Sufi Bahcall has a new book out called Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries. He was recently on the excellent a16z podcast, where he described how loonshots were the crazy ideas that had not become accepted enough to be called a “moonshot,” because a moonshot implied a known destination.
Bahcall applies the concept of phase transitions from the physical world to the world of management. He finds that organizations can quickly shift from embracing radical innovations to rejecting them. He finds this organizational “phase transition” is a function of size, similar to how the transition from water to ice is a function of temperature.
At 32 degrees, water suddenly turns to ice, but there are ways of modifying this, such as when we add salt to the water. Similarly, there is no “magic number” of employees where a firm becomes unable to embrace disruptive innovations. Bahcall identifies four “parameters” which we can use to change that transition point from disruptive to sustaining organizations.
There’s equity fraction. To what extent is a person being incentivized by base salary, in which case it will be a firm more focused on politics, and what extent are they being rewarded on their project.
Another parameter is what you can call a return on politics. To what extent is the system designed so that individuals can lobby their managers for promotion. Obviously, the more impact lobbying has the more political and the more careers matter. But some companies… take the promotion decisions completely away from the manager.
The third one is project-skill fit. So if you’re a coffee machine designer and your very good at it then you’re more likely to spend more time on your coffee machine… Now, if someone puts you on coffee machine design and you’re not a good designer with low aesthetic sense, then it doesn’t matter whether you spend and extra hour, 10 hours, or a hundred hours on your project, its still going to be the same lousy coffee machine. Might as well spend your time on politics…
And the fourth parameter: management span… There’s the right span for your goal. For example, if you’re building planes, you don’t want to assemble ten and see which eight fall out of the sky. You don’t want a very innovative, risk taking, trial-and-error approach. There, you want a narrow span of management because that encourages quality control and redundancy checking. On the other hand, if you want to do a ton of experiments, and have groups work together well, then you want to have a wide span. So there’s no right answer for a company…
Bahcall reckons that a firm may “transition” to more risk adverse anywhere from 30 people to over 5,000, depending on the parameter inputs.
A lot of good discussion on the podcast about science vs. engineering, artists vs. soldiers, whether the transistor was really a basic science success, the impact of Vannevar Bush on technology, and much more.
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