure if they are even necessary. But I agree that they would help increase your chances of success. And I also agree that they are more concrete than just suggesting «form strong teams and get out of their way.» The question is how much more concrete advice is this from that bottomline?

In comparison, the book I read last month, «Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration» focused on a much narrower domain, that of the loonshots accomplished within Pixar, but delivered more concrete advice for managing the creative process.

Lest you think I didn’t like this book, I did enjoy the Loonshots book a lot and recommend it to anyone interested in building organizations that nurture creative work.

2. On a micro scale, does this explain the draft and revise principle in writing?
Drafting is the artist side. Revising is the soldier side. You can’t have good writing unless you love both sides equally, and unless both sides interact with each other in a dynamic equilibrium. At some point, a phase transition occurs and you get to the correct narrative for your writing.

Apple’s Next Loonshot

Safi Bahcall’s recent book, “Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries” provides a great framework for cultivating progress in business and science. Bahcall defines a ‘loonshot’ as a neglected project that is widely dismissed, where it’s champion is not taken seriously by the mainstream market. He believes cultivating these ideas is the best way for companies to innovate. It is a convincing case and a fun read.

To understand Bahcall’s way of thinking about innovation, it is important to understand that there are two different modes of operation for almost all organizations, ‘loonshot’ and ‘franchise’. The difference is straightforward: the loonshot mode of operating is when an organization’s mines deep for crazy ideas that as mentioned before are for the most part written off by the mainstream. On the other hand, a franchise is an established organization aiming for incremental innovation and growth. Bahcall describes loonshots as being driven by more artistic type people and franchises by soldiers.

Finding a balance between these two modes, or what Bahcall refers to as ‘dynamic equilibrium’ is a great way to cultivate continued success.

As many of you might have noticed, Apple held its latest product launch last week. On the surface it seems like Apple has comfortably positioned itself in a franchise way of operating. It released a new fleet of phones with better cameras, a smaller Apple Watch, and a few new service offerings. Overall it received a vanilla response from customers.

Most of us expect loonshots from Apple.

The position that Apple holds in most of our minds is still driven by the products of previous decades; loonshots like the iPod, iPhone, iTunes, and App Store and the brand Steve Jobs built when he returned in 1997. But over the past few years, sales of what we think of as the traditional Apple product (eg. iPhones) is flattening. The engine of growth for the firm has been in peripheral hardware; products like the Apple Watch and Airpod headphones. Both of which are franchise style innovations.

At the same time, Apple has shifted towards a service oriented model. Apple Music has been around for a while and has steadily captured market share, and this past year it added Apple News, a subscription news site with access to hundreds of magazines, newspapers, and other types of media. The jury is still out on the AppleNews performance. Last week, Apple announced two new service offerings: one for video games and another for television.

The jump into services is clearly a shift to diversify its offerings and make up for the flattening sales on its high-margin hardware. But in services, it finds itself in fierce competition. Companies like Amazon, Spotify, and Disney are all positioning themselves in a similar way to Apple with its services. The level of competition is signified by longtime Apple board member and Disney CEO Bob Iger stepping down from Apple’s board this week.

So coming out of its recent product launch, Apple seems to be incrementally improving its classic hardware, continuing to evolve its peripheral hardware business (eg. Watch and headphones), and grow its service offerings. All under the assumption that its strong brand will keep customers coming back.

Classic franchise style innovation.

But is this really Apple’s strategy?

In his article covering the latest Apple product launch, Stratechery’s Ben Thompson points out an interesting point: it cut prices on its iPhone. This major shift in pricing strategy leads to an important insight about Apple’s customers, for the first time they are not craving the upgrade. They are not willing to pay for the best new product.

Many believe the most important battle for Apple and its iPhone business is against competitors running the Android operating system; companies like Samsung and Google. But Thompson highlights Apple is not only competing externally, it is also competing against the older version iPhones. This might be the more important battle. Customers seem to be committed to the iPhone and the Apple ecosystem, but they are looking for cheaper options.

So for a company with decreasing demand for the latest model of its flagship product, while also experiencing growth in lower margin and more competitive markets involving peripheral hardware and services. What should it do?

I think Thompson hits the nail on the head in concluding the article:

To that end, how long until there is a variant of the iPhone Upgrade Program that is simply an all-up Apple subscription? Pay one monthly fee, and get everything Apple has to offer. Indeed, nothing would show that Apple is a Services company more than making the iPhone itself a service, at least as far as the customer relationship goes. You might even say it is innovative.

This is Apple’s next loonshot, let me explain.

In the book, Bahcall makes a distinction between the style of loonshots. “P” or “product type” are what we classically think of as major innovations. Things like the airplane, internet, and printing press fall into this category. This is where Apple has made its bones since Steve Job’s return. The iPod, iPhone, and iPad are all ‘p-type’ loonshots.

Then there are ‘S’ or ‘strategy-type’ loonshots. These are harder for the public to see, they are minor tweaks of a business model allowing a company to make money in a way they would have been unthinkable before. The SaaS revenue model that Salesforce pioneered is an example here.

In the book, Bahcall provides a great example of how each of these different styles of loonshots work. He uses the rise of the commercial airline industry to explain.

The founder of Pan American Airlines, Juan Trippe, was the classic ‘p-type’ innovator. He was obsessed with aviation and this passion drove him to build the best and most capable airplanes in the world. At the time, the airline market was regulated. The prices for everything from tickets to plane food were set by the government. This allowed Trippe and his product innovations to flourish.

In 1978, the airline industry was deregulated. The massive price controls were removed and it opened up the market for more competition. With more slack to optimize business process and increase operating efficiency strategic innovations became more important.

If there was an opposite to Trippe in the aviation market, it was the American Airlines executive Bob Crandall.

Crandall was not an aviation enthusiast, he was an MBA trained businessman. While Trippe focused on consistent product innovation, like making planes better, faster, and bigger, Crandall focused on ‘s-type’ innovations in the business model. Deregulation created a major opportunity for strategic tweaks.

Understanding the opportunity deregulation provided, Crandall implemented the now mainstream hub and spoke model for air traffic, this made shuttling customers around the United States more cost efficient for American Airlines. He also built a frequent flyer program to facilitate brand loyalty and renegotiated labor deals to be more favorable for the company.

Maybe most importantly, Crandall built a booking system for travel agents called “Sabre.” You can think of it as the ‘Google Flights’ of that era. The software was free to use for travel agents throughout the country, and it made their day-to-day jobs much easier. There was one kicker, in the Sabre system American Airlines tickets were positioned above all other competition. Think about how much companies pay to be top ranked in Google search now-a-says, in Sabre, American Airlines got this distribution for free. It was a major distribution advantage.

These more strategic focused loonshots led to American Airlines accumulating massive amounts of market share. While Trippe was focused on improving product, Crandall improved strategy. These shifts eventually contributed to the end of Pan Am, and American Airlines is still thriving today.

Given its most recent moves, it seems like Apple is avoiding the ‘p-type’ trap that Trippe and Pan Am fell into. Apple realizes how difficult it is to continue to rely on p-type loonshots as the major engine of growth. Over the past few years Apple has built on its brand centered foundation with the development of peripheral hardware, services, and now a new pricing model to reshape it’s strategy. Now they are positioned to take a major s-type loonshot.

This is what Thompson mentions at the end of his article and I think it is the future of Apple.

Instead of buying Apple products. In this model, you buy the Apple way of life, the Apple experience. You get the hardware, the software capabilities, the services, and the status that comes with being an Apple user all for a monthly fee.

Subscription based models have been around for a while. There are a ton of businesses that will provide hardware for free if a customers purchase the service. Companies from cable providers, to cell phone service providers, and even fitness devices have been successful under this model. The idea is that the lifetime value of the customer will more than pay for the lifetime cost of the hardware.

But most of these companies have built there offering on a core piece of hardware and/or a few service type offerings.

This is where Apple is different.

Two of Apple’s key moats are it’s brand and it’s evolving ecosystem of products and services. Alone they are great, but as you add more and more to your daily workflow they become more valuable.

Think about it. One monthly fee and you get it all. The status of being an Apple customer, the latest phone, the Airpods, the services, and when upgrades come out, you get them as well. It would turn the Apple experience into the core product. Apple would not longer rely on one hit product to carry it in the future. The Apple experience is the sum of it all.

To be clear, this would not be cheap for customers, and Apple would have to sell a great story to attain adoption at scale.

But in an era where demand for Apple hardware is becoming more elastic, competition in peripheral hardware and services is intense, and there seems to be a trend moving away from hardware and towards virtual and augmented reality, taking advantage of current moats in brand and it’s product/service ecosystem to wedge deeper into customers lives would put Apple in a good position. The more surface a company covers in a customers day-to-day, the higher the switching cost and the harder it is for a customer to leave.

Bahcall writes that every p-type innovator gets shocked by a competitor. To survive companies must cover their blindside, they must find the “dynamic equilibrium” between major and incremental innovation. There is a graveyard of once innovative American companies who failed because they let s-type loonshots pass them by. If Apple continues to compete based on it’s past strategy it could also meet this fate. But if it continues to take p-type loonshots while shifting it’s commercial strategy away from hardware, services, and software towards ‘the Apple experience’ it would essentially double-down on its current moats and position it well to dominate in the future.

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