Loonshots

"Progress is measured in failures: each defeat rules out one possibility and brings you closer to the solution.” This is the spirit behind loonshots—ideas that seem absurd until they reshape the world.

1. Innovation thrives on risk, but organizations often stifle bold ideas.

Many of history’s most transformative ideas were initially dismissed as impractical or outrageous. These loonshots are fragile; they need nurturing before their potential is realized. However, large organizations often smother them with skepticism or because they view them as too risky to pursue.

This disconnect stems from how large organizations focus on tried-and-true methods. The shift to protecting existing successes often outweighs the pursuit of wild new ideas as companies grow. Management becomes more cautious, fearing failure will disrupt operations that already bring in stable profits. The outcome is a reluctance to take chances on promising ideas that are in their early, messy stages.

Take Nokia, for example. It dominated the mobile phone industry for decades due to its innovative culture. But when presented with the prospect of launching an internet-ready touchscreen phone—a precursor to the iPhone—executives rejected the idea. The decision was shaped by a focus on maintaining the status quo of their franchise operations, resulting in Nokia losing its edge in the modern smartphone market.

Examples

• Thomas Edison supposedly tested over 1,000 filament materials before perfecting the light bulb.
• Nokia dismissed its engineers’ touchscreen phone idea in 2004, and Apple debuted the iPhone just three years later.
• Kodak invented the first digital camera but hesitated to pursue it to protect its film business.

2. Nurturing innovation means protecting loonshots from organizational inertia.

Organizations stagnate when they fail to embrace new ideas. World War II provides a stark example: the U.S. military had access to groundbreaking radar technology as early as 1922 but ignored it. They saw it as an unnecessary expense with uncertain returns.

By the time they realized radar’s strategic importance, it was nearly too late. On December 7, 1941, the radar early warning system was still under development, and the Japanese attack on Pearl Harbor demonstrated the grave cost of ignoring innovation. This failure was born from a bureaucracy overly focused on current efficiency and dismissive of long-term breakthroughs.

Recognizing this pitfall, Vannevar Bush established a separate, civilian-led division—the Office for Scientific Research and Development (OSRD)—to explore risky ideas. This clear separation allowed loonshots to be pursued without disrupting the military’s conventional operations, ultimately leading to life-saving inventions like portable radar systems.

Examples

• The U.S. Navy passed on radar proposals in the 1920s and 1930s, delaying critical advancements.
• Vannevar Bush’s OSRD nurtured risky projects, like microwave radar, which helped win the Battle of the Atlantic.
• German submarines caused catastrophic supply losses for the Allies until radar technology realigned the war’s outcome.

3. Great leaders create space for both innovation and operation.

Balancing creativity and execution requires thoughtful leadership. Visionary leaders like Vannevar Bush and Theodore Vail succeeded by creating dedicated divisions for both innovation and franchising within their organizations.

Theodore Vail revolutionized AT&T in the early 1900s by establishing a department focused on “fundamental research.” This allowed scientists to grapple with novel ideas like long-distance telephony while freeing other parts of the company to run its day-to-day operations. The result? AT&T changed communication forever and won eight Nobel prizes for its advancements.

This separation is vital because artists (innovators) and soldiers (operators) have different mindsets. Without protection, soldiers’ preference for immediate practicality can stifle artists’ far-reaching visions. Bush and Vail demonstrated that allowing each group to thrive on its terms—and by ensuring smooth collaboration between them—can lead to breakthroughs while preserving existing successes.

Examples

• Apple struggled internally until Steve Jobs returned and supported both its artists (like Jony Ive) and soldiers (like Tim Cook).
• Vannevar Bush’s restructuring of U.S. military R&D ensured loonshots thrived without disrupting ongoing operations.
• AT&T’s research division helped achieve groundbreaking feats like the first coast-to-coast phone call in 1915.

4. A structure that enables risk-taking can ensure lasting growth.

When organizations grow, risk-averse policies tend to creep in. This shift can doom even promising ideas, as shown by Polaroid’s Polavision failure. Founder Edwin Land overlooked potential red flags because the company’s structure centered on his preferences rather than balanced innovation.

Smart organizations build frameworks to support loonshots instead. Apple, for example, reorganized under Steve Jobs’ second tenure to include dedicated teams for new product development. This structure allowed iPhone experimentation to progress without interference from Apple’s existing revenue-generating operations.

To sustain growth, businesses must adopt mechanisms to embrace change. This includes separating high-risk projects and shielding them from internal politics and immediate profit expectations.

Examples

• Polaroid’s centralized decision-making caused the company to miss opportunities in digital photography.
• Amazon provides small, independent teams the freedom to experiment as Bezos famously coined the "two-pizza rule" structure.
• Boeing succeeded with new plane designs by setting aside isolated engineering teams for experimentation.

5. Strategic innovation is as powerful as product innovation.

Product-driven innovation grabs headlines, but strategic leaps often decide the fate of organizations. Pan Am, for example, dominated air travel in its early days by adopting groundbreaking plane designs. But it faltered post-deregulation when competitors focused on strategic business models enabling lower costs.

American Airlines thrived because its executives introduced a two-tier wage system that balanced legacy costs while staying competitive. This strategic decision, rather than any particular aircraft, allowed the airline to navigate a rapidly changing market.

Organizations that fail to innovate strategically risk irrelevance, no matter how advanced their products. Balancing both types of innovation ensures adaptability in shifting markets.

Examples

• Pan Am’s focus on acquiring advanced planes proved ineffective during airline industry deregulation.
• American Airlines succeeded post-deregulation by implementing better pay structures.
• Netflix survived industry disruption by transitioning from DVDs to streaming due to its strategic foresight.

6. Risk-takers need champions, not micromanagers.

Innovators thrive with supportive environments, not interference. Effective leaders don’t micromanage but act as intermediaries who translate creative ideas into actionable outcomes.

When Vannevar Bush noticed pilots ignoring radar because it was too complex, he addressed the issue by insisting on simpler designs. This adjustment between creators and users improved radar applications, saving lives in World War II.

The key lies in focusing on the weakest link in the innovation process—coordination between invention and implementation. Leaders who approach loonshots with this mindset can amplify their organization’s creative output.

Examples

• Vannevar Bush streamlined radar displays to ensure pilots could integrate them mid-flight.
• Frank Jewett at AT&T encouraged researchers to take calculated risks while shielding them from market pressures.
• Leaders at Pixar actively encourage workers to collaborate, often refining ideas rather than discarding half-finished ones.

7. Overconfidence can derail even the most innovative organizations.

Organizations fail when leaders overinvest in pet projects without considering market realities. Edwin Land’s fixation on the Polavision film camera is a prime example. Land ignored internal resistance and pushed the project forward, despite mounting evidence that digital cameras were the future.

Overconfidence blinds leaders to external changes. Leaders who embrace feedback and admit failures create resilient companies ready to pivot in changing environments.

Examples

• Polaroid’s Polavision camera failed in an era quickly adopting digital technology.
• Kodak underestimated its own groundbreaking digital photography patents.
• Elon Musk avoided hubris in SpaceX by iterating and learning from failures like the Falcon 1 launch.

8. Competition creates fertile ground for groundbreaking ideas.

History shows that innovation thrives in environments with multiple opportunities. Take the emergence of the Scientific Revolution in Europe compared to stagnation in ancient China. European scientists like Tycho Brahe faced setbacks, but the fragmented political landscape allowed them to find new patrons to support their work.

In contrast, China’s centralized system left scholars like Shen Kuo with few alternatives, stifling progress. This example underscores the importance of creating market conditions or policies that encourage teams to chase bold ideas.

Examples

• Tycho Brahe relied on different European rulers to support his astronomical studies.
• Hollywood studios competing for original scripts brought revolutionary movies like Star Wars into production.
• Government policies in Silicon Valley encourage start-ups to compete, resulting in continuous innovation.

9. Loonshots shape industries, nations, and histories.

Ultimately, loonshots bring transformational shifts in industries, from technological revolutions to national victories. The United States military’s success with radar or Theodore Vail’s breakthroughs with AT&T proves that nurturing bold ideas often sparks revolutions in their respective fields.

Every historical leap was sustained by processes allowing resilient innovation, whether in war, business, or culture. This lesson applies universally: support loonshots against doubt, and they could rewrite history.

Examples

• Radar technology turned the tide of World War II with innovations developed in the OSRD.
• AT&T’s research division fostered technologies like transistors, enabling modern computing.
• The Scientific Revolution’s impact emerged from years of incremental theories becoming breakthroughs.

Takeaways

1. Separate innovation-focused teams from operational ones while protecting them from early dismissal.
2. Encourage feedback loops that improve coordination between creators and implementers.
3. Foster competition or diverse avenues for ideas to thrive when traditional structures fail.