Last September, delegates of the Space Generation Congress 2013 gathered in Beijing to discuss about current trends and future perspectives in the Space sector. 5 themes were prioritized: Industry, Agency, Society, Exploration, and Earth Observation. The following series of posts in the SGAC Commercial Space blog will present the recommendations provided by delegates in the Industry Working Group.
These recommendations aim at improving the efficacy and efficiency of the industry to ensure its long term sustainability. In this first post, how Space companies have many times incurred heavy investments in technical developments without looking into the actual needs of their customers leading to catastrophic financial results is discussed.
Space is inspiring. It certainly is one of the most demanding engineering areas. In such a harsh environment, even the slightest malfunction of a component may cause the failure of the whole system. Players in this industry have achieved impressive engineering milestones, unfortunately, this same focus on engineering has made these companies rely too much on the ‘build it and they will come’ philosophy. There are many examples of outstanding engineering projects that have turned to be terrible financial investments. Iridium is a remarkable example of that: it solved incredibly challenging engineering problems like assembly production of satellites (1 satellite each 4.5 days) or launching 72 spacecraft in about a year, while being a complete commercial failure because the company did not understand the market. Iridium was only able to attract 20% of the initially forecasted customers.
In the early ages of the industry (and in a lower level still today) governments exerted a great influence on the industry. Obviously, the space industry has been organized to respond to the governments’ demands. Needless to say, motivations for governments are different from commercial profitability: they seek to generate employment, foster STEM education or boost the national pride. The need to satisfy defense high-tech demands has transformed some aerospace companies into organizations closer to research institutions with very long term developments than to flexible companies in a competitive market. In a time in which governments are moderating their expenditures and investors are lowering the value on high-risk endeavors and favoring flexibility in front of long term plans, aerospace companies should adapt themselves into a commercially driven, customer oriented industry.
Today’s Young people face an industry that must be more responsive to customer needs and market demand
Use market data and research tools to ensure efficient use of resources in agency programs and commercial investments
At early stages of development, commit resources to generate reliable insight into customer demand and use cases
Involve a wider range of stakeholders (especially final users) in product development
a) Integrate techniques like design thinking, customer development, and lean market-product development
b) Low-volume production and prototyping for early market feedback (before main investment), potentially using emerging technologies like rapid prototyping or 3D-printing
In order to better satisfy the market needs and hence have optimal investments, the students and young professionals at the SGC 2013 suggested to the industry to make full use of market data and research tools to improve the decision making process in commercial space.
Ideally, these efforts should be done very early in the process; market should be validated before the big investments in product development are incurred. There is a new wave of market research techniques that should be incorporated to the industry like design thinking, a technique that combines creativity, empathy, and rationality to create innovative solutions for customers’ problems; customer development, for early product-market fit validation; or lean development for cost-effective launch of new products and services.
As an example, in the case of Iridium deployment, an early local simulation of the network conditions (data rate, building signal attenuation, terminal size, costs…) would have been very useful for calibrating the market and taking further product development and investment decisions.
Similarly, one of the most successful companies in space at the moment, SpaceX, is expanding the attributes of their services well beyond a technically bold vehicle (engineering focus). It works on understanding what is valued by its customers to better serve them by outperforming competitors in these underserved attributes (customer focus).
Reporting: Lluc Palerm. Subject Matter Experts: Paul Guthrie, Alanna Krolikowski. Moderator: Sandra González Díaz. Delegates: Nicole Tchorowski, Emma Braegen, Cynthia Chen, Zorana Dancuo, Thomas Hobbs, Chung Sheng Huang, Jakob Huesing, Abhijet Kumar, Philipp Maier, Daichi Nakamura, Pavel Paces, Daniel Sagath, Olga Stelmakh, Jan Svoboda, Prater Tracie, Saqib Mehmood, Phillippa Blaber, Luís Ferreira, Felipe Arevalo, Zihua Zhu