MGB226 Assessment 2 Spacex PDF

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MGB226 ASSESSMENT 2 DRAGON CAPSULE INNOVATION CASE STUDY

STUDENT NAME: COURSE TUTOR: Ken Huxley

WORD COUNT: 2020

Table of Contents 1.0

Introduction ........................................................................................................... 2

2.0

Product /Service Information ................................................................................. 2

2.1

Background and History .............................................................................................. 2

2.2

Features of Product/Service ......................................................................................... 3

3.0 Evaluation of Innovation ............................................................................................. 3 3.1 Disruptive Innovation ......................................................................................................... 4 3.2 Creativity and Innovation ................................................................................................... 5 3.3 Reason for Success - Strengths and Weaknesses ................................................................ 6

4.0 Recommendations for future improvement and development ....................................... 7 5.0 References ................................................................................................................... 8

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1.0 Introduction Mars has captured the imagination of humans for decades. It is predicted that NASA will send humans to the red planet by 2030 with SpaceX planning to have the launch as soon as 2024 (Nichols, 2017). Due to this, billionaire entrepreneurs are trying to create rockets suitable for human travel, whilst government agencies spend billions to further their explorations (Holmes, 2018). In order to overcome the major hurdle in space exploration, namely – the extravagant costs involved, organisations are now looking to develop more sustainable ways of constructing and launching spacecraft for future operations (Royal Museums Greenwich, n.d.). SpaceX has been selected as the focal point of this appraisal, as it can be considered one of the pioneer companies that has made an impossible mission a reality through its business model innovation. SpaceX designs, manufactures and launches advanced rockets and spacecraft. The Dragon capsule became the first free-flying spacecraft designed to deliver both cargo and people to orbiting destinations. It is the only spacecraft that is capable of returning significant amounts of cargo to Earth. Furthermore, by developing complete and reusable rockets, SpaceX is transforming space exploration by delivering highly reliable vehicles at radically reduced costs which won them a contract from NASA (SpaceX, 2020). The following appraisal aims to provide a brief history of SpaceX, evaluate various aspects of the business’ innovations and to provide recommendations for future developments and solutions to solve current problems.

2.0 Product /Service Information The background and history of SpaceX will be examined along with the characteristics and features of the Dragon Space Capsule.

2.1 Background and History SpaceX was founded in 2002 to transform aerospace technology, with the “ultimate goal of allowing humans to live on other planets” and reducing space transportation costs to enable the colonization of Mars (SpaceX, 2020). Due to this, Elon Musk desired to start launching his own rockets to space. During that time, the only rockets readily available to be purchased were located in Russia, hence this is where Musk’s journey began (Vance, 2015). He travelled to Moscow, Russia with a few associates to inquire about the cost of rockets. His initial offer on three rockets was 2

approximately $4 million USD per rocket. However, the Russians wanted to charge $8 million for each rocket. This was not a viable option because it exceeded the team’s budget. After thorough research, Musk reviewed the shuttle architecture behind rockets and realized that they could affordably build the rockets they needed from scratch rather than purchasing them from another party (Chaston, 2017). He challenged this, and along with his company, successfully built what they needed inhouse without sourcing it externally. In 2008, SpaceX’s first rocket, the Falcon 1 became the first privately developed liquid fuel rocket to reach Earth orbit. Since then, SpaceX has developed many space vehicles including the Dragon Capsule. Furthermore, SpaceX has grown exponentially through the creations of their spacecrafts and now has an estimated market value of $33.3 billion USD (Kolodny, 2019).

2.2 Features of Product/Service Elon Musk’s ultimate aim to eventually create a settlement on Mars resulted in a family of falcon rockets and the multi-purpose Dragon spacecraft being designed and created within seven years. The development of Dragon began in 2005 in hopes to provide a proposal for commercial resupply spacecrafts to replace the soon-to-be-retired shuttle. This proposal was submitted in 2006 and was announced chosen by NASA to develop cargo launch services for the International Space Station (Seedhouse, 2013). After various test launches and re-adjustments, the SpaceX Dragon vehicle docked with the International Space Station making history as the first commercial company to launch and dock a vehicle on the Station in 2012 and successfully deliver cargo. Characteristics and features of this rocket is its ability to send cargo to space and return back to Earth’s orbit at a reduced price by a factor of ten and still obtain a 70% gross margin in renting out this invention to others (Seedhouse, 2013). Furthermore, it has since become the successor to the space shuttle that would transport astronauts and cargo into space (Eldridge, 2020).

3.0 Evaluation of Innovation Three main topics will be discussed in this section. Firstly, why SpaceX is a disruptive innovation and how it impacts society. Secondly, the creativity problem-solving method and the new product development process behind this innovation. Lastly strengths and weaknesses have been identified to measure the success of this invention.

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3.1 Disruptive Innovation SpaceX’s business model is classified as a disruptive innovation rather than a sustaining one. This was evident as SpaceX entered the aerospace industry and revolutionised the prototype that existed for sixty years in the aerospace industry by introducing commercial practices and offering lower priced transport into space by inventing reusable rockets (Stiennon, 2018). It caused a fundamental change in the industry where traditional methods of flying spacecrafts were challenged to keep up with long term sustainability. This innovation serves the needs of a small niche market, offering this service that is capable and have high gross margins compared to rockets offered by market leaders such as NASA (Darici & Yazici, 2019). Furthermore, SpaceX has demonstrated disruptive trajectory by using the traditional structure of conventional rockets and improving the performance in their newly developed space vehicles. Although the invention of the Dragon Capsule may seem as new disruptive technology, this innovation can be seen as competence enhancing from an industry perspective as it builds on an existing technology (rockets) using the company’s existing resources. The structure of the spacecraft is derived from traditional designs with re-adjustments to simplify the complexity of the rocket systems. Furthermore, Musk’s ability to challenge the traditional models led to the dramatic decrease in price of rocket components built in-house which brings significant impact on the aerospace industry and society as a whole (Schilling & Shankar, 2019). Significant impacts in the long term include the future of humanity as it brings the reality of human’s ability to colonize Mars one step closer (Drake, 2016). The US space policy has changed directions due to SpaceX’s technical advances and cost reduction methods. This greatly expanded opportunities to exploit space and could increase numbers of planned mission to low Earth orbit and the International Space Station due to the lowered price tag (Cobb, 2019). As a result, SpaceX met the ambitious expectations of NASA and has become a dominant design in the space industry that will lower transportation costs. It has led the whole aerospace field into a new development trajectory. Furthermore, the Dragon Capsule will be enhanced and re-designed to travel through the solar system carrying up to 100 passengers in the 2020s (Cobb, 2019).

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3.2 Creativity and Innovation For decades, NASA had tried to provide low-cost space flight. However, that resulted in a failed promise of the Space Shuttle, a spacecraft that was meant to be reusable to avoid the expensive building process of a new craft for each mission (Agan, 2013). During the initial stages when Musk was observing the space industry, he faced dilemma with how and where he could innovate due to the stringent restrictions and obligatory performance criteria for space travel (Agan, 2013). His determination and creative problem-solving skills led to the realisation that there was room for improvement by learning from NASA’s past experiences. Creative Problem Solving is often referred to as “a method for approaching a problem or a challenge in a creative and innovative way” (Isakesen, Dorval & Treffinger, 2010). He harnessed this and decided to apply it to their process – set a big goal, learn from past experiences, look at the big picture to identify and prioritise opportunities, refine key aspects of model to achieve objective. In order to be successful, SpaceX must adhere to three main goals during the new product development process. Firstly, they must maximise fit with customer requirements in terms of quality, feature, price etc. This is evident as Musk and his team spent time experimenting and improving their Dragon capsule multiple times prior to the official launches (Seedhouse, 2013). Secondly, they must minimise development cycle time so they can bring the product to market and begin remunerating costs (Sedlet & Pursell, 1996). Given the nature of the product developed, it took many years for the Dragon Capsule to be launched. However, all the years of hard work paid off when SpaceX won the contract with NASA which was worth $2.5 billion (Wall, 2019). Thirdly, they must control development costs in order for the project to earn a positive return (Levitt, 1965). By developing reusable rockets, the environment also benefits from this as fewer metallic disposable waste is to be discarded at the end of each mission, leading to better sustainability.

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3.3 Reason for Success - Strengths and Weaknesses Strengths and weaknesses were observed in the success of SpaceX’s Dragon Capsule. It can be demonstrated through various factors that were considered during the innovation process. Such factors include that SpaceX created a superior product (rocket) with unique benefits and value of lowering transportation costs for their client – NASA (Agan, 2013). Another factor that led to the success of SpaceX was Musk’s willingness to take risks that NASA did not have, especially in investing in the reusable rocket system. They started from scratch and avoided funding existing models or subcontracting work to achieve the goal of minimising production costs (Terdiman, 2018). This is reflected through a drastic difference in cost that can be seen when comparing to SpaceX’s competitors Boeing. It is reported by the space agency’s Office of Inspector General that it will cost NASA approximately $90 million per astronaut to fly aboard with Boeing and around $55 million per astronaut to fly with SpaceX. Nevertheless, in order to be successful, the goals of the new product development project were aligned with the company’s strategic goals, in which was accomplished as the goal was to reduce production cost of rockets for space missions.

One of the weaknesses identified is that SpaceX targets a very niche market. Although this lies in a niche market of the aerospace industry, they are developing fully and rapidly reusable rockets, transforming space exploration by delivering highly reliable vehicles at radically reduced costs. Furthermore, another major downside to the space industry is the negative impact space launches has on the environment. As reported by the Russian Federation’s space programs, “once the rocket reaches the dense layers of the atmosphere, 70-80% of the entire mass of the combustion products are emitted” (Koroleva et al., 2018) leading to potential damage and depletion of the ozone layer. Launch emissions also have the potential to effect climate change due to the release of black carbon into the stratosphere hence poses major threats to the ecosystem (Dallas, 2020).

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4.0 Recommendations for future improvement and development Based on the analysis above, two recommendations are recommended for SpaceX to further improve their development. Firstly, in order for SpaceX to properly diffuse into the market, there are changes that need to be implemented to secure SpaceX’s longevity. Currently, the Dragon Capsule is in the initial stages of the S-Curve which means there is still a chance for SpaceX to further investigate the chances of reducing production costs. Further decreasing the cost of spacecraft launches will allow more people to access this service in the future. This will be beneficial as more average income consumers could potentially access the service of commercial spaceflight when it is released to the public.

Secondly, it is important that SpaceX takes corporate social responsibility into consideration and find ways to limit waste that is released into the atmosphere during missions. It is widely known that transportation is a major contributor of CO2 gas emissions, one of the main factors responsible for climate change. As climate change is becoming a prevalent issue in society, it would be highly desirable if SpaceX is able to create new innovations for a launch vehicle that was more fuel efficient. This can improve market share and positively impact the environment as less carbon emission is released hence less damage to the environment. Furthermore, SpaceX is a leading example of high innovation and it marks the new beginnings in how we innovate different modes of transportation.

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5.0 References Agan, T. (2013). What SpaceX Can Teach Us About Cost Innovation. Retrieved from https://hbr.org/2013/04/what-spacex-can-teach-us-about Chaston, I. (2017). Technological entrepreneurship: Technology-driven vs market-driven innovation. Springer. Cobb, W. W. (2019). How SpaceX lowered costs and reduced barriers to space. Retrieved from https://theconversation.com/how-spacex-lowered-costs-and-reduced-barriers-tospace-112586 Dallas, J. A., Raval, S., Gaitan, J. A., Saydam, S., & Dempster, A. G. (2020). The environmental impact of emissions from space launches: A comprehensive review. Journal of Cleaner Production, 120209. Darici, S., & Yazici, A. (2019). The New Opportunities in Space Economy. 8. 3252-3271. Drake, N. (2016). Elon Musk: A Million Humans Could Live on Mars By the 2060s. Retrieved from https://www.nationalgeographic.com/news/2016/09/elon-muskspacex-exploring-mars-planets-space-science/ Eldridge, A. (2020). Encyclopaedia Britannica. Retrieved 2020, from https://www.britannica.com/topic/SpaceX Holmes, O. (2018). Space: how far have we gone – and where are we going? Retrieved from https://www.theguardian.com/science/2018/nov/19/space-how-far-have-we-gone-andwhere-are-we-going Isaksen, S. G., Dorval, K. B., & Treffinger, D. J. (2010). Creative approaches to problem solving: A framework for innovation and change. Sage Publications. Kimber, L. (2020). Technology Driven Innovation – The Elon Musk Way. Retrieved from https://www.hargraves.com.au/technology-driven-innovation-the-elon-musk-way/ Kolodny, L. (2019). Elon Musk’s SpaceX is now worth more than Tesla. Retrieved from https://www.cnbc.com/2019/05/31/elon-musk-spacex-is-now-worth-more-thantesla.html Koroleva, T. V., Krechetov, P. P., Semenkov, I. N., Sharapova, A. V., Lednev, S. A., Karpachevskiy, A. M., ... & Kasimov, N. S. (2018). The environmental impact of space transport. Transportation Research Part D: Transport and Environment, 58, 54-69. Levitt, T. (1965). Exploit the Product Life Cycle. Retrieved from https://hbr.org/1965/11/exploit-the-product-life-cycle

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Muegge, S., & Reid, E. 2019. Elon Musk and SpaceX: A Case Study of Entrepreneuring as Emancipation. Technology Innovation Management Review, 9(8): 1829. http://doi.org/10.22215/timreview/1258 Nichols, M. R. (2017). Home/News/If we successfully land on Mars, could we live there? 99 If we successfully land on Mars, could we live there? Retrieved from https://astronomy.com/news/2017/05/could-we-live-on-mars Royal Museums Greenwich. (n.d.). What is the future of space travel? Retrieved from https://www.rmg.co.uk/discover/explore/future-space-exploration Schilling, M. A., & Shankar, R. (2019). Strategic management of technological innovation. McGraw-Hill Education. Sedlet, K., & Pursell, T. (1996). Systematic and Creative Approaches to Problem-solving: A Case Study. Journal of the American Dietetic Association, 96(9), A24–A24. https://doi.org/10.1016/S0002-8223(96)00390-2 Seedhouse, E. (2013). SpaceX Making Commercial Spaceflight a Reality (1st ed. 2013.). https://doi.org/10.1007/978-1-4614-5514-1 SpaceX. (2020). SpaceX About. Retrieved from https://www.spacex.com/about Stiennon, P. J. (2018). Disruptive technology in space transportation. Retrieved from https://www.thespacereview.com/article/3590/1 Terdiman, D. (2018). How Elon Musk and Jeff Bezos Are Trying To Upend Space Exploration. Retrieved from https://www.fastcompany.com/40552084/how-elonmusk-and-jeff-bezos-are-trying-to-upend-space-exploration?cid=search Vance, A. (2016). Elon Musk: how the billionaire CEO of SpaceX and Tesla is shaping our future ([Paperback edition].). London: Virgin Books. Wall, M. (2019). Here's How Much NASA Is Paying Per Seat on SpaceX's Crew Dragon & Boeing's Starliner. Retrieved from https://www.space.com/spacex-boeingcommercial-crew-seat-prices.html

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