Tuesday, November 18, 2008

Leadership in the Public and Private Sectors

One of the advantages of living and working in Huntsville, AL, is getting to meet or hear some of the bright bulbs in the space business. I've had the pleasure of meeting and listening to Rex Geveden, President of Teledyne Brown Engineering (TBE), and former Deputy Director of Marshall Space Flight Center and Associate Administrator of NASA. Today he was speaking at the Marshall Association's monthly luncheon, this time located at the Redstone Arsenal Officer's Club. Geveden's talk for today was about the functional, strategic, and performance differences and similiarities between leadership in the public and private sector. I found the comments most insightful, and a good reflection of life in the space business specifically.

Functional Differences
Geveden started by explaining the emphases of each type of leader. Government leaders, in his view, are concerned with maximizing/optimizing "mission value," that is, getting the most bang for your programmatic buck. A private-sector leader is more concerned (not surprisingly) with maximizing profit for the company or its shareholders. As he put it, "the business is about the business," sort of like Calvin Coolidge's comment that "the business of America is business."

Geveden recommended that government avoid "Total System Performance" or "Lead System Integrator (LSI)" contracts, where an outside entity/company is responsible for the overall performance of a program/project. His reasoning is simply that business leaders don't have the same interests or goals as the government (see above), and that those interests are incompatible. Also, if government turns over an entire program over to an external contractor (examples: Space Shuttle, Space Station), then the government agency overseeing things is adding little to no value and might as well just get out of the way. Geveden was even more specific: "That model does and will always fail."

By contrast, Geveden offered up the Ares Project as a good model for program management, as it allows the government to take responsibility for the final result, which offers a good compromise between government oversight and its needs (maximizing mission output) and private sector needs (performance and profit).

One of the advantages the private sector has is that the decision cycle time is shorter simply because the motivations are simpler (profits). One of the big challenges for government, Geveden acknowledged, is that it has to answer to multiple constituencies, so that every action and decision feels like an unsatisfactory compromise.

Strategic Planning
Government agencies have a specific burden that private-sector operations do not: they do not control the allocation of their resources. Any strategic plan becomes more like a "wish list," more often controlled by the President or Congress. "This is a brilliant model for government," Geveden said, "not strategic planning."

In the private sector, resources must be allocated in accordance with the strategic plan in order to ensure accurate/relevant measurement of performance. There are three ways companies can choose to focus their resources: economies of scale (e.g. Wal-Mart), product/service focus (e.g. FedEx), or product differentiation, as TBE is doing.

In the public sector, civil servants' performance is "nebulous," as Geveden put it, and "hard to measure." The private sector's performance can be measured easily, he joked: "Here's your check." In other words, all performance is tied to the bottom line.

Geveden closed by comparing the culture of NASA with the Russian space program. He believed that there was a common idealism and belief in the value of space exploration. That sense of community is not shared everywhere. For instance, Geveden did not believe that the idealism of space exploration held inside the Beltway, "where people scarcely know that Goddard Space Flight Center is nearby and that the International Space Station is still in orbit." Huntsville, he noted, "loves space," as it's part of what has made the town what it is.

Moving to the Q&A, the most important question Geveden answered, in my opinion, was, "What does NASA need to do to get the resources it needs to do its job?" I liked his answer, mostly because it's similar to my own view: "NASA needs to chose to do the very hard things. They need to look a little more toward relevance." The specific example he cited was energy independence and space solar power, suggesting that NASA should do a full-scale test mission of some kind.

I think Geveden's remarks deserve consideration, given his experience on both sides of the fence (public and private sector). If we are going to have a fully functional "space economy" in the future, we need to make sure that government is doing the sorts of things that best reflect its expertise and motivations, while the private sector should do things that will produce the best results through their profit motives. In my view, that means leaving "exploration" to government and "operations" to the private sector. We shall see what the future brings.

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