Loonshots – Safi Bahcall

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One might be forgiven for nursing a genuine assumption that the most famous “Bush” surname belongs to one of two men, both of whom happened to be the Presidents of the United States of America at different intervals. Safi Bahcall, a second-generation physicist (the son of two astrophysicists) and a biotech entrepreneur might also have harboured a similar notion until the day when the Chairman of a project group constituting the then-President Barack Obama’s Council of Advisors on Science and Technology mulled about the goal of the group being to “write the next generation of the Vannevar Bush report.”

Piqued by curiosity, Bahcall proceeded to look up the storied life and achievements of the former engineer and inventor who was tasked with the Office of Scientific Research and Development during World War II. Most importantly, Bush laid the edifice for US’ whirlwind success in Science and Technology. The greatest good to have come out of Mr. Bahcall’s inquisitiveness to learn about Vannevar Bush is undoubtedly his wonderful book, “Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries.”

So what exactly is a “loonshot?”. Mr. Bahcall says, a loonshot represents “a neglected project, widely dismissed, its champion written off as unhinged.” The most significant and influential breakthroughs, are often, the results of loonshots, where the ultimate outcome’ pioneers are initially dismissed, written off and laughed away as being loony. Richard Miller, an oncologist was a CEO in a struggling biotech company. Miller, who also served as a part-time physician at Stanford University pioneered a new drug that promised a radical line of treatment for cancer afflicted patients. Not only was his drug scoffed at, it also led to Miller losing a boardroom battle and resigning as CEO. However, continued clinical trials resulted in not merely encouraging, but mind boggling results. Patients administered with Ibrutinib, – Miller’s drug – showed a nearly ten times higher response rate. FDA approval followed shortly before Miller’s company, Pharmacyclics was acquired by a pharmaceutical company for a whopping sum of $21 billion! A classic example of Mr. Bahcall’s Loonshot.

Akira Endo, a scientist from the food-processing division at the Japanese conglomerate Sankyo, faced an experience similar to that undergone by Miller, in his quest to finding a solution to treat cholesterol. As Mr. Bahcall asserts, a Loonshot usually has to survive a few “Deaths” before announcing itself to the world. From screening fungi in discovering the mold Penicillium citrinum to experimenting with chicken, Endo’s drug had to survive Three Deaths. Failures and rejections later statins changed both the face of medicine and the fate of millions of patients. Cumulative statin sales of the pharmaceutical major Merck exceeded $90 billion while sales from all statins have exceeded $300 billion. In 2008, Endo was the recipient of a delayed recognition of his contribution to the medical world, courtesy the impressive Lasker-De Bakey prize.

At the core of Mr. Bahcall’s Loonshots lies the analogy of phase transitions. The behavior of water undergoes a dramatic shift at the critical point of 32 degrees Fahrenheit. A glass of water into which one could lazily swirls one’s fingers goes absolutely rigid and freezes over at the point of 32 degrees Fahrenheit. What causes such a sudden change. More so when the molecules inside are exactly the same? This behavior in physics is popularly known as phase transition. This analogy according to Mr. Bahcall can be fruitfully employed to analyse group behaviours and their attendant changes. In other words, “there is something about structure that causes molecules to suddenly change behavior and that has nothing to do with the top or culture. It’s what elements of structure transform the behavior of teams and companies. structure can drive culture! There is a famous saying in business that culture eats strategy for breakfast and the theme here is that structure eats culture for lunch. Here’s an example. Let’s say you took 50 people and asked each one of them individually, are you excited about this early project? They’re all individually excited. You organize them into a group and then they collectively reject that idea. Why?

According to Mr. Bahcall, a good example of structure driving culture is that of the multinational enterprise Nokia. Before becoming the globe’s leading smartphone company, Nokia dabbled in what looked like a haphazard menagerie of randomly selected items – rubber boots, and toilet paper included. This pottered experiment underwent a phenomenal transformation resulting in Nokia swamping the market for smart phones. In the early 2000s, a team within the company came up with an idea of a large phone, with unique touchscreens and an inbuilt camera. The head honchos however put paid to the idea, until a few years later a startled bunch of Nokia engineers watched Steve Jobs unveil what seemed to be their own prototype – with a mixture of awe and trepidation. The rest as the cliché goes is history. As Nokia grew and expanded, its structure changed and it crossed that point where it became more about people’s individual incentives and politics. The moment that transition was crossed, it was a mere inevitability that Nokia was going to become an institution that was rigid.

For managing these phase transitions, Mr. Bahcall provides the following measures:

  • Separate the phases:

Create separate groups for inventors and operators: those who may invent the next transistor vs those who answer the phone. Wide management spans, loose controls, and flexible metrics work best for loonshot groups. Narrow management spans, tight controls, and rigid metrics work best for franchise groups. S-type loonshots are small changes in strategy no one thinks will amount to much, whereas P-type loonshots are technologies no one thinks will work.”

  • Create Dynamic equilibrium:

Innovative leaders with some successes tend to appoint themselves loonshot judge and jury. 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.

  • Spread a system mindset:

Keep asking why, keep asking how decision making processes can be improved and identify teams with outcome mindset and help them adopt a system mindset.

Mr. Bahcall also warns us to be wary of what he terms the “Moses Trap.” One place where the working of the Moses Trap is very apparent is Silicon Valley. In Mr. Bahcall’s own words, “the leader is so enamoured with new ideas. You need two conditions. Number one is an all-powerful leader where the decisions really get made from the top of the mountain. Two, you have someone who becomes infatuated with the crazy ideas and always wants to have the next one. You always hear that something is the holy loonshot that will save the company.”

PanAm fell squarely into the Moses Trap. PanAm was soaring high on proud wings (literally). Boasting a talented leader who identified new technologies that allowed him to build bigger, faster, better planes, he kept turning that cycle and that worked for quite a while until it didn’t. “He had all these competitors and he was building bigger faster planes, but some of them were working on small changes in strategy like frequent flyer miles, things like yield management with big data, how to arrange seats. Things that sound kind of boring but actually make a big difference, and when airline deregulation hit [creating a free market for the airline industry], he had big, fast planes but no competitors. His competitors didn’t have as high-quality planes, but they had small changes in strategy that allowed them to run a much more economical business. They survived and PanAm didn’t.”

PanAm, however was not the only company to find itself swallowed by the Moses Trap. Edwin Land’s Polaroid, could have become the host, emcee and showstopper of the world’s digital revolution. Land, in fact was at the forefront of the digital technology, when in 1971, as part of a secret panel advising the US president, he advocated digital photography, which the US eventually adopted for its spy satellites. But the brilliantly talented Land was myopic to the promise of digital cameras for commercial use. He wagered all his money instead on a high-resolution, instant-print movie technology called Polavision, launched in 1977. It was a commercial flop. Later, Land invited a guest to visit a warehouse full of unsold Polavision cameras. “I wanted you to see what hubris looks like,” he said.

“Loonshots” teems with a plethora of interesting, illuminating and insightful examples similar to the ones mentioned in this review. It also provides a platform to nurture Loonshot thinking and institutionalization of the same as an organizational habit.

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