I’ve been thinking a lot about services (and likewise have been thinking about this post for a long time).
Since wrapping up the underlying contract strategy two years ago for making NASA’s Neutral Buoyancy Laboratory and Space Vehicle Mockup Facility available for reimbursable commercial use, I’ve been focused on a similar strategy for making NASA’s core “plan/train/fly” human spaceflight services also available for reimbursable commercial use. The fits and starts with wrestling with a new strategy in an unpredictable space policy environment have been a challenge, yet the challenges go beyond that, to the following fundamental question: what is a service? Whether we’re talking about commercial crew and cargo transportation services to low Earth orbit, the “plan/train/fly” services I just mentioned, or even NASA internal support services such as information technology, human resources, procurement, etc., we still have to wrestle with the same fundamental question: what is a service, and how does thinking about services differently make for a better future?
I’d like to share some background to stress how important it is to consider this question from a different viewpoint.
First, the US federal government is itself a provider of services as one of its primary functions. It mostly focuses on services that are not available in the private sector, in my view because either the associated benefit is not directly “monetizable” and thus cannot be traded against cost in a benefit-cost analysis, or the perceived implementation risks are too high to be borne by the private sector. Services provided by governments worldwide have evolved over time, with modern roots in the “Fordian” approach of the auto assembly line, and presently taking on some “post-Fordian” aspects driven by advancements in information technology, increasing globalization, and more widespread democratization. A key aspect of evolution of government services is that with time, they become optimized to the regulatory and socioeconomic environment they face. Keep this in mind as we talk about moving ahead, shortly.
Second, in the US private sector, the preponderance of economic growth over the last half century has been in services. Companies “built to last” that predate this growth period adapted successfully in part by shifting from manufacturing to services, whether we talking about examples such as General Electric or IBM. Other late-entrant firms with roots in “traditional” products such as HP and Dell are also making the shift today to more service-oriented business models. Heck, even Apple, when considered from a different viewpoint, is in the services business; even though you could argue that iPhone is a product, to me it is better described as a provider of services, whether I’m talking about communication services or making use of the apps hosted on it. (In my opinion, Apple’s success is due in large part to understanding what constitutes successful services, which I’ll cover later.) With all the recent talk by the current Administration of pushing growth in the manufacturing sector, the real potential for the future is in the continued growth of services, again driven by evolution in the same aspects I mentioned earlier: information technology, globalization, and democratization.
OK, so what does all of this background have to do with human spaceflight?
For starters, it sets the stage for thinking about the business models around human spaceflight in a different way. Here is what I mean.
Services are not processes. Now, I’m getting to one of the rubs that cause endless internal debates when we talk about services. For example, in my little corner of NASA, we’ve developed a highly–optimized set of plan/train/fly processes for NASA’s human spaceflight programs, with origins in the world of flight testing of high performance aircraft, and adapted for the rigors of human spaceflight over the last 50 years. Speaking in a general sense, however, we cannot assume that a set of processes optimized under one set of constraints (i.e., highly regulated, fiscally-constrained monopolistic environment) will yield the most optimal solution under another (i.e., free markets), or that it will even be deemed of value at all under that different set of constraints. Sure, a way to test that assumption would be to offer those services as-is in a competitive market – if such a market exists. However, if one doesn’t exist, I offer that another way to address the assumption is to think not in terms of processes, but rather in terms of customers and “experiences.” Such thinking completely turns upside down the “Fordian” process-oriented mentality, such as the government-run human spaceflight program to date. This is an extremely difficult transformational change to make – all we have to do is count the tens of examples of failure to change successfully in the private sector for the one success that is General Electric or IBM. I can see why Clayton Christensen’s disruptive innovation is such a popular topic nowadays.
Let me build upon this reversal of viewpoint a bit further. The path to a successful transformation passes through a key realization: services are about relationships. In looking at the value equation, where value equals benefit minus cost, the transformation from process thinking to service orientation starts with the concept of value delivered over time. With the passage of time, the surrounding circumstances, needs, and environment change. To respond to that change, the service needs to adapt for value to continue to be realized. A consequence of considering the time domain in value is that the value equation becomes more complex. It’s not about a point benefit offered in exchange for a point cost; instead, value is co-created by the mutual interaction of provider and recipient with time, with the services that are customizable and flexible. Therefore, a good service is as much about the relationship with the customer and the customer experience as it is the execution of a process by the provider. In the highly constrained regulatory and fiscal environment we face in the public sector, the need for flexibility and the capability to adapt services can be hard to embrace, and I don’t pretend to have easy answers here. I do have some starting points to suggest, however.
Build relationships instead of processes. Relationships are built person-to-person by the continuous exchange of stories, experiences, ideas, needs, and desired outcomes. People who really understand customer service, such as my friend Kate Nasser, realize the importance of relationships in driving teamwork, customer experiences, and adapting to change. It goes even further. Business development managers in the private sector realize the importance of networking and building relationships as a means to developing future business opportunities and creating value. As an example, the Strategic Opportunities and Partnerships Development office at the Johnson Space Center has created a handful of “relationship manager” positions to engage with commercial firms for potential partnerships, which I see as a very encouraging step. It is through relationships that new value can be identified and created through the modification and tailoring of services, in response to a changing environment. Without mutually beneficial relationships, value cannot be co-created.
Identify needless obstacles and get rid of them. Put simply, needless obstacles are value destroyers. For instance, in moving from Government-owned to commercial transportation services for access to low Earth orbit, if we blindly subject the latter to the same regulatory and fiscal constraints as the former, we likely will get a recreation of the same solutions we already have, with no improvements in performance or cost. Where is the value in that? Speaking broadly, it is incumbent upon us in the public sector to eliminate as much of the imposed complexity as we can, so that private sector solutions can focus on the inherent complexity that is human spaceflight and thus deliver better performance at a lower cost. Again, this is easier said than done. In my opinion, we in the public sector are great at creating new regulations and devising new processes to follow; however, we’re not so good at getting rid of the needless ones. This will be another hard challenge, but one that we must face if we are to transform successfully to a service orientation.
As I continue in my role for devising strategies for NASA’s plan/train/fly services, I’m sure I’ll continue to hone my view of services, ways to co-create value through relationships, and ways to remove obstacles. As I do so, I’ll share updates here on LeadingSpace.
- Everything is a Service discusses the emerging service economy and why thinking about services differently is a key to our economic future.
- Changing Role of Local Government as a Service Provider discusses the evolution of governance in the public sector and why “Fordian” approaches in government don’t work anymore.