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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is a former senior researcher at Harvard Business School’s Institute for Strategy and Competitiveness
Space agencies are having a bad month.
First came a damning report from the US National Academies of Sciences, Engineering and Medicine, which sounded alarm bells for the future of Nasa. Then former European Central Bank chief Mario Draghi published his report on European competitiveness, which expressed deep concern for the European Space Agency.
At least the US is still the world’s leader in space. Europe, on the other hand, is classified as a “spacefaring nation”, but not a global “space power”, according to a 2019 report by the European Space Policy Institute. It has a high level of capacity but low ability to execute.
The two agencies suffer from a similar problem: as large, public-sector institutions they have difficulty moving fast enough to adapt to modern economic and political realities. These include threats in the form of heightened military competition in space from China and Russia, which are both global space powers, and economic and innovation competition from Japan and India, which are rising space nations. There is also competition from commercial rivals.
Neither Nasa nor the ESA has found the right solution to deal with these changes.
Nasa has opted to use more private-sector contracts. Former Lockheed Martin chief executive Norman Augustine, the lead author on the Nasa report, describes how the agency has been hollowed out by the private sector, forced to compete for talented engineers and scientists and encouraged to focus on short-term goals.
One might start to wonder if Nasa has been reduced to little more than a very expensive and bloated back-office of Elon Musk’s SpaceX.
The ESA faces the opposite problem. If Nasa is crouching in the shadow of the private sector, the ESA is wilting without sufficient support. Compare launch vehicles. While Nasa has thrown its weight behind reusable rockets, the ESA has supported the update of its existing, single-use vehicle class. Its new Ariane 6 rocket may give it much-desired “launch sovereignty” but at a price so high the system is largely unusable.
Meanwhile, China and India are ushering in the next wave of pioneering launch capabilities thanks to government-led investment and private sector support.
It is, of course, easier for space agencies that do not have legacy technologies and organisational infrastructures in place to test out new ideas. What made Nasa and the ESA so great — their long history of technological invention — is now holding them back. The world has changed dramatically since their inception, from international competition through to euphoric globalisation to today’s private-sector enabled economy.
But herein also lies an opportunity. Agency leaders find themselves with a rare chance to create a strategy that takes advantage of their legacies.
Nasa should focus on long-term goals that the private sector lacks the incentive to pursue. Goals that can benefit humanity in the future.
The ESA needs to prioritise private sector support, offering incentives to start-ups in key areas.
This could result in both agencies creating long-term strategies predicated on the reality of the contemporary political economy; one that is aligned with how geopolitics, innovation and capital markets actually function. It is no small task, but one with potentially enormous returns.
The recent reports are correct. Without new plans that serve the needs of stakeholders — including private companies, start-ups and even investors — these once-competitive agencies will see their position among the global space players continue to slide.
