Mach Speed Product Development: Inside the Skunk Works

Of all the organizations established to develop products quickly and creatively, the Lockheed Martin Skunk Works probably is the most famous. We wondered how this concern, founded in 1943, was adapting to 21st century mission requirements. And what we discovered may help your company get a whole lot faster.

Since its creation in 1943, the Skunk Works, now part of Lockheed Martin Aeronautics (Palmdale, California), has grown to three facilities: Burbank, California, Fort Worth, Texas, and Palmdale, California. “Historically,” says Gary Ervin, vice president, Advanced Development Programs, “the company’s three aeronautics locations competed against one another because they were separate profit and loss centers. But the changing defense picture”– marked by a decrease in both appropriations and programs– “has forced us to rethink the Skunk Works’ place in the organization.”


That resulted in tearing down the walls between the three locations, as well as those that had built up around the Skunk Works itself. (Sound familiar?) And though the three sites still operate, they have been combined into a single “virtual” organization under the “Advanced Development Programs” (ADP) banner. Within ADP there are two sub-groups: Advanced Systems Concepts and Advanced Design Center. Ervin explains, “The Advanced Systems Concepts group designs the next- generation bomber, fighter, airlifter (cargo aircraft or tanker), or unmanned vehicle. The Advanced Design Center is full of creative people who look at what future defense needs might be, design systems that can satisfy those requirements, and present them to the various government agencies.”

The Skunk Works is doing what it has always done (i.e. develop new aircraft concepts for immediate-need and evolving mission situations). It’s just doing it more efficiently.

New capabilities include a Product Improvements and Derivatives (PID) group that gives the Skunk Works responsibility for all improvements to, and derivatives of, existing platforms, and works directly with the group responsible for technology development and integration. “This gives us an entrée into programs, and allows us to apply new technologies to an F-22 fighter program, C-5 cargo plane program, or whatever,” says Ervin. “Conversely, if they have requirements for things like a new capability, they present that challenge to us. It’s our job to help them satisfy those requirements by providing the necessary technologies.”

Sometimes, that technology already existed within the organization, but getting it out into the open was difficult at best because, as Ervin says, “each program created a silo that kept solutions inside the program’s walls.” The answer was the creation of the Cross-Product Integration (CPI) unit within the ADP organization. Its assignment is to understand the needs of each program, ferret-out existing solutions, and bring them out into the open where they can be shared. “CPI is working very, very well,” effuses Ervin. “It has created a ‘library’ of ideas that has allowed us to get problems solved and answers out to the organization much, much more quickly than ever before.” This brings the Skunk Works closer to its original focus of inventing innovative aircraft concepts and sharing its technologies with the rest of the organization, where feasible.

The key to making this complex virtual organization work isn’t more time on commercial airliners, says Ervin, it’s communication. “My travel time is up,” he admits, “but it’s not as bad as I thought it would be. Each facility has different capabilities, and folding them into one organization meant creating common procedures, using common tools, and speaking a common language.” Now most work is accomplished via Internet meetings, video teleconferences, e-mail, and other electronic media.

“We use the same set of electronic databases at all three sites,” says Ervin. “And most of the time our suppliers are part of the same database structure. So we send the files back and forth electronically, and the suppliers build the parts and ship them to us without ever having to make prototypes. The concept is the same whether we are dealing with ourselves or our suppliers. Integrated electronic tools are key to opening the lines of communication.”

Those tools, however, aren’t proprietary. “We use CATIA as a design tool, and that capability was developed with Boeing when we worked together on the YF-22 fighter program,” says Ervin. “It made it possible for us to work collaboratively and hurry the process along significantly.” Which begs the question: If Boeing uses the same tools as Lockheed Martin–and has its own Skunk Works in the form of Phantom Works, acquired when Boeing bought McDonnell Douglas–what makes the Skunk Works different from its competition?

“There are two major things,” says Ervin. “First, we look for people with a ‘can-do’ attitude. People who are free thinkers, creative, and don’t let conventional boundaries get in their way. Second,” he adds almost off-handedly, “we don’t have a standard set of management tools for every situation. We tailor and adapt them to the program. A small, ‘black’ [covert] program has very different requirements from a large, commercial program,” he continues. “We tailor what we do to whatever is appropriate to the program we are working on. It never pays to get lost in the process.”

How does this fit with the 14 rules established by Skunk Works founder Clarence L. “Kelly” Johnson (see “Kelly Johnson’s 14 Rules”) and used on every program from the P-80 Shooting Star through the F-117 Stealth Fighter? “Very well, actually,” says Ervin. “Like Kelly, we’re firm believers in small focused groups, the need for a program manager with complete control and authority over the program, and empowered individuals who complete a particular task. This maximizes the ability of your team to get the job done as quickly and efficiently as possible, without going completely outside the lines of the organization.”

Yet the constant expansion and contraction must have an effect on staffing, especially those empowered, creative types, right? “The Skunk Works grows and shrinks based on what we’re doing,” Ervin says matter-of-factly. “Between programs we do a lot of R&D, both under contract and internally. So we can move people back into the development side once a program is completed. Or, to take the X-35 Joint Strike Fighter as an example, we send out people who support that program as it moves into production. Then we backfill within the Skunk Works with new people. This helps us stay dynamic and agile on a number of levels, and makes certain this isn’t your typical nine-to-five job.”

By moving some Skunk Works personnel into the main business, Lockheed Martin has been able to give employees a first-hand look at the way that organization runs. According to Ervin, “Our non-Skunk Works employees have been very impressed by how quickly things can be accomplished. Something breaks, we identify it, and the fix is implemented in a very short time. It’s been so successful, that we are looking to roll-out the Advanced Development Program concept beyond the aeronautics division, and into the whole company,” he says. “It’s amazing what you can do when you give people the wherewithal to go create and perform.”


Kelly Johnson’s 14 Rules

Named after the mysterious moonshine operation in the “L’il Abner” comic strip, the Skunk Works started small, and worked hard to stay that way. The high-risk nature of its programs were such that success was far from guaranteed, and its small size meant that failure of any one program would not bankrupt Lockheed. For Skunk Works founder Clarence L. “Kelly” Johnson, risk was good for business. And it didn’t hurt that it helped create aviation landmarks like the P-80 Shooting Star (America’s first production jet fighter), F-104 Starfighter (the world’s first Mach 2 aircraft), U-2 (still the highest flying single-engine airplane), SR-71 Blackbird (the fastest, highest flying aircraft ever developed), and F-117 Stealth Fighter (the world’s first operational low-observable aircraft).

To minimize the risk as much as possible, while maintaining the greatest agility and creativity possible in a lean team, Johnson established the unit’s 14 Basic Operating Rules. They cover everything from program management to compensation, and are relevant for any advanced research unit within a larger organization. The rules, which date back to 1943, are:

1. The program manager must be given practically complete control of every aspect of the program, and report to a division president or higher.
2. Both customer and contractor must have strong but small project offices in order to keep overhead down and communications up.
3. The number of people connected to the project must be severely restricted. Use a small number of good people.
4. Drawing and release systems must be simple, have the flexibility necessary to make changes as needed, and allow the engineers to see how the elements blend together.
5. Reporting requirements must be kept to a minimum, though important work must be thoroughly recorded.
6. There must be a monthly cost review covering not only what has been spent and committed, but also the projected costs to the conclusion of the program.
7. The contractor must be delegated authority, and assume more than normal responsibility to get good vendor bids for subcontracts.
8. Much of the basic inspection responsibility must be put back on the subcontractors and vendors.
9. The contractor must be delegated the authority to test his final product in flight.
10. The specification applying to the hardware must be agreed to in advance of contracting.
11. Funding must be timely. Fixed price R&D contracts are bad business, as are cost and technology sharing.
12. There must be mutual trust between the project organization and contractor, with very close day-to-day cooperation and liaison.
13. Access by outsiders to the project must be strictly controlled by appropriate security measures.
14. Because only a few people will be used in engineering and most other areas, you must provide ways to reward good performance by pay that is not based on the number of personnel supervised.