A diversified space portfolio

In coming weeks, NASA is expected to announce more contracts in support of its ambitious effort to return U.S. astronauts to the lunar surface by 2024. This will be an important step for NASA as it works toward its statutory long-term goal to enable “human exploration and the extension of human presence throughout the solar system.”

The campaign to expand human reach and presence throughout the solar system is an immense task that will take many decades. Over the course of this effort, the U.S. will make a tremendous investment in people, technology and resources. The strategies that will inform the build up and management of this investment portfolio will play out year by year through the federal budget process and congressional action. Throughout this process, planners and decision-makers must not lose sight of the fact that this really is assembling an investment portfolio. Good portfolio management practices apply here as they do in any other large investment portfolio.

Diversification is an essential feature of a good, well-designed portfolio. In the case of space exploration, this means a balance between reliance on established incumbents and new entrants. Without delving into the details, the space exploration industry is playing host to a very familiar story, one we have seen unfold in computer, automotive, and other industries, in which established incumbents (companies like Boeing and Lockheed Martin) battle aggressive new entrants (think SpaceX and Blue Origin) over the future of space exploration.

The simple fact of the matter is that both incumbent and new players in space have, through technological audacity and sheer tenacity, carved out secure niches in the space industry. Nobody is packing it up and going home without a fight so devastating that everyone would lose. This simple fact frustrates some of the most adamant supporters on either side.

Depending on who you ask, the incumbents are either reliable, tried and tested manufacturers or old, antiquated dinosaurs. Likewise, the new entrants are either agile, high-tech pioneers or reckless, cavalier upstarts. Partisans for either side are quick to point out which nuances of space exploration or federal procurement make this case special on their way to arguing for why their side is indisputably superior.

The reality is that we simply do not know very much about the best way to design, build and implement the space exploration architectures and economic systems that will unfold over coming decades. It is reasonable to suppose that even 100 years from now that we will still be in the earliest stages of extending human presence throughout the solar system. Figuring out how to do that will involve a lot of trial and error. Claiming that we already know the best way to explore the entire solar system — considering humans have not even set foot on the moon in almost five decades, let alone traveled to another planet — is a pretty bold assertion.

The choice between established incumbents and new entrants is neither easy nor clear. Professionals throughout the space industry have some very strongly held (and wildly divergent) views about which approach is best. At times, the fight between these two camps has taken on the bitterness and intensity (not to mention futility) of a knife fight in a rubber life raft.

Certainly, familiar issues of cost, schedule and performance are at work (even if mutually agreed upon metrics and benchmarks are sometimes still elusive). But beyond that, there are broader — and murkier — issues. New and established entrants both engage the public very differently, with different results — no small matter in a taxpayer-funded program with a global profile. That hard-to-measure difference in public and political engagement goes beyond current messaging and will become extremely important in the event of a severe flight mishap, especially a fatal one.

A diversified portfolio decreases the chance that a single catastrophic failure will bring everything to a halt. Or, to put it in engineering terms, a diversified portfolio improves reliability through dissimilar redundancy. If one approach fails or cannot solve the problem, the existence of different alternatives can carry the day. This is critically important in the case of national strategic priorities where the U.S. might want to have reliable backups in place, should a major mishap occur.

Perhaps even more importantly, a broader portfolio that includes several high-risk, high-payoff options increases the chances that the investor will reap the benefits of new breakthroughs. In the space arena, new entrants are pushing some very bold approaches to space. If any of those meet expectations, the dynamics of space exploration will change radically. A diversified portfolio means that if those revolutionary breakthroughs do pan out, we can capitalize on them without having to make the leap of faith involved in relying exclusively on one big, ambitious gamble.

Moreover, both incumbents and upstarts affect and influence each other. New entrants are pushing established incumbents to aggressively reduce costs and revisit a lot of “received wisdom.” Established incumbents set a high bar for safety and reliability. Going all-in for either incumbents or new entrants is no more a sound investment than putting all your savings on black or red at the roulette table. Just choosing one color one over the other does not make for a wiser investment strategy, just a riskier gamble.

G. Ryan Faith is a space policy consultant who previously served as a professional staff member supporting the House Subcommittee on Space and Aeronautics. Faith was previously VICE Media’s Defense and Security editor and a research analyst for the Space Foundation.