Recently I wrote about the remarkable work of Elon Musk and his team at SpaceX and how what they achieved on December 22nd 2015 changed the very nature of the Space industry. You can read the article. The USA wins the Space Race. Again. This time with economics if you want some background.
I also stated that the Russian space program would be in trouble as a result.
Today President Vladimir Putin dissolved Roscosmos, Russia’s federal space agency.
Roscosmos has been plagued by corruption. The official Roscosmos ten year budget has been cut again and over $1.8Bn appears to have gone missing.
President Putin has decided to turn the agency into a government owned Corporation. It doesn’t seem likely that is going to help stop the corruption, but to simply divert where the money goes from one group directly to Putin. Putin has been running Russian as a kleptocracy
for many years, that doesn’t seem likely to change, and it certainly doesn’t seem likely he’ll stop with the Space program. Particularly as it generates so much hard currency.
Mr Putin is very fond of the Russian commercial space business and sees it as a national asset. However SpaceX are in the process of changing the rules on him. The Russian space agency has always been incredibly good at reusing existing technology and developing existing technologies to produce more. This worked well for them and is very different to the US system. Much of the Russian technology is little more advanced than the US Gemini program rockets of the early 1960’s. The Russians never got out of Orbit, never used reusable craft the Space Shuttle, and never built systems such as Pioneer, Voyager or New Horizons.
Much of the launch system technology used by the Russians is 1960’s technology. It’s reliable and the sunk R&D costs have meant the cost of each launch is lower than more modern systems. However when SpaceX changes the definition of success and lowers the cost of launching satellites and people into low earth orbit by a factor of 50x then they are going to need to rethink their strategy from the ground up. But they simply don’t have the money or experience. They could of course steal it, it wouldn’t be the first time. Russians steal Space Shuttle ideas.
In 2017 the US is planning to put 6 American astronauts on Soyuz Rockets for a total cost of $490m. In the medium term this is likely to continue, but for reasons beyond cost the US Government would certainly like to move away from relying on the Russians to launch Americans into space. After all Russia’s recent activities in Ukraine have brought with them significant sanctions on Russia.
Excession Events change the definition of success and failure. What Mr Musk and his team achieved in late 2015 will have ramifications far beyond simply lowering the cost of satellite launches.
It will be interesting to see how medium term the Russians cope when the rules have changed so much on them. There are lessons for us all here. Incremental change, the 10% improvement each year is something many existing systems can cope with. But a 10x change or more simply destroys your business faster than it can be react.
About the Author: Simon Dudley
Simon is a contrarian. He makes a habit of being the guy who questions the orthodoxy, the guy who doesn’t believe it just because the good and the great said it’s true. This has not always been good for his ascent up the corporate greasy pole. However it’s been very good for his employers if they are prepared to listen.
The Book The End of Certainty "How to thrive when playing by the rules is a losing strategy" explains why groupthink and the doing what you’ve always done is no longer the right move.
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