Feature Story

It’s a Rocket Revolution

In the space-launch industry, startups are blasting off into new frontiers of innovation. But don’t write off the established players.

After a successful launch to resupply the International Space Station last week, the first stage of a SpaceX rocket reversed course and landed upright at the Kennedy Space Center, just a few miles from where it took off.

Rockets that land upright — to be used again and again — were once found only in low-budget science fiction films. Today they are a game changer for the industry.

For decades, those expensive rocket stages either slammed into the ocean or burned up in the atmosphere.

With their reusable rocket stages, startups like Elon Musk’s SpaceX and Jeff Bezos’s Blue Origin are unleashing a highly disruptive innovation in an industry that has long resisted change. But which is experiencing an intense wave of new competition.

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“For decades, the major rocket companies said new innovation in rockets is not possible,” said Robert Zimmerman, a space historian and author. “You can’t save money. Vertical landing of the first stage is impossible. And even if it could be done, the rocket would no longer be useful. We are finding out how accurate those predictions were.”

Reusable first stages could cut launch costs by 30 percent, Zimmerman added.

But they are just one innovation in the newly competitive space frontier.

This competition is fueled by digitized upstarts challenging old-school ways of business. And it offers an important lesson for all executives: newcomers can disrupt in any industry, and established players need to respond if they want to survive.

Take United Launch Alliance (ULA) for example. This is a joint venture between two established players, Lockheed Martin and Boeing. This alliance was for years a government-sanctioned monopoly. But has been thrust suddenly into a volatile market.

ULA is learning to compete — fast.

“We are responding to the disruption of SpaceX in every dimension that you can imagine,” said Dr. George F. Sowers, ULA’s vice president for advanced programs.

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“From the workforce to our product lines, our cost structure, and the management structure of our company,” continued Sowers.

ULA is also adopting more digital technologies to speed design and implementation. It is rethinking relationships with longtime contractors and driving an innovative, “fail-fast” culture.

“It’s a painful process,” Sowers said. “To streamline ourselves in this new environment, we have turned over the management of the company and are reducing our workforce.”

Painful, yes. But some industry experts think ULA has the right stuff.

“ULA has new management,” said Dr. David Livingston, an industry analyst. “And they are turning out to be fiercely competitive.”

ULA flies modern versions of Atlas and Delta rockets, with roots in the Cold War and early space program. But the company is designing an all-new booster, the Vulcan, which they plan to launch by 2020.

Though it won’t land upright, Vulcan’s expensive main engines will separate from the first stage, inflate a protective shroud, and return by parachute to be snatched from the air by helicopter.

ULA used a Russian engine for its expendable Atlas V booster but has long relied on U.S. suppliers such as Aerojet Rocketdyne.

For Vulcan’s reusable engine, ULA is turning to Jeff Bezos’s Blue Origin. The company’s cutting-edge BE-4 is powered by liquid natural gas instead of kerosene or liquid hydrogen.

“Culture by Osmosis:” Disruptors’ Magic Rubs Off

By partnering with a startup like Blue Origin, ULA gains other advantages.

“There is a world of difference between the culture at Blue Origin and the culture at Aerojet Rocketdyne,” said Sowers. “We knew we could absorb some of their culture by osmosis, just by working with them.”

That influence shows up in cross-team collaboration. “We are literally breaking down walls to create a ‘Silicon Valley’ workspace,” Sowers said.

Digital technologies also enhance collaboration.

“If you have a truly functional set of tools that enable you to communicate with one another effectively and naturally,” said Carissa Bryce Christensen, managing partner with the Tauri Group, an aerospace analyst firm, “that makes an enormous difference for any complex engineering challenge.”

Above all, digital means agility. ULA may be slowed by some legacy technologies but is accelerating digitization to compete with its new rivals.

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According to Livingston, SpaceX, “has unbelievable computing power. If they detect a problem they can shut it down and redo the count quickly. That’s because the software enables them to track it down, synch it, and fix the glitch.”

Such innovations helped SpaceX make a competitive bid to resupply to the International Space Station.

On last week’s mission, SpaceX’s Falcon 9 rocket lifted its Dragon spacecraft to deliver supplies. The journey involved two days of travel to the Space Station, where a robotic arm grabbed the Dragon spacecraft and will transfer 4,900 lbs. of cargo over five weeks.

Despite 14 years in business, SpaceX continues to embrace the culture of a startup. That includes taking risks.

SpaceX’s first vertical landings failed spectacularly—and publicly—during otherwise successful launches of its Falcon 9 booster. Yet the efforts paid off.

“That was exactly the way to do that,” said Christensen. “They said, ‘Let’s see if it works.’ SpaceX was able to embrace that potential for failure and build it into their narrative.”

3 Lessons from a Disrupted Space Incumbent

  1. No pain, no gain: Find the “management fortitude” to drive cultural change and organizational shakeups, said Dr. George F. Sowers of United Launch Alliance.
  2. Disruptors make good partners: ULA is learning from highly digitized Blue Origin, which is supplying engines. One upshot: ULA is literally breaking down walls (and using more digital tools) to support cross-team collaboration.
  3. Fail Fast: While maintaining a “fail never” policy for operational rockets, ULA encourages out-of-the-box thinking and risk taking in its design phase.

Out of the Box: A “Space Truck” Fueled by an Asteroid

In response to such challenges, ULA is moving one stage further, literally. It plans a reusable second stage for later versions of Vulcan.

Second stages normally orbit the Earth before burning up in the atmosphere. Vulcan’s would be refueled and reused. “Every one of those becomes a space truck that you can use over and over,” said Sowers.

Since much of the expense of an orbital launch comes from lifting the rocket’s own propellant, ULA has explored using fuel mined from asteroids for its reusable second stage. (Asteroids contain water, which can become liquid oxygen and liquid hydrogen.)

“If we can use propellant mined from an asteroid, we can cut the costs of launch to the surface of the moon by a factor of three,” he said.

It’s the kind of thinking the company might have lacked in the old days. But it’s essential in the digitized, increasingly competitive marketplace of space.

“Digital technologies enable you to get better performance out of the same hardware,” said Christensen.

That, along with competition, and low cost, is driving a new “space rush.”

“The key to this is you just don’t know,” added Zimmerman. “We have no idea of what is coming. We do know that when costs come down somebody is going to have an amazing idea that no one thought of before. And do it in space.”