How Can the Government Innovate More Effectively? Leading Companies’ Approaches Offer Insight into Building Products Efficiently

Posted on May 18, 2022

Leading commercial companies, such as Amazon and SpaceX, take a disciplined approach to develop innovative products that satisfy their customers’ needs. This approach allows leading companies to deliver their products to market on time and within planned costs.

In a new report, we looked at how some of the federal government’s biggest spenders—the Departments of Defense and Homeland Security and NASA—invest billions of dollars to buy things like stealth jets, silent subs, and lunar rovers, all with complex software.

How can these agencies learn from leading companies’ approaches for developing and delivering systems? Today’s WatchBlog post explores.

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4 key principles used by leading companies

For our new report, we interviewed senior officials from 13 leading companies and found that they perform similar activities when developing their products. Some of these activities include:  

  • Using customer feedback in product development. Gulfstream asks potential customers about their preferences on a range of topics, such as desired noise level or the use of renewable fuels in aircraft, prior to starting a project.
  • Designing, building, and testing prototypes. GE Renewables can print 3D copies of parts for wind turbines to help manufacturers understand how the parts will operate together before producing large quantities of them.

These activities in the development process align with 4 key principles that help these companies’ project teams deliver their products to market quickly and efficiently. Project teams and their leadership generally:

  1. Continuously assess potential costs, benefits, and risks
  2. Revise the product’s design based on user feedback
  3. Prioritize schedule
  4. Collect customer feedback throughout development

For example, SpaceX revises its approach when designing launch vehicles, reducing the risk of continuing to spend funds on a less effective design. This approach allows SpaceX to move forward in the development process with a product that has the minimum capabilities needed for the project.

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How did DOD, Homeland Security, and NASA stack up?

DOD, Homeland Security, and NASA can apply these key 4 principles when developing and delivering a wide variety of systems. But, we found that their acquisition policies don’t always reflect these principles. For example:

  • DOD’s policies don’t require all programs to consider removing non-critical capabilities from the current release in order to stay on schedule. Not doing so can hinder programs’ best chance of staying on time.
  • Homeland Security’s policies don’t include provisions to use modern design tools during hardware and software development, limiting opportunities for programs to continually improve the design.
  • NASA’s policies don’t include mechanisms for programs to obtain and use product feedback from stakeholders or end users, such as astronauts using spacecraft. This approach can limit NASA’s insight into opportunities for product upgrades as part of future designs.

Unlike private companies, federal agencies don’t have to focus on profit margins and return on investments. But, they are charged with ensuring that taxpayers get the best return on their dollars. And despite environmental differences, we have long found that agencies can still benefit from leading companies’ disciplined approaches to developing and delivering products.

That’s why we recommended that DOD, Homeland Security, and NASA update their policies or create policies that reflect the 4 key principles that help leading companies stay on time and within budget.

What’s next?

We plan to do more work on how government agencies can implement leading commercial practices. Specifically, we plan to:

  • Focus on how agencies can use modern design tools, such as artificial intelligence, to successfully improve revisions to the design of their systems—a key leading practice; and
  • Look at the ways customer feedback informs agencies’ capability decisions in order to deliver on time.  

Until then, if you’re interested in learning more about our work on leading practices, check out our latest report

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