I want to share something that I’m noticing happen more and more in the space industry, and that’s having an effect on brand perceptions in the marketplace.
I call it the capacity-competence conundrum.
Every mission team wants to work with competent suppliers and service providers. A space mission is a tough challenge, even today. Engineering, operations, data security, sustainability, and profitability – achieving excellence in any of these areas is no easy task in the harsh depths of space.
Therefore, working with proven providers with a track record of success is important to de-risk your projects. And, ideally, you want a company that has made whatever service you need into one of their core competences.
On the other hand, suppliers seeking to stake a claim of the most exciting industry on Earth (and the only one off it) are increasingly aware of how important it is to gain flight heritage and build up expertise in real projects.
Approaching their strategic development in this way will enable a supplier to develop the basic capacity to provide certain products or services, but not necessarily a high-level of competence in every one of them. Particularly in the most competitive areas of the market.
And it’s easy to see why this situation has arisen when you look at the recent history of the industry.
Fertile ground is easy to plough
Around 4-5 years ago a flood of new companies entered the space market, many of who were from terrestrial sectors.
Finance was readily available, public perception of the industry was high, and many analysts were predicting massive growth in the global market for years to come.
And some of these companies did very well, and are still performing today. Whereas, for others, the picture was bleaker.
Yes, the SPAC “boom and bust” and the global Covid pandemic both had a big effect. But, for many of these newer entrants, they couldn’t achieve product-market fit fast enough to survive.
The reasons for these failures will be as numerous as the number of companies who have failed. But I am convinced that one issue common to many was the misguided focus on the successful completion of a space mission, or missions, rather than building a sustainable commercial offer from the get-go.
Now, there is a lot of nuance here. Hitting the objective of acquiring genuine flight heritage for your product or service in space is huge – and has plenty of emotion attached to it.
Although there are many in-orbit demonstration and hosted payload opportunities out there, the work it takes to build, test, qualify, prep, launch, and operate your own technology above the Kármán line is enormous, particularly for a new team.
But, in the excitement of reaching such a milestone, it is my view that some suppliers can get a little carried away with the commercialization of aspects of their mission (both products and services) that, while at TRL 9, are simply not market-leading.
In today’s industry, with competition growing across the board and end-user expectations higher than ever, it isn’t enough to simply fly a piece of technology and then offer it up for sale. It also needs to have an edge on the alternatives on the market.
And for mission engineers assessing the options on the supply chain, how such technologies are marketed can cause issues.
Capacity vs. competence in procurement
As an engineer evaluating options for a mission, or someone working in supply chain or procurement for a space operator, the tendency for some suppliers to over-commercialize, in order to try and find some product-market fit, can pose a bit of a problem:
Is the supplier commercializing a capacity that they have built up as a result of trying to achieve other strategic goals?
Or are they offering a solution that they have committed to making a core competence of their company?
These questions aren’t easy to answer.
The conundrum is that, as a buyer, you don’t always know if you’re purchasing a capacity or a competence, because both types of solution are marketed and sold in the same way.
A lot of business development in the space industry is done with limited resources, particularly by newer companies, and there is a tendency for marketing messages to conform to those of other businesses.
This results in even very new startups painting a picture of global, industry-wide disruption and change as an ultimate goal (which is no problem) alongside very sober and detailed presentations of individual products or services (which can be an issue).
Heritage alone is the minimum needed in order to qualify to compete in this market. For a product to become the best choice for a mission team, it needs all-round quality and, ideally, key points of difference.
So how can potential customers ensure that they are buying a real competence and not a simple capacity, developed incidentally (or, sometimes, accidentally) on the way to meeting some larger goal?
Here are a few suggestions of what to ask the supplier, alongside the usual queries that are expected when procuring something for space:
How does this system compare to others on the market on the specific figures of merit?
Every technology has a few killer criteria that need to be considered when figuring out the best cost-performance ratio – focus on these first.
Where does this the product fit in their wider roadmap?
If they are honest about progress towards greater ambitions, it should be pretty clear to see whether the solution you are interested in is central to that goal or not. If it is not, then it is a capacity they have developed for now, but may be superseded by something on the market, or become obsolete, in the future.
Can you provide any data or insights on the performance of previous product iterations?
The answer to this will be telling. A supplier dedicated to creating the very best solution to a specific problem is likely to have gone through multiple generations of development, and will be only too happy to discuss them. This is a supplier building a market-leading competence.
Trust but verify
The commercial space industry is still very new. And it is still going through a few growing pains.
There is a lot of smoke and mirrors out there, a lot of vapourware being marketed, and a lot of foundational capacities being sold as industry-beating competences – sometimes unintentionally.
The capacity-competence conundrum is present in hardware (though not usually at component level), services, and software. So keep an eye out for it!
The key for any engineer should be to trust the supplier’s claims in first order assessments (otherwise you can miss out on a suitable solution through your own bias) but verify each of them in as much detail as you can – and this is where satsearch can help.
On the supplier’s side of things, I would implore companies out there to seriously think about what they want to bring to market as a strategic imperative.
Everything in space takes time, whether building a new mission or trying to get market traction for a subsystem you’ve created.
Make sure that you spend your time on commercial opportunities and business development campaigns for things that you want to work on for the long term.
Don’t just try and sell your simple capacity – bring your core competencies to market, in the best way you can!
Further reading
- Meeting space engineering challenges with satsearch
- What’s next for NewSpace, in 2025 and beyond?
- How satsearch is fixing space procurement
- A brief introduction to the space supply chain
- Procurement advice from space industry experts
- Satellite components – supply chain hub
- Engineering the future
