Loonshots summary

The Allies’ victory over Nazi Germany was a century-defining moment. But if there’d been prediction markets in 1939, the odds would’ve favored Hitler. Why? Well, the Allies lagged behind in what Winston Churchill called the “secret war” – the race to develop more effective weapons.

That wasn’t because they didn’t possess the necessary know-how. In fact, the Americans held the key to winning the great aerial and naval battles of the future decades before they entered World War Two – they just didn’t know it. Unlike their Axis counterparts, who were developing a new generation of submarines and planes, they weren’t nurturing breakthroughs.

So what were military planners doing that was so important they couldn’t free up resources to pursue research into radar? Well, they were running a classic franchise organization: producing ever-greater quantities of tried-and-true conventional weaponry. Generals were convinced that tomorrow’s wars could be won with yesterday’s tools – infantry, guns and bayonets.

That was an attitude the engineer Vannevar Bush had seen firsthand while working with the US Navy after the First World War. Nothing, he believed, was more damaging to the nation’s long-term interests. His answer? A military research department run by non-military men like himself and given free rein to explore the seemingly bizarre. After a meeting with President Roosevelt in June 1940, Bush got what he wanted: a new, civilian-led unit called the Office for Scientific Research and Development or OSRD for short.

Vannevar Bush rescued a large organization whose focus on its franchise operations and neglect of innovation had landed it in an existential crisis. But nurturing loonshots isn’t solely about winning wars – it’s as vital to success in business as it is on the battlefield.

Take it from Theodore Vail, a boardroom pioneer who did for a struggling telecommunications giant what Bush would later do for the US military. But before we get to that, let’s rewind a little. In 1907, the financier JP Morgan bought the American Telephone and Telegraph Company, or AT&T. A direct descendant of the world’s first telephone company, AT&T had an illustrious past, but its future was less certain. The original patent for the telephone had expired, and thousands of competitors had eaten into its margins.

Innovators are often viewed as lonely geniuses single-handedly translating their brilliant visions into reality. In truth, innovators need someone to champion their work. Like careful gardeners, these loonshot enablers tend their plots to ensure the best ideas take root and thrive. Doing that, as both Bush and Vail realized, is all about applying a couple of basic principles – call them the Bush-Vail Rules.

Here’s the first rule: shelter the people responsible for high-risk, early-stage ideas – the artists – from the soldiers responsible for managing the already successful parts of an organization. Embryonic ideas usually come covered in warts, and soldiers – like the military planners who dismissed radar – often struggle to look beyond these. They want products and projects ready for instant roll-out, and that means they’re likely to bury loonshots that don’t fit the bill. The result? Well, ask the film studios that passed on an incomprehensible screenplay called The Adventures of Luke Starkiller – the prototype of Star Wars, one of the most successful movie franchises of all time!

So far we’ve explored the importance of balancing innovation and franchise operations and the rules that effective loonshot nurturers have adopted to do just that. In this blink, we’ll take a closer look at two different types of loonshots in action: game-changing products and strategies.

Let’s start with product-driven innovation. Few companies in American business history relied as heavily on cutting-edge products as Pan Am airlines. Founded by JT Trippe in the 1920s, Pan Am started out as a taxi service flying wealthy New York couples to Long Island. It was a popular route, but there was a problem: the repurposed World-War-One-era planes Trippe was using only seated one passenger. His solution? Import state-of-the-art French engines, move the fuel tanks to the outside of the fuselage and add another seat.

We’ve discussed a couple of reasons organizations miss loonshots, but there’s one culprit we haven’t gotten to yet: overweening leaders who champion their favored loonshots come hell or high water.

Call it the Moses Trap – the reliance on holy leaders. Let’s take a look at one of the most innovative companies of the twentieth century to see how it works. Established in 1937 by Edwin Land, the consumer electronics giant Polaroid was responsible for a breathtaking series of advances in photography. Over 30 years, Polaroid pioneered sepia and black-and-white prints, automatic exposure, instant color printing, the SX-70 all-in-one foldable camera and sonar autofocus.

So far we’ve looked at organizations’ internal structures. In this blink, we’ll zoom out and take a look at loonshot nurseries on a macroscale to see what we can learn about the context in which they operate. To get us started, let’s think back to that Luke Starkiller script. In a parallel timeline the Star Wars franchise wouldn’t have ever seen the light of day. So how did “Jedi,” “lightsaber” and “Sith” become household names?

Here’s the short answer: Hollywood had more than one studio. Put differently: all the scriptwriters had to do to get Star Wars off the ground was keep asking until someone said yes. And that’s true of loonshots in general. As long as there’s another door to knock on, every crazy idea has a chance. That’s why the context outside an organization matters so much. The best example of that is the ultimate loonshot – the Scientific Revolution.