The Beginning of New Markets?

Some Theories of New Markets

It is common for new and changing markets (which are related to, but different from, industries) to be based on changes referred to as “innovations.” In these cases, market development can be described by innovation development theory. “Innovation development meta-theory” (i.e., theory about innovation theory) has characterized 3 theoretical categories and characteristics, including the following: (1) historical event models, described as “clock-like,” with regular, orderly, and predictable stages, (2) functional goal models, similar to “cloud-like” phenomena, with irregular, disorderly, and unpredictable steps, and (3) emerging models, characteristically referred to as “interacting,” descriptive of processes that are creative, adaptive, and problem solving in improvisational ways.^2,3 The space transportation market sector is best characterized by the functional goal model, because of the intermediate level of institutional requirements (e.g., regulations and laws), lack of specific well-defined market development stages, well-defined market goals (e.g., reliable and safe transportation to and from space), and multiple methods, and less-than-radical innovations, to achieve those goals.

Models of the functional goal innovation process fit within a larger context of market emergence and evolution.^4,5 The model of this context includes 3 levels: (1) the environmental long-wave “landscapes,” (2) the sociotechnological “regimes,” and (3) the fast-moving, technical, and market “niches.” Radical innovation processes occur primarily during the early phases of the sociotechnical transition at the niche level. Sustaining innovations take place in the regime level.

The processes of innovation ⁶ are modeled as including 12 stages, broken into 3 periods: initiation, developmental, and implementation/termination. These phases and stages do not progress linearly, and the process is undoubtedly more complicated in reality than as it is depicted in the model. An analogy to characterize innovation process management is that of 6 people in a rubber raft floating in a river of raging rapids. The river (i.e., the innovation process) cannot be controlled or managed by the raft's crew. The river is, at best, navigable. The first period of the innovation process starts with the generation of knowledge and technologies, required for the future “commercial birth of a technology,” through nonproprietary research and development (R&D) activities. ⁷ Owing to the low appropriability of knowledge creation (i.e., high spill-over effects that do not benefit the funding organization, and exacerbate the free-rider problem), the private sector is disincentivized to invest in research. The result is a predominance of public funding during this stage. ^† These activities are ultimately recognized by entrepreneurs as the foundation of market innovations.

In addition to the importance of early R&D on market emergence and change, economist Mensch researched 19th and early 20th century technological innovation (1979), ⁹ and observed that the earliest market offerings of new technologies corresponded closely to the initial inventions, and called this the “seniority principle.” This pattern was found to be highly consistent (Mensch asserts ∼95% reliability), and also implies that the future direction of commercial offerings in a market will be determined (to a significant extent) by the R&D history of the relevant technologies. Depending on how radical the market changes, public opinion must change to be receptive to adoption of the innovation. The new product can require 1 or 2 generations for the concepts to be sufficiently accepted, or influential enough, to enable a market transition. The transition can take more or less time, but a lag of 50–100 years was demonstrated in Mensch's research.

New Market Ties to the Past

In summary, when looking ahead to the changes in space transportation markets of high-mass cargo and crew, it is important to understand the role and relevance of the U.S. civilian space program activities, as symbolized by the Saturn V projected on the east face of the Washington Monument. In addition to the great achievements of all the men and women, civil servants, and contractors, whose dedication and hard work led to the successful execution of Projects Mercury, Gemini, and Apollo, this image represented, to me, the foundational knowledge and technologies created by the U.S. government so that, 50 years later and without any prior intent, it would seed the market change in the Earth-to-orbit space market segments of cargo/satellite delivery, and (hopefully, soon) human transportation. ^‡ Apollo, and the other programs, were not imagined, funded, and executed with the intention of creating new markets, but this may be an additional legacy they can proudly claim, and that may be comparable with putting a human on the moon (and returning them safely). It is a goal of New Space to make Apollo's market legacy a reality! Future editorials will continue this discussion, first by discussing terms like “commercial space,” “space industry,” “space markets,” and then by providing an overview of the definition of “New Space.” ^§

In this Issue

This issue of New Space features 76 pages of original content, including 1 perspective article and 5 peer-reviewed articles. The perspective article, entitled “Commercial spaceflight preparation and extravehicular activities training: the next generation,” describes a start-up envisioning a new way to train astronauts and spaceflight participants. This article outlines the facilities and training curricula that the company, Blue Abyss, will use to provide spaceflight training and commercial spaceflight preparation services. The first peer-reviewed article is entitled “Exploring trends in the global small satellite ecosystem,” and discusses possible future developments in this exciting segment of the satellite market sector. The second peer-reviewed article is entitled “Scientific exploration of Mare Inbrium with OrbitBeyond, Inc.: Characterizing the regional volcanic history of the Moon” and discusses a private sector firm's activities in lunar science. ^** The third peer-reviewed article is a case study of the NASA SBIR/STTR programs. Entitled “Making NASA more business friendly: An SBIR/STTR case study,” this article details another way that the U.S. government is enabling innovative activities by small businesses and universities. Fourth, “How can African nations effectively develop a space industry? Positioning Ghana using the dual double diamond model” uses a strategic management model to quantitatively assess different factors affecting competitiveness in the space industry and explore the capabilities of African countries. This article offers insights into the emerging African space industry, and highlights the capability of Ghana in particular to capitalize on the benefits derived from space for economic and socioeconomic development. The final peer-reviewed article, “Government engagement with commercial remote sensing companies: A framework for evaluating public data buys,” provides a novel perspective to assist with the execution of governmental acquisition of satellite data.