Two-Minute Takeaways: Loonshots by Safi Bahcall

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Some FISD members recently read Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries by Safi Bahcall. Bahcall holds a PhD in physics and helmed his own publicly traded biotech company for many years – naturally he brings a unique perspective to the topic of innovation at scale. Below is a summary of some of the book’s most important takeaways for FISD members, according to FISD Reads group leader Hope “Hope-rah” Wilkes.

There are two major categories of innovation. You can innovate a new product (“P-type innovation”) or innovate a new strategy (“S-type innovation”). Companies that rely on P-type innovations to grow churn and burn their own great ideas, needing to come up with newer, better ideas increasingly quickly. Companies that favor S-type innovations are better equipped to handle changes in the industry. If you need a trick to remember this, think of Polaroid, a P-type innovator that was left with warehouses full of new products when the photography industry abruptly changed.

Tired of superhero movies? Make sure you understand how franchises happen. At a certain size, by their very nature and structure, companies can disincentivize innovative projects in favor of guaranteed winners (“franchises”). A big swing that pays off might barely move the needle for the department or the company as a whole. But for the individual who fails in the attempt, the loonshot can be a career killer. It’s much safer for a career-minded employee to work on franchise projects. In such an environment, innovation will only grow if you specifically feed it.

Rethink incentives. Doctors have been known to perform C-sections when they’re not medically indicated in order to get paid more. Consider bringing in an expert to identify perverse incentives in your organization that hinder innovation. Giving employees autonomy in their work and visibility through partnerships, conference presentations, and the like is a more effective incentive to excel than money alone.

Celebrate results, not rank. Bahcall’s example organization, DARPA, thrives because employees are there for finite terms known from the outset. This frees them to put all of their energy into their projects rather than spending time politicking for their next promotion.

Don’t just hire intelligently. Assign people to projects intelligently. Your rock star, high-talent employee is a bad fit for a project that requires her particular skillset if that project is beneath her. She won’t grow from the project and gains little by devoting much time to it. You’d be better served putting a less talented (but still good) employee in the project instead whose time investment in the project is positively correlated with good, even innovative project outcomes. Likewise, it should be a no-brainer to keep an employee off of a project for which he lacks the requisite skills. Not finding good project-skill fit anywhere among your employees? Training can help, plus training reinvigorates employees, providing them with new ideas they’ll be eager to try out.

Sorry, you’re not Steve Jobs. Leaders who succeed while getting their hands deep into many of the company’s products come along maybe a couple of times in a generation. Without the innate knack that Jobs had, you’re liable to make a bad choice when acting as judge and jury for new ideas. According to Bahcall, successful top-level leaders “mind the system, not the project.” Support innovation at a remove so you don’t inadvertently become a gatekeeper for it.

The will to innovate isn’t enough. Your organization has to genuinely be prepared to support risk-taking projects – and see the good in them, even if they have problems at first. Bahcall put it best when he wrote, “Leaders who order their employees to be more innovative without first investing in organizational fitness are like casual joggers who order their bodies to run a marathon. It won’t happen and the experience is likely to cause a great deal of pain.”

Hope Hope Wilkes is Program Manager, Professional Certification at FISD. Her portfolio broadly encompasses member professional development as she also produces the FISD Rising Stars event series which encourages participation from people early in their market data careers. She subscribes to Harry S. Truman's adage, "Not all readers are leaders, but all leaders are readers. With that in mind, she started the FISD Reads virtual book club to help FISD members hone their management skills through outside-of-the-classroom learning.