Loonshots

"I've always appreciated authors who explain their points simply, right up front. So here's the argument in brief: The most important breakthroughs come from loonshots, widely dismissed ideas whose champions are often written off as crazy. Large groups of people are needed to translate those breakthroughs into technologies that win wars, products that save lives, or strategies that change industries. Applying the science of phase transitions to the behavior of teams, companies, or any group with a mission provides practical rules for nurturing loonshots faster and better." Key Takeaways The Bush-Vail Rules: Many of the lessons in this book are adapted from how Vannevar Bush at DARPA and Theodore Vail at AT&T's Bell Labs handled and fostered loonshotsSeparate the phases Separate your artists and soldiers Create separate groups for inventors and operators: those who may invent the next transistor vs. those who answer the phone; those who design radically new weapons vs. those who assemble planes. You can’t ask the same group to do both, just like you can’t ask water to be liquid and solid at the same timeTailor the tools to the phase Wide management spans, loose controls, and flexible (creative) metrics work best for loonshot groups. Narrow management spans, tight controls, and rigid (quantitative) metrics work best for franchise groupsWatch your blind side: nurture both types of loonshotsMake sure your loonshot nursery seeds both types of loonshots, especially the type you are least comfortable with. S-type loonshots are the small changes in strategy no one thinks will amount to much. P-type loonshots are technologies no one thinks will work.Create dynamic equilibriumLove your artists and soldiers equallyArtists tend to favor artists; soldiers tend to favor soldiers. Teams and companies need both to survive and thrive. Both need to feel equally valued and appreciated. (Try to avoid calling one side “bozos.”)Manage the transfer, not the technology: be a gardener, not a MosesInnovative leaders with some successes tend to appoint themselves loonshot judge and jury (the Moses Trap). Instead, create a natural process for projects to transfer from the loonshot nursery to the field, and for valuable feedback and market intelligence to cycle back from the field to the nursery. Help manage the timing of the transfer: not too early (fragile loonshots will be permanently crushed), not too late (making adjustments will be difficult). Intervene only as needed, with a gentle hand. In other words, be a gardener, not a Moses.Appoint and train project champions to bridge the divideSoldiers will resist change and see only the warts on the baby-stage ideas from artists. Artists will expect everyone to appreciate the beautiful baby underneath. They may not have the skills to convince soldiers to experiment and provide the feedback that is crucial for ultimate success. Identify and train bilingual specialists, fluent in both artist-speak and soldier-speak, to bridge the divideSpread a system mindset Keep asking why the organization made the choices that it didLevel 0 teams don’t analyze failures. Level 1 teams assess how product features may have failed to meet market needs (outcome mindset). Level 2 teams probe why the organization made the choices that it did (system mindset). They analyze both successes and failures because they recognize that good outcomes don’t always imply good decisions (got lucky), just as bad outcomes don’t always imply bad decisions (played the odds well). In other words, they analyze the quality of decisions, not just the quality of outcomes.Keep asking how the decision-making process can be improvedAnalyzing a product or a market may be technically challenging, but it is a familiar and straightforward exercise. Analyzing why a team arrived at a decision can be both unfamiliar and uncomfortable. It requires self-awareness from team members; the self-confidence to acknowledge mistakes, especially interpersonal ones; and the candor and trust to give and receive delicate feedback. The process is likely to be more efficient, and less painful, when it is mediated by a neutral expert from outside the team.Identify key influences – people involved, data considered, analyses conducted, how choices were framed, how market or company conditions affected that framing – as well as both financial and nonfinancial incentives for individuals and for the team as a whole. Ask how those influences can be changed to enhance the decision-making process in the futureIdentify teams with outcome mindset and help them adopt system mindset Raise the magic numberReduce return-on-politicsMake lobbying for compensation and promotion decisions difficult. Find ways to make those decisions less dependent on an employee’s manager and more independently assessed and fairly calibrated across the company.Use soft equity (nonfinancial rewards)Identify and apply nonfinancial rewards that make a big difference. For example, peer recognition, intrinsic motivatorsIncrease project–skill fit (scan for mismatches)Invest in the people and the processes that will scan for a mismatch between employees’ skills and their assigned projects, and will help managers adjust roles or employees transfer between groups. The goal is to have employees stretched neither too much nor too little by their roles.Fix the middle (reduce perverse incentives for middle managers)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 between loonshots and politics. Shift away from incentives that encourage battles for promotion and toward incentives centered on outcomes. Celebrate results, not rank.Bring a gun to a knife fight (engage a chief incentives officer)Competitors in the battle for talent and loonshots may be using outmoded incentive systems. Bring in specialist in the subtleties of the art – a chief incentives officer. Fine-tune the spans (wide for loonshots groups; narrow for franchise groups) Widen management spans in loonshot groups (but not in franchise groups) to encourage looser controls, more experiments, and peer-to-peer problem solvingFor anyone championing a loonshot, anywhere:Mind the False FailIs a negative outcome due to a flaw in the idea or the test? What would you have to believe for it to be a flaw in the test? How might you evaluate that hypothesisListen to the Suck with Curiosity (LSC)When you have poured your soul into a project, you will be tempted to argue with critics and dismiss whoever challenges you. You will improve your odds of success by setting aside those urges and investigating, with genuine curiosity, the underlying reasons why an investor declines, a partner walks, or a customer choose a competitor. It’s hard to hear no one likes your baby. It’s even harder to keep asking whyApply system rather than outcome mindsetEveryone will make wrong turns in navigating the long, dark tunnel through which every loonshot travels. You will gain much more (and feel much better) by trying to understand the process by which you arrived at those decisions. How did you prepare? What influenced you? How might you improve your decision-making process?Keep your eyes on SRT: spirit, relationships, time When championing a loonshot, it’s easy to lose sight of what’s important, of why you are doing with what you are doing. A little obsession can be good. Too much can backfire. What’s helped me, on occasion, to pull back from the edge – to create a more sustainable and productive level of obsession – is stepping back to think on SRT What I got out of it A beautiful and powerful framework for how to foster and handle loonshots. Important for any size company or venture