Strategizing for NASA, Part 3: DARPA, Kodak, and Wiring Innovation

DARPA is a wonderful example of an organization designed for innovation and creating value. The Defense Advanced Research Projects Agency (DARPA) is an agency of the United States Department of Defense responsible for the development of new technologies for use by the United States military. DARPA has funded the development of the Global Positioning System (GPS), stealth capability, unmanned vehicles – and where would we be without the ARPANET? You wouldn’t be reading this in all likelihood.

How is DARPA designed for innovation and creating value? Case studies1 of DARPA at the Naval Postgraduate School conclude that wiring innovation directly into the DNA of an organization is a tremendous engine of value. Here are examples of how DARPA is wired to innovate:

  • Through its organizational structure – DARPA only has about 100-ish full-time employees organized in a very flat reporting structure
  • Through shortened tenure of its project managers – the average length of a project, and hence a project manager at DARPA, is four years
  • Through challenges and incentives – DARPA uses a variety of prizes and competitions as incentives to produce results

Contrast that against human spaceflight at NASA. Most of NASA’s current human spaceflight projects and programs are extremely long, crossing the boundaries of multiple Presidential administrations, with large organizational structures spread across the country. I can’t help but wonder if the tendency for such a structure is to exacerbate the inertial effects of an organization – leading it to play it safe and perpetuate the status quo – rather than innovate. DARPA shows that quicker turnover of projects and programs and leaner organizations provide a greater engine for innovation.

In thinking further about how innovation is wired into an organization, I also wonder about innovation efforts that are on the organizational periphery, or are relegated to the “grass-roots.” Does such an approach heighten the likelihood that innovation efforts will be ignored in the daily routine of the big programs and projects? I think so.

As a case in point, I offer Kodak. Although Kodak invested in research and development, it failed to exploit its discoveries such as in digital imaging, partly out of fear of what those new discoveries would mean to its core film business. The failure at Kodak highlights the critical need to figure out how to move forward with innovations while maintaining the core business, and readying those innovations to become the “new” core business.

Think about how such an approach at NASA might revolutionize human spaceflight.

For instance, put an “innovation office” in key organizations as part of the formal organizational structure, reporting to the director of that organization. Give the innovation office access to resources and “grand challenges” from the director to create innovative approaches that drastically reduce cost or greatly improve performance in the products and services of that organization. Each of these challenges could be turned into a short-duration project and run from the innovation office with managers whose tenure lasts for the duration of the project. Recognizing that many, perhaps even most, of the projects will fail is to be expected, even applauded. But for those that succeed, they might displace the old way of doing business, and serve as the engine of new ideas.

It seems to me that wiring innovation into the organizational structure of human spaceflight within NASA is worth a conversation for creating a meaningful, sustainable strategy for human spaceflight.

Next time: The FBI and Transformational Change

Previous entries in this series:
Part 1: The United States Postal Service and the Porter Five Forces
Part 2: Disney and the Resources Based View

1See Dew, Nicholas, “The ‘As’ in DARPA: Advanced or Applied?”



Strategizing for NASA, Part 3: DARPA, Kodak, and Wiring Innovation

Strategizing for NASA, Part 2: Disney and the Resources Based View

Disney and a Resources Based View (RBV) analysis illustrate the conditions under which organization-specific resources provide a sustained competitive advantage.  Specifically, Disney through its beloved character Mickey Mouse shows that an organization can sustain a competitive advantage if it has available to it resources that are inimitable (unique), durable, appropriated to where the organization captures most of the value, non-substitutable (can’t be trumped by another resource), and are clearly superior.  Disney has all of these with Mickey Mouse.

Think about it for a minute.  Mickey Mouse is very unique – children recognize Mickey Mouse even in a silhouette form.  Mickey Mouse as a character dates back to his first appearance in Steamboat Willie in 1928, nearly 90 years ago.  Mickey Mouse doesn’t go on strike, do drugs, or otherwise create employment strife.  There is only one Mickey Mouse, and nothing else comes close to representing what Mickey represents for Disney.  Even with a very superficial RBV analysis I just did, it is clear that Mickey Mouse represents a tremendous competitive advantage for Disney.

What about NASA?  Candidate enduring strategic resources are its facilities and workforce, created in the high-stakes crucible of the race to the moon during the 1960’s.  These resources, assembled during Mercury, Gemini and Apollo, were leveraged afterwards to the Space Shuttle and the International Space Station.  An RBV analysis leads to the following observations:

  1. For most of the last fifty years, it was difficult for others to imitate the facilities and workforce of NASA simply due to the unforgiving nature, demands, and opportunities afforded by pioneering human spaceflight to the moon and reusable spacecraft to low Earth orbit.  This implies a degree of past inimitability of these resources.  However, this inimitability is being challenged today by other governments (such as the recent Chinese mission to land a rover on the moon) and soon by commercial firms who will provide routine access to low Earth orbit within the next few years.
  2. People at NASA spend 40, even 50 years in their careers, pointing to the durability of the workforce.  In 2009, the average age of a NASA employee was 50 with 25 years of service.  Many of the facilities built at the dawn of the space race are still in service today.  Therefore, both of these resources have proven durability.
  3. From an appropriability standpoint, NASA captures much of the value provided by these resources.  Many of NASA’s employees can get higher-paying jobs in other industries.  As a former NASA administrator told me, “People self-select into NASA because they believe in its mission.”  However, many of the new, emerging commercial human spaceflight companies are drawing similar, dedicated talent, and thus are capturing much of the value of their respective workforces in a similar way.   Regarding facilities, NASA is providing its facilities to commercial firms on a cost reimbursable basis, so this permits NASA to continue to capture the value from the facilities, even if they are being under-utilized by NASA itself.  On the flip side where commercial space firms choose to use NASA facilities instead of building their own, this permits them to obtain value from those facilities without having to invest in high fixed costs for development of similar facilities.  This means they are capturing more value from that arrangement than they would otherwise.  Overall, I offer these resources are providing less of a distinctive edge today for NASA from an appropriability standpoint.
  4. What about substitutability?  In principle, the building blocks of these resources have always been obtainable elsewhere.  Military space is a potential source for these resources, and NASA has always relied heavily upon contracting from the aerospace industry.  Therefore, NASA’s workforce and facilities are substitutable.
  5. Whose resources are clearly better?  Critics will point out that NASA has managed to kill seventeen of its astronauts despite its workforce and facilities, whereas commercial resources have yet to be proven.  Until proven otherwise, NASA’s are better, although it may be challenged soon.

Therefore, RBV analysis of NASA’s workforce and facilities leads me to point to (2) durability and (5) clearly being superior, along with (1) inimitability and (3) appropriability as explaining why NASA had a sustained competitive advantage.  Unfortunately, the analysis reveals some erosion in the latter two, and perhaps a challenge soon to superiority.  Therefore, a future strategy for NASA’s human spaceflight must take into account a way to restore the inimitability and appropriability of key strategic resources, along with ways to maintain the durability and providing clear superiority, for the strategy to be enduring.  Figuring out a way to make them non-substitutable will help, too.

Next time:  DARPA, Kodak, and what happens when innovation is wired (or not) into an organization.

Previous entries in this series:
Part 1: The United States Postal Service and the Porter Five Forces

Strategizing for NASA, Part 2: Disney and the Resources Based View