Aeronautics Innovation: NASA's Challenges and Opportunities (2006)

NASA’s Aeronautics Research Mission Directorate (ARMD) supports research and development in advanced airframe, engine, emissions, air safety, and air traffic control technologies. These diverse missions predate the creation of NASA in 1958 and have survived many changes in the industry. They are still recognized as important governmental functions by recent public bodies, such as the Commission on the Future of the Aerospace Industry, and private organizations ranging from the National Academies to the National Institute of Aerospace.

Reviews of NASA’s record and research portfolio note a number of impressive accomplishments and in general praise the quality of research performed in advanced materials, propulsion, aerodynamics, aviation safety and emissions, controls systems, human factors, and many other areas. Nevertheless, there is ongoing concern about the translation of NASA’s aeronautics research results into product and systems innovations that improve the air transportation system. This is not surprising in view of the enormous management challenges the program faces, including the following:

• Unlike in most of its space-related activities, NASA has no institutional responsibility, resources, or ability to directly implement technologies developed by the aeronautics program. Rather, implementation is dependent on external customers such as airframe, engine, and other aircraft component manufacturers and assemblers and the regulatory and operational arms of the Federal Aviation Administration (FAA).

• These external customers have exceedingly diverse goals, needs, time horizons, and technical capabilities. The missions range from supplying quasi-public goods (air transportation safety) to supporting commercial activities. The users range from highly sophisticated aircraft, engine, and other component manufacturers to a federal government entity, such as the arm of FAA operating the nation’s air traffic control system, with limited incentives and technical capabilities to innovate.

• What NASA’s customers and users have in common, however, is that they are operators, managers, and developers of complex systems (aircraft, engines, avionic subsystems, air traffic control hardware and software), entailing the integration of many technology advances. Discrete technologies, however technically successful, may not be incorporated into these systems. In that case, they do not represent innovations.

• Among federal R&D agencies, NASA supports a very broad range of activities—from basic research through demonstration of specific technologies.

• NASA aeronautics is overshadowed in resources, managerial attention, and political support by the agency’s principal mission of space exploration and discovery. The difference in status between aeronautics and space is if anything more pronounced since President Bush’s announcement of a new mission to return human beings to the moon and eventually send them on to Mars.

In addition to these facts of life, NASA aeronautics officials also recognize that there have been advances in private- and public-sector innovation management that might be applied or adapted to their tasks. For these reasons, ARMD asked the National Academies’ Board on Science, Technology, and Economic Policy to recommend tools, techniques, and practices that might facilitate and accelerate aeronautics innovation involving the results of NASA’s R&D activities. Interpreting the charge to focus on the deployment of NASA-developed technologies by users outside the agency, the National Academies appointed an ad hoc study committee composed of academic experts in technology management and public administration and people experienced in the development of a variety of technologies directly and indirectly related to aeronautics.

In attempting to address this task, the committee was soon struck by the growing discrepancy between the needs said to be served by the pro-

gram and the resources available to it. The committee concluded that NASA’s aeronautics program faces an overriding management challenge: a lack of national consensus about the federal government’s role in civilian aviation generally and NASA’s role in aviation technology development in particular. On the one hand, the community of industry, academic, and other stakeholders and experts support an expansive public research and development program with NASA playing a lead role. On the other hand, successive administrations and sessions of Congress have over the past seven or eight years reduced NASA’s aeronautics budget without articulating how the program should be scaled back. In these circumstances, NASA has tried to maintain an expansive program by spreading diminishing resources across existing research establishments and many objectives and projects—too many to ensure their effectiveness and the application of their results. This has been a growing problem for several years, but administration budget plans for FY 2006 and succeeding years—anticipating a 50 percent reduction in the aeronautics R&D budget and personnel overall by 2010—have made it extremely acute.

Modern innovation management in a resource-constrained environment has as a first principle identifying and adequately supporting the highest priority projects and winnowing out less important ones. Within ARMD this process has only recently begun. Unless it is guided by a clear strategy, carried out in close consultation with all stakeholders and extended to all areas of aeronautics in which NASA is currently involved, other managerial advice is of little utility in helping meet the nation’s needs.

The committee was neither asked nor constituted to redefine the government’s role in civil aviation, nor to recommend what NASA’s aeronautics R&D priorities should be or how the enterprise should be organized. We do offer the following general advice on what a national policy should entail and how prioritization of the activities supporting it should proceed.

Congress and the executive branch should engage in a dialogue to articulate national goals in civil aviation and the corresponding public sector role(s). The government’s role is likely to differ among (1) pursuit of fundamental understanding and yielding scientific and engineering results available to all; (2) pursuit of quasi-public goods, such as safety, efficient management, and environmental enhancements; (3) development of improved commercial and general aviation aircraft that are successful in domestic and international markets; and (4) development of advanced aeronautics technologies for which there are currently no providers in prospect. The tradi-

tional market failure rationale for government intervention varies considerably among these categories and even within a category over time (depending, for example, on the degree of private competition).

• NASA’s first order of business in promoting innovation is to translate a national aeronautics policy into a strategic or mission focus that is in better alignment with the resources available to it—its budget, personnel, and technical capabilities. This, in turn, should lead to a prioritization of programs and projects involving the research centers, external grantees, and contractors. The result may be a reduced mission scope and portfolio, but one with greater impact on innovation in air transportation.

• The portfolio should reflect stakeholder needs. There should be ongoing consultation with customers and users.

• The portfolio should also be closely aligned with the core competencies of the NASA research centers and those of the external performers that the agency supports. NASA should continue to undertake core competency reviews and explicitly include aeronautics among the highest priority competencies. Within aeronautics, the ranking of competencies should take into account world leadership in technology, public additive value, and skills enabling partnerships and processes of transitioning R&D results.

• The portfolio should be balanced between near-term needs and longer term investments required to achieve transformational national capabilities. Externally imposed requirements (e.g., through congressionally directed funding) limit management decision making and prioritization flexibility, but they are a fact of life, perhaps especially in an environment in which the mission is diffuse or uncertain. NASA should optimize its ability to use such projects productively.

The lack of agreement on the future direction of the aeronautics program has made it difficult for the committee to comply with ARMD’s request to recommend practical measures to enhance the implementation of NASA-developed technology. Obviously, the advice would not be the same for projects designed to yield fundamental knowledge and projects undertaken for clearly identified customers leading to prototype technologies, for example for fuel-efficient engines or air traffic control modernization. A decision to confine NASA’s R&D program to fundamental research would shift the focus of attention away from the management of the R&D process and the hand-off of resulting technologies and toward the dissemination of fundamental knowledge, for example, via peer-reviewed publica-

tions, participation in scientific and technical meetings, and training of entrants into the professional workforce. In other words, it would call for a study very different from the one we have conducted.

Refocusing the NASA aeronautics program exclusively on fundamental research may appear to be a reasonable strategy given the current outlook for funding, but it risks losing the support of industry stakeholders, without which the program cannot compete effectively for resources in a constrained budget environment. Moreover, the areas of public good in which the argument for government involvement is strongest—safe, efficient air traffic management and environmentally benign aviation operations—are arguably the areas in which users are more dependent on outside suppliers to deliver fairly well-proven technologies and in which NASA’s technical capabilities are in some respects superior. These are also areas where the market is unlikely to produce the optimum level of innovations. For example, companies will innovate to comply with environmental standards, but they may not conduct R&D to improve a standard or to determine where the standard should be set. In terms of aviation system capacity, incumbent operators may benefit from a scarcity of capacity that inhibits competitive entry and thus may not have the incentives to conduct the R&D necessary to expand system capacity. Thus, to sustain its relevance and support, ARMD should have a portfolio quite diversified in terms of the stage of technology being developed, even if that means the portfolio will be reduced because the costs of technology demonstrations, prototype development, and other activities to reduce the risks of applying new technology can be high.

If the aeronautics R&D program is more strategically focused, the committee thinks there are a number of principles derived from innovation management theory and public- and private-sector practice that would facilitate implementation of NASA-developed aeronautics technologies. We categorize these as transition management tools, flexible personnel practices, and financial management to minimize the disruptive effects of externally imposed demands on resources.

ARMD should implement and regularize for all relevant projects organization-wide a series of management tools aimed at fostering technology transition to users.

• ARMD should cultivate close relationships with external customers and users, engaging them very early in jointly conceptualizing, planning, and prioritizing R&D activities and sustaining regular involvement through the implementation phase.

• ARMD should use decision processes, sometimes referred to as decision gate processes, at predetermined points to establish common expectations among customers, research managers, and the technical team throughout the development process, to clarify goals, schedules, deliverables, concrete target performance metrics and review templates, and to set decision criteria and force accountability of all constituents involved. Documented planning for technology transition (i.e., hand-off) to external stakeholders should be a universal managerial practice for all ARMD R&D projects.

• ARMD should work aggressively to solidify its reputation as a trustworthy, reliable partner.

• The Joint Planning and Development Office (JPDO), the multiagency entity charged with developing a plan for a modernized air traffic control system, may be a model for future ARMD technology development projects requiring close external collaboration. The committee could not evaluate the experience with JPDO to date, but we found the concept sufficiently promising to consider employing it in other contexts.

• The variety of technologies and the diversity of stakeholder capabilities require increased ARMD flexibility and variability with regard to project time horizons and stage of technology development.

ARMD should implement more flexible personnel practices, increase incentives for creativity, and actively manage existing constraints on staffing decision making to minimize their innovation-inhibiting effects. Several of these are authorized by the Space Act of 1958 but are in quite limited use.

• ARMD should increase rotation and secondment of personnel to and from its several research centers and its external partners as tools for enhancing staffing and access to needed competencies, securing early engagement of partners, and facilitating technology transitioning.

• ARMD should foster external customer contact early in and throughout the careers of technical personnel.

• ARMD should pilot-test a dual-track, pay-for-performance program similar to that in place at the Air Force Research Laboratory.

• ARMD should allow its R&D personnel some small fraction of their time for “free thinking” and encourage its use by organizing regular events to showcase employee ideas; external stakeholders should be invited to participate in these events.

• NASA should expand its Centennial Challenges program to offer high-profile aeronautics prizes of a magnitude sufficient to generate considerable participation and public attention.

ARMD should structure financial management to minimize the disruptive effects of externally imposed demands on resources and one-size-fits-all accounting rules.

• NASA should modify full-cost pricing for ARMD test facilities use, with charges more closely aligned with marginal costs.

• AMRD should work with the Office of Management and Budget and Congress to establish separate centrally funded budget lines for national infrastructure and facilities maintenance.

• Because midstream changes are in the nature of research and development, ARMD should establish greater budget and milestone flexibility through centrally funded pools and contingency accounts.

• ARMD should explore establishing Working Capital Fund structures for wind tunnels and aeronautics R&D services.

• ARMD should negotiate with congressional sponsors of directed funding and recipients to align mandated activities better with established programs. If this is not possible, directed funding should be separated in budget accounting and in management.

Even if NASA implemented these recommendations regarding transition planning and personnel and financial management, successful innovations would still be impeded by the policy differences and budget realities facing ARMD and its research centers. Until the divide is bridged and a consensus mission supported by adequate resources, this committee’s management advice, although potentially useful, is a secondary priority.

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