Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries

The pattern of sudden changes in the behavior of teams and companies—of the same people suddenly behaving in very different ways—is a mystery in business and social science. Entrepreneurs, for example, often say that big companies fail because big-corporate types are conservative and risk-averse. The most exciting ideas come from small companies, b

When people organize into a team, a company, or any kind of group with a mission they also create two competing forces—two forms of incentives. We can think of the two competing incentives, loosely, as stake and rank. When groups are small, for example, everyone’s stake in the outcome of the group project is high. At a small biotech, if the drug wo

As teams and companies grow larger, the stakes in outcome decrease while the perks of rank increase. When the two cross, the system snaps. Incentives begin encouraging behavior no one wants. Those same groups—with the same people—begin rejecting loonshots.

Nobel laureate Phil Anderson once captured the core idea underlying the answers to these questions with the phrase more is different: “The whole becomes not only more than but very different from the sum of its parts.”

Bush’s new organization, eventually called the Office of Scientific Research and Development (OSRD), would create the opportunity Bush sought for scientists, engineers, and inventors at universities and private labs to explore the bizarre.

In other words, Bush understood intuitively that being good at franchises and being good at loonshots are phases of organization.

Since the end of World War II, hundreds of industry-changing, or industry-creating, discoveries originating in the US—including GPS, personal computers, the biotechnology industry, the internet, pacemakers, artificial hearts, magnetic resonance imaging, the chemotherapy cure for childhood leukemia, even the original Google search algorithm—sprang f

Crandall described the airline business as “the closest thing there is to legalized warfare.” One competitor described Crandall’s strategy as “cannibalistic. His goal is to kill the weak.” Sabre gave American an immense battlefield advantage. But the most crucial advantage from Sabre surprised Crandall and his team. They were soon flooded with data

Although American was not the first to develop a computerized reservation system, it developed the most functional one, which listed all fares, and then gave that system, Sabre, to travel agents all over the country. One study showed that American got at least 50 percent more business from travel agents who used Sabre than from other bookings. In a