Why is SpaceX more agile and successful than NASA at launching new projects?
Why does Tesla invest in R&D only to open out the patents it acquires?
The answers to all these questions lies in a new system of solutioning which runs counter to industrial manufacturing and product development.
Open source software movements have leveraged similar ideas over the past three decades but we’re now at a point where these principles can be applied to innovation in any industry.
NASA’s legacy model of space exploration relies on monolithic projects. Every project involves highly specific decisions and investments which contribute towards a one-off rocket launch.
This standalone project approach is highly inefficient – components are not reusable or configurable for application to future projects. Development times are longer in the absence of reusable work. Investments, which are largely project-specific, cannot be amortised across multiple initiatives. Because components are not leveraged across projects, there is a lack of continuity in NASA’s space exploration efforts. Each mission starts ground up, leading to inefficiencies and delays in the development process.
In contrast, SpaceX takes a Building Blocks approach to space exploration.
As I explain in The Building Blocks Thesis Volume One:
Solutions are often consumed as bundles of value. For instance, a primary school student consumes education as a bundle comprising textbooks, teacher-delivered training, self-administered testing etc.
A building blocks approach unbundles a solution bundle into its fundamental constituents – in the above example, textbooks, teacher-delivered training, self-administered testing etc. would serve as individual building blocks. Building blocks may be combined and recombined to create a wide scope of end solutions, each solution leveraging common building blocks.
This is the approach employed by SpaceX – as also an entire emerging private space exploration industry.
It reimagines space exploration as a set of modular building blocks, which may be cross-leveraged and reused. Investments are no longer project-specific but can generate returns across projects. Using reusable building blocks, SpaceX has succeeded in cutting costs to orbit by a factor of 18 and attracting industry-wide inflow of investments into this space.
Building blocks can be recombined to create entirely new systems – as SpaceX does across projects.
As firms adopt a building blocks approach, a flywheel effect takes hold. Take SpaceX as an example. The larger the universe of building blocks, the more diverse projects it can support, leading to more launches. With every project, new building blocks get created and existing ones get configured further.
Most importantly, investors are de-risked. They are no longer investing in all-or-nothing projects. They are investing in a project execution framework supported by an ever-growing library of building blocks. Regardless of the outcome of a specific project, returns on the overall portfolio of projects improves over time.
As I summarise in the thesis:
Digital building blocks enable solution design at ecosystem scale. A digital building block leverages digital technologies, enabling greater flexibility in solution design. Digital building blocks are autonomous and hence perform specific tasks and functions independently. But by defining standards and specifications, these building blocks may be recombined towards solution design allowing interoperability between building blocks as well as interoperability between higher end solutions designed using these building blocks.
Effectively, digital building blocks enable a ‘system of solutions’ that can plug-and-play across each other, enabling a vast and seemingly unconnected ecosystem of solution creators to more effectively coordinate their efforts towards solving large-scale problems through diverse context-rich solutions.