The following is an excerpt from Safi Bahcall's Loonshots.

The Bush-Vail Rules

There is a pervasive myth of the genius-entrepreneur who builds a long-lasting empire on the back of his ideas and inventions. (We will explore this myth, and the trap it creates, over the next several chapters.) But the ones who truly succeed—the engineers of serendipity—play a more humble role. Rather than champion any individual loonshot, they create an outstanding structure for nurturing many loonshots. Rather than visionary innovators they are careful gardeners. They ensure that both loonshots and franchises are tended well, that neither side dominates the other, and that each side nurtures and supports the other.

The structures that these gardeners create share a common set of principles. I’ll call these principles the Bush-Vail Rules.

The first two rules are the ones mentioned above, the key to life at 32 Fahrenheit: separate the phases (the groups working on loonshots and on franchises) and create dynamic equilibrium (ensure that projects and feedback travel easily between the two groups). Break apart while staying connected.

1. Separate the phases

Separate your artists and soldiers

People responsible for developing high-risk, early-stage ideas (call them “artists”) need to be sheltered from the “soldiers” responsible for the already-successful, steady-growth part of an organization. Early-stage projects are fragile. “Although military officers became avid for a new development once it had thoroughly proved itself in the field,” Bush wrote, they dismissed any weapon “in embryo”—as they did with radar, with the DUKW truck, and with nearly every early innovation, which almost always arrives covered in warts. Without a strong cocoon to protect those early stage ideas, they will be shut down or buried, like Young and Taylor’s early discovery of radar.

Leaders of powerful franchises across every industry routinely dismiss early-stage projects by picking at their warts (the incentives behind this will be discussed more in part two). The major pharma companies passed on the idea for treating cancer by blocking tumor blood supply: the blood vessels known to surround tumors were dismissed as irrelevant inflammation. Major film studios passed on the idea of a metrosexual British spy who saves the world (warts included a script in which the chief villain was a monkey). They also passed on a script titled at one point The Adventures of Luke Starkiller, featuring an incomprehensible plot and a lead character named Mace Windy, suggesting a gassy superhero.

As we will see later, both industries have evolved a structure to rescue and nurture loonshots, despite the dominance of the powerful Majors. Warts were removed. Blocking tumor blood supply—called anti-angiogenesis therapy—became one of the great cancer breakthroughs of the past two decades. The first such drug, Avastin, achieved $7 billion in annual sales. The two unlikely film projects grew into the two most successful movie franchises of all time: James Bond and Star Wars.

The goal of phase separation is to create a loonshot nursery. The nursery protects those embryonic projects. It allows caregivers to design a sheltered environment where those projects can grow, flourish, and shed their warts.

Tailor the tools to the phase

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.

Bush quarantined the team working on radar in anonymous office buildings at MIT. He recognized that the tight organization needed by the military, mentioned earlier, is not conducive to scientists exploring the bizarre, just as “a good organization for a research laboratory would not work well for a combat regiment in the field.”

Vail quarantined the team working on the technology for long-distance telephony in an office building in lower Manhattan. Like Bush, he tailored the systems. He “moved away from the rigid task allocation” of telephone operations and toward a similar loose-touch style.

Both Bush and Vail understood intuitively decades ago what is repeatedly being rediscovered today. Efficiency systems such as Six Sigma or Total Quality Management might help franchise projects, but they will suffocate artists. When 3M, for example, inventor of Post-it Notes and Scotch Tape, brought in a high priest of Six Sigma as a new CEO in 2000, innovation plunged. It didn’t recover until well after he left and a new CEO dialed back the system. The new CEO described the efficiency system as a mistake: “You can’t say . . . well, I’m getting behind on invention, so I’m going to schedule myself for three good ideas on Wednesday and two on Friday.” Art Fry, the retired inventor of Post-it Notes, said that his idea would never have emerged under the new approach.

Which doesn’t mean that efficiency systems have no place. Loose goals and dream sessions might help artists. But they will harm the coherence of an army.

2. Dynamic equilibrium

Love your artists and soldiers equally

Maintaining balance so that neither phase overwhelms the other requires something that sounds soft and fuzzy but is very real and often overlooked. Artists working on loonshots and soldiers working on franchises have to feel equally loved.

After creating what eventually became Bell Labs, Vail wrote, “No division, department, branch or group can be either ignored or favored at the expense of the others without unbalancing the whole.” The trap for most groups, however, is that soldiers naturally favor soldiers and artists naturally favor artists.

Equal-opportunity respect is a rare and valuable skill. Vannevar Bush, although a veteran academic at the start of the war, genuinely respected the military. “I have enjoyed associating with military men more than with any other group, scientists, businessmen, professors,” he wrote years later. The deference with which Bush treated officers helped him understand, and ultimately influence, the military far more than the many scientists and engineers who had tried, and failed, before him.

The less-famous history of an ultra-famous icon captures one person’s evolution toward this balance. During Steve Jobs’s first stint at Apple, he called his loonshot group working on the Mac “pirates” or “artists” (he saw himself, of course, as the ultimate pirate-artist). Jobs dismissed the group working on the Apple II franchise as “regular Navy.” The hostility he created between the two groups, by lionizing the artists and belittling the soldiers, was so great that the street between their two buildings was known as the DMZ—the demilitarized zone. The hostility undermined both products. Steve Wozniak, Apple’s cofounder along with Jobs, who was working on the Apple II franchise, left, along with other critical employees; the Mac launch failed commercially; Apple faced severe financial pressure; Jobs was exiled; and John Sculley took over (eventually rescuing the Mac and restoring financial stability).

When Jobs returned twelve years later, he had learned to love his artists (Jony Ive) and soldiers (Tim Cook) equally.

Although equal-opportunity respect is a rare skill by nature, it can be nurtured with practice (more on this in chapter 5).

Manage the transfer, not the technology

Bush, although a brilliant inventor and engineer, pointedly stayed out of the details of any one loonshot. “I made no technical contribution whatever to the war effort,” he wrote. “Not a single technical idea of mine ever amounted to shucks. At times I have been called an ‘atomic scientist.’ It would be fully as accurate to call me a child psychologist.”

Vail similarly stayed out of the details of the technical program. Both Bush and Vail saw their jobs as managing the touch and the balance between loonshots and franchises—between scientists exploring the bizarre and soldiers assembling munitions; between the blue-sky research of Bell Labs and the daily grind of telephone operations. Rather than dive deep into one or the other, they focused on the transfer between the two.

A flawed transfer from inventors to the field is not the only danger. Transfer in the other direction is equally important. No product works perfectly the first time. If feedback from the field is ignored by inventors, initial enthusiasm can rapidly fade, and a promising program will be dropped. Early aircraft radar, for example, was practically useless; pilots ignored it.  Bush made sure that pilots went back to the scientists and explained why they weren’t using it. The reason had nothing to do with the technology: pilots in the heat of battle didn’t have time to fiddle with the complicated switches on the early radar boxes. The user interface was lousy. Scientists quickly created a custom display technology—the sweeping line and moving dots now called a PPI display. Pilots started using radar.

In some cases, as with the radar-controlled fuse on artillery shells mentioned earlier, Bush acted alone when he sensed a weak link. The Army initially paid little attention to the fuse, so Bush got on a plane and flew straight to battlefield headquarters in Europe. He was received by General Bedell Smith, Eisenhower’s chief of staff.

“What the devil are you doing over here?” Smith asked Bush. “Don’t we have enough civilians in the theater without your joining?”

“I [came] over to a dense bed of ignorance,” Bush replied, “to try to prevent the destruction of one of the best weapons of the war.”

After this exchange, Bush reported, they got along swimmingly.

In other cases, Bush worked closely with FDR’s secretary of war, Henry Stimson. When generals initially refused even to look at radar, Bush called Stimson. Stimson flew on an experimental plane equipped with the technology and watched as radar quickly sighted distant targets. The next day, the chiefs of both the Army and Air Force found identical notes on their desks:

I’ve seen the new radar equipment. Why haven’t you?

Key to that dynamic equilibrium—and Bush’s ability to speak freely to generals—was support from the top. In the middle of managing a difficult conflict, Bush wrote, “I told FDR that he had handed me a hot potato, and I might have to bump some heads together. I remember well his answer. He said, ‘You go ahead and bump, and I will back you up.’”

Not long after, one of the bumped heads came to FDR and launched into a tirade about Bush and his operation. The president, according to an aide who was present, was in the middle of signing letters. FDR paused for a while to listen, went back to signing letters, then said, “Look, Mac, I put that in Bush’s hands. He’s running it, and you get the hell out of here.”

It may be helpful to visualize these first two rules, and what follows in the next several chapters, as shown below:

Bush and Vail succeeded in bringing stagnating organizations straight to the top-right quadrant: well-separated and equally strong loonshot and franchise groups (phase separation) continuously exchanging projects and ideas in both directions (dynamic equilibrium).

Many companies, however, especially when faced with a crisis, try to legislate creativity and innovation everywhere (“The CEO must be the CIO—the Chief Innovation Officer!”). This usually results in chaos, the top-left quadrant.

Not every phone operator has to be a champion innovator. Sometimes you just need them to answer the phone.

The most common trap, however, is to head straight to the bottom-right quadrant. As mentioned earlier, leaders proudly draw a box on an org chart, rent a new building, and hang a shingle advertising a new research lab. In chapters 3–5, we will see why that fails so frequently and how to get back on track to the top-right quadrant.

But first, we need to understand a little bit more about the nature of loonshots. Why do they need to be sheltered so carefully? Why are they so fragile?