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(originally published by Booz & Company)


The Rocket Science of Low-Cost Innovation

“Cumulatively, second round managers worked with less money, weaker cultures, and more divided centers of integration,” the author writes. “A project manager overseeing a second round project typically struggled with two of these three disadvantages. First round managers encountered practically none.”

What happened next, in the third round? Managers could have focused their efforts on overseeing the projects more carefully and consistently, while keeping budgets low, in line with strategies employed in the first round. But NASA took the opposite tack. Relative to the complexity of projects in the first and second rounds, NASA officials funded the next 10 projects in the low-cost stream at significantly higher levels, and invested two to three times more resources. Even the least complex missions carried higher price tags than they should have, according to the author. Although all 10 projects met their goals, the third round represented a retreat to more traditional project management methods—more money, less careful management.

But those methods aren’t sustainable, and the painful lessons of a misapplied corporate strategy have had long-term effects that can serve as a warning to other companies. The cost of the Mars Curiosity rover that landed in 2012 soared to $2.5 billion—taking it well outside the low-cost range. In turn, shortly after the Curiosity’s much-publicized landing, the agency’s overseers announced they would not fund another big-budget mission. Facing significant budget cuts and sustained public debate over the value of its expeditions, NASA knows that much of its future now depends on embracing a lower-cost approach and making it work—this time, for good.

Bottom Line:
NASA’s initial success with low-cost, team-based initiatives shows that even large organizations can innovate with trimmed budgets. But the agency’s inconsistent strategy led to catastrophic failures, underlining for companies that scaled-down innovative efforts depend on strong integration, a supportive culture, and a real commitment to the low-cost approach.

Author Profile:

  1. Matt Palmquist is a freelance journalist based in Oakland, Calif.


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