This column is a follow up to the column I recently wrote on the topic of risk in the space sector. Specifically, that column was on the topic of execution risk. This is also a follow up to columns I have previously written on the topic of complexity. That’s because I think the two topics are actually related.
And that’s because it turns out that space projects are inherently complex. By which I mean “Complex” in the project management sense. This is a whole topic unto itself but let me explain briefly.
“Complexity Theory” is based on the fact that there are a class of project management problems that defy classic project management approaches. Those classic approaches are based on the central idea the outcome of a project can be predicted if the problem, and the potential solutions, are characterized well enough. Thus, standard project management techniques put a premium on collecting high quality data and making plans based on accurate predictions.
But a Complex project does not work this way, instead Complex problems are what a physicist would call “Non-Deterministic” and “Non-Linear.” In other words, their behaviour cannot be predicted accurately because they defy prediction both in terms of where they go and how fast they get there. Their unpredictability is unavoidable and natural.
Applying a standard approach to these kinds of projects actually makes things worse, not better, because it tends to direct time, effort, and resources to explaining why things are not going to plan, instead of working out ways to adapt and overcome the obstacles and challenges that were not, and could not have been, foreseen.
Well, that, to me, describes most space projects – including the development and deployment of a new technology. And that’s because success in space depends on a lot more than simply developing the next disruptive technology. And that’s because making anything work in space requires more than a working technology. It also requires a spacecraft that not only functions correctly in the harsh environment of space, but one that also survives the different but equally hostile environment of launching to space. Moreover, that spacecraft has to end up where it is supposed to be. And the spacecraft has to be identified, tracked and communicated with while it is there.
Furthermore, every part of that spacecraft has been designed to fit into a size, weight, and power budget that is very tightly constrained. And then all of those constituent parts need to interact with one another and with the environment in ways which are difficult to predict and also difficult to monitor remotely once the spacecraft has left the planet.
All of which means that working in space almost always involves dealing with contingencies, anomalies, and so called “emergent behaviour” – which are the very hallmarks of Complexity.
So, if space projects inherently fit the definition of “Complex” what can be done about it? Traditional project management is not well adapted to this environment. What does work? And, critically, if you are an investor, how can you assess in advance whether an organization is likely to be successful?
Well, to begin with I would like to point out that dealing with complexity is a solvable problem. In fact, in my personal experience there are people and organizations that are very good at it. Those that thrive in such environments where others don’t exhibit certain fundamental characteristics.
First of all, organizations that thrive on complexity, and the individuals who populate them, need be comfortable with contingency. To make a success of a complex project requires the ability to not only “expect the unexpected,” but to welcome the challenge that unforeseen events generate.
Second of all, teams that are effective at managing complexity are able to stay focused on moving towards the goal, instead of simply developing and executing a plan. In other words when contingencies and anomalies occur the first question such a high performing team asks is: “OK, now what? Can we make use of that new data to move forward?” as opposed to saying “Oh No, what went wrong? Why didn’t that work? How can we fix it?”
Finally, in order to deal effectively with complexity a team needs to be comfortable solving problems using a “sense and respond” approach as opposed to “predict and measure.” Which really means that instead of stopping and conducting lengthy analysis and replanning, effective teams are not afraid to use limited, controlled, but responsive, “trial and error” to find their way out of situation that they did not expect to find themselves in.
And so, to circle back to the theme of this article, the only way to reduce the execution risk to a space company is to develop those very characteristics because they will always be needed
And, not surprisingly, these are the very things that Flight Heritage teaches, because every mission throws up contingencies and anomalies. Learning to deal with that fact is as important as dealing with the anomalies themselves.
To be successful, or even to learn from failure you have to avoid being discouraged by the failure.
And the simple fact is that those who are at home in this environment stay in it. Those who are not, do not.
Which means that the very experience of working in space exercises “selective pressure.” Those who are really at home in this kind of environment, thrive on uncertainty and meeting challenges, turning them into opportunities. They develop the attitude and skills to work in a complex environment. Including the ability to focus on preserving outcomes rather than explaining failure.
They also develop an innate sense for how to troubleshoot problems in the unique space environment. This experience is hard-won and sometimes not for the faint of heart. It is also most often gained by working with “veterans” who have been there and done that.
In other words, the most effective way to reduce the risk of poor execution in the space business is to have Flight Heritage or, at the very least, have access to those that do have it.
And the most pernicious challenge that this poses is that often it’s hard to spot the real risks to successful execution without that same kind of experience. Experience with most founders – and most investors – don’t have.
So, the bottom line is that, because developing a technology and a business for space is an inherently Complex problem, the risks associated with it are not predictable. This, in turn means, that the usual tools like technology road maps and business plans will be subject to change – not because of poor decision making – but because that is the nature of the business.
Now, if you are running, or have invested in, such a business and those changes occur there will be a natural tendency to measure progress by looking at how far from the plan you are – rather than looking at how close you are to the ultimate outcome.
This has the natural effect of meaning that both founders and investors tend to place a higher value on a company in the early stages – because they don’t understand the risks, and then a lower value on the company as those risks are encountered, because they don’t know how to move past them – and may not even realize how close they actually are to the outcome they want – because they are looking backwards instead of forwards.
None of which makes space a comfortable investment environment. But it DOES offer interesting opportunities for investors and founders who crack the code of how to get and profit from the experience they need.
So, it looks like this will be part two of a three-part series. In the next column I will talk about what “flight heritage” really means. And why it makes all the difference.
As always if you have comments or data that you would like to contribute to this discussion, please contact me through LinkedIn.
