This is an incredible book. It’s in every bestseller list and the whole world is raving about it, including the likes of Daniel Kahneman, Bill Gates ,Adam Grant, Malcolm Gladwell, Susan Cain and Daniel Pink.
In short, don’t waste your time debating whether you should read it or not. Start reading.
The key idea of the book is to explain the principles of nurturing “loonshots”, which are radical breakthroughs that can change the world. A trained physicist, Safi borrows a concept called Phase Transitions to explain the mysteries of group behaviour which can be harnessed to create the right organisation structure for loonshot innovation to happen. The theory is complex but the writer does a brilliant job of simplifying it without losing its essence.
The ideas that I loved the most:
Phase Separation and Dynamic Equilibrium
This is the central argument of the phase transition theory. An great organization needs excellent execution of daily tasks as well as innovative ideas for the future. The best way to to do both is to have clearly demarcated teams for both purposes which work independently and have to be handled differently. Safi calls them soldiers and artists.
At the same time, you also need a dynamic feedback mechanism between the two teams. Innovative ideas need to be tried and tested in the field by the soldiers for further improvements. And the artists need inputs from the field to identify the right problems or opportunities. Vannevar Bush putting together an R&D team outside of the military establishment during WW2 is a great example of making this happen.
The key role of the CEO
The CEO has to make sure that there is a dynamic system in place — which manages exchange of ideas and feedback between the soldiers and the artists and ensures that the loonshots are getting selected on merit and nurtured through the early stages. This is a tough job. Getting the balance right by handling them differently yet showing equal love to both teams is hard. Even the great Steve Jobs failed miserably at this in his first stint at Apple. Vannevar Bush on the other hand did a fabulous job. He was a scientist with a naval family background. He was at home with both the soldiers and the artists and could speak the language of both teams effectively.
P-type Vs S-type Innovation
Innovation can be of two types. P-type or product innovation and S-type or strategy innovation. The p-type innovators often run the risk of ignoring the need for a system and driving innovation based on what ideas they like. Many great companies were built on brilliant inventions made by their founders but they need to decide what role they eventually want to play- the CEO or the head of the artists? When the founder does both, they break the system ( required for dynamic equilibrium ) and ignore the S-type innovation. Both are fatal.
They end up falling in the Moses trap, when ideas advance only at his decree depending on what loonshot he falls in love with. The examples of Edward Land and Polaroid and Juan Trippe and Pan-Am illustrate this really well.
On the other hand, you have Ed Catmull and Pixar. Catmull saw his role in managing the system as a gardener and not as a project manager. I can see similarities in the case of Ralph Lauren and Polo, where the founder donned the hat of Chief Creative officer and not the CEO.
The need for Project Champions in modern organizations
A Loonshot is very vulnerable in its early days. It needs to be promoted and shielded from the critics. Most inventors are lousy at doing this. They feel the idea will speak and stand for itself but that rarely happens. They are generally incapable of packaging and promoting the idea effectively to convince skeptical leaders and build buy-in within the organization.
This is where the project champion comes to the rescue. Nowadays, most pharma and biotech companies have this specialist role. They are trained and empowered for this job — to sell the ideas internally. Multilingual ability is a must have for them. Like Vannevar Bush (who could do science speak as well as military speak), they need to speak the language of all the teams involved.
I have seen this firsthand. A guy who can speak effectively to both sales and technology teams bridges the understanding gap between them and ensure new launches are adopted successfully.
The role of Structure in fostering innovation in growing companies
A lot has been written about the role of culture in building innovative teams. This book provides the best explanation for achieving it by designing the right structure. According to the author, culture and structure are complementary and organizations should use both.
An organization is highly innovative in its early days. Then it grows and the dynamics change. And one fine day, it becomes a bureaucratic company where everyone cares about career advancement and not about innovation. This is an example of phase transition. One complex group behaviour transitioning into another.
The author explains the scientific theory of this phase transition through other examples, which according to him, have the same fundamental principles. This is where the book is most technical — percolation theory, emergent behaviours etc etc.
These transitions can be managed through control parameters. An example is the transition of free flowing traffic into a traffic jam. Traffic engineers can prevent this from happening by managing the parameters — speed of the traffic and density of cars on the road.
Similarly, the architects of a company can design an organization structure which ensures that the company continues to nurture loonshoots and drive innovation even as it becomes bigger and bigger. The control parameters to manage this are:
Management Span — Span is number of people reporting to one manager. More means flatter structure and that is good. Otherwise, people are promotion obsessed as they have so many rungs to climb.
Equity Fraction — This is defined as impact of an employee’s work on the company’s income and his share in the pie. High correlation encourages people to focus on impactful work.
Organizational Fitness — This is the balance between return-on-politics and the project-skill fit. Innovative organizations ensure people are well matched to their jobs and the rewards for politicking are meagre.
Salary Growth Rate- The increment you get when you are promoted. If its very high, then there is a lot of incentive to focus on whatever it takes to get promoted. Usually such focus distracts you from doing great work.
If you reached this far, then I am guessing you found these concepts interesting. You should definitely read the book!
Written by Avnish Anand
Avnish Anand is COO and Co-founder at CaratLane. He is an avid reader of Leadership & sports books. Follow him on his Medium site!