Social Science Homework

Change Management

The Reinvention of NASA by Loizos Heracleous, Douglas Terrier, and Steven Gonzalez

April 23, 2018

Summary.   

Project Apollo Archive/NASA Johnson Space Center/Flickr

Since the Apollo program, NASA has faced funding cuts, competition from other nations for

space leadership, and a radical restructuring of its operating environment due to the emergence of

commercial space — all of which have forced the organization to change its ways of thinking and

operating. So over the past few...

NASA today is a very different beast from the NASA of the 1960s.

Though many would call that decade NASA’s golden age, we’d

argue that NASA’s innovation and influence is even greater today.

more

Since the Apollo program, NASA has faced funding cuts,

competition from other nations for space leadership, and a radical

restructuring of its operating environment due to the emergence

of commercial space — all of which have forced the organization

to change its ways of thinking and operating.

Over the past few decades, not only has NASA delivered crucial

technologies for society, such as water filtration systems, satellite-

based search-and-rescue, and UV coating on eyeglasses, it has

also evolved its dominant logic and business model. NASA has

moved from being a hierarchical, closed system that develops its

technologies internally, to an open network organization that

embraces open innovation, agility, and collaboration.

This reinvention demonstrates that substantial organizational

change is possible, even amid barriers such as regulations and

politics. It offers an example of what we call “strategic agility,” or

the ability to effectively (and continually) adapt how a firm

operates and competes. This is not driven by a single leader, but

by a multitude of champions scattered around the organization

who push forward initiatives that slowly create change.

The challenges facing NASA

During the Apollo program NASA’s funding peaked at 4.5% of the

federal budget (US$5,250 million) in 1966. But shortly after the

first moon landing in 1969, their budget plummeted. It is

currently at less than o.5% of the federal budget.

Meanwhile, the organization’s mission aspirations grew bolder.

The Commercial Space Launch Act of 1984 (and amendments in

1988 and 2004) called for government agencies such as NASA to

support the development and growth of commercial space. This

not only necessitated a more collaborative way of operating, but it

also called for the agency to differentiate its missions. As

commercial space organizations began to drive more low-earth

orbit (up to 2,000 km from earth) activities, NASA has had to shift

its efforts toward exploring deep space, accomplishing further

manned missions, and setting up permanent facilities on the

moon as a gateway for missions to Mars and beyond.

The emergence of commercial space has also gone hand in hand

with an accelerating pace of technology development. This means

that the technologies necessary for successful space-faring,

particularly human space travel beyond low earth orbit, cannot all

be developed by a single organization. NASA has had to become

more outward-looking and network-oriented to develop and

acquire the technologies it needs.

Competing nations have also been expanding their space

exploration efforts. The space industry is now a global, multi-

faceted, multi-stakeholder endeavor, where commercial activity

accounts for the lion’s share of value. (Over three quarters of the

$350 billion global space industry revenues are driven by

commercial products, services, infrastructure, and support

industries.) Sustaining NASA’s and the USA’s space leadership has

called for a new way of organizing and competing.

Adapting to change

The reinvention of NASA has been an evolution spanning three

phases, each focused on achieving different goals and

characterized by particular technology strategies, cultural values,

and ways of working with external parties.

The traditional model (from 1960s to 1990s): In its early days

NASA served as both the prime contractor and the exclusive

customer of space technologies. This model made sense for a few

reasons. First, the frontier technologies that NASA needed were

not already available on the market; they had to be developed

from scratch by specialized contractors. Second, the Cold War and

the space race meant that NASA needed to have control of the

resulting technology rather than the technology being made

available on the market by contractors after development. Third,

NASA’s military heritage, and more broadly the procurement

processes of government agencies at the time, meant it operated

by issuing cost-plus contracts and owning the resulting

technology.

Think of the Apollo program in the 1960s. NASA gave detailed

specifications to contractors (such as North American Aviation,

which built the command/service module of the Apollo

spacecraft, and Ford Aerospace, which built the mission control),

defining what should be done and how. NASA, purely funded by

government, incurred the total costs and became the owner of the

resulting technology.

In this model, the relational approach was one of positional

authority and hierarchy. NASA focused on developing and

monitoring precise engineering specifications. NASA engineers

had large amounts of control over what the contractors were

doing. The technology strategy focused on agency-driven

investments and strict control over the internally developed

technologies. there was a sense of technological superiority and

exceptionalism that developed from the government’s efforts to

attract the brightest scientists.

The transitional model (from 1993 – 2006): This phase kicked

off with the International Space Station project. In 1993 NASA was

directed by the White House to collaborate with other nations on

the design and construction of the International Space Station.

The agencies involved were the European Space Agency (ESA),

the Japan Aerospace Exploration Agency (JAXA), the Canadian

Space Agency (CSA), and Roscosmos.

The ISS was a necessary step in the grand goal of launching

human missions in deep space, such as to Mars, a key NASA

aspiration for decades. A round-trip human journey to Mars

would take around 21 months, depending on a variety of factors.

NASA needed to understand what would happen to the human

body during extended missions in space, and the ISS would

provide a way to gather this knowledge by stationing astronauts

on the space station for long periods. But ISS would be too

expensive for any one country to build alone.

During this transitional phase, NASA learned how to function

within a cluster of partners, as opposed to being the dominant

party in a supplier/buyer relationship. This demanded shifts in

cultural values, relational approaches, and technology strategy.

Culturally, the sense of technological superiority developed

during the Apollo program was still present, but now there were

more players with their own cultures, technology, and operating

models. NASA had to learn how to collaborate. Further, greater

cost consciousness developed, as the American public and

politicians began questioning the amount of resources needed by

the agency. Unlike the Apollo era, when funds were no barrier in

the effort to win the space race, NASA now had to accomplish its

missions as efficiently as possible and be more explicit about its

added value to society. It invested more in external

communication.

Relationally, the hierarchical pecking order of the traditional

model had to accommodate a cluster of international

governmental organizations. NASA negotiated with, coordinated,

and led the network of international space agencies to accomplish

one of the most complex undertakings of humanity, designing

and building the ISS. The work was distributed: NASA ISS

program managers led the effort at the operational level and

worked with international counterparts to implement the

program. There were 15 centers around the world focused on ISS;

in the U.S., much of ISS training and program management took

place at the Johnson Space Center in Houston.

NASA’s technology strategy also evolved to leverage the

investments of state partners and share technical responsibility.

The agency worked with its partners on developing shared

technical interfaces, standards, and protocols, learning how to

operate within public-public partnerships.

The network model (from 2006 to present): The network model

began with the Commercial Resupply Services program that

launched in 2006 to carry cargo to the International Space Station

after the space shuttle was retired. The space shuttle’s retirement

meant that NASA had to find other ways to resupply the ISS that

would not only be reliable but also require fewer resources than

the space shuttle. This and a number of different factors — budget

pressures, government interest in promoting commercial space,

and rapidly growing commercial expertise in space — led NASA to

seek suitable commercial partners.

NASA wanted to use part of its budget not only to buy services it

needed, such as to resupply the ISS with cargo, but also to spur

the growth of commercial space. NASA looked for outside

partners because it recognized that the expertise was now

available in the open market to deliver frontier capabilities, at

lower cost compared to what NASA could develop them for. In

2008 NASA awarded contracts to Space X and Orbital Sciences to

transport cargo to the ISS. Space X carried out its first resupply

mission in 2012 and Orbital Sciences in 2013.

This model has changed NASA’s technology strategy. It now

involves fixed-price contracts within public-private partnerships,

where NASA does not exclusively own the resulting technology.

Commercial partners can sell their services and technology to

other customers. Costs are shared, and NASA pays for milestones

reached. Rather than providing detailed specifications for the

what and the how, NASA specifies high level goals (the what),

leaving the how to the commercial partners. The innovators can

then exploit these technologies commercially as they see fit,

further fuelling the development of space technology and

enhancing the value of the industry overall.

The commercial resupply program has taught NASA how to work

effectively with the commercial sector and to manage ongoing

public-private partnerships. Culturally this has led to a more

outward-looking agency that recognizes the innovative capacity

of the market. Dealing with commercial actors has also taught

NASA greater commercial awareness, that is, a focus on

accomplishing things as efficiently as possible and being

conscious about the costs of any given activity — a far cry from

what was seen as unlimited resources of the Apollo program.

New offices such as the Commercial Crew and Cargo Program

were set up within NASA to manage and promote commercial

partnerships. Leaders managing these partnerships adopted the

mindset that NASA is one of several parties involved in space

technology development, and favor an open engineering

architecture that can facilitate commercial collaborations.

In this networked model, NASA has also embraced open

innovation. The agency now poses innovation challenges online

in open competitions, crowdsourcing solutions and ideas as a

complement to internal innovation efforts. Successful open

innovation challenges have included competitions on the design

of pressurized yet flexible astronaut gloves, ways to accurately

measure the strain on materials used in space such as Kevlar

straps, and better forecasting of potentially destructive solar

flares.

Given the recent directive the U.S. government requiring NASA to

return to manned missions to the moon and beyond, the

organization’s new capabilities and structure are becoming even

more important. NASA is now able to use innovations wherever

they emerge within its networks, so that it can accomplish goals

such as deep space exploration, the search for extra-terrestrial

life, and a manned journey to Mars.

Loizos Heracleous is a professor of strategy at Warwick Business School. Follow him on Twitter @Strategizing.

Douglas Terrier is Chief Technologist at NASA’s HQ in Washington, DC.

Steven Gonzalez is a Technology Transfer Strategist at NASA’s Johnson Space Center.

DT

SG

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