Wednesday, April 18, 2012

NASA - end of an era

This week, the Space Shuttle Discovery made its final flight. Although the NASA administrator Charles Bolden said the event marked the “next era of exploration” for the agency, there are many doubts as to whether NASA’s dominance has ended[1].

Private agencies might have a particular difficult time developing analysis for their strategy because of changes in political leaders, economic variability, and changes in the public’s preferences. NASA has had a new goal of going to Mars, however, as the McKinsey article “The perils of bad strategy[2]” points out, goals are not the same as strategy. The budget crisis has been building for several years, but it is unclear whether or not NASA “diagnosed” this problem and created a “guiding policy” and set of “coherent actions” to “cope…with the obstacle[3]. However, the budget crisis is not NASA’s only challenge. It’s also seems that NASA’s primary customer, the American public, have largely lost interest. This is a great example of a mature industry. Although space exploration is a public good, taxpayers are able to reveal their preferences for spending. Space exploration was important to a previous generation, but our current generation has either lost interest or prefers to spend our limited resources on other programs. While historic competitors have been other countries, current competition involves the private sector. Private companies in the U.S. will be able to take astronauts into space[4].

Bolden explains that NASA is critical to the country’s technology development, which may be a strategic position that was not always primary. However, today it seems those social externalities are important in gaining the agency additional funding. I think this case presents further analysis and discussion. How should a public agency craftits strategy with the current budget realities? How does it determine customers for such a public good and how does it evaluate potential competitors?

[1] Sands, Geneva. “NASA administrator: Final shuttle flight marks the ‘next era of exploration.’ The Hill. April 18, 2012

[2] Rumelt, Richard. “The perils of bad strategy.” McKinsey Quarterly. June 2011

[3] Ibid.

[4] Ibid.

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