Loonshots
Fostering ideas that revolutionize
Description
Loonshots are crazy big ideas that challenge conventional wisdom. They are initially dismissed yet end up changing the world. Identifying loonshots is hard because their effects are nearly impossible to predict. But they can disrupt industries for the better.
To spark more loonshots, create an environment that lets many ideas grow rather than trying to pick winners. Nurture loonshots like a gardener tending young plants, not like a judge deciding their fate. Support them as they evolve from fringe notions to mainstream innovations.
Loonshots and existing franchises flourish under different conditions. Being skilled at launching loonshots and running franchises are different organizational phases requiring alternate approaches.
The science of emergence teaches that loonshots thrive when given space to develop organically. So set up the right nursery and let loonshots blossom.
Table of contents
01The definition of a moonshot
Innovative ideas often begin as delicate seeds of thought, easily overlooked or dismissed as mere flights of fancy.
Without careful nurturing, these embryonic 'loonshots' may never mature into the transformative forces they have the potential to be, and the opportunity for revolutionary change could be lost.
During the initial phase of World War II, Germany seemed poised for victory. The nation's strategy shifted to using U-boats to prevent supplies from reaching Britain from the United States after their aerial bombardment campaign failed to force Britain into submission.
In the year 1941, German U-boats were responsible for sinking 4.3 million tons of Allied shipping, a figure that soared to 7.8 million tons the following year. Although radar technology had been employed in the Battle of Britain, it was still too cumbersome for use on ships or aircraft.
On the brink of war, Vannevar Bush, an MIT dean, cautioned President Roosevelt that the U.S. military's preoccupation with stockpiling weapons overshadowed the need for technological advancement.
Bush's vision led to the formation of the Office of Scientific Research and Development (OSRD), with the mission to foster scientific ideas that, while untested, held the key to winning the war.
Under Bush's guidance, the OSRD began funding unconventional research that the military had previously ignored. Within six months, it had secured 126 research contracts with laboratories and universities across the country.
02Separate the pioneers from the settlers
Individuals who pioneer high-risk, early-stage ideas bear a resemblance to artists in their creative and exploratory nature.
It's crucial to distinguish these innovators from the soldiers within an organization, those who manage and optimize the steady-growth components.
Creating a nurturing environment, or a "nursery," allows these so-called loonshots to develop and evolve beyond their initial imperfections.
Contrary to the popular myth of the genius entrepreneur single-handedly building an empire, the reality is that true success comes from carefully nurturing a multitude of loonshots.
These leaders act more like humble gardeners, ensuring that both innovative projects and established franchises coexist beneficially, with neither overshadowing the other.
Loonshots often seem impractical at first glance, with early versions marred by flaws that may prematurely label them as failures.
However, it's essential to capture and support these ideas, anticipating their initial shortcomings.
03Balance both pioneers and settlers
People who develop high-risk early-stage ideas are akin to artists, and it's crucial to distinguish them from the soldiers who manage the steady-growth segments of an organization.
Creating a nurturing environment, or a "nursery," allows these loonshots to evolve and overcome their initial imperfections. Contrary to the popular belief in the genius entrepreneur who single-handedly builds an empire, the reality is that true successes come from carefully nurturing a multitude of loonshots. These leaders act more like humble gardeners, ensuring that both innovative loonshots and established franchises thrive in harmony, with neither overshadowing the other.
Loonshots often seem impractical at first glance, with early versions marred by flaws that may disguise their potential. Recognizing and capturing these ideas early on, despite their imperfections, is essential.
04Instill a growth mindset
Successful organizations understand the importance of analyzing both their triumphs and failures to grasp what truly drives performance.
Instead of merely focusing on outcomes, they delve into the quality of the decision-making process itself.
Legendary chess grandmaster Garry Kasparov made a clear distinction between an "outcome mindset" and a "system mindset." In the former approach, he would analyze why a specific chess move led to a loss. However, Kasparov didn't stop there; he also examined the thought process behind the move, adopting a systems view. This approach allowed him to adjust his strategy to avoid repeating mistakes. This same principle applies to organizations.
Teams that do not assess their setbacks are considered weak. Slightly better ones might diagnose why a project failed but fail to explore the underlying decision chain. In contrast, truly excellent teams scrutinize their decision-making process to prevent future recurrences.
To foster a systems mindset, organizations should continuously analyze why certain decisions are made, regardless of whether the outcomes are successful or failures. It's crucial to recognize that favorable outcomes don't always indicate sound decisions, as luck can play a role, and vice versa. Therefore, assessing the quality of decisions separately from outcomes is essential.
05Achieve critical mass
Innovations often struggle to gain traction in large organizations.
As companies grow, politics and personal interests can distract from collective goals that benefit the company as a whole.
Researchers have identified 150 people as an approximate threshold - below that number, incentives encourage focusing on shared objectives, but beyond 150, career advancement and promotion take priority over enterprise-wide success.
This 150-person ceiling operates as a “phase transition” - an inflection point where group dynamics qualitatively change.
In a large corporation, innovative "loonshots" appear too risky compared to incremental improvements of existing revenue streams.
Even if a loonshot beats the odds and succeeds, it may barely affect overall revenues.
However, in a small company, betting on an innovative idea makes sense since it could determine future viability.
Leaders can raise this 150-person threshold by implementing strategies to reduce politics and better align employee incentives:
First, make lobbying for promotions and raises more difficult by basing those decisions on independent assessments rather than manager discretion. This reduces the returns for political maneuvering.
06Championing a moonshot
Loonshots are radical ideas that defy conventional wisdom and are often dismissed by business leaders as impractical. Unlike the Silicon Valley mantra of "fail fast and pivot," loonshots cannot be approached with the same mindset; they require a patient and nurturing environment to flourish.
History is replete with loonshots that were initially rejected. For instance, Robert Goddard's early 20th-century vision of jet propulsion and rockets was ridiculed until their military potential was recognized during World War II. Similarly, Akira Endo's discovery of statins in the 1970s faced skepticism because they showed no effect on rats, which were later found to be a poor model for testing these drugs due to their lack of "bad" LDL cholesterol.
When evaluating a loonshot, it's crucial to be wary of "false fails" and to consider contrarian perspectives. Peter Thiel's investment in Facebook, for example, was informed by his insight into user retention data that contradicted the prevailing belief about the fickleness of social network users. This contrarian approach led to significant returns.
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