1
National Aviation Needs and the Federal Role

PRIVATE-SECTOR PERSPECTIVE

World leadership in air transportation and aircraft manufacturing is widely viewed as a cornerstone of U.S. economic welfare and national security. U.S. commercial air transportation handled over 40 percent of total U.S. freight by value,1 and domestic flights drew nearly 600 million business and private passengers in 2003,2 constituting the backbone of the U.S. travel industry.3 General aviation carries up to 150 million additional passengers per year.4 In its 2004 report on aerospace research at the National Aeronautics and Space Administration (NASA), the National Academies’ Committee for the Review of NASA’s Revolutionize Aviation Program called air transportation “vital to the U.S. economy and the well-being of its citizens.”5

1  

Anyone, Anything, Anywhere, Anytime: Final Report of the Commission on the Future of the United States Aerospace Industry (2002), p. 1-2.

2  

The projected 2004 total, as of March 2005, was 635 million. Air Transport Association, available at http://www.airlines.org/econ/d.aspx?nid=1032.

3  

Travel Industry Association of America, preliminary figures exclusive of international passenger fares, available at http://www.tia.org/Travel/econimpact.asp.

4  

Final Report of the Commission, p. 2-1.

5  

National Research Council, Review of NASA’s Aerospace Technology Enterprise: An Assessment of NASA’s Aeronautics Technology Programs (Washington, DC: The National Academies Press, 2004), p. 5.



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Aeronautics Innovation: NASA’s Challenges and Opportunities 1 National Aviation Needs and the Federal Role PRIVATE-SECTOR PERSPECTIVE World leadership in air transportation and aircraft manufacturing is widely viewed as a cornerstone of U.S. economic welfare and national security. U.S. commercial air transportation handled over 40 percent of total U.S. freight by value,1 and domestic flights drew nearly 600 million business and private passengers in 2003,2 constituting the backbone of the U.S. travel industry.3 General aviation carries up to 150 million additional passengers per year.4 In its 2004 report on aerospace research at the National Aeronautics and Space Administration (NASA), the National Academies’ Committee for the Review of NASA’s Revolutionize Aviation Program called air transportation “vital to the U.S. economy and the well-being of its citizens.”5 1   Anyone, Anything, Anywhere, Anytime: Final Report of the Commission on the Future of the United States Aerospace Industry (2002), p. 1-2. 2   The projected 2004 total, as of March 2005, was 635 million. Air Transport Association, available at http://www.airlines.org/econ/d.aspx?nid=1032. 3   Travel Industry Association of America, preliminary figures exclusive of international passenger fares, available at http://www.tia.org/Travel/econimpact.asp. 4   Final Report of the Commission, p. 2-1. 5   National Research Council, Review of NASA’s Aerospace Technology Enterprise: An Assessment of NASA’s Aeronautics Technology Programs (Washington, DC: The National Academies Press, 2004), p. 5.

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Aeronautics Innovation: NASA’s Challenges and Opportunities Aviation’s national economic impact does not stop with the air transport system. Aerospace exports made up approximately 27.5 percent of all 2003 U.S. exports in the category that the U.S. Department of Commerce labels “advanced technology products.” In that year, trade in airplanes and parts delivered a surplus to the United States of $21.1 billion, which significantly defrayed a deficit of $47.9 billion in all other advanced technology categories.6 As for its military significance, the Commission on the Future of the United States Aerospace Industry, reporting to the President and to Congress in November 2002, declared a healthy U.S. aerospace industry to be “one of the primary national instruments through which [the U.S. Department of Defense] will develop and obtain the superior technologies and capabilities essential to … maintaining our position as the world’s preeminent military power.”7 For the Aerospace Commission and many other industrial and academic groups, recent signs that the nation’s preeminence in aviation may be imperiled have occasioned deep concern. At least 11 studies of U.S. activity in aeronautics published over the past half decade by the National Academies, as well as various industry and government bodies have repeatedly called attention to the vulnerability of the United States’ traditional leading position. In its final report, the Aerospace Commission stated that “the critical underpinnings of this nation’s aerospace industry are showing signs of faltering” and warned bluntly, “We stand dangerously close to squandering the advantage bequeathed to us by prior generations of aerospace leaders.”8 Most recently, 250 members and affiliates of the National Aerospace Institute, in a report commissioned by Congress, declared the center of technical and market leadership to be “shifting outside the United States” to Europe, with a loss of high-paying jobs and intellectual capital to the detriment of U.S. economic well-being.9 A consensus emerges in these reports that the United States must overcome a series of major challenges—to the capacity of its air transportation 6   Charles W. McMillion of MBG Information Services, analyses of U.S. Department of Commerce data. 7   Final Report of the Commission, p. 4-4. The Commission on the Future of the United States Aerospace Industry is hereafter referred to as the Aerospace Commission. 8   Final Report of the Commission, p. vi. 9   National Aerospace Institute, Responding to the Call: Aviation Plan for American Leadership. (2005).

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Aeronautics Innovation: NASA’s Challenges and Opportunities system, the industry’s ability to compete for international sales, its ability to reduce noise and emissions, and the air transportation system’s safety and security—if the nation’s viability in this sector, let alone international leadership, is to be ensured. The reports highlight the following problems, among others: A strained air transportation system. Air transportation in the United States has, in a sense, fallen victim to its own popularity, “reaching capacity, resulting in increased delays and costs for both passengers and shippers.”10 Even before the months leading up to September 11, 2001, a period of growing demand, passenger airlines’ on-time records were deteriorating. “Aviation’s speed advantage is now nearly lost over shorter distances,” the Aerospace Commission noted in its 2002 report. For trips less than 500 miles, doorstep to destination travel speed is between 35 and 80 miles per hour.11 Barring improvement of the transportation system, the Aerospace Commission estimated that delays will cost the U.S. economy an estimated $170 billion for the period 2002-2012, and their annual cost has been predicted to exceed $30 billion by 2015.12 Demand represents only one side of the equation. The air traffic management system, although generally judged to be safe, reliable, and capable on the whole of handling today’s traffic flow, relies on 1960s technology and operational concepts and is resistant to innovation.13 Along with other factors, such as airport runway capacity, it is a severe constraint on expansion in the future. In a 2003 report, a National Academies’ committee was emphatic: “Business as usual, in the form of continued, evolutionary improvements to existing technologies, aircraft, air traffic control systems, and operational concepts, is unlikely to meet the challenge of greatly increased demand over the next 25 to 50 years.”14 Increasing competition in commercial aircraft. A view common to several of the reports is that European competition, which has already eroded U.S. 10   Final Report of the Commission, p. 1-5. 11   Final Report of the Commission, p. 2-5. 12   Final Report of the Commission, p. 2-5. 13   Final Report of the Commission, p. 1-5. 14   National Research Council, Securing the Future of U.S. Air Transportation: A System in Peril. (Washington, DC: The National Academies Press, 2003), p. 9.

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Aeronautics Innovation: NASA’s Challenges and Opportunities dominance of commercial aircraft sales, threatens one of the nation’s few standouts among value-added exports. The U.S. share of this global market plummeted from 71.1 percent in 1999 to 50.7 percent in 2003, while the market share of rival Airbus climbed over the period from 28.9 to 49.3 percent.15 Military aerospace capabilities, assessed as “robust” by the Aerospace Commission, were nonetheless deemed to be at significant risk owing to their reliance on platforms and an industrial base—measured in both human capital and physical facilities—that are aging and “increasingly inadequate.”16 One indicator of the aerospace industry’s health, total U.S. employment, in February 2004 hit a 50-year low of 568,700—a level more than 57 percent below the peak of 1.3 million it had reached in 1989.17 “Aerospace sector market capitalization, research and development investments, and return on investments/assets are down and consolidations are up …,” the Aerospace Commission noted. “Jobs are going overseas.”18 Although advanced aircraft and air traffic management systems could be procured from foreign suppliers if U.S. manufacturers fail to remain competitive, according to the American Society of Mechanical Engineers that could mean forfeiting the “important national security and economic benefits” that “the supremacy of the U.S. aeronautics industry provides.”19 Environmental degradation. Although a half century of effort has paid off in significant reductions of both the noise and emissions emanating from the turbine engine, the growth of air traffic over the period has more than offset these fruits of technological progress. In fact, objections to aircraft noise and emissions have been the primary barriers to building new airports or adding new runways at existing airports,20 both of which are key to relieving pressure on the U.S.’s overburdened air transportation system. Safety and security concerns. The U.S. air transportation system has an excellent safety record: between mid-November 2001 and mid-December 2004, U.S. commercial aviation, both passenger and cargo, saw a total of 15   Percentages reflect the dollar value of deliveries; statistics, compiled by Richard Aboulafia of the Teal Group, quoted in New Technology Week, July 12, 2004, p. 7. 16   Final Report of the Commission, p. 4-2. 17   Aerospace Industries Association, available at http://www.aia-aerospace.org/issues/subject/employment_facts.cfm. 18   Final Report of the Commission, p. 1-5. 19   Securing the Future, p. 59. 20   Final Report of the Commission, p. 2-13.

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Aeronautics Innovation: NASA’s Challenges and Opportunities 36 fatalities resulting from four mishaps.21 Although the possibility exists that increased demand over the next 25 to 50 years could result in more accidents, a National Academies committee points out that, in the past, safety improvements have been able to reduce the total annual number of fatalities from commercial aircraft accidents despite increased demand.22 There is, however, little assurance that historical trends will continue uninterrupted. The events of September 11, 2001, did more than show the vulnerabilities of the air transportation system; they focused attention on new homeland security requirements that call for system capabilities not previously anticipated. TECHNICAL REQUIREMENTS Of the dozens of recommendations advanced in the reports described above, some relate to generalized goals such as “leadership,” “coordination,” and “vision,” others to specific policy areas, such as trade and government regulation. Nevertheless, collectively the reports attribute an important role to new technology, identifying numerous technical requirements for meeting each of the challenges that the aerospace sector now faces.23 There is no suggestion that the civil aviation system as a whole, despite its origin over 100 years ago, is a mature sector subject to mainly incremental technical improvements. Some of the technologies identified have application primarily in one of the four major areas of challenge: modernizing the air transportation system, improving aircraft performance, curtailing environmental impacts, or enhancing safety and security. Others, crucial in more than one area, may be seen as playing an enabling role across the board. In any case, the interrelation of these four areas is such that improvement in each can be affected by improvement—or by lack of same—in one or more of the others. Collectively the reports seem to place the most emphasis on the following general technical capabilities or enabling technologies: 21   National Transportation Safety Board, available at http://www.ntsb.gov. 22   Securing the Future, p. 9. 23   For a synthesis of the recommendations apart from those contained in the more recent National Institute of Aerospace report, see Logistics Management Institute, Working Paper NS 454, Response to Reports on U.S. Air Transportation: Assessment of Recommendations (April 2004).

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Aeronautics Innovation: NASA’s Challenges and Opportunities Modeling and simulation. The National Academies’ Committee on Aeronautics Research and Technology for Vision 2050 included in its report a set of detailed recommendations that, it promised, “would provide the long-term systems modeling capability needed to design and analyze evolutionary and revolutionary operational concepts and other changes to the air transportation system.”24 A second Academies panel, the Committee on Breakthrough Technology for Commercial Supersonic Aircraft, foresaw modeling and computer simulation as a significant factor in lowering manufacturing costs, which could help make commercial supersonic aircraft economically successful.25 Taking a broad view of their potential, the Aerospace Commission projected modeling and simulation, among other applications of information technology, as contributing not only to automating and integrating the air transportation system but also to reducing aviation transit time, fatal accident rates, noise and emissions, and technology-to-system transition time.26 Human factors. The National Academies’ Committee for the Review of NASA’s Revolutionize Aviation Program, in assessing NASA’s efforts on aviation safety, described human factors as critical and in need of more support.27 With specific reference to designing supersonic aircraft, studying the human response to shaped waves was judged necessary, both to assist vehicle design research and to validate new regulatory standards.28 Describing a future that “will involve much more automation” at the levels of both the individual aircraft and the total air transportation system, the Academies’ Committee for Aeronautics Research and Technology for Vision 2050 called for a focus on efforts to design synergistic partnerships between humans and automation that result in better performance in all operating conditions than either could achieve alone.29 The Aerospace Commission, concurring that human factors research could help “enhance performance and situational awareness … in and out of the cockpit,”30 24   Securing the Future, p. 25. 25   National Research Council, Committee on Breakthrough Technology for Commercial Supersonic Aircraft, Commercial Supersonic Technology: The Way Ahead (Washington, DC: National Academy Press, 2001), p. 34. 26   Final Report of the Commission, p. 9-9. 27   Review of NASA’s Aerospace Technology Enterprise, p. 75. 28   Commercial Supersonic Technology, p. 18. 29   Securing the Future, p. 11. 30   Final Report of the Commission, p. 9-7.

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Aeronautics Innovation: NASA’s Challenges and Opportunities predicted it would be a “primary contributor” to tripling the capacity of the U.S. air transportation system by 2025.31 Distributed communications networks. “New integrated air, space and ground networks will enable us to acquire large volumes of data, process that data and then make it available to decision makers anywhere in the world, in near-real time,” the Aerospace Commission stated, envisioning applications from cyber security to military logistics to vehicle design.32 To this end, the Academies’ Committee for the Review of NASA’s Revolutionize Aviation Program recommended exploration of “revolutionary concepts” related to distributed air-ground airspace systems, including the distribution of decision making between the cockpit and ground systems and reorganization of how aircraft are routed, with significant implications for airspace usage and airport capacity.33 The Academies’ Committee on Aeronautics Research and Technology for Vision 2050, recommending research targeting such “[g]eographically distributed activities,” named a variety of specific requirements with multiple applications and benefits.34 Examples of specific technological requirements identified by the panels are shown in Box 1-1. THE FEDERAL GOVERNMENT’S ROLE IN TECHNOLOGY A significant federal role in aviation research, development, testing, and evaluation has paralleled the history of flight. Wartime requirements have greatly expanded that role, but it has also influenced civil aviation developments. The numerous commissions and panels that have issued reports in recent years share the view that a substantial federal role is still appropriate, not only in relation to public goods that will not be provided by the private sector—airspace management for mobility and commerce, safety and security, and environmental protection—but also in the development of new aircraft and engine technologies that exceed the time horizon and risk profile of private producers. Today that role is highly dispersed among many federal agencies—the military services and the Defense Advanced Research Projects Agency 31   Final Report of the Commission, p. 9-9. 32   Final Report of the Commission, pp. 9-3, 9-4. 33   Review of NASA’s Aerospace Technology Enterprise, p. 46. 34   Securing the Future, p. 16.

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Aeronautics Innovation: NASA’s Challenges and Opportunities BOX 1-1 Technical Needs of Aeronautics Air Transportation System boosting the security and reliability of voice, data, and ultimately video connections to in-flight aircraft increased use of satellites in handling traffic flow use of synthetic vision, cockpit display of traffic information, and controller displays to improve awareness of aircraft separation prediction and direct sensing of the magnitude, duration, and location of wake vortices safety buffers to account for monitoring failures and late detection of potential conflicts accommodating an increased variety of vehicles (e.g., unpiloted, tilt-rotor, lighter-than-air) Aircraft Performance improved propulsion systems, both the evolution of high-by-pass turbofan engines burning liquid hydrocarbon fuels and the development of engines using hydrogen as fuel new airframe concepts for subsonic transports, supersonic aircraft, runway-independent air vehicles, personal air vehicles, and uninhabited air vehicles composite airframe structures combining reduced weight, high damage tolerance, high stiffness, low density, and resistance to lightning strikes high-temperature engine materials and advanced turbomachinery enhanced airborne avionic systems the application of nanotechnology for advanced avionics and high-performance materials passive and active control of laminar and turbulent flow on aircraft wings tools to reduce the need for costly hardware testing (DARPA), NASA, the Federal Aviation Administration (FAA) and other parts of the Department of Transportation, the National Science Foundation (NSF), the Transportation Security Agency of the Department of Homeland Security, the Department of Health and Human Services, the Environmental Protection Agency (EPA), and the National Oceanographic

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Aeronautics Innovation: NASA’s Challenges and Opportunities Environmental Impacts low-emissions combustor technology to reduce NOx emissions and particulate matter alternative sources of energy for application to aviation structures and materials to reduce drag and improve aerodynamics understanding of aviation’s effect on climate and the need to balance NOx and CO2 emissions improved dispersion models a standardized method for measuring particulate emissions engine and airframe noise reduction technologies testing of technology for reducing sonic boom Safety and Security fault-detection and control technologies to enhance aircraft air-worthiness and resilience against loss of control in flight prediction, detection, and testing of propulsion system malfunctions technologies to reduce fatalities from in-flight fires, postcrash fires, and fuel tank explosions, including self-extinguishing fuels systems using synthetic vision and digital terrain recognition to allow all-weather visibility technologies to reduce weather-related accidents and turbulence-related injuries understanding human error in maintenance blast-resistant structures and luggage containers improved technology for passenger screening intelligent autopilots able to respond to anomalous flight commands reduced vulnerability of global positioning system (GPS) guidance and Atmospheric Administration.35 But NASA is in many respects the principal sponsor. When it was established by the Space Act of 1958, NASA 35   As we observe again at the end of this chapter, coordination of aeronautics R&D has been a recurrent theme of the reports discussed above. The most elaborate proposal, by the

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Aeronautics Innovation: NASA’s Challenges and Opportunities absorbed the National Advisory Committee on Aeronautics (NACA), chartered in 1915 (operational in 1917) to coordinate private and public aeronautics research. According to NSF surveys of federal agencies’ basic and applied research spending, NASA accounted for 56 percent of the federal investment in aeronautical engineering in 2001.36 The Scope and Quality of NASA’s R&D Program NASA has a broader portfolio of R&D activity than any of the other agencies with projects in each of the four areas described above—air traffic management, aircraft and propulsion, emissions and noise reduction, and safety and security.37 The National Academies’ Committee to Review NASA’s Revolutionize Aviation Program in 2003 enumerated 15 major projects encompassing 51 subprojects and a total of 231 tasks. For example, in the area of airspace management, the program has aimed at moving the air traffic management system away from sector-specific human control to a much more highly automated system-wide control system while also dealing with airport congestion through work on dynamically reconfigurable runways and smart, nontowered airports. In the area of vehicle systems, the program has aspired to contribute to “revolutionary new air vehicles,” through development of intelligent turbine engines with significantly reduced emissions;     Commission on the Future of the U.S. Aerospace Industry, called for the establishment of a multiagency task force, the Next-Generation Air Transportation System Joint Program Office, under which NASA, the FAA, DOD, the Department of Homeland Security, and the National Oceanographic and Atmospheric Administration would draft a plan incorporating the strategy, schedule, and resources needed to develop and deploy such a system. The reports of the American Society of Mechanical Engineers and the Aerospace Industries Association called for the creation of a new coordinating body, one that would oversee federal aeronautics research and development in general. The National Academies’ Committee on Strategic Assessment of U.S. Aeronautics (1999) proposed an entity that, while similar, would reach beyond the federal government into industry and academia. 36   National Research Council, Board on Science, Technology and Economic Policy, Trends in Federal Support of Research and Graduate Education (Washington, DC: National Academy Press, 2001). DOD accounted for 43 percent. Aeronautics is separated in the surveys from space or astronautical engineering research, in which NASA’s dominance is, of course, even greater. 37   See NASA, The NASA Aeronautics Blueprint: Toward A Bold New Era of Aviation (Washington, DC, 2002); and Fiscal Year 2004 Strategic Plan (Washington, DC, 2004).

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Aeronautics Innovation: NASA’s Challenges and Opportunities airframe and engine noise reduction technology; ultralight smart materials and structures, aerodynamic concepts, and lightweight subsystems; an unmanned air vehicle (UAV) capable of routine operation in the national airspace; controls enabling reduced or no human intervention; and other technologies contributing to the goal of a “feeling, seeing, sensing, sentient air vehicle.” And in the interest of safety and security, the NASA program is working on technologies ranging from blast-resistant luggage compartments and self-extinguishing fuels to an automated passenger information and threat assessment system. According to independent evaluations as well as NASA reports, the agency’s aeronautics R&D program has scored a number of significant technical successes, some of commercial importance. As recently as December 2004, NASA aeronautics successfully flew the first air breathing hypersonic vehicle, the X-43A. Moreover, despite declining resources that are discussed later in this chapter, the current program has been judged to have relatively high technical merit. The National Academies’ 2003 evaluation of the program ranked over four-fifths of the 172 tasks under the vehicle systems program as either “world class” or “good” and only 17 percent as “marginal” or “poor.”38 NASA’s Management Challenges NASA’s accomplishments in aeronautics technology development are even more impressive in light of the many challenges faced by the program’s managers, currently titled the Aeronautics Research Mission Directorate (ARMD).39 The program’s principal challenges include the following: 38   It is not indicated what proportion of the vehicle systems budget the low-ranked tasks represent. 39   Previously known as the Aeronautics Enterprise, the program’s scope, location, and workforce have remained largely the same through agency reorganizations and nomenclature changes, with the exception that responsibility for oversight of the Ames Research Center in northern California was shifted from ARMD to the Space Science Directorate in 2004. Ames continues to perform aeronautics R&D, mainly related to air traffic management, under ARMD’s direction. Likewise, ARMD continues to have management responsibility

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Aeronautics Innovation: NASA’s Challenges and Opportunities Two other components of the aeronautics research cost structure must be considered in assessing ARMD’s decision latitude: general and administrative (G&A) expenses and congressionally directed research projects that might not otherwise be undertaken. Certain fixed administrative costs incurred by the agency arise from its responsibilities as defined in the Space Act, obligating NASA to maintain certain national facilities and core competencies in certain areas of aeronautics. G&A costs are normally determined for each center and applied as a percentage of labor cost involved in the program at that center. The center G&A costs at Dryden, Glenn, and Langley are high because of the obligation to support an aging legacy infrastructure. They range from 110 percent of direct labor costs at Glenn and Dryden to 144 percent at Langley, according to the budget submission. Optimistically, in FY 2006 this would leave only approximately $75 million out of the projected aeronautics budget for other programmatic costs, such as the extramural research program and the cost of subcontracts and demonstration costs. A growing part of the extramural program is determined by Congress in directing funds to particular projects in the annual appropriations cycle. The number and cost of these projects has increased in recent years. Although in some instances there is little apparent relationship between the project and NASA’s mission, some of the mandated expenditures reflect congressional views that some important public good objectives are being neglected in NASA’s planned activities. Nevertheless the congressional prohibition on attaching administrative charges to the mandated projects amplifies the budgetary impact of the assignments, further constraining the aeronautics budget. In previous years NASA has accommodated the budgetary reductions in a variety of ways, including closing some antiquated research facilities,50 extending the timeline of certain projects, and ending certain projects at levels of development (in NASA parlance, technology readiness levels, or TRLs) earlier than originally planned. What has apparently not occurred, until it was proposed in the President’s FY 2006 budget submission to Congress, is a commensurate reduction in ARMD’s program scope or R&D portfolio. 50   Testimony of Dr. Philip S. Anton, RAND Corporation, before the Subcommittee on Space and Aeronautics, House Committee on Science, U.S. House of Representatives, March 16, 2005, pp. 13-18, available at http://www.house.gov/science/hearings/space05/Mar16/Anton.pdf.

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Aeronautics Innovation: NASA’s Challenges and Opportunities Management of Technology The tendency to spread resources over a wide range of opportunities to meet such diverse expectations as the NASA aeronautics program faces is understandable, especially when the technical merit of the activities is highly rated.51 Still, the temptation needs to be resisted. One of the more robust findings of the management of technology (MOT) literature is that, over time, innovative organizations exhibit a rather sharply defined strategic focus. The pattern was perhaps first documented in the Japanese consumer electronics industry.52 Later studies document a similar pattern in firms as diverse as Toshiba and Intel, Monsanto and Genentech, GE and IBM, and Corning and Motorola,53 while extensive anecdotal evidence suggests an analogous force to be at work in such historically innovative firms as 3M, Oracle, Cisco, Microsoft, Fanuc, and Canon. Evidence of the impact of strategic focus on innovativeness over time can also be found in a recent, multiyear, multifirm study of the management of radical innovation.54 In these and many other cases, a well-defined, explicitly articulated strategic focus powerfully shapes the entire context for technology management. This strategic focus serves as a guide for distinguishing opportunities that are important, even vital, to pursue from those that are merely interesting. In addition, it fuels persistence in the pursuit of those opportunities. Most major industrial innovations require a decade or more of development, during which they inevitably encounter delays, setbacks, and failures. It is only if these projects can be justified as strategically central that 51   Review of NASA’s Aerospace Technology Enterprise, p. 16. 52   See especially R. S. Rosenbloom and W. J. Abernathy, “The Climate for Innovation in Industry: The Role of Management Attitudes and Practices in Consumer Electronics,” Research Policy 11 (1982), pp. 209-225; and R.S. Rosenbloom and M. A. Cusumano, “Technological Pioneering and Competitive Advantage: The Birth of the VCR Industry,” in M. L. Tushman and W. L. Moore, eds., Readings in the Management of Innovation, 2nd ed. (Cambridge, MA: Ballinger, 1988). 53   See M. Maidique and R. Hayes, “The Art of High Technology Management,” Sloan Management Review 25 (Winter 1984); J. Morone, Winning in High-Tech Markets (Boston: Harvard Business School Press, 1993); P. A. Abetti, U. Sumita, and Y. Kimura, “Toshiba Information Systems—From Mainframes to Laptops and Notebook Computers,” International Journal of Technology Management, Special Issue (1995), pp. 139-160; G. Lynn, J. Morone, and A. Paulson, “Marketing and Discontinuous Innovation: The Probe and Learn Process,” California Management Review 38 (3, Spring 1996). 54   R. Leifer, C. McDermott, G. O’Connor, L. Peters, M. Rice, and R. Veryzer, Radical Innovation (Boston: Harvard Business School Press, 2000).

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Aeronautics Innovation: NASA’s Challenges and Opportunities they garner the continuing support necessary for their long, often tumultuous development. Furthermore, over time, a sustained strategic focus, accompanied by sustained technology development in support of that focus, fuels the development of unique capabilities in the firm’s domain of concentration. As its technology and marketing organizations focus on the same general domain through successes, partial successes, and failures, they learn ever more about the technology and markets in that domain; they also accumulate ever more expertise and talent, a situation that in turn increases the odds of successful innovation in that domain. Thus, the history of technological innovation in the most highly innovative firms appears in hindsight to consist of a succession of development projects—some successful, some partially successful, some unsuccessful—with each project building on its predecessor and all projects exploring promising opportunities within the firm’s strategic focus.55 Although innovative firms demonstrate a striking pattern of technology push, that push evolves within a widely shared strategic framework that guides effort in certain directions and not others. In contrast, firms that lack strategic clarity tend to bounce from one opportunity to another, never focusing on a domain of opportunity long enough to fully explore its possibilities or build the competence necessary to exploit them.56 Effects on Innovation The constraints on NASA’s aeronautics program budget have direct and indirect bearings on innovation. First, in the absence of an effort to adjust the R&D portfolio to available resources by foregoing projects that 55   For example, after its successful development of the CT imaging business, GE Medical came to view itself as being in the business of diagnostic imaging, whereas it had previously considered itself to be a more general medical equipment enterprise. It then explored in ambitious fashion, over a two-decade period, development of digital X-ray (a failure), nuclear imaging (a modest success), ultrasound (another failure), MRI (a huge success), and again digital X-ray (a success). The same pattern was exhibited by Corning from the mid-1970s to the early 1990s (cellular ceramics, optical fibers, LCD glass, glass-plastic composites) and by Motorola from the late 1940s through the 1980s (mobile radio, portable radio, paging, cellular telephones, portable data, iridium). See J. G. Morone, Winning in High Tech Markets. 56   The classic example is the American consumer electronics industry. See R.S. Rosenbloom and W. J. Abernathy, “The Climate for Innovation in Industry.”

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Aeronautics Innovation: NASA’s Challenges and Opportunities may have technical promise and support but are not affordable, the inclination will be to extend project timelines. In NASA this practice is said by NASA managers and customers to be fairly common (see Chapter 2). In an innovation-oriented organization, ingredients for success start with clear expectations and commitments and accountability for meeting those commitments on a planned schedule, so that both leadership and development teams are on the same page throughout the project cycle. A second tendency is to declare projects completed earlier in the development of new technologies than originally planned or earlier than ideal from the standpoint of either persuading or enabling users to take them up. Several participants in the committee’s workshops expressed the concern that too many NASA aeronautics projects stopped short of full demonstration of their technical success and utility to users. Experience shows that a potential innovation must be reduced to practice in the complex environment in which it will function before it will be accepted as credible and adopted by the target user community. Such demonstrations in aeronautics often require large expenditures, as has been amply demonstrated by prior NASA and DOD advanced technology demonstrations. The costs of such demonstration programs normally amount to hundreds of millions of dollars. A major part of these demonstration costs is attributable to the systems phenomenon described earlier—unless the technology can be shown to perform as part of the highly integrated system in which it will be used, the prospective user community is likely to discount it. Quite apart from concrete budget limitations, it is apparent that NASA aeronautics program managers feel under increasing pressure to favor shorter term, nearer payoff development projects. As in other federal agencies, the Office of Management and Budget (OMB) is seen as a primary source of this pressure. In our interviews at the research centers, NASA informants cited a reluctance to carry research to higher levels of technology readiness out of concern that OMB would perceive such an activity as inappropriately close to market needs and that NASA’s private-sector customers should be responding to this need on their own, without substantial government support. A third impact of sharply declining budgets is on core technical competencies. Insufficient attention to core competencies was a concern of the National Academies’ 2004 Review of NASA’s Aerospace Technology Enterprise, which concluded that the Vehicle Systems Program (VSP) in particular reflected lack of a “good understanding of the core competencies (in order of importance) required to meet [the] goals” set forth in its mission

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Aeronautics Innovation: NASA’s Challenges and Opportunities statement. Similarly, the panel judged the VSP investment strategy to be ad hoc, characterizing it as having “too many unprioritized projects and tasks and no apparent methodology to determine which research areas will provide the greatest benefit to the U.S. gross domestic product and do the most public good.”57 Aviation Safety and Airspace Systems Programs The previous National Academies’ panel appears to ascribe this lack of clarity at the VSP to an overall failure by NASA to maintain a firm grip on the relative value of its many capabilities. This may have been of less moment when the agency’s prowess and resources were unrivaled. The competencies developed by NASA during the 1960s, 1970s, and 1980s, the panel recalled, “enabled the U.S. aerospace industry to take a dominant position in both the military and commercial marketplaces worldwide.” Today, however, when industry state of the art has overtaken NASA capabilities in some areas, the fact that “NASA no longer has a clear set of core competencies and technologies” carries a substantial price. Because “NASA has not reduced the scope of [its existing] core competencies or research focus areas even in the face of changing market needs and reduced budgets,” some of its research activities—here, the panel was referring specifically to those within the VSP—“find themselves on budgetary ‘life support.’”58 The panels that reviewed the two other programs under aeronautics research, the Aviation Safety Program (AvSP)59 and the Airspace Systems Program (ASP), for the same report did not address these concerns with the same degree of explicitness. Still, comments included in their reports exhibit comparable misgivings about the efficacy with which these programs were managing both their core competencies and the projects to which these competencies were applied. The former panel asserted that “there were too few in-house personnel and that too much of the research was being conducted by contractors” in the case of some tasks of the then-AvSP, adding that such distribution “tends 57   Representatives of the committee were told in January 2005 that NASA had begun an agency-wide inventory of core competencies—but also that this activity did not begin with aeronautics research and appeared unlikely to reach it for some time. 58   Review of NASA’s Aerospace Technology Enterprise, p. 13. 59   This program, subsequently renamed, is now known as the Aviation Safety and Security Program (AvSSP).

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Aeronautics Innovation: NASA’s Challenges and Opportunities to weaken the core competencies of NASA.”60 Moreover, it explained that each individual task within the AvSP is structured to last five years, making it “difficult, if not impossible, for NASA to maintain core competencies with these five-year program cycles.” Describing these short cycles as “more suitable for a product-oriented program,”61 it raised a question about the balance between fundamental and product-driven research62 within the then-AvSP, having found several instances of products being developed by NASA that are similar to or have considerable overlap with products developed by industry. It therefore recommended that the program “compare (benchmark) its research projects against those of other research and development entities in government and industry to ensure that NASA’s work is leading,”63 adding: “NASA should not be working in a specific technical area unless it is leading the field.”64 This appears particularly important in the light of evidence that in some instances the breadth of the work being done was at the expense of technical depth.65 The ASP panel expressed similar concern that ASP research was generally too focused on short-term, incremental payoff work, whereas it should instead support basic research relevant to long-term objectives and focus on areas of greatest payoff—that is, areas that relieve choke points and other constraints to a more efficient air transportation system.66 A fourth concern from an innovation standpoint is the impact of shrinking budgets on the external R&D program. Any vibrant, innovative R&D program should seek and support ideas outside its organization. Funds should be available for maintaining an extramural program that would facilitate contact with significant numbers of innovative participants from academia and industry. 60   Review of NASA’s Aerospace Technology Enterprise, p. 76. 61   Review of NASA’s Aerospace Technology Enterprise, p. 74. 62   Review of NASA’s Aerospace Technology Enterprise, p. 73. 63   Review of NASA’s Aerospace Technology Enterprise, p. 76. 64   Review of NASA’s Aerospace Technology Enterprise, p. 4. 65   Review of NASA’s Aerospace Technology Enterprise, p. 78. 66   A cause of this short-term focus, the panel suggested, is that NASA “tends to view success in terms of the ability to mature technology and get the FAA to implement it for operational use.” Attributing to “[s]ome FAA users” the opinion that “this view of success leads NASA to focus too much on implementation issues, which NASA may not be qualified to address given its limited operational experience,” the panel declared: “Success of NASA applied research tasks should not be defined solely in terms of implementation.” Review of NASA’s Aerospace Technology Enterprise, pp. 3-4.

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Aeronautics Innovation: NASA’s Challenges and Opportunities In short, ARMD faces a dilemma often confronting private-sector managers of technology: Opportunities for new technology development exceed the resources available, especially once work progresses beyond the stage of preliminary exploration. In those circumstances, the principal task of managers is to distinguish between opportunities that are worth pursuing and affordable and those that, however attractive and technically promising, must be forgone. Deciding which pathways to forgo lies at the heart of competent technology management, and it is essential to achieving the objective of innovation. Instead, NASA has spread resources across more R&D endeavors than can be sustained to the point that users are able to take up the results. The committee thinks that unless NASA aeronautics R&D managers narrow their mission focus and align programs with available resources, the advice we offer with respect to management techniques to facilitate innovation will be largely ineffectual. Recommendation 2: ARMD’s first order of business in promoting aeronautics innovation is to translate a national aeronautics policy into a strategic or mission focus that is in better alignment with the resources available to it—its budget, its personnel, and its technical capabilities. This, in turn, should lead to a prioritization of programs and projects involving the research centers, external grantees, and contractors. Clearly, the result may be a reduced mission scope and portfolio but one with greater impact on innovation in air transportation. Prioritization of the Vehicle Systems Program Last year, there was a short-lived effort in this direction. In connection with a sharp $109.5 million (20 percent) drop in the FY 2006 budget request for the VSP, NASA announced a striking change in scope of activity. ARMD would “transform its program to focus on projects that demonstrate breakthrough technologies/capabilities,” changing from a “philosophy of broad technology based research and technology to a few focused projects for development and demonstrations of barrier breaking technologies, reducing the number of high-risk, high-payoff demonstrations, and [eliminating] incremental aeronautics technology projects” that merit “a federal role.”67 Specifically, the focus would be reduced to achieving flight 67   Budget Estimates, p. SAE 11-5.

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Aeronautics Innovation: NASA’s Challenges and Opportunities demonstrations in four areas of subsonic noise reduction, sonic boom mitigation, zero emissions, and high altitude, long-endurance UAVs or remotely operated aircraft. ARMD would greatly reduce or abandon altogether work on conventional subsonic aircraft technology, including aerodynamics, smart structures, and rotorcraft.68 Our committee did not address the technical merits of ARMD’s four remaining “breakthrough” projects in vehicle systems development. Instead, we considered whether this descoping action, although perhaps a psychological breakthrough of sorts,69 represents the kind of focusing and selection process that we think is vital in ARMD’s current circumstances. First, it is not clear to us, although we do not rule it out, that a strategy of how to address certain national needs guided the selection of program emphases. The articulated rationale for the choice of the areas of subsonic noise reduction, sonic boom mitigation, zero emissions aircraft, and high-altitude, long-flying UAVs is that they could demonstrate a series of technical successes or “breakthrough technologies/capabilities” within a few years and periodically thereafter, in contrast with the previous philosophy of broad technology-based research and technology or a “field of 1,000 flowers approach.”70 There is a pronounced public good rather than a commercial or precommercial character to the projects selected (UAVs being of principal interest to the military and the weather service), but this is not explicit. ARMD’s mission statement in the FY 2006 budget submission continued to emphasize its general contributions to an efficient air transportation system, as well as developing new uses for science or commercial applications as well as to improving aircraft performance.71 68   Budget Estimates, p. SAE 11-15. The National Academies’ report, Review of NASA’s Aerospace Technology Enterprise, lamented the last prospect, saying that “research in civil applications of rotorcraft will not be conducted elsewhere in government or industry and … NASA’s decision to discontinue rotorcraft research has left critical civilian needs unaddressed” (p. 8). 69   In its briefing to the House of Representatives Appropriations Committee staff, NASA described the VSP revision as a “landmark opportunity” to take a “new approach” that could serve as a “pilot for transforming all” activities under its purview. NASA briefing of the staff of the House of Representatives Committee on Appropriations, March 8, 2005. 70   NASA briefing of the staff of the House of Representatives Committee on Appropriations, March 8, 2005. 71   Budget Estimates, Fiscal Year 2006, p. SAE 10-3.

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Aeronautics Innovation: NASA’s Challenges and Opportunities A second, related concern is that the downsizing was budget crisis-driven rather than an effort to right-size the budget to a set of strategic priorities. Unless the new focus has a compelling, articulated rationale, it remains vulnerable to further budget cuts rather than strengthening the program and its support, especially in the event that technical success is more elusive or longer term than planned. In a “Risk Management” discussion accompanying the FY 2006 budget submission, NASA actually conceded that elements of its remaining research portfolio might become imperiled: “RISK: Given significant cost overrun/schedule slip in a project deliverable, there is the possibility that lower priority activities may be descoped or eliminated…. “RISK: Given that technologies from other programs do not meet planned readiness levels, there is the possibility that this program’s cost and schedule may be impacted…. “RISK: Given customer needs and requirement changes, there is the possibility that the 15-year roadmap [to be delivered in fall 2005, according to Dr. Lebacqz72] will need to be updated.” To mitigate each of these risks, ARMD promised to “track progress … and maintain contingency plans, including further descope options.”73 Third, because the transformation was a part of a closed-door budget process of negotiation exclusively between NASA and the White House, it proceeded largely without consultation with users and customers, both those who might be expected to benefit from the new priorities and those who might be disadvantaged by the downgrading or elimination of other activities. ARMD officials conceded as much, stating in the budget request, “Over the next year, the [Vehicle Systems] program will work with the aeronautics community to define the scope of the overall program,”74 scheduling workshops after the budget announcement to explain the action 72   Statement of Dr. J. Victor Lebacqz, associate administrator for aeronautics research, NASA, before the Subcommittee on Space and Aeronautics, Committee on Science, U.S. House of Representatives, March 16, 2005, p. 3. 73   Budget Estimates, Fiscal Year 2006, NASA, p. SAE 11-16. 74   Budget Estimates, Fiscal Year 2006, p. SAE 11-1

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Aeronautics Innovation: NASA’s Challenges and Opportunities and seek reactions to it, for example, from the aircraft and engine manufacturers. As we describe in the next chapter, this after-the-fact consultation with technology users is the reverse of the process the committee thinks is critical for innovation. In the end, both a new NASA administrator and congressional authorizing and appropriating committees turned aside the VSP revision and restored the status quo, including the budget level, underscoring our overriding concern that a national policy, a strategic agency focus, and a set of program priorities need to be articulated and agreed on. This process needs to involve ARMD management, but it exceeds the grasp even of NASA’s leadership. It needs to begin at the highest levels of government, with the White House and Congress.

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