Since World War II, the United States has invested an astronomical amount of government funds in the research and development of “pre-competitive” technologies to achieve its goals for both the Nation’s defense and its competitiveness within the global marketplace.

The cancellation of NASA’s Constellation Program — officially heralding among other things the evolution of commercial rocket technology from “pre-competitive” to “competitive” — publicly punctuates the expanding maturity of American space technology capabilities and space-derived commercial value.

Predictably, the transition so far has not been easy. Like for the teenager whose 18th birthday marks in some communities an overnight conversion from child to adult, the rules can quickly change for a company whose technology has matured to “competitive” status. And those rules directly affect the economic stability of entire regions, like Florida’s Space Coast, and the voters who depend upon it for their family’s livelihood.

Once it begins, the most striking shifts are often in the business model used and funding sources that fuel it. The “cost plus fixed fee” model widely used in government R&D procurement is replaced by the wholly different “fixed price” model. Also a change of seismic proportions is the attendant shift from requirements-based (read: “Do as I say because I said so.”) to performance-based (read: “Figure it out for yourself and be accountable for your solution.”) fulfillment criteria.

Although wrenching, the payoff can be worth the pain. It comes in gaining access to the global capital markets, which have far deeper pockets than does the U.S. government. But the cost of such access can be enormous for organizations small and large alike, whose cultures must cope with the attendant changes in business risk, labor capital skills needed, far different accounting rules and procedures, and the sharing of company equity and control with investors and skilled entrepreneurs needed to turn a competitive technology into a successful venture or profit center.

Like turning your garage into a “halfway house” for your not-quite-an-adult teenager, some federal agencies have been willing to soften the transition by being an “anchor tenant” for ventures commercializing newly emancipated technologies. When this happens, it is usually for a limited period of time during which the technology’s owner is gradually weaned from its reliance on public funding as it builds credibility in the global capital markets.

In Part 1 of this 7-part series, we highlighted Northrop Grumman CEO Wes Bush’s call for the U.S. aerospace industry to resist repeating its annual request to Congress for legislation to provide “for industrial protection and government programs to keep our workforce intact.” Although for some a tough pill to swallow, his proposal responds creatively to the increasingly lethargic support Americans have for its space program by urging industry leaders to:

  • “Incorporate true affordability as a requirement,” and
  • “Turn the many emerging substitutes for space from rivals into partners.”

Bush was specifically urging the American aerospace sector to take this advice within the context of its traditional “government-as-customer” domain. Reported as asserting that “affordability is as essential as technical accountability,” he advised:

“First, we need to embrace innovation to help address the issues of affordability, risk management, and vulnerability – and with the same amount of zeal we exhibit when developing new technology to extend capabilities.”

Bush then punctuates the second element of his proposal – urging space stakeholders to partner, rather than compete, with rival air and ground solutions – by issuing an even broader call:

“In addition, industry and government – especially in the acquisition community – will need to work together to reach across the current buying patterns that we are all used to. Stove-piping and hermetic system autonomy is costing us – and the taxpayer – much more than it needs to. Stove-piping has got to go. The new coin of the realm must be system concepts that rely on multiple capabilities that are integrated into the conops, and are successfully operated.”

We urge you to consider a more expansive version of his advice. We urge all innovators of American corporate aerospace – from the biggest to the smallest company – to venture beyond their conventional stomping grounds to the wider range of “cousin industries” that employ aerospace-derived technologies in their products and services…space-based and terrestrial alike.

(X) True Affordability as a Requirement

Reviving the parent-teenager metaphor, remember that the parent’s financial burden eases as the young adult child makes his/her way into productive employment. Indeed, the newly emancipated child’s energy and low-overhead lifestyle quickly result in both creativity and productivity in the newly “extended” family. And the parents get to launch a new career, or explore parts of the world they have yet to visit, or downsize their home or retool it for new uses.

OK, the metaphor breaks down a little here. But you get the idea. When a competitive technology is kicked out of its pre-competitive family-of-origin, the U.S. economy gets more jobs, profits, global market share, and investment opportunities for less cost and risk.

(X) Seeing Rivals as Partners

Central to the success of a young person’s entry into adult society is an environment full of helpful mentors and constructive role models. Even if the youngster attains, and eventually exceeds, the level of talent delivered by this older generation, the early stage partnering is an essential exchange for young and old alike.

Consider this: You could once again be the new kid on the block – the one everyone reaches out to with a helping hand. Venture beyond your comfort zone by recognizing that what you have may be valuable to industries other than traditional aerospace. Aerospace and aerospace-derived technology make important contributions to many global industries including, among others, agriculture, art, banking & finance, biotechnology, capital markets, chemicals, cleantech, computers & information technology, consumer goods & retailing, education, electronics, energy & power (both traditional and renewable), entertainment, environment, government, human resources development, infrastructure, insurance and risk management, logistics, manufacturing, media, nanotechnology, pharmaceuticals, resource management, sports, telecommunications, and tourism.

Coming up in Part 3: Do You Want to be King, or Do You Want to be Rich?


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