What do the 1994 Ford Mustang, the IBM PC and the F-117 Stealth Bomber have in common?
A skunk.
All of these breakthrough products were the product of a company’s recognizing its own limitations. And the specific limitation in each case was the company’s own bureaucracy, which suffocated innovation.
Top management realized this and sought the answer in a “Skunk Works.”
The original Skunk Works, named after a fictional moonshine still in Al Kapp’s “Li’l Abner” comic strip, was set up within Lockheed Aircraft Co. and was a secret team led by aviation genius Kelly Johnson.
The achievements of the Skunk Works are legendary: The P-38 WW2 fighter aircraft, the first U.S. jet fighter, our first supersonic jet fighter, the U-2 spy plane, the Stealth Bomber and more.
What they have in common is that they were designed and produced outside the usual procedures at the parent company. Being outside the bureaucracy allowed the project to be completed promptly instead of being delayed and suffocated with paperwork.
Because of the remarkable successes of the original Skunk Works, the name became popular to describe corporate projects organized outside the normal channels and chain of command. IBM, for example, recognized that product development in its company worked on a multi-year timeline. But, as top management recognized, if they waited to produce their personal computer they would miss the market and lose their edge and reputation as industry leader.
Their solution was to set up an operation in Boca Raton, Florida, distant from any other IBM installation or bureaucracy. The result was the IBM PC, which legitimized the personal computer and essentially created the PC market as we know it today.
Much the same prevailed at Ford Motor Co. as it saw its chance to revive and reboot its Mustang. Their own bureaucracy estimated that design and development costs would exceed $1 billion and take years.
Top management was concerned about missing the market. Fortunately for them, though, they were able to lower the development cost and dramatically shorten the timeline by setting up a Skunk Works-style “Team Mustang” and successfully bringing the 1994 model to the market at the right time.
As impressive as these achievements in aviation, computers and automobiles are, they all involve very large corporations in the manufacturing sector with tangible products, and they all involve cutting-edge, even visionary applications of technology.
Is there a place for skunk works in the service sector, which generally is a consumer of technology, not a developer? And is there a place for skunk works in smaller businesses?
On both counts, yes.
To get that answer we have to go back to management fundamentals and the sources of productivity. Technology is not the only source of productivity gains. Another major source is organization. Productivity in the service sector is a function of how its work, its workforce and its management is structured.
If there was any doubt about that fundamental, the Amazon.com story dispelled it. The company began by challenging the long-entrenched retail book industry. There was no technological innovation involved, unless you consider the combination of imagination and hutzpah a breakthrough,
That same combination was visible and effective when it reappeared and took on area after area of the retail sector. Amazon, as it grew, restructured its warehouse operations to make better use of existing technology in computers, automation, robots, data analysis and artificial intelligence.
Most Americans today work in service companies, and it is in that sector that productivity gains are hard to come by. There are two reasons for that: The first is that many service sector jobs have not changed much in years, even centuries in some cases. The second is that in all business organizations the staff bureaucracy grows faster than the business itself.
It is in the nature of bureaucracy to specialize — in the name of expertise, of course, to protect its turf and to avoid decisions. The unintended consequence of this is that any change, in fact, anything at all, takes forever.
Once businesses begin to grow past the point where the CEO can do any task that comes up, it is also building its own bureaucracy. For that reason, most businesses, product-based or service sector, large or small, could make good use of a “skunk works” group to bypass the usual processes. It could be a task force, a separate facility or even simply an individual in a very small business.
Skunk-works thinking may hold the key to raising productivity throughout our economy — speeding up the adoption of technical and organizational innovations. It could help us focus on doing more things better rather than bickering over shares of the existing pie.
More skunks. That’s the key.
James McCusker is a Bothell economist, educator and consultant.
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