Monday, December 30, 2019

"“Loonshots” and phase transitions are the key to innovation, physicist argues"

Always keeping in mind the less well known part of one of the most farsighted speeches ever delivered in the USA, President Eisenhower's Farewell Address to the American People, January 17, 1961.
Most folks know his warning on the military-industrial complex:
"...In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together..."
But they don't remember what followed immediately after:
"...Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.
In this revolution, research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.

Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.

The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present--and is gravely to be regarded.

Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite...."
And the headline story from Ars Technica:
Ars chats with physicist and biotech guru Safi Bahcall about his book Loonshots.

Few people these days are familiar with the name Vannevar Bush, an engineer who played a significant role in fostering the developing of key technologies that helped the Allied Forces win World War II.  He also spearheaded a highly influential federal report, Science: The Endless Frontier. Presented to President Franklin Roosevelt in 1945, the report famously argued for federal  funding of basic research in science, calling it "the pacemaker of technological progress." It shaped national science policy in the US for decades, and helped usher in an unprecedented explosion of economy-boosting scientific and technological innovation. (On the downside, Bush took a very dim view of the humanities—including science history—and social sciences.)

Physicist Safi Bahcall first learned about Vannevar Bush when he joined the President's Council of Advisers on Science Technology in 2011, charged with producing a version of that 1945 report for the 21st century. The experience dovetailed nicely with his longstanding interest in the arc of human thought over the course of history, and his background as both a physicist and a biotech entrepreneur. (Bahcall comes by his physics bona fides naturally: his father is the late John Bahcall, best known for helping to solve the solar neutrino problem.)  The result: an intriguing new theory about fostering innovation, based on the physics of phase transitions, that led to his first popular science book: Loonshots: How To Nurture the Crazy Ideas that Win Wars, Cure Diseases, and Transform Industries.

"I think business people are really tired of the thousands of more or less identical business books produced every year, saying more of less the same stuff," Bahcall told Ars about his fresh approach to the topic. "And most economists have never seen the inside of a real company, so their models have no connection to reality. I happen to be in the middle of a very weird Venn Diagram of someone with condensed matter physics experience, someone with business experience, someone who likes to tell stories, and likes to think about history."

According to Bahcall, the most significant breakthroughs comes from what he calls "loonshots," as opposed to "franchises": ideas that seem a bit crazy and are hence often dismissed outright, with anyone championing it labeled unhinged. There are two types. An S-type loonshot introduces a novel strategy or business model that no one believes can ever make money. When Sam Walton founded Walmart in 1962, for instance, he did so in a small town far away from major cities, bucking conventional thinking about the best locations for major retail. Walmart is now the largest corporation in the world by revenue, per the Fortune Global 500 list.

A P-type loonshot introduces a new product or technology that nobody believes will work. Business leaders once thought the telephone was little more than a toy, and foolishly passed on investing in what would become the Bell Telephone Company. Similarly, physicist Robert H. Goddard's design for a liquid-fuel rocket in the 1920s was dismissed by academic and military experts at the time. Decades later, his invention helped usher in the era of spaceflight.

Understanding the science of phase transitions can nurture loonshots faster and better, according to Bahcall, so groups can achieve a harmonious balance between radical innovation (loonshots) and "operational excellence" (stable franchises). Instead of trying to change corporate culture, he maintains that small changes in structure can help transform group behavior, much like making tiny structural changes in a material can change its phase (water freezes into ice, or boils away as vapor). That was the secret to Vannevar Bush's success: US military culture was resistant to taking risks on radical new ideas, so instead of trying to change the culture, he changed the structure, creating a separate research branch (eventually leading to the establishment of  DARPA), where those radical "high risk, high gain" ideas could find a home.

Bahcall's theory rests on three fundamental concepts familiar to any condensed matter physicist: phase separation, dynamic equilibrium, and critical mass. No two phases can co-exist in an organization—say, being good at loonshots (eg, original independent films) versus excelling at franchises (eg the Marvel Cinematic Universe)—unless they are poised right at the critical edge of a phase transition. "At the cusp of a phase transition, blocks of ice co-exist with pockets of liquid," he writes. The phases break apart but stay connected, cycling back and forth to maintain a state of dynamic equilibrium—teetering on the edge of chaos.  Ars sat down with Bahcall to learn a bit more about his intriguing new theory.

Ars Technica: Most people associate the critical threshold of a phase transition with Malcolm Gladwell's 2000 bestseller The Tipping Point. How does your book differ from Gladwell's take, almost 20 years later?
Bahcall: The Tipping Point is simply a qualitative discussion of the concept that the spread of ideas is governed by a phase transition. That's well known in the literature, and [Gladwell’s book] weaves popular stories around the concept that the spread of ideas is like the spread of a virus. Gladwell pioneered the idea of translating academic science through compelling personal stories for a popular audience. That field, which was N=1 when he did it, is now N=5,000 people imitating him.

But there's no underlying new theory there. Loonshots is written by a scientist, and it's based on an underlying original theory that hasn't existed in the world of economics. No one has ever suggested the concept of an organization having a phase transition based on underlying incentives. People have been working on this problem literally for 200 years, since Adam Smith first asked, "Well, how might incentives affect behavior in organizations?” There's a straightforward underlying academic paper I could write, which is essentially appendix B of the book. Here's the model. Here's why it's reasonable. Here's why I'm making these approximations, and here's how you analyze this model. And here's what you extract from it.

Ars: Let’s talk a moment about "disruptive innovation" versus "loonshots," because you draw a distinction between these two concepts.
Bahcall: So many people are sick of hearing about disruptive innovation. The flaw with that is that it's a hindsight problem. Disruptive innovation is all about the effects of something on a market. If you're talking about a new idea, the market might be two years, five years, ten years, or 20 years away. The even bigger flaw is that if it's a very early stage idea, any experienced entrepreneur knows you have no idea where it’s going to be not only a year from now, but even next week. It could morph into something totally different. So you talk about disruptive innovation to analyze history. Otherwise, we should rip that word out of the dictionary....