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Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop (2019)

Chapter: 5 Strategies and Tactics for Creating the Desired Future

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Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
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Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
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Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
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Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
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Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
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Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
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Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
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Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 37
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 38
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 39
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 40
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
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Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
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Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 43
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 44
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 45
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 46
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 47
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 48
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 49
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 50
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 51
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 52
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 53
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 54
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 55
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 56
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 57
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 58
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 59
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 60
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 61
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 62
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 63
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 64
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 65
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
×
Page 66
Suggested Citation:"5 Strategies and Tactics for Creating the Desired Future." National Academies of Sciences, Engineering, and Medicine. 2019. Continuous Improvement of NASA's Innovation Ecosystem: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25505.
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Page 67

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5 Strategies and Tactics for Creating the Desired Future Following a first day that was devoted primarily to discussing what the future of NASA should look like, the workshop’s second day tackled the question of what was needed to build that future. To that end, the workshop participants were divided into four parallel breakout sections that lasted much of the day. The topics of the four sections were Career and Talent Management, Portfolio Management, Program Leadership and Management, and Classical Enablers and Impediments to Innovation. The morning portion of each breakout section included presentations by outside experts followed by a discussion period; the afternoon portion of each section had an exercise (different for each section) designed to produce a large number of ideas for how NASA can reach its 2030 goals. These parallel sections were followed by an afternoon plenary, during which representatives from each breakout section briefly described what they had heard from the experts’ presentations and listed some of the ideas for actions that had been generated. That was followed by a general discussion of some of the general themes that had appeared at the workshop. As a result of a Day 2 format with four lengthy parallel sections, workshop participants generated a great deal of information and a large number of actions, and no single person attending the workshop was exposed to more than a fraction of it. This chapter provides a summary of the presentations in the four sections and a sampling of some of the ideas developed by the workshop attendees. Most of the details are drawn from the breakout sections themselves, while some are pulled from the summaries and discussions of these sections that took place during the following plenary session, and the sources of the various comments are given. CAREER AND TALENT MANAGEMENT The breakout section Career and Talent Management for Sustaining Innovation was led by Janice Fraser of Bionic and Bob Gibbs of NASA. Fraser began the morning portion of the section with a description of four principles, or pillars, that Bionic emphasizes to organizations interested in improving their innovation. That was followed by a panel discussion featuring Erika Long of Procter and Gamble (P&G), Atherton Carty of Lockheed Martin Advanced Development Programs (better known as the “Skunk Works”), and Colonel Rhet Turnbull of the Space Superiority Systems Directorate of the U.S. Air Force. The afternoon portion was devoted to an ideation session in which participants went through a structured exercise to come up with a variety of ideas for improving innovation at NASA. Four Pillars of Organizational Innovation Fraser began by describing a model for buy-in, although she noted that she generally avoids using that term “because it’s nonspecific. You think you have it, and then you forget to keep it, and it goes away.” Ideally, she said, buy-in should take place in four steps, beginning with understanding and then moving on to belief, advocacy, and decisions. Belief is the solid foundation on which everything else PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-1

should sit, she said, and she added that she includes actions as part of decisions since every action is a form of decision. The best-case scenario is that buy-in follows that sequence—that people understand something before they decide to believe it, before they decide to talk about it and advocate for it, before they make decisions based on it. “But often,” she said, “for very good reasons we have to make decisions before we fully understand what it is that we’re signing up for,” and the problem then is that “that’s a fragile form of buy-in because if we make a decision and we don’t really understand it, when we finally do understand we may not believe it, which means that we might unmake that decision.” That model, Fraser said, can help explain why people who talk a good game might never actually take any action—they might not truly understand or even believe what they’re advocating for. But a person who has a deep understanding of a subject and speaks with a passion that is rooted in that understanding is more likely to truly believe in something and take action. So Fraser asked the participants in the section to keep that model in mind during the section’s discussion of talent and innovation and to think about their own understanding and beliefs and whether they truly intend to take action on those beliefs “so we can diagnose our own buy-in as well as keeping an eye out for others.’” Fraser then moved into her discussion of her four pillars, or what she described as the “philosophical underpinnings for the organizational transformation that fosters innovation.” Her company, Bionic, has been working with P&G to transform its innovation culture, she said, and those four principles underlie the transformation that is taking place at P&G. “I’ve used them with a variety of other companies as well,” she added. The four pillars are as follows: (1) “Pigs” and “chickens” both need food (2) Safe to try (3) Do the easy thing that’s good enough (4) Team performance over individual “Pigs” and “Chickens” Both Need Food The first pillar, Fraser explains, comes from the business parable, “When it comes to making a breakfast of ham and eggs, the chicken is involved, but the pig is committed.” In short, when a company is undergoing some sort of change, some employees will be truly committed to the change—they are “all in”—while a much larger group will be involved, or affected by the change, while not being totally committed. The principle expressed in the first pillar is that all of these workers, both those who are committed and those who are involved, must be taken into account in the planning and execution of a new program. Often, Fraser said, those who are involved but not committed get mostly ignored at such a time. “We try to feed the pigs, and then we forget the chickens,” she said. “The chickens peck your ankles, it hurts, and you get frustrated.” At a place like NASA, the pigs would include the persistent innovators and “the people who support and make room for the persistent innovators, who are trying to make the hard organizational change.” They tend to get most or all of the attention during a change because they are driving it or most intimately affected by it. The chickens, by contrast, are “those people around the agency who are not directly involved in radically changing or even incrementally changing the status quo, who instead are keeping humans alive in space” or those working in the legal department or in compliance or in some other part of the agency that will be affected in some way by the change. These people may have understandable concerns or questions about whether the changes are somehow going to hurt their ability to be successful, Fraser said. They have a “legitimate need to feel safe and secure in their current situation,” she said, “and we have to respect that and take care of that.” PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-2

Safe to Try Fraser characterized the second pillar, “safe to try,” as probably the most important for those at the workshop, based on what she had heard in the previous day and a half, and it certainly seemed to generate the most discussion of the four pillars. “By any means, we must create circumstances of real and perceived safety for everyone involved, and for the organization at large,” she said. In particular, she said, an organization’s innovators must believe that it is safe to try, and she noted that the phrase was deliberately written to be ambiguous. Try what? “Big things, little things, process changes. It has to be safe to say, ‘Do we need this regulation? Do we need this level of specificity?’” No one’s career should be threatened by questioning and trying something different. A NASA employee in the section expanded on Fraser’s point about the importance of being able to question established methods. “Do we have to be A-plus students in everything that we do?” he asked, arguing that the impulse to always be A-plus students can have a “chilling effect on innovation.” He described an experience in which he and a colleague had been talking about delegating hiring authority to carry out some pilot projects or demonstrations at the different NASA centers. “And my folks came back, trying to get an A in compliance,” he said, “and what they had done was they had narrowed that authority and approached it from a perspective of not letting too many people use it. That’s exactly wrong from an innovation perspective.” Unfortunately, he said, that sort of approach is common at NASA—people focused on following the rules precisely just for the sake of following the rules. “What do we get for that?” he asked. “What’s the investment to get to that? What’s the chilling effect on innovation?’ Fraser responded that she really liked his story because of the attitude it expressed. “That’s an innovator’s attitude,” she said. “You’re saying, ‘I’m going to ask a little bit of forgiveness, instead of a lot of permission.’” She also liked the fact that the NASA workers were trying to do the right thing as they understood it, she said. “The world is made up of regular people,” she said. “We are all regular people. And regular people want to do the right thing.” However, she added, regular people are also natural innovators, and if just a few adjustments are made to the system—adjustments that might initially be uncomfortable to those regular people—it can unlock a tremendous amount of value. To create real and perceived safety for everyone at NASA, Fraser said, the agency’s leaders will need to see their jobs differently—not as making sure that everyone under them is doing what they are “supposed” to do but rather making it safe for them to accomplish their goals. She paraphrased a comment she had heard in a workshop session the day before. One of the participants was describing how leaders in his organization approached their work: “They meet monthly, they review progress, and they have really one function there, one question that they ask: What can I unblock for you?” she said. “That’s their job, and it’s not about oversight. It’s not about ‘i’ dotting and ‘t’ crossing.” That is a different approach to leadership, Fraser said. It is an approach to leadership that is focused on discovering rather than on knowing. In most organizations, Fraser continued, people are promoted for being the expert, for knowing the right answers. And, she said, she had heard various people at the workshop say that that approach is common at NASA as well. But an innovation-focused organization requires different things from its employees, which in turn requires a different approach from managers and leaders. “The kind of service that [leaders are] providing is not a knowledge-based service,” she said. “It’s a discovery-based service and an unblocking service.” A key role of leaders in such an organization is to remove roadblocks so that others can deliver maximum value from their ideas. Not only management teams but also human resource (HR) teams should follow this principle, Fraser said. Unfortunately, she added, “this is the opposite of how HR folks tend to think,” and changing how HR functions can be a major challenge. Nonetheless, it is a challenge that is important to take on. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-3

Do the Easy Thing that’s Good Enough Fraser described the idea behind her third pillar, “Do the easy thing that’s good enough,” as taking the fastest path to the most value. As an example, she mentioned the stories that had been discussed earlier in the workshop about the approach that SpaceX has taken to develop its space transportation capabilities. The company is launching its rockets regularly, and if a rocket crashes, it is not a major failure for the company, because the financial risk is low. “They’re doing the inexpensive, ‘easy’ thing that’s good enough to just get that next incremental learning,” Fraser said. The early launches in particular might have seemed like failures from the outside because the rocket didn’t behave the way it was supposed to, she said, but SpaceX didn’t care, because the goal wasn’t to get the rocket off the ground—it was to find out whether particular parts worked as planned. So the “failures” were treated as learning experiences rather than true failures. To put the third pillar into practice, Fraser said, NASA should “make expedient decisions to give people the safety and freedom to create and grow new businesses.” Doing this will often involve implementing short-term fixes that are neither sustainable nor scalable, she said, but that is just fine. At this point, rigor and scalability are red herrings. If a new business becomes successful and begins to add staff in large numbers, it will then be time to figure out how to scale up the different systems. But until that point, the idea is to create “good enough” solutions—what Fraser termed “patches”—that will support a population of a few dozen “pigs” and a few hundred “chickens.” In response to a comment from a member of the audience, Fraser clarified what she meant by “easy.” Different people define it in different ways, she said. For some, “easy” might mean the path of least resistance, for example, but that just leads to sticking with the status quo. For the purposes of this pillar—Do the easy thing that’s good enough—the idea is to look for the fastest, most efficient way to take the next step along the path, she said. “So we’re going to do an increment of work—what is the smallest amount of work we can do to meet the learning objective we have?” That smallest amount of work that gets the job done is the “easy thing.” Team Performance over Individual The final pillar, “Team performance over individual,” concerns how performance is evaluated in an innovation environment, Fraser said. Innovation is a collective endeavor, she explained, so “individual effectiveness is valuable only to the extent that it contributes to team effectiveness.” This means that individual performance evaluations should strongly reflect how an individual performs within and contributes to a team. To illustrate, Fraser told a story about an experience she had while working with a software company. The company is very focused on teams, it thinks a lot about team dynamics and team behaviors, and it is optimized for team behaviors in very specific ways, she said, and yet there were still teams at the software company that were not particularly functional or effective. In analyzing what made some teams good and some not so good, she and her colleagues found that there were certain individuals who made every team they were on better. In particular, she noticed a young man named ‘Alan.’ Although he was very smart, he “didn’t really present as an intellectual giant.” He would misspell words on slides and make other mistakes that would generally cause him to not be advanced very quickly. “But we noticed that every team he was on was great,” Fraser said. “He’s a designer, and we noticed that every time we paired him with a young designer, that designer became a [key player] faster.” So where it might take a normal hire 6 months and two projects to reach that level, designers who worked with Alan were generally working well and independently within 2 months. This and similar experiences led the company to make it a policy to recognize those people who, like Alan, would make others great. Eventually, Fraser said, the company made Alan a manager. A few years later, he returned to an individual contributor role, but at a much higher level and with a tremendous loyalty to the teams he was PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-4

on. “He’s one of these Gen Z people who would have left after a couple years, had we not noticed the behaviors and noticed the effect he had on everyone around him,” Fraser said. “So that’s my story about team over individual.” In response to Fraser’s fourth pillar, one participant noted that there are many structures within the federal government that make it difficult to make team performance a major part of individual evaluations. “This is not unique to NASA,” Fraser replied. But one difference between NASA and business organizations is that it can be much more difficult to change systems and processes in a federal agency. Indeed, some of the systems may be essentially impossible to change. So it will be important to understand which can be changed—and to what extent—and which cannot. Another participant suggested that managers do have one important tool with which to recognize and reward team performance. “We have to use the performance system and document that stuff, and that is all on an individual basis,” he said. “But the thing that motivates people at NASA is the ability to work on a fun project, and that’s not part of the individual performance management system. That’s at our discretion.” In short, managers can reward individuals for their value to team performance by helping them get assigned to desirable projects. That ability, he said, “is a very powerful incentive that we can use any way we want.” “Can I just add that it’s not just a fun projects, but it’s the fun teams?” another participant added. Even if a project isn’t going into space, and even if the assignment is just working on strategic workforce planning, he said, if it’s a good team, people will want to be part of it, and they can be rewarded in that way. Career Paths and Advancement After discussing the four pillars, Fraser spoke about the general patterns of career paths and advancement, which she illustrated with a slide describing Bionic’s talent management system (Figure 5.1). From an organization’s point of view, she said, the first step is to attract the right people and then to figure out whether a potential hire is the right match. From what she had heard at the workshop, Fraser said, it seemed to her that NASA had a lot of process devoted to this recruiting and screening—“perhaps too much.” After hiring workers, an organization must develop them with coaching, feedback, and various experiences. If they grow appropriately, they are promoted, and they must still be supported in various ways—coaching, sponsorship, feedback. The developing and supporting of workers is “about feeding your pigs and chickens,” she noted. And the organization must also work to retain their workers with incentives and other methods. It is a basic model that provides a way of thinking about an organization’s talent management system, she said. From there Fraser moved to a different model of how careers work, one that was more focused on promotions and advancement (Figure 5.2). That model, she said, was based on a literature review done in 2016 that looked at about 30 different studies. “If you look at what leads to senior leadership roles in general,” she said, “70 percent of advancement comes in the form of a stretch assignment, which is giving someone the opportunity to do something they had not previously had the chance to try.” This is where making it “safe to try” really comes into play” she said, since it is the people who take on stretch assignments who typically get advanced in an organization. Another 20 percent of advancement comes in the form of sponsorship, Fraser said. Sponsorship can come in different forms, she said. One form of sponsorship, for example, is helping people get the right sorts of assignments—those that will help them advance. Another type of sponsorship is protecting workers—giving them the chance to fail and then protecting them from any negative repercussions if they do fail. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-5

FIGURE 5.1 Talent management system map for Bionic. SOURCE: Janice Fraser, Bionic, “Career & Talent Management” presentation to the Workshop on the Continuous Improvement of NASA’s Innovation Ecosystem, November 30, 2018. The final 10 percent of advancement, she said, relies on some combination of performance measurement, mentorship, performance evaluation, skill building, and training—in short, all of the things that are normally considered to determine advancement. It turns out that, when you look at the statistics, these factors actually have much less to do with advancement than stretch assignments and sponsorship, she said, and she reiterated that this was not her opinion but rather the finding of research on a large number of organizations. Fraser concluded that part of her presentation by saying that she had not done any studies specifically of NASA to see how much of this applies to the agency and asking the participants to comment on the model as it applies to NASA. “Where does it match and where does it not match?” That led to a lively discussion about careers and advancement at NASA. A number of people in the group agreed that stretch assignments play a major role in advancing at NASA. “If you’re defining a stretch assignment as something that is a very difficult assignment, really pushing the envelope,” one participant said, then Fraser’s model captures the reality at NASA “because those things get noticed, they get recognized, and the individuals who are pushing towards senior leadership, they developed sort of a reputation.” Another participant echoed that opinion: “The majority of your good reputation is difficult assignments—doing things that haven’t been done before, coming up with a different idea or approach to something that’s completely not what we’ve experienced before.” That participant added a comment about Fraser’s “safe to try” pillar as it applies at NASA. “There’s kind of a small safety zone where it is okay to fail,” she said. “But it doesn’t go all the way up to a general safe zone to make new mistakes, and then once you make a mistake, you end up at the gulag somewhere.” PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-6

FIGURE 5.2 General model of career advancement. SOURCE: Janice Fraser, Bionic, “Career & Talent Management,” presentation to the Workshop on the Continuous Improvement of NASA’s Innovation Ecosystem, November 30, 2018. Fraser responded by pointing out that in her model the “gulag” is part of what she terms “sidelines and laterals.” This is an alternative career path for people who are not given stretch assignments and are thus not given the chance to move up the usual career path. “A lateral is a move from one position to another at the same level,” Fraser said, “and often laterals lead to sidelines [or the gulag], and it’s a way that your career can stumble.” That then led to a discussion of the difference between lateral assignments and stretch assignments. Several participants noted that at NASA what is called a lateral assignment is actually a stretch assignment—that is, an opportunity to take on new challenges and to learn and grow in new ways. Fraser explained that her model was originally developed when she was trying to understand why women and underrepresented minorities were not advancing into positions of leadership, and what she found was that being given lateral assignments was one way that people found their careers stymied. So the lateral moves in her model are what might be called “non-growth laterals,” in contrast with what she called “rotational stretch assignments,” which shift people from one place to another in an organization with the goal of having them extend their skill set or their understanding of the organization. Although they are lateral in the sense that they do not involve promotions, such moves should be thought of as stretch assignments. And, indeed, she said, such rotational stretch assignments are among the best ways to help workers in an organization grow. One participant said that NASA often refers to these lateral moves that are designed to help people stretch as “detail growth opportunities.” Sometimes they are advertised, she said, and sometimes they are just created and do not come with a promotion, so in a sense they are lateral assignments, but they are very different from the sort of going-nowhere assignment that is referred to as the “gulag.” One participant posed a question for the people from NASA. “Not everybody wants to go up the ladder,” she said. “Not everybody wants to be a senior leader. So my question is, . . . What’s in place for NASA to support those folks who don’t want to be in [a senior leader] position someday?” A participant answered that the general pattern in federal agencies is that it is necessary to take on supervisory management responsibilities if one wishes to advance through the General Salary (GS) pay scale. However, he continued, some people at NASA are working hard to get exceptions from these rules. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-7

“So if you just want to be the technology expert in this role,” he said “we want to be able to advance you as far as we can. I think that has to be rewarded as well, and it has to be recognized as well. Often we put people in the senior leadership positions who want nothing to do with it. Wouldn’t it be really great if all of our senior leaders really want to manage people? Continuing, he noted that the GS scale is a very old structure. It was created in 1949 and redone in 1976. If the system were a person, he noted, it would be 3 years past retirement age. “How many of you are driving a car from 1949?” he asked, and he said that the GS system should be placed into the category of “Stop doing stupid.” Another participant commented that there is one NASA center whose human resources are not operated under the federal system. That is the Jet Propulsion Laboratory (JPL) whose employees are not federal workers but rather are employees of the California Institute of Technology (Caltech). “A few years ago, HR [human resources] at JPL went through an enormous push to restructure the levels and the incentivization system to beef up the attractiveness of the individual contributor path,” he said. “So I would say today there’s a much more open recognition that management and managing people is not something that most people at JPL would ever want to do or should want to do, and that that’s just fine.” As a result, he said, the pay structure and the perk structure at JPL have been reworked in an effort to bring the individual contributor track into parity with the management track so that JPL employees do not have to become managers to advance. On the other hand, another participant said, JPL has a variety of issues that other parts of NASA do not have to deal with. “JPL has to work under the NASA rules,” he said. “They also have to work under the Caltech rules, and the most restrictive of all, under the California state employment rules. So when you layer in all of these rules, there’s a lot of restrictions that I don’t necessarily have with the federal workforce. So it isn’t always grass being greener on the other side.” The same sort of observation applies with the private sector as well, he said. Returning to the idea of the gulag, Fraser suggested that it might be a good place to find innovators. “Mine the gulag,” she said. “If you want to look for misfits, people who are not toeing the line, that are getting in “trouble,” those are the people who actually have ideas and are willing to take risks.” A participant commented that she does believe that some of the workers in NASA’s gulag are people whose talents have not yet been identified, but she cautioned that this does not apply to everyone in the gulag. Many of the people in the gulag are there because they do not have the skills to be successful at what they want to be. “They are where they are because they’ve just decided to check out,” she said. “I don’t know how we deal with that, but that’s what I see in our group.” Fraser suggested that some of these people may be frustrated because they have no interest in managing—and perhaps no skills at managing. “I think that when you have multiple ways to get ahead, multiple ways to have satisfying careers, people will stop aspiring to jobs they’re not suited for,” she said. “Often we aspire to the job that is at the top because that is what has been socially deemed the path forward, the way to get ahead.” Often the system does not give certain types of people ways to excel. “We want to make little boxes that, if you’re going to be extraordinary, you have to look and act like this,” she said. A different type of system—one that also rewards and recognizes senior individual contributors— could give more people the change to contribute and to excel.” PANEL DISCUSSION Following her presentation, Fraser invited Erica Long, Atherton Carty, and Colonel Rhet Turnbull to the front of the room for a panel discussion on talent management in innovation organizations. Each spoke briefly about his or her work, and then they had a wide-ranging discussion on what it takes for innovation organizations to excel. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-8

Turnbull, an active colonel in the U.S. Air Force, said that he had been working at the Air Force Space and Missile Systems Center at Los Angeles Air Force Base in California for about 3 years. About half his career has been in the space business, he said, and the other half in building nuclear weapons. “The Space and Missile Systems Center shares a lot of similarities to NASA,” he said, “so I feel your pain. We are also undergoing a major transformation right now.” The center employs about 5,000 people, he said—about 60 percent of whom are civilians and the rest active-duty military. Carty leads the technology roadmaps organization within the Advanced Development Program (“Skunk Works”) at Lockheed Martin. His organization serves as an important piece of the “innovation engine” for Lockheed Martin, he said. Many of the programs that Lockheed Martin has been best known for over the years, such as the F-22 and the F-35, were designed, developed, and tested in the Skunk Works. “I’ve been with the Skunk Works over 21 years now,” Carty said. “In that 21 years, I’ve had two or three dozen jobs. That’s one of the things that I love about the organization—that there’s a lot of ability to push into different areas that you don’t have expertise in, develop yourself, grow yourself, garner new opportunities, based on your ability to adapt and change.” His technology organization is responsible for a wide range of technologies, he said, from those with very low technology readiness levels (TRLs) to mature technologies. “We try to be very intentional about cultivating and incubating very-low-TRL technologies and growing them into things that can be matured,” he said. “And then there’s an element of the portfolio that also focuses on conceptual design, which we consider a core competency of what we do at the Skunk Works—the design process of how you create a new system solution, a new aircraft solution.” Erica Long said she had been with Procter and Gamble (P&G) for 8 years in human resources, where she supports P&G’s research and development group. For 3 years, she said, P&G has been working to bring lean innovation into the company and transform how it innovates. “We learned early on in the journey,” she said, “that there were some human systems things that needed to change about the company in order to enable this new innovation ecosystem.” She is part of a team that is experimenting with different human systems across the company to determine how best to improve innovation. Procter and Gamble After the introductions, Long began the discussion by describing the process that P&G has been going through. At the beginning of the process, she said, she and her colleagues got in touch with the people who were going to be involved—both the pigs and chickens. “I think that was really important,” she said. “We talked to the innovators, but we talked to the managers, we talked to the leaders to hear what was standing in their way about our systems or processes or culture or organization. We got really clear on the problems to solve.” From those discussions emerged three “work streams” that needed to be focused on,” Long said. The first was leadership and leadership behaviors. P&G learned that entrepreneurial management is a different discipline than general management, with different demands and different required capabilities. P&G is working to develop those capabilities through external coaching with Bionic, Fraser’s organization. “We learned that we had to bring HR in early, and not just one person, but HR leadership,” Long said. “We really lean on HR to say, How are we growing that leadership capability?” The second work stream is structure. There are structural elements or principles that lead to teams learning more quickly, she said—things like being fully dedicated, having direct access to decision makers, and having a team of coaches that helps enable the innovators and gets things out of the way. “Where we have these structural elements in place, those teams are learning the fastest.” The third element is the talent ecosystem. A particularly important aspect of that is how to recognize and reward innovative work. It turned out, Long said, that P&G innovators needed to feel that their work was valued and rewarded like those at the core of our business, so it was important to learn factors, both intrinsic and extrinsic, that would make the innovators feel valued and rewarded. P&G has PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-9

also been working to determine how to take into account the team versus the individual. “Up to this point,” she said, “we had only rewarded based on individual contributions, and so we’re trying to learn how we how we bring the team factor into it.” Another aspect of the talent ecosystem is skill and capability development, Long said. P&G has made a big push to grow skills and capabilities across the organization and not just in certain pockets. “We’ve learned that measures in the innovation space are different than measures in the core business space,” she added, “and so we’re learning what innovation metrics are.” A key change has been to not assume that those at headquarters assume that they know or can figure out solutions and instruct the rest of the organization on what to do. Instead, she said, the approach now is to use lean innovation and run small, fast, disciplined experiments in the business units in order to get clear on the problem to solve. “We measure them, and we make a decision,” she said. “Did this work, did this not work, and what do we need to do next?” Skunk Works Carty began with a brief history of the Skunk Works. During World War II, U.S. propeller-driven fighters were being dominated by the German ME-262, the world’s first jet fighter, and Lockheed’s Kelly Johnson got a contract from the U.S. Army Air Corps to produce a jet fighter that could compete. But Johnson faced a problem of where to carry out his project. At the time, Carty said, Lockheed was building 28 aircraft a day. To put that in context, Lockheed Martin’s current C-130 line builds 28 aircraft a year, and its F-35 line maxes out at 20-some aircraft a month. The Boeing 737 line, which Carty characterized as the most productive production line in the world, produces two aircraft a day. Lockheed was doing 14 times as many, and it had 93,000 people employed. There was no place to put Johnson’s project. “There was no room in the factory,” Carty said, “so what did Kelly do? He pulled together all the crates that the engines were showing up at the plant in, and that made . . . pillars on which he hung a circus tent.” Skunk Works was the name of the Lockheed division originally created to develop and build the first U.S. jet fighter, and it was born in that circus tent. “I know that’s a lot of background,” Carty said, “but it frames where this thing came from. It came from boiling things down to the essence of what you needed to get done, always focusing on the essence of the goal.” From the beginning, he said, the Skunk Works has been focused on finding the simplest path to an effective solution, and that is still true today. He described the organization as one that is focused on common goals under the direction of an empowered leader who has the necessary resources and a minimum of administrative burden and who can adapt processes as needed to get the job done. Today, Carty said, “the real challenge is finding out how to keep things simple in a complicated world and figuring out what are the bounds of taking a model, that’s rooted in simplicity and functionality and pragmatism and scaling it up.” The original Skunk Works team was Kelly Johnson and 34 of the best engineers he could pull from Lockheed’s 93,000 workers. Today’s Skunk Works employs thousands of people, Carty said, and now instead of a single product—the first jet fighter—there is a portfolio of products for multiple customers. So it is challenging to maintain the same sort of simplicity that characterized Skunk Works in the beginning. Concerning its workers, Carty said that while Skunk Works certainly values talent, it values perspective and worldview and passion more. Many of the people working there have always dreamed of working there or working on the sorts of problems that Skunk Works does. “We tend to gravitate toward bringing folks in that may not have the skills they need because we believe that, as a team, we can teach them those skills,” he said. The Skunk Works tries to keep communication paths minimal, Carty said. For example, if there is a large project that needs to be done in a short amount of time, the project’s designers and engineers will likely be located together on the production floor. So a mechanic or production engineer can walk over to the desk of the engineer who designed something and say, “Let me show you why this isn’t working” or PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-10

“Let me show you how this could have been done better” or “Could you change this for us?” That instant feedback is very important, Carty said. Ownership and accountability are also very important, he said. For example, the designers and engineers on a project will generally follow it all the way through to the end “because the best way to learn is to have to live with your mistakes and then fix them,” he said. “Once you’ve made that mistake and had to fix it, you probably won’t repeat it.” Finally, he said, those who work at the Skunk Works recognize it as a national institution and a resource to the nation, and they tend to feel an obligation to maintain that status. “So it’s always at the front of our minds that we’re trying to focus on performance and meeting our commitments and doing it quickly and quietly and with quality,” he said. “That’s the mantra.” U.S. Air Force Space and Missile System Center Working for the military comes with various constraints, Turnbull said. “Our promotions, for example, are done by a central board that reviews your performance records—[people] that have never met you,” he said. “When you have a system like that, you end up with a number of both written and unwritten rules. You’ve got to do A and B and C because the people that are promoting you did A and B and C. . . . So that’s the overall framework.” So, he asked, how does one succeed as an innovator in that kind of environment? Referring to Fraser’s model, which found stretch assignments to account for 70 percent of advancement and sponsorship to account for 20 percent, he said he believes that the numbers are wrong and that sponsorship is actually a much bigger percentage. The reason, he said, is that sponsorship is what leads to the opportunities to have stretch assignments. Given the opportunity, one must perform, of course, but one must first get the opportunity, and much of that depends on sponsorship. In his case, he said, he was lucky to work for great leaders who wanted to innovate and to get results, even if it required doing something different than what the system expected. They gave him an opportunity, and once he succeeded on that, they would put him on another project, and so on. “From my perspective,” he said, “that’s the only way to do it within the kind of system that we have.” It has proved very difficult to change that system, Turnbull said. “We’ve had multiple chiefs of staff—the person in charge of the Air Force—who have tried to change things and failed because the system just has so much inertia,” he said, so he is not going to be able to change the system. But what he can do is figure out how to open doors for other people and give them opportunities. A worker has to understand what the rules of success are in that system, he said, and so he makes it a point to have a conversation about those rules very early in the career of those people doing innovative work. He tells them, “Look, this is the system. These are the rules. I don’t like them. I didn’t write them, but these are the rules. You’re going to need to do A, B, and C. Let’s figure out how to get you to do A, B, and C, while still giving you the opportunity to do the innovative things you’re trying to do.” So he works to open doors for these innovators while they must check all the necessary boxes. He has not always been successful, he said, and he spoke in particular of two “crushing blows” he has had. One was a female lieutenant colonel who had been in the Air Force for 20 years and was leading Turnbull’s most sophisticated project. She delivered results several years ahead of plan, was a phenomenal leader, and had been selected for a prestigious fellowship, Turnbull said, but despite everything he could do, she did not get promoted to colonel. She immediately filed her retirement paperwork and left. “That is a complete loss to the system,” he said. “There’s no way for us to get her back. And so it doesn’t always work, because we don’t control that central system.” Turnbull also described a younger officer, a major, who had won accolades and awards as one of the Air Force’s top program managers because he was delivering really innovative results. But he had not checked off all of the boxes, and so he did not get promoted to lieutenant colonel. Fortunately, Turnbull said, in this case the officer will have a second chance next year to get promoted, and he hopes the outcome will be different next time. “I think we have stacked the deck in his favor,” Turnbull said, “but PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-11

we had to proactively reach into the system, pull him out of where he is, and then put him somewhere where he’ll check one of those boxes.” Turnbull summed up the responsibility of managers of innovators in this way: “If we want innovative people to succeed, . . .we have to be personally and directly involved in trying to reach in and protect those people where we can put them into the right opportunities, open the right doors. And we have to make sure that leaders at all levels of the organization are doing that.” In response, Fraser told Turnbull that that was “the best description of sponsorship I have ever heard, and I’ve been thinking about this and talking about it for 4 years now.” QUESTION-AND-ANSWER SESSION After lunch, there was a question-and-answer session with the three panelists. The first question, from Dan Ward of MITRE, referred back to the third pillar that Fraser spoke about, “Do the easy thing that’s good enough.” In discussing that, she had said that this will often mean implementing short-term fixes that are neither sustainable nor scalable and that this is just fine. At this point, she said, rigor and scalability are red herrings. “That resonated with me so much,” Ward said. “We do fall for the importance of rigor and scalability in places where it isn’t necessarily needed.” So he asked the panel members for their responses to this idea. Long answered that she has taken that lesson to heart at P&G but that it can require a change in perspective. In running experiments, she finds that people expect that whatever is being tried will be scaled up eventually. “So we’ve had to change the narrative around,” she said, and to make the focus more on the present. Then the major issue becomes what is needed to answer the question in front of you, which for her experiments generally requires just 5 or 10 people instead of 100 or 1,000. “Two things popped into mind,” Carty said. “One is that we try to be vigilant about watching out for reviews and audits that don’t actually aid in making decisions.” He is not always successful in avoiding those things, he said, but he is conscious of trying to. Furthermore, he added, more and more of those unnecessary reviews and audits are driven by process, and “the process is a substitute for the simplicity that we talked about.” In a situation where there was a truly integrated team that could communicate with each other directly, then the need of process would be less. “So process is something that you feel like you have to bring in as things scale and get bigger and bigger,” he said. “They add complexity, they add abstraction, they add ambiguity, and that’s the challenge as those things creep in— Can you identify what’s actually adding value and what isn’t?” Col. Turnbull answered that when he heard the comment about short-term fixes that are neither sustainable nor scalable, he immediately thought of computer hacks. “Everybody loves a good hack,” he said, “but if you add enough of those over time, they are certainly not sustainable.” However, he added, if things are changing fast enough, the hacks quickly become irrelevant, and you just find new hacks. If you had taken the time to scale the process, then it would have been overtaken by events by the time you were finished. “It doesn’t matter,” he said. “So just stack the hacks.” On that topic, Col. Turnbull said that he has found it can be useful to encourage people to hack the system and then to look around and see which things have been hacked by multiple people. “When you find four different product centers hacking the same thing,” he said, “that’s your clue that there’s something we’ve got to put some attention on fixing.” The one-off hacks, by contrast, can be ignored because there probably is not a great enough return on investment to fix those things. A question about what things people had tried that had not worked generated several responses. Long began by describing an experiment at P&G whose current version is working but whose earlier versions had “failed.” The experiment involved something Long had mentioned earlier—how the entrepreneurs at P&G needed to feel like their work was valued as highly as the work of the people in the core of the business. “One of our early ideas was to come up with something called an entrepreneur track at P&G where you could build your career as an entrepreneur,” she said. However, when the idea was presented to a group of employees, it was rejected immediately. “But we did that in such small, fast PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-12

experiments that it didn’t feel like a failure,” she said. This happened with a number of versions of the entrepreneurial track, but it never seemed like they had failed. “We were learning with 5 or 10 or 15 people as opposed to developing something and then rolling it out to the whole organization,” and with each iteration they learned something to apply to the next version. The current version is getting much better reviews, she said, “but the earlier versions of it were terrible.” Carty had a response that was similar to Long’s. “We work on things all the time that aren’t successful,” he said, “but one part of our culture is we try to drive to demonstration as quickly as we can and learn from it and adapt and try it again.” Even for systems where crashes are not an option, it is still possible to simulate them and learn what the failure modes are. “So those things that didn’t work, I would say they did work because you’re learning and you’re changing your solution, and then you’re trying it again.” It is possible to learn a lot about the culture of an organization or a research team from its response to failure, Carty said. Is the first thought of retrenchment or cover one’s bases or fear or concern. Or is it to “run faster, get back in the lab, get back on the horse”? Ideally, he said, an organization will have a learning culture that is not inhibited by a fear of failure. The only true failure is “a failure without learning, a failure without some kind of diagnosis or a path forward.” Col. Turnbull described an episode in which he had attempted to change a security-related process that was inhibiting his ability to deliver warfighter capability. When he came up with a new process that would remove the impediments, he was told that a particular Air Force instruction (AFI) prevented him from doing that. The AFIs are “the rules we live by,” Col. Turnbull explained. “So I went and found the person in the Pentagon who wrote that AFI, and I got them to change it,” he said. “And I came back to the person and said, ‘Look, I changed the rule. You can do this now.’” But even after he had gotten the rule changed, he said, there was still much resistance to the new process. What was going on? “I figured out that it came down to fears: This is going to make me irrelevant. This is going to make my job disappear. And this affected a large number of people in the organization.” So to this point, he said, he has not yet succeeded in changing that process, although he is still working on it. He needs, he said, to find a way to make those chickens happy. “Happy chickens don’t make trouble,” Fraser commented. What are they afraid of, and what will it take to make them feel safe? Knowing that their job is safe? Knowing that they have more interesting work rather than more bureaucratic work? “We have to think about our chickens with compassion,” she said. “It’s easy to beat on them and think, ‘You’re an impediment.’ No, they’re humans.” At the end of the question-and-answer period, Fraser asked Dan Ward to explain his theory, “The Simplicity Cycle,” which he said is intended to help people think about complexity and its effects in designed objects. He described the cycle in terms of a graph where the horizontal axis is “complexity” and the vertical axis is “goodness.” Complexity, he said, means “consisting of interconnected parts.” Greater complexity means a greater number of interconnecting parts. Goodness refers to different things in different contexts, he said. “It could mean fitness for use. It could mean maturity of the design. It could mean effectiveness, efficiency, whatever your measures of merit are.” Thinking about the simplicity cycle, he said, is intended to force people to answer the question, What do we mean by goodness? What constitutes better? A design starts with a blank piece of paper. In that case, both the complexity and the goodness are zero. “So we begin adding things to our design,” he said. “As we add pieces, parts, and functions, complexity rises and goodness rises. I add a bubble canopy to my airplane. Now I can fly higher. It’s a new part, a new capability. Complexity and goodness are directly proportional.” At some point, however, the design reaches a critical point beyond which adding pieces, parts, and functions does not add to the goodness—indeed, will often detract from the goodness—while still adding to the complexity. On the graph, this looks like a downward bend in a line that had up until this point been going up. “This is not diminishing returns,” Ward said. “This is negative returns.” At this point, he said, the way to continue to increase goodness is to “adopt a different set of design behaviors and begin simplifying—begin subtracting trimming, streamlining, using reductive thinking models instead of additive thinking models.” It is important, Ward said, to understand that there PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-13

is this bend in the curve—that it is not possible to keep increasing complexity indefinitely without eventually affecting goodness—and to keep an eye out for that point at which increasing complexity creates negative returns. IDEATION SESSION The rest of the group’s time was spent on what Fraser referred to as an “ideation session.” She divided the group into teams, each of which included one of the section’s invited experts. She then provided five problem areas and challenged everyone to come up with at least 10 ideas that had been inspired by what they had heard during the section. The ideas were to be written on sticky notes so that they were easy to organize by sticking them to posters. Once everyone had finished their sticky notes, Fraser said, they would be organized by putting them on whiteboards corresponding to the five problems areas. On those boards, the ideas would then be categorized according to how difficult they would be to achieve (easy, less easy, hard, impossible) and by how pressing they were (less urgent, more urgent). Fraser called the approach dump and sort: “You dump out all your ideas, you sort them, you figure out which ones matter and that you can take action on more easily. . . . And by the end of the day, we should have a work plan that can be summarized in a one- pager.” The five problem areas were as follows:  Human systems—the hiring, developing, managing, etc., of workers;  Gen Z magnet—how to attract, inspire, and retain the generation coming out of school and into the workforce now;  Safe to try—creating a workplace in which people are not afraid to fail;  Stop the stupid—getting rid of policies and practices that are obviously not effective or even actively damaging; and  Ambidextrous leaders—developing a new model of leadership that rests on a culture of “and” rather than “or,” that values discovering over knowing, and that has leaders who ask questions and remove roadblocks. It has been described as the best style of leadership for innovation. The resulting whiteboards with ideas on sticky notes were organized by difficulty and urgency. In a plenary session later that afternoon, Fraser and section co-leader, Bob Gibbs of NASA, highlighted the top suggestions from each of the five problem areas, focusing more on the suggestions that had been classified as more urgent. Under human systems, a more urgent task that had been classified as easy was “Incentivize leaders to sponsor innovative people.” It was noted that incentives both provide a signal of what is important in an organization and lead to more of the incentivized behavior. Another more urgent but easy task suggested was “Create short-term stretch jobs to identify innovative leaders early in their careers.” This was a product of the extensive discussion in the section about how stretch jobs can provide tests of people’s capabilities. A more urgent task that was classified as less easy was “Disrupt the one-size-fits-all approach to rewards and benefits.” Different people are motivated by different things; the reward system should recognize that. Other more urgent suggestions that were rated as less easy or hard included “Experiment with reward systems (intrinsic and extrinsic),” “Experiment with career systems,” and “Redefine success measures.” The next subject area was Gen Z magnet, or how to become a magnet for the next generation. A suggestion for an urgent but easy task was “Do more cheerleading and spotlighting,” while an urgent but less easy task was “Define what is best and brightest (it’s not just talent).” Gibbs noted that the sorts of talent required will differ for every mission. Other urgent, less easy tasks were “Recruit early and often,” PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-14

“Know what is valued,” and “Try new things willingly.” An urgent but hard task was “Offer early ownership.” In the category of safe to try, or how to make it safe for innovators to try things, an easy but urgent task was “Create small, fast projects that can accept failure in order to develop the workforce more quickly.” The idea, Fraser noted, is to choose some resilient projects where failure isn’t too impactful so that early-career workers can stretch their wings. Another urgent, easy task as “Visibly reward and recognize failures and learning.” This sends the signal that “failures” are not regarded as negative as long as they involve learning and help the project move toward to the overall objective. An urgent task that was classified as less easy was “Adopt ‘Do more experiments’ as a valued practice.” The next category was “stop the stupid.” “This is about creating simplicity,” Fraser said, mentioning Ward’s description of his simplicity cycle model. The easiest task that was categorized as urgent was “Create an award for stopping stupid.” It is a way of drawing attention to the need to identify and modify ineffective practices. A second easy but urgent suggestion was “Find the person who made the rule and ask if it can be changed.” This was, of course, referring to Col. Turnbull’s story about his attempts to get a process changed that was hindering innovation. Unfortunately, as Gibbs noted, in Col. Turnbull’s case, even going to the person who made the rule and getting the rule changed was not enough because of resistance to change inside the organization. The final category was ambidextrous leadership. In this case, there were a number of suggested tasks that were characterized as urgent but also easy. Some of them were aimed at spreading the word about ambidextrous leadership and its importance: “Educate people about ambidextrous leadership” and “Seek, support, and celebrate ambidextrous leaders.” Others were intended to develop more ambidextrous leadership: “Leadership training/coaching,” “Ask questions without knowing the answers,” and “Encourage rotation.” That last suggestion prompted a discussion between Fraser and Gibbs. Fraser began by asking whether NASA has leadership rotation. “No,” Gibbs said, “but I would tell you that we’re sharing a lot more talent from center to other centers and to headquarters in D.C. That’s definitely been a trend in the last 3 to 5 years.” Fraser commented that she had heard some discussion about having career NASA people—those who had been with the agency for 10, 20, or more years—have rotations outside the organization. “Yes,” Gibbs said, “that’s something that I’ve heard in a lot of different sessions and a lot of different times.” He added that it was something that he would love to work on and that, indeed, NASA has been working on it. “We have a legislative proposal in right now to allow us to do more of that,” he said. “We’re not getting as much traction as I would hope within the Administration, but it’s something we’re continuing to push.” Fraser replied, “I would say that falls into the very hard and potentially impossible if you don’t get support for it.” In responding to that, Gibbs commented more generally on the urgent tasks that seem hard, if not impossible. “In doing this kind of work,” he said, “you have to know which of the super important, but very, very hard things are worth breaking your back on.” Fraser suggested one way to do that is to break down the task into smaller things and attack them one at a time. So, for example, if an outside rotation is not legally possible, maybe there would be some other way to get that “outside” perspective in the thinking of NASA’s leaders. If NASA people could not work at an outside organization for a year or two, perhaps they could do it for shorter periods of time. “There might be a better return on investment for a longer detail,” Gibbs said, “but at least that’s a great stepping stone.” PORTFOLIO MANAGEMENT The breakout section on portfolio management examined the general question of what it takes to have a healthy portfolio of investment in innovative technologies. The three speakers in the section were Barbara Dalton, who manages Pfizer’s private equity portfolio, Pfizer Ventures; David Longren, the retired vice president of Polaris Industries; and Mark McClusky, the founder and president of the consulting firm Newry Corp. After hearing the speakers’ presentations, the section’s members PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-15

participated in a brainstorming period to develop ideas for improving NASA’s management of its innovation portfolio. As a lead-in to the presentations, section co-leader Martin Curran of Corning described how that company develops and uses its “one-pager” (Figure 5.3), a brief overview of the company’s current situation and its objectives, which is used to focus the organization and get everyone in the company on the same page. The one-pager originated in 2003, after Corning had experienced what Curran called “a near-death experience.” In the beginning, he said, the company was just trying to survive. “We lost half of our company, half of our sales in the dot-com bubble.” So the company’s management developed the one- pager as a way of getting “all hands on deck.” The first version was focused on financial metrics, as the company was focused on maintaining cash and access to credit lines and restoring profitability. After the company did return to profitability, it maintained the practice of producing the one-pager, which summarized the company’s key objectives as a way of maintaining focus across the company on top objectives and activities that are key for our success. Financial and performance metrics are still a key component, he said, and there is always a reminder to live the company’s values. Curran showed an example of what Corning’s one-pagers look like and said that it was the only time in 15 years that it had been shown outside the company (Figure 5.3). It is a dense one page of text, with objectives listed for each of the company’s businesses and, beneath the objective for each business, goals for specific products. The business objectives are things like “Stabilize returns and build new businesses” and “Grow at double-digit rate,” while the product goals include things like “Deliver growth,” “Win new customers,” and “Demonstrate process capability and supply chain manufacturing readiness.” To one side is a collection of specific financial targets, including for cost reductions, revenue growth, and capital spending. Having listed the objectives and goals, the company then monitors progress throughout the year and will color the individual items on the one-pager green, yellow, or red to indicate success, still working on it, or failure. “I can tell you without a doubt,” he said, “that in 15 years we’ve never had all the first two columns [with the business objectives and product goals] green. We’ve had many times that the right- hand column [with the specific financial targets] is green.” It is a way of judging at a glance how the company’s overall performance has been and what things in particular need attention. The one-pager is focused specifically on annual goals, Curran said, that also tie strategically to Corning’s 5-year plan, which is refreshed yearly. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-16

FIGURE 5.3 Corning “one-pager.” SOURCE: Martin Curran, Corning, Inc., “Portfolio Management,” presentation to the Workshop on the Continuous Improvement of NASA’s Innovation Ecosystem; ©2019 Corning Incorporated. The Innovation Portfolio at Pfizer Pfizer is one of the world’s largest pharmaceutical companies, Dalton said, with more than $53 billion in sales in 2017. The company has approximately 500 drugs on the market and another approximately 400 in the pipeline, so its portfolio includes about 900 products. Characterizing Pfizer and NASA somewhat facetiously as “twins separated at birth,” Dalton listed a number of parallels between the two organization beginning with the fact that they both rely on innovation—Moon shots and space exploration for one, drug development for the other. Both are in the knowledge discovery business, and both have long development cycles. Just as it can take a couple of decades to put people on the surface of Mars, it can take a couple of decades to discover, develop, and market a new drug. In both organizations, she continued, innovation is necessary not only in technology, but in workforce practices, partnering, and business practices. Both are dependent on the federal government, albeit in different ways—NASA for its funding, Pfizer for various laws and regulations that shape its business. A great deal of innovation that affects each organization takes place outside its walls, so each organization has to be aware of that and determine how to work with it. Both face competition from smaller, more nimble organizations, and both are operating in an environment in which there is a new age of collaboration between competitors. Both NASA and Pfizer manage a large number of projects, Dalton continued, and both provide societal benefits that are not easy to quantify. Finally, she said, both face a situation in which failure is not option because failure can lead to people dying. Continuing the theme of parallels, Dalton showed a slide, “Barriers to Innovation at NASA,” where she had crossed out “NASA” and written “Pfizer.” It got a laugh, but her point was serious: “Every single one of those are questions that we grapple with and have to deal with on a daily basis,” she said. “It was amazing to me to read this list.” The items on the list were: a risk-averse culture, short-term focus, instability, lack of opportunity, process overload, communication challenges, and organizational inertia. Someone in the audience explained that the list of barriers to innovation was put together by a group of younger scientists and engineers at NASA, sponsored by the chief technologist’s office. Next, Dalton spoke about Pfizer’s portfolio of products and projects. She broke it down into four categories: in the laboratory (~200 products), being tested in human studies (~200), at the Food and Drug Administration (FDA) waiting for approval (~50), and on the market (~500). Each category has its own characteristic rate of failure, she said. About 50 percent of the laboratory projects fail, about 90 percent of the drugs being tested in human studies fail, about 5 percent of the drugs submitted to the FDA for approval fail, and about 20 percent of the drugs that make it to market are commercial failures. The failure rate in human studies is high, she said, because there is no way to know just how a drug will work in humans until the effects are observed; even drugs that prove to be effective in animal models have no guarantee that they will be effective in humans. “We’re operating in the dark,” she said. “So we have a phenomenal failure rate,” she said. “We fail every day. If we don’t fail, we’re probably not doing our job.” Making portfolio investment decisions is inevitably a subjective task depending on human judgment, she said, because there are so many unknowns involved. Still, companies try to base those subjective decisions on objective information and analysis to the greatest degree possible. “Successful decision making requires reliable, unbiased inputs and well as a qualitative lens so that any one factor does not dominate,” she said. The decisions are made by people who look at all of the information and apply their experience and expertise, taking a holistic approach that takes into account such things as PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-17

cost–benefit analyses and considerations of regulatory factors, strategic considerations, platform capabilities, and potential patient benefits. Ongoing projects should be reevaluated regularly, she said. “Portfolio management is all about where you’re spending your money,” Dalton said, “and you’re spending your money in a place where you think you can make money.” Decision on a portfolio management strategy requires commercial decisions and research decisions and regulatory decisions, and they’re made on the basis of totally different factors, she said. Thus, for example, those on the research end are likely to see the issue in very different terms than those on the commercial end. All of those factors must be balanced. There are various software tools to help in making portfolio decisions, Dalton noted. She mentioned Monte Carlo simulations used to predict how various portfolios are likely to perform, there are various analytic methods; iPort, which uses an internal enterprise database to track individual projects and aggregate portfolio data; and the Enterprise Portfolio Simulator, which is now in testing. Dalton’s job at Pfizer, she said, is to manage the company’s venture capital investment portfolio, which she referred to as “a portfolio of disconnected science projects.” The company makes venture capital investments in various ventures in areas that Pfizer is already involved in or that it may become involved in. Decisions about which companies to invest in are generally not highly analytical, Dalton said. Instead they most often rely on “soft analytics”—experience, knowledge basis, and gut feelings. The decisions are made by a small group of people, and success is determined simply by return on investment. In making investment decisions, Dalton said, she looks for what she called “star clusters.” These are collections of several companies all doing work in a new area. The idea is that if there are several different companies that all believe this new area is worth developing, then there is a good chance something will come out of it. In such cases, Dalton said, the idea is to invest in one of the “stars” in the cluster; at that early point, it is impossible to tell which is likely to be most successful; the idea is to have some presence in that area in case something important develops. Pfizer’s venture capital investment portfolio has a 10 to 15 percent investment in about 30 companies, Dalton said. And when Pfizer has an interest in a company, it helps increase that company’s chances of success in various ways, she said. It helps the company identify a good management company, for example, and offers various sorts of advice. This is a strategy that NASA could adopt, Dalton suggested—developing relationships with small, cutting-edge companies and providing help and support to increase their chances of success. Spreading the knowledge and expertise that has been developed at NASA is part of the agency’s mission, she suggested. One of the benefits of Pfizer’s venture capital portfolio, Dalton said, is that it allows the company to tap into innovation outside the company—which is an important thing for any innovative organization to do, she said. There are various ways to do this, she said. It is important, for example, to develop external collaborations, even with competitors. In that case, she said, “Trust, but verify” is good advice to live by. An organization should also generate tools to tap into external innovations, she said; you will need several. It is best if these actions are driven by the organization’s workforce, which raises the question of how to get the workforce to see the value of external collaboration. As time goes on, Dalton predicted, organizations like Pfizer and NASA will increasingly find that they need or can benefit from external innovations, and she suggested that organizations could benefit the generational change that is taking place. Millennials bring different perspectives and experiences to the table, and the diversity they offer can be valuable. Finally, Dalton spoke of the role of failure in innovation portfolio management. “Failure comes with the business,” she said. Science moves forward through both success and failure, and people learn more from failures than from successes, so it is important to encourage a culture that embraces failure and uses it as a tool, she said. “Fail early, incrementally, knowledgably, repeatedly,” she said, “so the overall mission can be successful.” PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-18

Innovative Success at Polaris Next, Longren described how Polaris recreated itself to become a highly innovative company whose success was driven by a steady stream of new innovations. The company, which manufactures off-road and military vehicles, was started in 1954. In the early 2000s, Longren said, the company’s chief executive officer initiated a series of changes designed to transform the company to a high growth business. Longren was hired as the chief technology officer to help lead that initiative. “It took us about three-and-a-half to four years of foundational work to transform ourselves,” he said, and the company’s sales began to take off in 2008 to 2009. Over the next 7 years, Polaris experienced “very high growth,” Longren said, and its total sales tripled. Perhaps the most striking part of the transformation was how the company’s sales came to rely on new products, by which Longren meant products that had been introduced in the previous 3 years. Longren defined the vitality index to be the percentage of total sales that is accounted for by new products, and he said that it is a key measure of how important innovation is to a company’s sales. In particular, there is typically a larger margin on the sale of new products, it is a rough indication of profitability or, at least, of potential profitability. Polaris’s vitality index averaged 80 percent for multiple consecutive years, Longren said, a number that several people in the audience indicated was quite impressive. Longren described the elements that combined to allow Polaris to achieve that level of innovation. It starts with a strong leadership focus, he said. The leadership must have a clear vision of where they want to go and allocate resources accordingly. It is vital that the people have a passion for high performance and innovation and that the company’s processes support that. The leaders should strive to build a culture of collaborative innovation, that is focused on the customer. “We have competitions among new products coming down our pipeline,” Longren said. “We can have two or three products competing to be what’s ultimately going to come out. But it’s all what’s best for the marketplace, whether it’s for our consumer or for our military customers out there.” The company must invest in innovation, developing an effective infrastructure, tools, processes, and program management. It is important to enable flexibility and agility while maintaining world-class quality, Longren said. The company must plan for innovation, and Polaris does that mainly through its portfolio management, he said. Finally, he said, there must be a continued focus of people and processes on innovation. Speed is important, he said, but it is not as important as direction. To talk about what goes into successful innovation, Longren pointed to three very different examples: the development of the P-51 Mustang, the successful return of Apollo 13, and the U.S. hockey team winning the gold medal at the 1980 Olympics. The three examples point to key “rules” for successful innovation, Longren said:  Have a clear objective and focus; in each example, there was a real-world problem that forced the people working on it to set solution boundaries.  Set high expectations—the organization can deliver more than you think.  Teamwork is more important than individuals; create and reward a strong team culture.  Speed is as important as precisions.  Use real-time feedback control systems. Polaris used these guidelines in transforming the company, Longren said. Next, he spoke about the company’s portfolio management activities. Any company must decide how it will allocate its investments—in high-growth areas, in quality improvements, in new markets, etc. The company decides ahead of time what percentage of its expenditures will be on research and development, and it keeps to that figure or sometimes increases it. The company’s leadership spends a lot of time debating what percentage of the portfolio it is going to invest in each area, he said. Each year they PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-19

set resource allocation and set various goals, and the senior leadership reviews these quarterly. There are also monthly status reviews and product planning and weekly program team meetings. For each product type, the leadership talks about how big the market opportunity is and how risky it seems. They look at both the short term and the long term. The company has an innovation planning framework that includes both top-down and bottom-up approaches, Longren said. Looking at macro market conditions and doing economic analyses, including looking at new growth-market opportunities and disruptive products, they set top-down goals. And working with their key innovators and scientists, they look at what new tools and technologies they have coming and decide on bottom-up expectations. They merge the two together and go through an evaluation process to decide where to make investment and what their goals should be. The result is a 5-year technology development roadmap, which gets reviewed every 6 months by the company’s senior leaders. The Polaris culture is designed to encourage innovation. “Our culture is about boundary management,” Longren said. “It’s not about point solutions. So we create space for innovators to innovate within them.” Similarly, projects are guided with priority ranked boundary requirements. Work is done in small, integrated project teams of 10 to 12 people, and these teams leverage subject matter experts in the company as needed. People are constantly rotating in the company, Longren said, and there are also experts who “parachute” into the company to serve as needed for a period of time. Generally speaking, no one at the company stays working in one small area for years at a time. They go where their expertise is needed at the time. “Our workforce is highly flexible,” he said. The company also has various design challenges to take advantage of crowdsourcing. A problem will be set forth, and people from inside the company or from the company’s suppliers can offer solutions. The challenge will generally run for no longer than a month. People submit their ideas, and winners are announced. “No one cares about the prizes,” Longren said. “It’s about the fun.” And if an idea looks particularly marketable, the company has a reserve of funds that can be used to develop the idea. Polaris leverages its suppliers to increase its ability to innovate, Longren said. Their key suppliers are treated as strategic partners, and frequently visit and work with the company’s R&D centers (although there are multiple firewalls that protect certain sensitive information). These partners are encouraged to bring ideas to Polaris about new technologies and solutions that they have created or adapted from other applications. A key feature of Polaris’s success is how it captures and uses knowledge gained from its business operations. “We have a very formal knowledge management system in place,” Longren said. “It’s all about capturing learnings, capturing discovery.” Technical people do not always like to share the knowledge that they’ve gained in their own work, he said, and that’s understandable. “But that’s not what we want,” he said. “We want you to share it so the next time we don’t have to do it again.” Furthermore, he said, the company wants to capture the assumptions that people were working under, because in the future there may be new technologies that mean those assumptions are no longer valid and the problem can be solved in a new way. The company’s key technical people enter their key learnings into the knowledge data base, Longren said. Workers are rewarded for capturing significant knowledge and discoveries. . Finally, he said, the company focuses on continuously improving all the company’s processes. They map out all of the steps of the processes, see how long each of the steps takes, and assign value to each of the steps. Then they look for changes that can be made to improve quality, add value, and eliminate wasted time and effort. This frees up innovators’ time and reduces their frustration, leading to improved focus and, ultimately, better innovation. The company uses proven technologies and platforms, where possible, in order to free up design team’s time allowing them to spend more time on breakthrough technologies. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-20

Pruning the Innovation Portfolio Getting rid of poorly performing projects—“killing things”—is essential to the success of innovation organizations, McClusky told the portfolio management section. It is not easy, he said, but it is one of the key factors that separates excellent innovation entities from mediocre ones. “I can say with certainty that if you get better at doing what I say, your entire institution will be more successful,” he said. He described his company, Newry, as a market insight and strategy consulting firm that focuses on organic growth for specialty chemicals and materials companies. Its specialty is helping clients determine whether early-stage projects are worthy of additional investment. To offer some context, he said that every year his company does about 100 early-stage project evaluations. Of these, he said, about 35 should be killed—but fewer than 10 actually are. Then he asked, “How many people in this room . . . are aware right now of a project [in their organization] that every single person knows ought to be killed, but isn’t?” The room exploded with laughing agreement. “That is the way of our world,” he said. The continued existence of such projects that should not be pursued is very damaging to an organization, McClusky said, because they have huge opportunity costs. First, it is wasting the time of the people assigned to the project because they could be working on something with real value to the organization—and far too often it is some of an organization’s best people who are working on these bad projects because they are seen as needing extra assistance. Second, he said, “you have to kill your way through a lot of projects to get the ones that will succeed,” so if you don’t kill off the bad projects, chances are you will never get around to the good ones. To illustrate, McClusky showed a slide with the results of a study he had done of a client’s projects from 1995 to 2017. That client had developed hundreds of concepts during that time and had ended up pursuing 85 as funded gate-stage projects. Of those, 54 percent had been discontinued, 20 percent were still in progress, 24 percent had made it to initial sales, and only 2 percent were “home runs.” It is not always easy to know which projects are going to be home runs, so a company should spend as little time as possible with projects that have little or no chance of succeeding. Finally, McClusky said, if you don’t kill off bad projects, it sends a signal that reality and results don’t matter. Nothing is more damaging to an organization, he said. Why is it so hard to kill off bad projects? McClusky offered four reasons. First, managing the uncertainty—and the stakeholders—involved in a decision to kill a project is very difficult. It takes “almost superhuman intuition and guts” to be able to do it. Second, the sunk cost is a bitter pill to swallow. After investing a lot of money and time in a project, it is difficult to write that off as having no return. Psychologically, it is easier to keep going in the hope that there will eventually be some reward. McClusky showed a graph of a project where the investment in that project grew from year to year until the company was spending $70 million to $80 million a year on it. Meanwhile, the sales were consistently less than $5 million a year. When McClusky spoke with the company about it, he learned that they attitude was “We’re just around the corner.” But that was the same attitude year after year, and they never made it around the corner. Furthermore, the sunk costs are not the only psychological factor making it difficult to shut down a project. People get attached to projects they have been working on, McClusky said. “A lot of the scientists that I work with have devoted the entire middle of their lives to a project, from their 20s to their 40s” he said. “And they love it. They love it in a way that they love their own children.” Furthermore, these are very smart people who are able to come up with convincing arguments for why something should be continued. The third reason it is difficult to shut down a project is that there are generally political repercussions to a “kill” decision, McClusky said, emphasizing that there are politics in every organization. A person who chooses to abandon a project risks losing face, losing funding, or even losing his or her career, he said. Because the status of a project is generally more linked to its size than to its prospects, he said, shutting down a large, albeit poorly performing project can lead to a major loss of status for the people in charge of it. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-21

Finally, he said, sometimes there just isn’t anything better to replace the killed project. If there are not promising projects in the pipeline to replace it with, the strong tendency is to continue with the one that exists. Given that it is so difficult to kill projects, McClusky said, what can be done to make it easier? He listed several tactics for getting better at eliminating poorly performing projects. First, he said, set up “lines of death.” He explained that these are certain predetermined performance levels that a project must meet by a certain date in order to continue. They can be operational excellence (such as a low cost), product superiority, customer personalization, or something else, but there is always a cutoff point, he said. “If we don’t get to this level by this date, we’re done.” Amazon is one organization that uses this technique, he said. It will set 6-month milestones, and if a project reaches the milestone within 6 months, it continues; if it doesn’t, it’s canceled. “It’s not reviewed, it’s not revisited—it’s done.” That tends to bring great focus to a project, he said. Next, McClusky said, get great at shelving things. In some cases, an idea that doesn’t work today may work sometime in the future after technologies have changed and markets have changed, so it can be useful to shut down a project in such a way that it can be started back up easily at another time—that is, to shelve it. McClusky told a story of how Corning had shelved a project in the 1970s and then when Apple called with a particular request 40 years later, Corning was able to pull that project off the shelf and use it to fulfill Apple’s request. However, some things should be killed altogether, McClusky said, and if you are going to kill something, you should be careful to kill it completely. Otherwise it is possible that it will at some point “rise from the dead” and take up even more of the organization’s time and resources. Replace whatever you kill with something better. By having a good replacement project ready to go, it becomes much easier to kill a poorly performing project. The organization has something else to shift its funding and employees to, and the workers have something new to focus on. Thus it is a good idea for a company to have a collection of early-stage projects ready to go when the decision is made to kill an existing project. Finally, build a culture that rewards project closure. He mentioned one client is particular that is said is “fabulous” at this. “They let everyone in the organization know that when a hard call, an ending takes place, that’s a moment for real celebration.” Such an attitude sends a signal that the company is serious about making the right call, he said. In closing, McClusky said that while it is always difficult to kill a project and that everyone struggles with it, there are things you can do to make it easier. “You can get better at this,” he said. The Key Lessons In the afternoon plenary session, Matt Szugye, the managing director of Newry, offered his summary of the key points of the portfolio management section. In coming up with the list, he said, he had talked with a number of the other section participants and gotten their input. First, he said, referring to Martin Curran’s talk, simplify the management path. “Complexity is actually pretty easy,” he said. “What’s really tough is to synthesize it down to the stuff that really matters.” And the approach that Corning uses—putting together a one-pager that lays out goals and expectations for the coming year—is an excellent way to do it. “I could see simplifying the strategic plan of the NASA agency down to one page, to what really matters . . . and then roll that down the teams as well.” The second big idea was to emphasize innovative portfolio techniques, such as venture capital investing and open innovation. “Make some big bets,” he said. “One of the things that emerged from the talk about Pfizer is that you learn something new when you get out there and you place a bet or you try a new technique. It might not work out, but you’ll make progress along the way, and you’ll have a new vantage point based on that new position.” PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-22

The third lesson that Szugye listed was to take an aggressive approach on partnership. “Find great friends to partner with, then be the partner of choice” so that you get many opportunities to work with and learn from others. Next, be aggressive about killing bad projects. “Forget the sunk cost, celebrate the kills and getting that stuff out of the portfolio, and then reallocate to something better.” But, he added, “make sure there’s something better in the back of the pipeline” to keep driving profits to make it easier to move on. Fifth, focus on the bright spots in the portfolio management process. “I think that it’s easy to get down and it’s actually pretty tough to make change when you’re focusing on the negative,” he said, “but there’s a lot of positive that’s going on in the organization.” So it is important to, for example, make a big deal of a hero moment where there’s something excellent going on in the organization or to create a hall of fame of innovators to inspire change in the organization. Finally, he said, free the innovator. “A lot of industrial innovators spend a ton of time thinking about how to get out of the way so that innovation can happen,” he said, “and that was one of the things that resonated with me. . . . Make sure that it’s streamlined and that when people have a great idea, they can run with it without running into management.” Ways to Improve Portfolio Management In the afternoon portion of its section, the group was asked to brainstorm ideas for how NASA can improve its portfolio management. They were asked specifically to think about three areas— stakeholder management, decision management, and culture—but ideas in any area were welcome. After the section participants were divided into teams and given 25 minutes to brainstorm, each team was asked to select two of their ideas that were very important and doable. Then they presented those ideas to the entire group by describing the idea and answering several questions about it: Why is this a good idea? What are the challenges and obstacles? What are the resources? Who are the allies? What would make it better? And, from the point of view of a devil’s advocate, why is this a terrible idea? The last question was intended to highlight the weaknesses of an idea. The resulting key ideas were as follows:  Incentivize collaborations—build a structure and define mechanisms to facilitate external collaborations. The obstacles and challenges included the following: bureaucratic process, intellectual property rights (as set forth in the International Traffic in Arms Regulations and the Export Administration Regulations), the fact that it can take a long time to establish a collaboration, and the fact that getting funding for NASA’s share of the collaboration can be challenging.  Create a climate where project turnover is anticipated by modeling behavior. An example of this would be eliminating, say, 10 percent of projects within the next year. Among the obstacles and challenges cited were Congress and the Administration, the timescale, and finding new projects to replace the ones that are being eliminated.  Establish a shared vision with the stakeholders of ‘Why NASA?’ Among the challenges listed were the fact that NASA people tend to underestimate the value of telling their story. The available resources included modern communications methods and other government agencies.  Develop processes for killing and replacing projects. Among the obstacles were ingrained ownership and passion, fear of being labeled a failure, and sunk costs. One strong objection captured in the section is that large-scale projects are impossible to replace immediately.  Implement shorter life-cycle project phases (fund high-risk, high-payoff projects that are of shorter duration). The obstacles include Congress, the budget process, and workforce management. The allies and resources listed were crowdsourcing, academia, and innovative engineers and management. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-23

 Expand partnerships internally and externally. To expand partnerships internally, one of the recommended actions was to find a great success story and publicize that to the right stakeholders. To expand external partnerships, the necessary actions would include understanding a market and potential partnerships and then identifying assets to create value to those to those partners. The obstacles included the time it takes to carry out such a program, the fact that it might be viewed as redundant with the Small Business Innovation Research (SBIR) or other programs, and the necessary level of commitment since this would be a continuous process. The allies and resources included NASA leadership, technical assets such as wind tunnels, and the NASA brand.  Create an external innovation fund to support the development of space technologies. The obstacles included legal restrictions, questions about the ownership of intellectual property, and the fact that the selection criteria would have to be different from those for typical NASA programs. PROGRAM LEADERSHIP AND MANAGEMENT A third breakout section dealt with program leadership and management. The outside experts were Wanda Sigur, a former vice president for space systems at Lockheed Martin; Julie Setser, vice president of innovation capability at Procter & Gamble; and Michael Gazarik, vice president of engineering at Ball Aerospace and previously the associate administrator for NASA’s Space Technology Mission Directorate. (Because Gazarik’s presentation focused mainly on the challenges facing NASA, it is described in Chapter 4.) Program Leadership Influence on Innovation Sigur began by addressing the question of inward versus outward innovation and how the two compare. Working from the NASA 2030 vision, she noted that the vision saw NASA as being at the “leading, bleeding edge” of technology. Given that NASA already accounts for just a small percentage of the aerospace industry spending and that this percentage will almost certainly be even less in 2030, she said that it would not be possible for NASA to be at the cutting edge of aerospace technology while relying only on its internal resources. Thus, if NASA wishes to fulfill its vision, she said, it will inevitably have to be outward looking—that is, it must be willing to learn from other organizations and industries to address its needs. Such an outward-looking focus is critical to innovation leadership today, she said. With that addressed, Sigur moved to the topic of achieving successful innovation. What, she asked, could trigger and sustain a culture of innovation? What would that look like? It looks like “an entire population opting into the idea of innovating every day,” she said. Workers have the option of “just checking the box,” she said—doing their jobs for a paycheck, but nothing more. Or they can become so engaged in their jobs that time passes quickly and before they know it, it’s hours past the typical closing time. So what would push individuals to be more like the latter than the former? To answer that question, she described her “best job and worst job ever.” She was a program manager for the space shuttle external tanks after the Columbia disaster, and it was her job to address the foam loss on the external tanks that had caused that disaster in order to allow a safe return to flight. She initiated a program that examined the fracture mechanics of foam, and she had been giving a presentation describing that program when someone came up to her and asked if she had spoken with any of the foam sprayers. She had not, but after that conversation, she went and talked with the workers on the production floor who were responsible for putting foam on the tank. “I had never consulted with those guys,” she said, “and as it turned out, neither had my engineers.” The tanks were very large—27.5 feet in diameter and 152 feet long—and the foam that was sprayed onto them underwent an exothermic reaction, releasing heat and sometimes burning the PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-24

applicators. “Then it hit me right between the eyes,” she said. “We were focused on the engineering challenge without necessarily considering what we should have focused on, which was how to get a defect-free tank out the door, and we missed some of the most important elements in that solution set, which were the guys who were actually doing it.” Furthermore, she said, she found that the people spraying the tanks had a lot of ideas to make the foam defect-free. To get to zero-defect operations, Sigur said, she ended up bringing together not only the foam applicators and her engineers but also human resources staff and, indeed, the entire community. “We had innovation of materials systems, of tooling, of processing—we developed new statistical process control methods and new analysis techniques.” It was a valuable learning experience, she said, and many leaders on the team have since found ways to develop innovation cultures. Sigur then offered a collection of lessons from that experience. First, management has to be part of an innovation environment. “It has to be something they embrace and they understand,” she said. They sent the managers to business acumen and entrepreneur-type classes. “If you can’t understand where the line is,” she said, “there is no way you’re going to be able to step over it.” The team needed to understand the fundamentals of business and what the competition was likely thinking about in order to push to reach new levels of accomplishment. They also changed how they recognized innovative accomplishments. In particular, they established a system for recognizing people who had received patents for their innovations, including monetary rewards. They instituted metrics that support hands-off management while emphasizing error-free execution. “The last thing people want to have is a boss looking over their shoulder and requiring them to be innovative,” she said. “There are some things that it really doesn’t pay for you to develop yourself,” Sigur said, so it is a good idea, when appropriate, to acquire new technologies instead of developing them. A clear vision is vital. “Knowing that you’re working on something bigger than what you do day to day is absolutely critical to making folks wake up and want to be part of the bigger picture or effort,” she said. When trying to institute innovation in an organization, Sigur said, there are various factors that are likely to prevent success. “Everybody is looking for an innovative culture,” she said. “The problem is that most of those conversations end with the leadership team. If the effort is strategic only or directed only, that is most likely a death knell. Engaging the entire organization is critical. Similarly, if you don’t touch the hearts and minds of the people you need to engage, and if you don’t have them engaged consistently, she said, things fall apart. She mentioned one organization that spent around $600 million in a transition that affected tens of thousands of workers, only to have it fall apart because the reorganization affected “fiefdoms” that had existed in the company. The people running those fiefdoms were affected by the reorganization and “undid it completely,” Sigur said. There are some aspects of NASA’s culture that will make it more difficult to transform the organization, she said. NASA has a strong mission-focused culture, she said, which allows people to develop a sense of camaraderie, but it can also make it harder to recognize that you are part of a bigger picture. Instead, the culture is likely to lead to more of an us-versus-them environment. That is one of the challenges that will likely face NASA, she said—the fact that it is easy to develop partitions. On the other hand, she added, “there are bright spots where I think NASA has cracked the code.” The recent science-in-the-loop exploration missions have not only changed the dialog at NASA, Sigur said, but they have changed the dialog outside of NASA. “You’re causing the conversation to change because you’re talking differently among yourselves,” she said. Another bright spot is how NASA is working with commercial entities, she added. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-25

Program Leadership at Procter & Gamble Setser began her presentation by commenting that she had been listening to various people speak at the workshop, she had been struck by how similar the problems at NASA were to the problems at P&G. The projects are different, she said, but the problems are the same. Like NASA, P&G is a highly innovative company, Setser said. “We pride ourselves on leading the innovation in all the categories in which we compete.” And, like NASA, P&G has experienced various failures in the past that has led the company to codify many of its processes so as to avoid such failures in the future. “That results in a lot of the same dilemmas that you guys have talked about,” she said. On the issue of internal versus external innovation, Setser said that there really is no question or debate—it’s essential to be able to access innovations from outside the company. “You’ve got to find a way to access the [innovation] ecosystem.” Indeed, she said, over the past 20 years P&G has focused on trying to create a system of open innovation. It is important to figure out how to form strategic partnerships with other innovation leaders, how to work with academia, and how to access startups and small- and medium-sized enterprises. The main focus of her presentation, Setser said, was how P&G is fundamentally changing the way it does innovation. She began by showing a figure that demonstrated what she called P&G’s “architecture of discovery” (Figure 5.4). FIGURE 5.4 Procter and Gamble’s (P&G’s) “architecture of discovery.” SOURCE: Julie Setser, P&G, “Program Leadership & Management,” presentation to the Workshop on the Continuous Improvement of NASA’s Innovation Ecosystem, November 30, 2018. “What you do when you’re doing project management is fundamentally different from what you do when you’re discovering,” she said. Project management is a planning-based system, and it’s based on extrapolating the future using evidence from the past, she said. That is a different architecture from what you need when you’re doing discovery, which is all about uncertainty. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-26

“We’re essentially following the playbook of lean startups,” Setser said. Another way to think about it, she said, is that P&G is attempting to create entrepreneurialism at scale. The question at the heart of it is how P&G should operate in the realm of high uncertainty. Before explaining P&G’s architecture of discovery, Setser noted that it is important for everyone in an organization to be on the same page. It is not enough for the leaders to get it; everyone in the organization should. And by everyone “getting it,” she was referring not only to everyone working toward the same goals but also to everyone having a similar understanding of what those goals are and how to work toward those goals. She distinguished between “shared purpose,” which refers to everyone having the same goals, and “shared consciousness,” which refers to everyone seeing and approaching problems in the same way. Having the leaders get it and everyone knowing the purpose is not good enough, she said; it is important that everyone has a shared consciousness, and that requires a very different type of system. The discovery architecture that P&G created has three elements, Setser explained. The first element is “learn like an entrepreneur.” This begins with really falling in love with the problem, she said. She drew a distinction between loving the problem and loving the solution. At P&G, people will spend years—up to a decade or more—working on a particular solution, and it is easy for them to fall in love with the solution. The result can be a massive, multi-million-dollar development of something for which P&G has to seek out a problem to apply it to. The goal instead, she said, is to get everyone oriented toward the problem instead of toward the solution. The rest of the “learn like an entrepreneur” element, beyond loving the problem, looks very much like the scientific method, she said: Define the problem, build potential solutions, measure the outcome, learn from it, repeat. This has to be done within the context of a multifunctional team, she said, since many of the team members will not be familiar with the scientific method. They may be from the legal department, for instance, or regulatory or safety, and it is here that conversations take place about possible risks and how to manage it. “This is operating like an entrepreneur,” she said. “That’s all it is.” The second element is “invest like a venture capitalist.” One of the key questions that is asked in this step is, “What are the big problems we need to solve for humanity?” That might sound big coming from P&G, she said, but she offered an example of what she was talking about. P&G ships a lot of products in plastic bottles, and its products contain a tremendous amount of water, yet it is becoming increasingly important to decrease the use of both plastic and water. “We need to crack the problem of more sustainable products,” she said. It’s good business for P&G to be leading in that area, she said. After a big problem is identified, the next steps are to generate ideas and to test them to see which ones work best. The idea here, she said, is to do small, fast experiments so that it is possible to quickly weed out the bad ideas. After settling on a solution, the final steps are to incubate it and take it to scale. The third element of P&G’s innovation architecture is “create a new growth operating system.” This is where the shared consciousness is developed, Setser said. P&G is working now mainly with small, dedicated teams, she said. At P&G, as at NASA, things tend to become very complicated very fast, she said, “but we’re trying to operate more with scrums and teams of teams to keep this small-team focus on very specific tasks.” But what’s particularly important here, she said, is that those small teams have direct access to leaders, and that’s what creates the shared consciousness—the constant interaction between the working teams and the leaders. In shifting to this new way of working, P&G is running lots of experiments, Setser said. For example, they are doing experiments to determine which sorts of reward structures are most effective for this kind of work. One of the big choices that P&G had to make, she said, was where to place the decision-making responsibility. Like NASA with its different centers, P&G has a number of different business units, and the decision was to place much of the decision making in the business units themselves rather that at headquarters. One of the keys to making this new process work, Setser said, is humility, and she compared that with the importance she had heard being placed on curiosity in a place like NASA. “To me,” she said, “curiosity is very similar to humility. It means you don’t know all the answers, and you’re curious, and PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-27

you want to learn. The behavior of a humble leader is the behavior of a leader who is going to be willing to try things and willing to be surprised and willing to learn from new evidence.” Actionable Items After hearing the presentations by Sigur, Setser, and Gazarik in the morning, the members of this section came back after lunch and developed a set of actionable items based on what they had heard. Those items included the following:  Advertise the technology and knowledge gaps further. The goal is to make people more aware of what the problems are. One possible approach would be to create a portal that listed “problems” from all areas.  Expand technical outreach to non-technical employees by simple training. This will free up time for engineers and scientists and enable more outreach.  Put the outreach people into the project teams to help with the communication.  Treat 7120.8 as best practices, but allow for interpretation. Have good examples and templates available—for examples, videos on YouTube. Have the chief engineer’s office help with how to work with it; the chief engineer should not be just a legislator of the document.  Preserve and expand the STMD organization and content as the directorate serves as a cornerstone of the NASA innovation culture.  Touch point content is critical, as is external awareness. Consider an early-career rotation in industry. There are likely some legal issues that will need to be worked out before it is possible to do rotations between government and the industry side. One way to get around this would be to do early-career rotation at the centers; if it is not possible to do it across centers, do it internal to the centers so that the early career people get broad exposure to different parts of NASA. The rotation should be not just in the technical arenas, but also in the technical program management budget arenas.  Make the mentor program deliberate and intentional as part of the rotation program. Pick the best mentors for the people, but make it a deliberate part of part of the activity.  Define, champion, support, and celebrate.  Fund innovation projects in a metered way where certain questions have to be answered along the way and it’s more about the learning necessary to answer those questions. It should not be milestone-based because milestones start to drive you to solution. Keep it where you have learning that needs to occur.  Institute an 80 percent early-career replacement plan. That is, as people leave or retire, their replacements should be 80 percent early career, with early career defined as within 5 years of graduating with a degree.  Create a structure for talent management. At P&G there is a talent council that pulls together the data on what skills are needed and when. All the decision authority is retained by the managers themselves. The talent council is not a bureaucratic step to go through. It is a data organizer, provides the data to the decision makers, and the decision makers make their decisions using that data. CLASSICAL ENABLERS AND IMPEDIMENTS TO INNOVATION The breakout section on classical enablers and impediments to innovation was focused on the question of what it takes to start up and maintain a highly innovative organization. The section was led by Fred Kennedy of the Defense Advanced Research Projects Agency (DARPA), working with Craig Kundrot of NASA. As Kennedy explained in a short recap of the section he and Kundrot provided later in PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-28

the afternoon plenary, the goal of the section was to assemble several people who had either successfully led or stood out at innovative organizations and to learn from them what they thought were the key elements to success. Instead of simply having them describe their experiences, Kennedy said, the idea was to create a dialogue between them and members of the section. Thus, after the three panel members introduced themselves, they carried out a wide-ranging discussion of enablers and impediments to innovation that was mainly driven by questions from the audience. The three panel members were David Hamilton, former director of the U.S. Air Force Rapid Capabilities Office; Tom Ingersoll, former chief executive officer of Skybox Imaging; and Christopher Shank, senior advisor to the Secretary and Under Secretary of the U.S. Air Force. During the afternoon segment, section participants generated concrete suggestions for actions to improve NASA based on what they had heard during the morning segment. As Kundrot later explained during the plenary session, the Enabler section’s discussions revealed that there is no “single magic recipe” for successful innovation. However, he said, “there are a lot of key ingredients that, depending on what dish you’re preparing for what purpose, can be extremely valuable.” In particular, he said, much of the discussion was focused on four specific categories of ingredients— vision, process, isolation and autonomy, and people—as these were the categories that had received the most attention during that breakout section. Vision The first ingredient that was talked about, as Kundrot told the afternoon plenary in his section summary, was a compelling vision. That may sound trivial, he said, but it is surprising how often such a vision is missing. For instance, during the breakout section, Christopher Shank spoke about a vision in terms of the “how” versus the “what.” While it is important to know how something is going to be accomplished—and while that may be the most interesting thing to innovators—everything starts with what is going to be done. “It is not about the engineering,” he said. “It’s about the systems, the boots on the Moon. That is the compelling vision to be done. . . . So my personal advice is, quit talking about the individual systems, talk about what we’re going to do when we build this thing.” During the breakout section, Kennedy spoke about the compelling mission that underlay DARPA’s founding and how difficult it can be to create a vision-driven organization. “It is hard,” he said. “You have to have a confluence of events, a compelling problem statement, a mission.” In DARPA’s case, there was the Russian satellite Sputnik circling Earth and, with it, the sudden realization that the United States had fallen behind the Soviet Union in this important technology. “And so they grabbed everybody that they thought could contribute, and they ran flat out to solve the problem,” he said. “You don’t get that a lot. You don’t get those kind of compelling moments.” So, he said, it is actually quite difficult to set up an organization with a purpose and a vision in this way. Something will be missing— the compelling problem, the mission that will address it, something. Furthermore, he added, you have to assemble the right people to tackle the problem. “So I do think there’s a little bit of historical accident that goes into some of these things.” There are many instances when people tried to create DARPA-like entities and failed, he said. Why did that happen? “I don’t think you understood what it was you were getting yourself into or you were actually truly committed to this whole thing,” he said. “You wanted the benefit, but I don’t think you put all the ingredients in.” An important piece of an organization’s vision is knowing what sort of organization it is. One section participant observed, for example, that much of his office’s function was not so much innovation as integration—“grabbing things that other people had already invented and integrating it in a different way.” It was important to recognize that, he said, because the two approaches require somewhat different types of people. Still, having a clear vision is not enough, Ingersoll said, and he offered an aphorism that resonated with many of the people in the section: “Vision without execution is hallucination.” PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-29

In his experience with Silicon Valley start-ups, he said, he has seen many companies with an excellent vision but very little follow-through. NASA does not seem to have a problem with this, he added, but many companies in the emerging space industry confuse innovation with bad engineering. “That’s not what I’m talking about,” he said. “Innovation is actually really, really hard, and you need your best engineers and your smartest people and your most disciplined people.” Process The second category of ingredients discussed in the section was process, as Kundrot told the plenary session. “You want to be doing enough of it to be helpful,” he said, “but not get too wrapped around the axle in the process itself, which is our big challenge now.” For example, in the breakout section Tom Ingersoll spoke of how his teams working on defense programs at McDonnell Douglas (acquired by Boeing) created some of the early rapid-prototyping procedures that are still in place today. They did not even start with existing processes, he said, but instead asked what it was they needed for success and worked from that. There is a well-known process for being successful in engineering, he said, and his team had a saying that they needed to touch all the bases but not spend too much time there. “You get organizations that will have a whole organization around configuration management, a whole organization around risk control and risk analysis, a whole organization around systems engineering, and all those things are important,” Ingersoll said. “But when you’re trying to innovate, you don’t want to make a career out of configuration management. You just have to do enough of it to make sure you don’t screw up.” The goal is to hire people who have the discipline to do good engineering and not to encumber them with a lot of processes that are not particularly effective. This is only true in certain, highly innovative situations, he added. In flying a shuttle, for example, you don’t want a lot of innovation—you want to get things done a certain way, and this is where detailed processes are important. But if you are trying to do something new, it won’t work within that shuttle environment, he said. “Managers have to understand that and be willing to let people come up with the processes that are needed and appropriate for the projects that they’re involved in.” Later, a participant in the breakout section asked Ingersoll to expand on this point. “You want to tell them what to accomplish,” Ingersoll answered. “You need to give them very, very clear metrics, how you define success and checkpoints along the way,” but they should not be given much instruction about the how. That flexibility about the how allows them to do what they do best—come up with new ideas and new approaches, that is, to innovate. But it can’t just be chaos, he said. It can’t simply be “Here’s the check, now have at it.” And he described an experience he had to illustrate why. “A software team tried to convince me that they were going to write millions of lines of code with no requirements, they’re just going to go lay it all out,” he said. “Guess what—it didn’t work. You have to know what you’re doing, and you need waypoints, you need decision points, and you need reviews.” When he was the chief executive officer at Skybox, he said, the company had multiple reviews of its projects. “We brought in 25 people to have the team present their status and have them think it through.” This was a way of ensuring that there was discipline and accountability, he said, both of which are key to successful innovation. Define the waypoints, but then give your innovators a lot of leeway in how they get from one point to the next. Part of the accountability, he added, is forcing the innovators to own up to the science. “You can’t cheat on science,” he said. If the innovators think it’s a good idea to save some money by using a certain kind of electronics to go into space, that’s fine, but is it going to survive? “Prove to me that it’s going to survive. Go to a cyclotron and zap it with radiation to prove it to me.” Innovators who are true innovators will love that sort of challenge, Ingersoll said. They understand physics, and they will live within its boundaries. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-30

Metrics Part of accountability is having clear metrics for success, Ingersoll said, and he told a story in the breakout section to illustrate that. At Skybox they had a photo that Google had provided of the national mall in Washington, D.C. It had been provided by the IKONOS Earth observation satellite, and Google had said, “If you can get an image of that quality [from a satellite], we will buy all the imagery you can generate.” So they put that photo up on the wall, and it served as their standard—what they called their “customer acceptable image.” Ingersoll said that he met with the design team every week and asked, “How are we doing relative to that picture?” That was their metric for success. They were not just trying to build something cool, he said—they had a clear and concrete image of what success would look like. “So when we built that satellite and the thing flew, our image was better than that,” he said. “And Google paid a lot of money for our company because we were able to accomplish that goal.” Acceptance of Failure Because innovators are trying to do things that no one has ever done before, they will sometimes fail, Kennedy told the breakout section, and the system must be set up to accept the possibility or likelihood of failure. “Probably 10 percent of our projects [at DARPA] go on to full-on transition with DOD [the Department of Defense],” he said. “Maybe 10 percent. That’s not too good, is it? I think it’s fantastic. We did the Internet, for God’s sake. We’ve done stealth aircraft. . . . A whole lot of what we do in the defense department today was an innovation that was piloted out of DARPA sometime between 1958 and today.” And in very few of those cases was it obvious early on that the innovation would work or that it would be useful, he said. “We make educated guesses about new capabilities we might want, and the payoff is iffy. But when they pay off, the payoff is huge, and that’s what’s important.” Isolation and Autonomy Because a team of innovators is likely doing things in a way that is different from the rest of an organization, it is important to create a “safe space” for that team in which to do its work. In the breakout section Ingersoll referred to this as “isolation and co-location and autonomy.” Given that a team of innovators is trying to “break things,” a lot of other people in the organization are likely to feel threatened by that, he said, and the bureaucracy can put various impediments in their way. It can be very demoralizing, Ingersoll said. “I can tell you many, many experiences where [someone said], ‘You can’t do that, Tom. That’s dumb. Why are you doing that? Why are you wasting your time on that?’ because I was threatening something they were doing.” The best way to avoid those sorts of impediments and demoralization is to physically isolate a team from the rest of an organization, bringing all of the team together in one place that is separate. For example, when he was working on the DC-X for McDonnell Douglas in the early 1990s, the group was placed in a building on the far side of McDonnell Douglas campus. “They isolated us, and that was one of the best things that we did,” he said. “We were all there . . . working on the project together.” In addition to this isolation and co-location, Ingersoll said, it is important to provide autonomy. “You’ve got to make sure that this team can break some rules, that they’re not working within the same boundaries that everybody else is, because that’s not going to work,” he said. If a team has to work within the existing processes that have been set up to maintain an operation or organization, it will be very difficult for that team to innovate effectively. Leadership must understand that and allow their innovators the independence to do things different, he said. Hamilton made a similar point about his time at the Air Force’s Rapid Capabilities Office. In setting up that organization, he said, they created a charter that left out many of the standard Air Force PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-31

processes and also had them reporting to a board of directors that included their leadership in order to ensure their autonomy. They did get some complaints from the staff at the Office of the Secretary of Defense, Hamilton said, but the Secretary of Defense was generally very defensive of them, particularly Ash Carter. “He used to say he spent most of his time keeping people away from us,” Hamilton said. “But we were able to get a lot of things done because of the leadership support. If it wasn’t for that leadership support, we wouldn’t have been successful.” Hamilton continued that he tries to provide the same sort of support and cover for people who are working for him. “What I always ask,” he said, “is if you’re going to get into an argument, let me know first, so when I get the phone calls, I can defend you.” He noted that it is a leader’s responsibility to protect the people who are trying to do something new. People While vision, process, and isolation and autonomy are all important ingredients in successful innovation, there is one that is more important than the rest, Ingersoll said in the breakout section. “Number one, the most important thing about innovation—and you’ve heard it over and over again—is the people. People. People. People.” Hire Rebels . . . Hamilton told the breakout section that recently a number of people have asked him what they need to do if they wish to set up a Space Force or a Space Development Agency or some other group that is tasked to do new things. “I say the first thing you need to do is hire rebels,” he said. “You need to hire the people who were aggravated with the current system and put them in charge of doing something different, because if you’re hiring the same people and just changing the office name, you haven’t done anything.” He grew up in the flight test community, Hamilton said. He went to test pilot school, helped built airplanes, etc. “And as you might imagine in that community, there’s frustration with higher headquarters and things that don’t happen fast enough.” Therefore, he said, when he set up the Air Force’s Rapid Capabilities Office, he pulled 90 percent of them out of the flight test community because these were the people he believed could figure out ways to do things more quickly and with fewer resources. Once the office was up and running, he said, “we were developing and delivering capabilities with about 10 to 25 percent of the [usual] human resources required to manage programs.” Furthermore, the programs were being run by people who were younger and of lower rank that was typical in the rest of the Air Force— generally about one rank lower. One lesson from this, he said, is that younger people can do things if given the opportunity. “You have to push them outside their comfort zone,” he said, “and you have to watch very carefully because there’s some people who don’t do well being pushed outside their comfort zone. But that’s the way to help people grow. You have to count on them, and it’s your job to make sure that when you push them out on that limb, you’re there and you don’t push them so far that you know they’re going to fail.” There was a downside to having younger people take on these responsibilities, he added. “When lieutenant colonels who had been managing billion-dollar programs left to go get their next job, they were told that they weren’t qualified because they weren’t senior enough.” So once they left the Rapid Capabilities Office, they were put in charge of programs far smaller than they were used to running. Tom Ingersoll added a second caveat: the “Hire rebels” advice applies only to those situations that call for real innovation. “You don’t want innovative people doing certain jobs,” he said. “You want innovators that are rebels that like to take flak doing things where there’s change required. You don’t really want a rebel doing configuration management for you.” But since not everyone is an innovator, that PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-32

is okay. Hire rebels for the innovative jobs, and hire people who are not innovators for those jobs that call for a steadier, more process-driven approach—the ones focused more on knowledge than discovery. The important thing, he noted, is to be able to tell which is which, both among the jobs and among the workers. . . . But Only If You Can Take the Heat Several speakers made the point that managing rebels is a challenge and that not everyone is cut out for it. “The leadership has to be able to accept that there are going to be people out there breaking glass,” Hamilton said. “You’ve got to be able to take a lot of heat, and for some people, that’s not their thing. They don’t thrive well in that.” Ingersoll echoed that: “A lot of managers can’t take it because most innovators are in your face. They’re telling you the truth. They’re telling you you’re stupid. They’re telling you what you’re doing wrong.” It’s natural to get tired of that and disengage from the innovators, push them into some sort of corner, he said, but often it turns out that the innovator is right, and a manager has to be able to embrace the truth even if it was delivered in an unpleasant way. “There’s two kinds of people,” Ingersoll said—those who seek truth and those who seek to be right. And leaders of innovative organizations need to get rid of those people who seek to be right and surround themselves with people who seek the truth. The best managers in an innovative environment are those who don’t have an ego, who are just trying to get the right answer and get the right thing done, he said. They have to be comfortable with people who are trying to do things differently. “The other thing that I found in innovative organizations,” Ingersoll said, “is those people actually are really, really smart, and you have to surround yourself with smart people.” He said that he had seen a pattern, especially in large organizations, where there are pockets of competency but that not all parts of the organization are competent. “Smart people attract smart people, and dumb people attract not so smart people,” he said, so the goal should be to have an organization “where all the smart people want to go because that’s where the cool stuff is going on,” but eventually that will only succeed if there are managers who can support and deal with those kinds of people. Create Turnover Kennedy told the breakout section that one of the elements of DARPA’s success is that it has managed to maintain a relatively young workforce. “We do that through a variety of mechanisms,” he said, “but the key one is kicking people out the door in a few years and inviting new folks to come in.” In particular, each time a new program manager in brought in, he or she is given 2 years to define a problem statement, get the money, get people on contract, and demonstrate some sort of results. Every once in a while one of them will stay on, but for the most part they are gone after 2 years. “That turns out to be very valuable in terms of refreshing what we do,” Kennedy said. He noted that the policy can also cause problems. Because of a lack of institutional memory, “people come in and sell us something, and we won’t remember that we tried it 3 years ago,” so they end up redoing something. But that disadvantage is far outweighed by the benefit of having a small group of people led by one innovator drive something through in a short period of time, as this makes it possible to learn something fast and either turn the results into a big program or kill it. Limit Resources Another method for getting the best of an innovation workforce, Kennedy said, is to limit resources in order to create an artificial sense of urgency. “I would say that’s critical for the innovator,” PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-33

he said. “You’ve got a little bit of time, not a lot of money, go make it work. And I find that brings out the best in people.” Motivate the Right Way How does an organization attract and keep the best innovators? And how does one get their best effort from these innovators? In other words, what motivates them? It is not money, Ingersoll told the breakout section. The best innovators need to have enough, but what really motivates them is a compelling vision and the opportunity to work on an interesting, challenging project with other innovative people. “Most people who are really innovative are kind of odd ducks,” he said. “They’re abrasive, they’re brash, often they’re not politically correct, and they’re probably not going to be on the management chain in any organization.” That is not true of all innovative people, he said, but it is true of many. “They’re odd ducks, they thrive with people like them, and . . . that’s where they want to be.” So the best way to motivate them, he said, is to create an environment where they have a compelling vision, where they have enough constraints so that they get the product right, and where they have enough freedom to do really cool things—and then let them loose. “Doing cool stuff is really what it’s about.” Mentoring The importance of mentors came up several times in the discussion. Mentors teach the sorts of lessons that generally aren’t taught in school. Shank commented in the breakout section that finding a mentor is particularly important for young people. His own mentor, Pete Warden, taught him a number of things, but most importantly the value of persistence and “not accepting your first ‘No’ in whatever organization or hat you’re wearing at that time.” “What happens in mentorship often happens over coffee and beer,” Shank said. “That’s what mentorship is really about because there’s a conversation.” He said that Tom Young, a former director of the Goddard Space Flight Center and later at Lockheed Martin, was a great mentor for him. “He taught me how to speak the truth, but be nice about it, so it’s not personal,” he said. The 4 Percent and the 96 Percent A number of the speakers referred to the widely held notion that only 4 percent of the workforce are likely to be true innovators. There actually do not seem to be any hard data backing this up, Kundrot said, but the exact numbers are not important. “The key here,” Kennedy told the breakout section, “is to recognize that innovators actually are kind of rare. And it’s okay.” Not everyone has to innovate, he said, and it is probably for the best that so few actually are innovators because a large number of jobs do not require any sort of innovation. It’s important to keep that in mind when designing jobs and choosing employees. One implication of the rarity of true innovators is that finding and recruiting them can be challenging. “I spend a lot of time just recruiting,” Shank said. “Not everybody makes it.” You are looking for people who are really innovative and persistent and willing to put up with the many inconveniences of government work. Although government jobs can be incredibly fulfilling, they do not pay well, so people have to think carefully about what is more important to them and what is less important. Conversely, he said, “it is incumbent upon managers to ask, ‘Is that the type of person that wakes up every morning and says, How am I going to make a difference today?’ That type of person is PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-34

really rare because most people just want to get through the day. But that is how innovation happens and how you get things over the goal.” Diversity Because innovation is a search for answers and no one knows where those answers will be found, it helps to have a team of individuals with different ways of doing things. Experience has shown, Ingersoll said, that diversity is important to innovative teams—diversity of culture, diversity of gender, and diversity of age. He spoke particularly about diversity of age. “People tend to think that only young people innovate,” Ingersoll told the breakout section. “It’s not true. In fact, my experience on multiple fast-moving, innovative, cool projects where we have broken barriers is that you have really bright young people, but you also have very experienced older folks, the gray beards, to keep them in line.” The combination of younger innovators who have been out of school for just a few years with older innovators who have had the opportunity to learn through experience seems to be a key to success. Ingersoll spoke in particular of his experience at Skybox. The average age of Skybox employees was probably about 30, he said, and for many of the people there, it was their first job out of school. They were very bright and super talented, but not very experienced. So he brought in a former NASA associate administrator for spaceflight, to put together a technical advisory team to help advise the young engineers. “When they first met [him],” Ingersoll said, “they were like, ‘He’s just the old guy. Why’d you bring him here?’ And I said, ‘Okay, I understand, [he]’s an old guy. So am I. But just listen to what he has to say. There’s going to be gold in the hills that he creates. Just listen to what he has to say.’” And sure enough, Ingersoll continued, after about 3 months the younger innovators loved him, and he had become a mentor to many of them. “I don’t think we would have been successful without marrying the young, who had really clever ideas and [knowledge about] the state of the technology, with the leadership that we got from the old,” Ingersoll concluded. Steve Shih, the associate administrator for diversity and equal opportunity at NASA, expanded on Ingersoll’s point about diversity. Having people with different talents and different ways of thinking helps identify and mitigate blind spots, and it provides a cognitive diversity that can increase the likelihood of successful innovation. He noted that the challenge for NASA—which it is working to meet—is to recruit a diverse workforce and then provide them with a psychologically safe environment where they can have different ways of thinking and express unconventional opinions. Useful Thoughts When later summarizing the categories of ingredients as described above, Kundrot told the plenary audience that there were several additional ingredients that he lumped together into the category of useful thoughts, and the section discussions that led to those are summarized below. Run Faster than the Ankle Biters During the breakout section, Hamilton told the story of a project after 9/11 to put up an air defense system around Washington, D.C. As this would involve installing radars, missile launchers, and a variety of other technologies around the nation’s capital, a number of agencies “came out of the woodwork and said you couldn’t do that.” Fortunately, he said, the President and the Chairman of the Joint Chiefs of Staff were behind the effort and helped them avoid the naysayers. In every situation involving a new technology or a new use of a technology, it is likely that there will be people objecting or saying it can’t be done. “So,” Hamilton concluded, “when the ankle biters are trying to stop you from PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-35

doing something—this happens in every organization—you’ve just got to run faster than them, and they can’t keep up.” Innovators must also be on the lookout for people dropping poison pills in front of them, he said. “You are doing something different. They do not want you to succeed. They’re looking to prove that you guys were crazy because you were trying to do it differently, because you’re taking on their intellectual momentum, the way they know how to do things. You’re making it uncomfortable for them.” He added, however, that if you are trying to do something truly innovative and you are not making some people in the organization uncomfortable, then you are probably not succeeding at your task. On the positive side, he said, you can use the naysayers and the ankle biters and the poison pill droppers to sharpen your approach. “They’ll come up with things trying to put roadblocks in front of you that you didn’t think of,” he said. “Learn from those.” Those arguments against your idea are great opportunities to identify whatever weaknesses your approach might have. Since you have been trying to move fast, you might not have had enough time to think through all of the possible issues. “So listen to the people throwing rocks at you, because there’s probably some truth in what they’re doing.” It’s Not Failure; It’s a Pivoting Event In the breakout section Ingersoll described a mindset he learned from working with venture- backed companies. They think in terms of much shorter time spans than NASA does, and they take calculated bets where the expected outcomes are not necessarily success or failure. They go down a particular path where they have defined various checkpoints along the way, and if they arrive at a certain checkpoint and the outcome is not what they were expecting, they have to decide what to do—whether to keep going or change direction. The Silicon Valley term for this change of direction is “pivot,” he said. “Once you realize that’s not the right path, you want to pivot,” Ingersoll said. “You don’t want to say, ‘I failed.’ You say, ‘I’m going to pivot.’ And that’s very important for the mindset of everybody involved. I would explain to our investors, ‘We’re heading down this path. We’re not sure where it’s going to take us. But if we realize it’s not a good path, we’re going to pivot.’ We’re not going to call it a failure. We’re going to pivot, and that protects everybody.” This is a key lesson from Silicon Valley, Ingersoll said. You communicate a certain expectation to your stakeholders. You don’t tell them that the outcome of a particular venture will be either success or failure. You explain that it is a learning path that will have certain decision points, and that you may pivot in response to what you learn along the way. This is also an important mindset for the people doing the work, Ingersoll said. “Failure in my mind is when you are sloppy and when you don’t do a good job,” he said. “That’s a failure. Being unsuccessful at something that you try—that’s not necessarily failure.” Suggested Actions In the afternoon portion of the section the group divided up to come up with suggestions for different actions that NASA could take to improve innovation capabilities. The idea was to create a list of practical things that workshop participants could take back to their own organizations and implement. The suggestions fell into a number of broad categories. Encourage Diverse Experience through Rotations The section’s speakers had all agreed that it is valuable for innovation teams to have members with a diversity of backgrounds and experience. There are various ways that this could be encouraged, but some of the participants came up with one particular action that could be put into action relatively PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-36

quickly. The deputy chief technologists at each of NASA’s 10 centers could be rotated, with each spending perhaps 6 months or a year at a different center. Ideally they would spend time at centers with very different missions than their own in order to maximize the diversity of experience. So a deputy chief technologist at a space center might spend time at a science center or an aeronautics center and then return to the home center and share what he or she had learned about the operations, technologies, and capabilities at that other center. Then that person could rotate to another center. So the chief technologist would remain at each center to maintain stability, but there would be rotating deputies who would spread that desired diversity of experience. Such rotations would not have to be limited to the deputy chief technologists and the 10 NASA centers. In the past, there was a military exchange between NASA and DOD; that could be reinstated. There have also been rotations with European space agencies; those are no longer done because of the International Traffic in Arms Regulations, but there may be some way to get them restarted. And it is even possible that NASA could work out rotations with private industry. That would be complicated by the competition among various companies and the need for confidentiality, but it might even be possible to work something out there. The goal would be to significantly broaden the knowledge, experience, and connections that NASA innovators bring to their teams. Hire Rebels When Management Can Tolerate Rebellion A number of speakers made the point that many of the most effective innovators are the rule breakers, the rebels, the pirates—there are many terms for them, but the common thread is that these are people who are more interested in following their own paths than keeping to the path that someone else has laid down. They are challenging for management, however, so the decision to hire them will require strategic conversations about where you want or need rebellion. That in turn raises the question of where those conversations should take place. They are already happening at the agency level, but there is plenty of room for those conversations to happen on the mission and engineering side of the house, and it makes a lot of sense for that to be an agency conversation, but it has to flow fast to the place where the change happens. Since knowing the environment is key to making the decision about hiring rebels, it makes sense to have the conversations at the center level, but the centers will need a signal from headquarters saying, “Yes, we encourage that.” Use More Flexible Hiring Permissions As one speaker observed during the plenary session, “Normal GS hiring is what it is. It’s hard. You cannot just write down, ‘I need a rebel.’” Furthermore, hiring true innovators comes with its own challenges—they are relatively rare, and they tend to be in high demand. Thus another recommended action was to use more flexible hiring permissions. DARPA has special hiring authority, Kennedy explained in the plenary session. “I can actually go out and pay people pretty well above GS scale to come in,” he said, “and that is valuable.” On the other hand, the innovators aren’t really doing it for the money, he said, so the value of the special hiring authority is not so much about the cash as it is about the flexibility. “I can say, ‘Hey, I need you,’ and then a few weeks later I’ve got that person in the office, and they’re off and running.” The members of the group discussed it, and a number of them believed that a similar sort of hiring authority—including the ability to hire on the spot—is already available to NASA managers now. The problem, Kennedy said, “is that nobody really believes they are implementable or wants to try due to the typical risk aversion to bureaucracy.” “I think it’s 50/50,” Kundrot told the plenary session. “I think half of it is getting the authority, the other half is actually convincing yourself that it’s okay to use it.” PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-37

One observation made during the group discussion was that supervisors seem to be held back from using more flexible hiring practices by a lack of education about what is possible. Because that sort of flexibility is attractive and ripe for abuse, managers are implicitly discouraged from using it. One way to get around this would be to get HR and the legal department to brief managers on hiring flexibilities— specifically on how they can be more creative and direct in how they hire. It would be particularly useful if managers were more aware of—and more willing to use—on-the-spot hiring permissions when appropriate. Cull the Deadwood “The flip side of hiring permissions is firing,” Kennedy said during the plenary session. “Sometimes you’ve got to let people go. . . . Sometimes you have to cull the deadwood.” Unfortunately, the normal GS processes do not make that easy. It can be done, however, and it is more straightforward than widely believed. One action that could help accomplish this would be to train management to be proactive and persistent in firing non-performing employees. Use Pivot Gates A number of people thought that the idea of pivoting, borrowed from Silicon Valley, is a useful alternative to talking about outcomes in terms of success or failure. Thus, writing a plan with checkpoints where one has either succeeded or failed, it would make sense to use pivot gates where, depending on how the work has gone up to that point, you go in one of two directions. If the expectations are stated in this way, as long as there is a definitive yes/no answer, the work is not seen as a failure but rather as informing you concerning the next step to take. “I really do think it’s important that that we stress that in experiments and demonstrations of the kinds we like to do, failure is not defined in the normal way,” Kennedy told the plenary session. “We’re doing experiments. We’re trying to confirm or disconfirm hypotheses, to some extent, and a disconfirmation of a hypothesis isn’t a failure.” Decide Where NASA Needs to Be Innovative Innovators may be the point of the NASA spear, one participant in the breakout section observed, but innovation is still just part of what NASA does, and it is important for the agency to decide where it needs to be innovative. This will depend on NASA’s vision and mission and will get established at the agency level. However, there is no reason that the individual centers cannot develop their own strong visions and missions to support the agency vision and clarify where innovation is needed. On a related note, another participant observed, it is important to distinguish between innovators and integrators, as these are different skills. Innovators should be placed with innovators. It makes sense to look for things that can be integrated within each building. PREPUBLICATION COPY – SUBJECT TO FURTHER EDITORIAL CORRECTION 5-38

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