Loonshots

Books · Startups, Technology

(Read this in May 2019, adding to Notion in Feb 2021)

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Loonshots

Chapter 1

Being good at franchises (1 to n) and being good at loonshots (0 to 1) are phases of Organization. The same organisation can’t be in 2 phases at the same time.

Radar — ignored for many years. Was instrumental in winning world war 2 (sinking German U-Noats)

Nuclear fission and it’s application — the nuclear bomb

State support for basic research is important, as the private sector and philanthropists are unreliable. They’re unlikely to invest if they don’t see a short term payoff.

Separate and protect radical ideas. Have a department of loonshots.

Bell labs — vacuum tube, transistor, solar cell, the ccd chip, first continuously operating laser, unix operating system, C programming language. 8 Nobel prizes

Breakthroughs fail many times before they succeed. Emerge from marriage of genius and serendipity. Luck is the residue of design.

Rules

  1. Separate the phases. Separate the artists and the soldiers.
  2. Set up a dynamic equilibrium. Ensure that ideas and feedback travel easily between the two groups.
  3. Early stage projects are fragile. Bau executives will dismiss most ideas in embryo — picking at the warts. They only become interested after seeing early success.
  4. Tailor the tools to the phase. Separate systems tailored to the needs of each phase. Quarantine the disrupters. Efficiency systems like 6 sigma help bau, but suffocate the artists
  5. Manage the transfer, not the technology

Chapter 2 — the surprising fragility of the loonshots

In the real world, experiments are ridiculed, initiatives are dropped, budgets are cut, and good they people are fired for stupid reasons.

Nearly every breakthrough idea has at least 3 near death experiences

Cholesterol lowering molecule was extracted from a mushroom — mostly because of an astute observer (Endo). It saved millions KS lives and made tons of money — was the seed of all statins. But first had to survive the 3 deaths

  • Death #1: By the time Endo presented his initial results, the idea of lowering cholesterol as a way of fighting heart disease had been “debunked” by consensus
  • Death #2: When Endo administered his drug on rats he saw nothing. No cholesterol lowering was seen. He ended up testing on hens (who have a higher cholesterol level - and in whom the effect of the drug would be easier to detect). The results were spectacular in hens. Reason for failure in rats was that they are high in HDL Cholesterol, and have very little LDL cholesterol. This made them a poor test subject
  • Death #3: High levels of metastatin appeared to cause cancer in dogs (because of a flaw in study design)

“Counting the arrows in your ass” - Judah Folkman. He pioneered some of the earliest interventions for limiting cancer growth, but was mercilessly ridiculed in his early days.

Lessons

  1. Investigate failure. Learn to separate False Fails from True Fails
  2. The best inventors don’t necessarily make the best champions. Inventing an idea and packing+promoting it (building support inside a skeptical organization) are two different skills
  3. Listen to the suck with curiosity. Overcome the urge to be defensive when faced with criticism. Instead, investigate failure with an open mind
  4. Contrarian answers that you’re confident about make for very attractive investments

Chapter 3 - the two types of loonshots

Jet Engines vs Frequent Flyers

After its founder retired, PanAm went from one of the world’s most admired companies to a perpetual failure

S-Type (Strategy) Loonshots. Very low profits/revenue at first. Then sudden growth. These are more gradual to take over. Arise because of small, seemingly minor changes in strategy. Example — Walmart, Frequent Flyer Programmes (sustaining innovation)

P-type (Product) Loonshots. Big changes in strategy or technology. These make headlines. Example — Netflix, Jet Engines (disruptive innovation)

Learn how to be good at both types of Loonshots. PageRank was a P-type Loonshot. Google’s ad strategy was a series of S-type loonshots.

If you’re a P-Type innovator, watch your blind spot (Innovator’s Dilemma)

Chapter 4 — Edwin Lamb and The Moses Trap (when leaders anoint the Holy Loonshot)

You have have the Moses Trap/Hero Syndrome - where you decide everything at the expense of the company. After decades of success, proud old companies grow stale. A young upstart then comes along, and slays the giant with an innocuous looking weapon.

  1. Dangerous virtuous cycle builds momentum. P-type Loonshots feed a growing franchise, which in turn feed more p-type loonshots
  2. Franchise blinders harden. Only those P-type loonshots that continue to spin the wheel matter. The lessons of chapter 2 (fragility of loonshots) are forgotten
  3. The leader grows all powerful and anoints loonshots by decree

Chapter 5 - Escaping the Moses Trap

Process/System mindset vs Outcome mindset

Manage the system, don’t micromanage the project

Be a gardener, not a Moses/Hero

Chapter 6 - Phase transitions 1: When gradual shifts cause sudden transformations

(Not very insightful)

Tipping points exist

Power laws exit

Fat tails exist

Chapter 7: Phase transitions 2: The magic number 150

Dunbar’s number

Chapter 8: Raise the magic number

Reduce the return on politics

Don’t have a career ladder. Only returns on the project that you’re working on

Project-skill fit

Free-rider problem amongst employees