I love this book. It is a great lesson in managing innovation in business. The author does an amazing job of connecting the lessons from the past to current organizational challenges that are faced in business.

well-separated and equally strong loonshot and franchise groups (phase separation) continuously exchanging projects and ideas in both directions (dynamic equilibrium).

Luck is the residue of design

Just separating loonshot and franchise groups is not enough. It’s easy to draw a box on an org chart and rent a new building. But the list of failed companies with shiny research labs is long. True phase separation requires custom homes to meet custom needs: separate systems tailored to the needs of each phase.

“In Italy, for 30 years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland, they had brotherly love, they had 500 years of democracy and peace—and what did that produce? The cuckoo clock.

<aside> 💡 The researchers found a middle ground by creating a model that was simple, but not simplistic. Throw away too much detail, and you explain nothing. Retain all the detail—same thing. We want a model that is just simple enough so that we can extract macro insights with confidence in their micro origins. In other words, we want a model that describes the forest but is built from the trees.

</aside>

Hemingway wrote that “the dignity of movement of an iceberg is due to only one-eighth of it being above water.” He called it his Theory of Omission. The power of beautiful prose comes from what you leave out. In science, it’s the same. The power of a beautiful model comes from what you choose to omit.

Safi notes that for companies to have successful innovation they need to have equally loved loonshot (innovation) and franchise (current product operations) departments.

1. Phase separation: separate loonshot and franchise groups
2. Dynamic equilibrium: seamless exchange between the two groups
3. Critical mass: a loonshot group large enough to ignite Applied to companies, the first two are the first Bush-Vail rules. Critical mass, has to do with commitment. If there is no money to pay for hiring good people or funding early-stage ideas and projects, a loonshot group will wither, no matter how well designed.

When a company can love both sides, there is a chance for amazing, world changing innovation to emerge and reach scale.

Here is the Link to the Amazon book.