Making space for loonshots

How to make both loonshots and franchises successful inside an organisation

Founding Fuel

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Dear friend,

Nurturing crazy ideas does not seem like a business strategy. However, organisations that have the right structure and culture in place can indeed make this a successful practice. In the excellent book, Loonshots, author Safi Bahcall summarises that businesses need to look at loonshots (crazy, risky ideas) as well as manage franchises (manage existing businesses) for survival. But doing this is not easy.  

The analogy of water at room temperature and when it is frozen makes the idea easy to understand. When the temperature drops, liquid becomes solid. It now does not resemble its original form, even though everything in it is exactly the same. In his argument, a team working on loonshot ideas has a clear motivation—a very high stake in the outcomes of what they discover or produce, whereas in companies that manage franchises, the motivation shifts to perks and rank which consequently lead to low focus on high-impact outcomes.

So, loonshot ideas can only survive when the teams are relatively small and the high-stake outcome benefits everyone in the team. 

We can see how this plays out in the real world. Startups with highly motivated team members are redrawing industry boundaries and inventing new business practices. Why do we choose Spotify or Gaana for music, bookmyshow or makemytrip for booking our next movie or travel experience? Why didn’t record labels create a popular music app or a travel agent like Thomas Cook create a new travel experience? It certainly points to the structural and cultural uniqueness of loonshot teams in startups that drive these successful outcomes. 

In order for both loonshots and franchises to be successful inside an organisation, Bahcall argues that the people managing these two activities be kept in separate groups (calling them artists and soldiers) and be provided different tools and operating structures, because artists like to try new things, whereas soldiers want predictability and less risk. But an even trickier need would be to foster a healthy flow of ideas and feedback between the two groups. Through examples from successful organisations, Bahcall provides a well thought out framework for balancing loonshot activities with franchise activities.

I am drawn to this book also because it tells the story of how the US military beat the technologically advanced Germans by out-inventing them in a very short period of time. Vannevar Bush quit as dean of engineering at MIT and moved to work with the US government. He is credited with building breakthrough technologies that helped win the war. US President Franklin Roosevelt honoured Bush and asked him to develop a blueprint for how the Americans could stay ahead of the rest of the world in scientific pursuits. Bush published a report that set the stage for the oversized impact US technologies have had on the world.

That makes us think about the lack of technological innovations India as a country has produced. Yes, we do have a few things under our belt, but by and large we don’t have any that have made a global impact. In a review of Arun Mohan Sukumar’s book Midnight’s Machine, N Dayasindhu provides a good perspective on why this is so. Please read the extract from the book as well as the review for a good overview of the challenges in India and the unintended consequences of the Indian government’s policies on technology development.

Have a great week ahead!

CS Swaminathan

For Team Founding Fuel

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Founding Fuel

Founding Fuel aims to create the new playbook of entrepreneurship. Think of us as a hub for entrepreneurs- the go-to place for ideas, insights, practices and wisdom essential to build the enterprise of tomorrow. It is co-founded by veteran journalists Indrajit Gupta and Charles Assisi, along with CS Swaminathan, the former president of Pearson's online learning venture.

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