Crossing the technological valley of death with Steve Cook

Steve Cook (00:00): It's like a hockey game, the puck's moving back and forth all the time. If you race to where the puck is at now, that puck's not going to be there by the time you get there. So you have to look out in the future and say, "Well, where'd that hockey puck go?" So you have to look at it from a needs' perspective, same kind of thing, and say, "I'm going to lean in on this early." Even though they're not there yet, I see a need for doing that.

Bridget Bell (00:27): Welcome to MindSET. As we wrap up season two, we're talking with Steve Cook from Dynetics about the technological valley of death. He describes what that is and why it is so common.

Katea Murray (00:39): He also gives five reasons Dynetics has been successful bridging this valley and talks through how relationships are critical in overcoming the challenge associated with the valley of death.

Bridget Bell (00:48): So let's get started. Welcome to MindSET, today we're speaking with Steve Cook, Deputy President of Dynetics Group. Welcome, Steve.

Steve Cook (01:08): Great to be here.

Bridget Bell (01:09): We're so excited to talk with you today, and today's topic is the technological valley of death. Can you describe what that is for our listeners who might not be as familiar with the term?

Steve Cook (01:20): I'd love to. When you hear the term valley of death, you don't think of things that are very exciting and you wonder why you're going there. But really, when we talk about the valley of death, we're talking about the life cycle of a program or a product in particular. When I talk about life cycle, we talk about it from the inception or idea stage where I've got this great idea on one end of the extreme, we'll call that level one, to the other end of the extreme is something is operational, it's in the field, it's being produced, it's being used, and we'll call that number nine, if you will.

Steve Cook (01:54): So that valley of death typically falls in between about four and seven, and why it's called that is because many, many programs get to that level four, level three, level four and they don't go any further. They may make it to five, but they don't go any further. This is really in that phase where we're going from a laboratory scale system or a prototype that doesn't have to work, to an operational capability or an operational prototype that does have to work. That's why it's called that. Fundamentally, because things don't get across that valley of death often enough, it really is stifling bringing new innovative ideas to the operational state. We talk about innovational new ideas, and that's important, you need those new ideas coming in the pipeline on the one end, but if they don't ever actually ever get to an operational system, then we've stifled what we're really setting out to do.

Katea Murray (03:03): Great. When talking about innovations or the technology life cycle, it's a fairly common term to describe the valley of death, why do you think that is? Why is this so hard to cross this valley successfully?

Steve Cook (03:16): So it's become so common that programs die in this valley of death, when they get to this point, it's become this term of industry. There's a couple of reasons from this, number one, typically the customers will be different. So a customer that's funding science and research activities, when that customer gets ready to shift to somebody that does development, it's often a different customer, it's a different funding source, there's a different committee in Congress, if it's a government funded program that has to oversee this, and so there's this interface point that's already built in there and that doesn't help. So that's number one, so a lot of times that shift in the customer side does not happen very well.

Steve Cook (03:59): Again, going from a lab where you're on a bench top or small scale things of that nature into the field, where it has to work, it's just hard. Things break, there are an incredible number of unknowns, especially when you're at the operating at the edge of technology, which if you're bringing things through that valley of death, that's exactly what you're doing. Another reason I think this has become more of this term in the last maybe 20 years or so, particularly for the aerospace and defense market, and that's what I'll focus my comments really around today, is we've lost the strong pull where we've got to have systems coming across that valley.

Steve Cook (04:43): In other words, the people on the other side of the valley, the operators that are looking for these new innovative products, the degree that they're trying to pull things across and the speed of which has changed. That fundamentally changed, I believe, with the fall of the Soviet Union in the early 1990s. Because our big single adversary that we were spending most of our aerospace and defense dollars against fell apart, the Cold War ended, there was peace dividend, what are we going to do? They suddenly become our ally and our friend and we start working together to get those kinds of things. So what happened, clearly we had the War on Terror, which came along about a decade later, but that really strong, I've got this adversary, I've got who is continually upping their game, that went away because the new innovations that a terrorist organization say might bring against you are going to be fundamentally different than a nation state power.

Steve Cook (05:43): o what happened out of that is today, to get a new system, whether it's a new aircraft or a new missile system, from that early day of, I've got this great idea at state number one, to it's in the field and operational state number nine, that takes 15 years on average today. Think about that, 15 years. So when we think about the span of World War II, right? The US part of that was from 1941 to 1945, we're talking over three times that. Again, that's because we could take our time, we didn't have the strong threat, so we didn't have the strong pull and the industry lapsed into this taking very long to go across that field.

Steve Cook (06:27): So what's different today though is this return to great power competition, where you've got not only a resurgence of Russia, but you've got this emergence in a big way of China, as not only what we would call a near peer, but actually in some cases a peer to the United States and our capabilities. They're capabilities are advancing quickly, so they're moving much faster than we are. So that's why it became I think this term of arc, particularly over a span of most of my career, but we've got to overcome it.

Bridget Bell (07:02): So I've also heard it used to describe companies that are often trying to transition from services to hardware, why do you think that is such a challenge?

Steve Cook (07:11): It certainly does, but it really affects any organization or firm that's trying to build a system, whether it's a software system or a hardware system. Now, for firms in particular that are trying to make that transition, as Dynetics did in over the last decade, it's particularly hard. So it's really a challenge everybody's going to face, Dynetics had that challenge of learning how to deal with that and Dynetics was going through a fundamental shift itself from a company that just about a decade ago was heavily focused on high-end engineering services to a company that today not only does high engineering services, but produces hardware and software products.

Steve Cook (07:54): So the challenges are, again, when you're going into the field and when you're going through these processes, the hardware's going to break, you have to change, as you go through that process, you have to change your workforce. So you've got to change your workforce to tackling delivering a product or a program, versus just supporting your customer doing that. So Dynetics, for example, had done that, as do other services companies, for many, many years. As going from, "I'm going to help my customer get that particular product or program out the door," whether it's a missile system or an aerial system, something of that nature, to now you're responsible for getting it out the door, it requires adding additional capabilities, it requires adding additional people.

Steve Cook (08:44): For example, over the last 10 years, we've gone at Dynetics from having equipment that can produce high-end machine parts, so whether I'm machining titanium or aluminum parts that go into an aerospace vehicle, we had less than 20 what they call computer numerically controlled machines. Today, we have over 106 of those kinds of machines. So we've substantially invested to have our own equipment to be able to do this kind of work. The amount of facilities that it takes and the square footage to put these things together, if I go back 10 years ago we had around 300,000 square feet, today we have 1.7-million square feet. So one of the challenges for companies that are particularly involved in the services' sector that want to get involved in delivering, you've got to be willing to make an investment. In fact, you have to be willing to make substantial investments. Substantial investments in equipment, substantial equipment in facilities, substantial investments in bringing in new people that have different skillsets.

Steve Cook (09:54): While it's great to have engineering skillsets may be the same, right? You've got to have different management tools, and you have to have different management methods. You need to understand risk management much more deeply than you did before. When you're building systems and putting them out the door, you have to have a supply chain. So you've got other companies now working for you. I would say 10 years ago we were probably, 90% of our work was either done by ourselves or we would subcontract for labor services. Today, a solid 60% of our business is subcontracting building hardware out to other companies. Well, how do you flow down those requirements to them? How do you ensure they're delivering on what they need?

Steve Cook (10:36): So these are all the things that make this really hard, and particularly when you're transferring from just doing services to doing services plus hardware. Now, I'll tell you though, and I'll get into this a little bit later on, there's a real advantage to being able to do both, and we'll hit on the power of that a little later on.

Katea Murray (10:55): I've heard you say that Leidos, more specifically Dynetics lives in this valley, how are you successful at bridging that gap?

Steve Cook (11:02): Yeah, we really do. If you look at Dynetics in the scope of what our group does for Leidos, we literally are working on systems that sit on the seafloor bed, the seafloor bed all the way to deep space, whether it's to the moon or for Mars, right? And many, many things in between. So you think about the scope and magnitude of the kind of things that we're working on, what I joke is we have to be equally happy with hugging that coral reef, which is prickly and hard, to hugging a cactus that sits in the middle of that valley, right?

Steve Cook (11:36): So we embrace it, so actually Dynetics has said, "Hey, not only is this valley of death something we need to tackle, we live here." We live here, we embrace it, we love it, because fundamentally we have to bridge that gap. Our customers today are, and this is where it gets back to this pull, so what's happened today? Today, as opposed to 30 years ago, we now have a return to this great power competition, we have adversaries that are moving very fast, that are bringing new innovations and new capabilities far faster than we are today, and things that we would say, "Well, we'll project China will have something in 2030," now they're saying, "Well, it might be more like 2025." So they're pulling things in faster.

Steve Cook (12:22): So now our customers are particularly looking to break this 15-year cycle, this cycle from step one to step nine, and that pull, I've never seen, for doing things faster, has never been stronger since I've been in this business, and I started in 1987. Again, I think that's largely driven by we have a particular need to get this done. So why has Dynetics been successful and how are we being successful? Number one, we recognize the need. Number two, we're willing to take risks. If you're working on these problems that are hard, you're going to break things on the ground, you're going to break things in flight, things aren't going to go like you want them to go, and you have to be willing to press through that and get to the other side. That's a normal part of it. When you're bringing new things to the table, that's part of what it is.

Steve Cook (13:17): Another key part that's allowed us to be successful is, and this is going to sound obvious, but we give customers what they want. What I mean by that is today, a lot of companies, a lot of big companies that are big aerospace and defense companies, they're making chocolate cakes, let's say, and they love to make chocolate cakes, they're really good at that, there's not a lot of risk, they're stamping those out like Little Debbie's coming out the line over there on the side, and they do what they need to do, they operate as they're supposed to, the risk is low, the profit margins are high, and particularly for publicly traded companies, they like that because it's low risk. We get that over and over, and over again.

Steve Cook (14:00): Well, then along comes the customer and says, "I need a lemon cake. It's still a cake, but I need a lemon cake." What Dynetics focuses on is how do I give them the best lemon cake I can give them? I'm not trying to go over and say, "I have this chocolate cake over here, you really want that. I know you want lemon, but I'm telling you, switch over here to this chocolate cake." So understanding what the customer wants, embracing that and giving them what they want, again, it sounds obvious, but when you're motivated, when your whole operational system, as many, many large companies are, are set up to build chocolate cakes but, "Hey, I've got to make a shift," that's hard. So being able to have the agility to see the need, be willing to take the risk and then jump on that is critical.

Steve Cook (14:45): Hey, look, I want to get these things and the lemon cakes into production too, and that's great, but the keys to doing all of that are, number one, you've got to have customer intimacy, and that's one of the things, by the way, that has come from our services' business. For many, many years, we were out working with our, hand in hand, particularly with the Army, with the Air Force, with the Navy, with intelligence community, and we saw a lot of their needs. In a lot of cases, we were working with them to help them better understand their own missions. Then comes along this need to move faster, so at the same time we were expanding our capabilities, our equipment, our facilities, our people, skills that I talked about earlier, and so how do I then take that customer intimacy and then translate that into smart risk taking? What makes sense to get into?

Steve Cook (15:37): So obviously Dynetics doesn't go build human aircraft, like an F-35 fighter jet, or we're not building submarines to take people on, that's not what we do, so we're not going to take on those kind, or aircraft carriers, that's just not what we're going to do, but we may take on a new missile system, we may take on parts of a submarine, we may take on a radar system, things of that nature where it makes sense to take the risk. We have the right skills and capabilities to take on those things. Then number three, you have to be agile in making decisions that get you to that point, and then why you're executing. Because the key is to get across that valley of death fast, right? I don't want to hang out in the valley any longer than I have to, right?

Steve Cook (16:17): I want to get across that from that lab state to that field state as quickly as I can, so that requires me to be able to make decisions fast. I have to be able to invest for success, as I mentioned earlier, and then we have to have good partners in our supply chain, right? Because now we're going to be bringing parts from sometimes all over the country, and sometimes all over the world, to put some of these things together, and having that supply chain of trusted partners that you can work with is absolutely critical. I'd say overarching all that is you have to be willing to say, "Hey, 80% of what you might like is going to be good enough." I call it the 80% rule.

Steve Cook (16:56): If I try to drive all the requirements in the front and I make this system so exquisite that it does everything I want it to do, it takes longer and longer, and longer to do. I have to be able to say, "It's more important that I get this done fast, so I'm willing to accept less from the beginning and then I'll improve later on," versus, "I want to try to have this exquisite thing perfectly." Because number one, there's never anything perfect, and when you try to make it perfect you're outpaced by your competition, and now it's out of date anyway.

Bridget Bell (17:27): So I'm curious if you can share some examples or an example of a recent innovation that survived this valley, what is one of those lemon cakes that you were talking about? Talk us through what specifically kept this program moving forward quickly, getting it through that valley of death.

Steve Cook (17:45): Yeah, absolutely. So I think a great example of that today is Dynetics Small Glide Munition. So the Small Glide Munition is a glide weapon that's released out of either a manned or an unmanned aircraft, it is for the Special Operations community, and that came about because for many years the Special Operations community, I'll call them SOCOM, would come to industry at these industry events and they'd say, "Hey, here's where we have needs." There was a particular area for a small glide weapon that had about twice the punch of a Hellfire, but didn't have a solid rocket motor in it to power it, but would be just as cheap as a Hellfire. "We have this niche need."

Steve Cook (18:30): Industry largely ignored it, for years and years, and years. Dynetics had developed its capabilities long enough to say, "We think we have an idea that would fill that particular niche." So we partnered, but this particular customer doesn't fund new development very often, we said, "We'll take the risk and we'll do the development with our investment, if you will take it and test it." They said they would do that, so we partnered up and within about a year, we went from somebody's literally a napkin drawing to a prototype that we were flying, and the test process went very, very smoothly to the point where the customer signed a decision called Acquisition Decision Memorandum, an ADM, and they signed it off and said, "We're ready to go buy these."

Steve Cook (19:17): We went from that memo to literally this thing being fielded and used by the Special Operations community in 16 months. So about a year to get through that prototype and then 16 months to have something producible and working. So that's been a great example of customer had a need, the larger community said, "No, there's not enough to build there, we'll keep selling you the chocolate cake, but we really want a lemon cake." We said, "No, we're going to go address that need," and it's turned into a way for us to disrupt that market. Because fundamentally, it's a classic disruption story, right? Where we're able to get in fast, meet a customer need in an area that others aren't necessarily paying direct attention to every day.

Steve Cook (20:04): To do that required us, again, doing the five things I talked about, having that customer intimacy, being able to be smart in our risk taking, being agile in what we did, investing for success and having a series of partners as a part of our supply chain to get that across the finish line. We've got several now that are actually in the process of crossing that valley. So if you look across the valley, you'll see a few things crossing it today, Hypersonic Glide Bodies, high energy laser weapons, high power microwave weapons, let's call them during air defense, are all programs that are working themselves across that valley in very rapid order to be able to get done and to support our war fighters.

Katea Murray (20:47): You've talked about the need to be agile in order to support our customers, why is surviving the transition through the valley of death so important for our customers, especially federal customers?

Steve Cook (20:58): Well, first and foremost, it costs a lot of money. So if I'm spending a lot of money to get things started and then I get them partway across that valley and they don't get across it, we're talking billions of dollars that have been lost over the last several decades, right? So that's number one, and we only have limited resources, right? But really, I think even more important to that is again, this return to great power competition demands that we solve this. We know that China is quickly advancing their systems and they're becoming more and more of a threat in the India and Pacific region, we know that Russia is reemerging with capabilities and technologies.

Steve Cook (21:42): Just a few years ago, they were worried about being able to pay their military, and equipment was being dropped off at various places and just left to rust, that's no longer the case. So they're rapidly moving these things along and that's why things like 15-year development cycles are just completely unacceptable. So it's not just for our customers, it's for our country. The key to frankly maintaining our way of life I believe is at stake, unless we fundamentally learn as a country how to get across this valley of death much quicker and much more repetitively, then what we have maintained in the world order that we've largely had since World War II is at stake. The US preeminence in supporting freedom and democracy across the globe is at risk.

Steve Cook (22:37): So in effect, if you look at what Dynetics is trying to do, we're actually making ourselves like the aerospace and defense community was like pre the end of the Cold War, because before the end of the Cold War, there were many, many more companies doing this kind of work, you had more innovative ideas coming, not only most things weren't controlled by two or three companies, it was done by a broader set of firms. So Leidos and Dynetics are really tackling this problem head on, because we're not afraid to take those risks, we're willing to make the investments, because we see the importance for our country in the longterm of being successful, we have to solve this problem and we are solving this problem one program at a time. But it's hard, and it takes vigilance it takes determination to be able to do this.

Bridget Bell (23:32): This has been such an interesting conversation, because you've talked through not only how Dynetics and Leidos get across this valley, but really why it's so critical and the importance there. I'm curious, as we wrap up, any final words or advice you'd give to our listeners who are facing the valley of death?

Steve Cook (23:51): Yeah, absolutely. First off, don't fear it. It's gotten this name for good reason, but there are reasons to change it and there are ways to deal with it. First and foremost, I think you need to understand your customers' needs, get intimate with the customer, understand what's driving them and give them what they want. Sometimes you have to help them figure out what they want, and that's okay, that's a great thing. That's the kind of relationships that we have with our customers and we want to continue to grow, because customers are incredibly important to us.

Steve Cook (24:26): When I think about the foundations of this company and I look at quotes that are around our global headquarters building from Dr. Robert Beyster, who was the Founder and CEO for many years, he talks about our success being measured in terms of our customer success. I think we need to always keep that first and forefront. I think a lot of the industry has lost that, and so let's get back, let's go back to that touchstone. What do they need and why and how do we help them in developing what that looks like?

Steve Cook (24:58): Secondly, you have to be willing to smartly invest in people, equipment and facilities and in technologies. You have to be able to lean into the problem. So there's going to be cases where, what I mean by lean in, you've got to get ahead and you've got be willing to jump ahead and invest sometimes even ahead of need, because you see where this is going. So it's like a hockey game, the puck's moving back and forth all the time, if you race to where the puck is at now, that puck's not going to be there by the time you get there. So you have to look out in the future and say, "Well, where'd that hockey puck go?" So you have to look at it from a needs' perspective, the same kind of thing, and say, "I'm going to lean in on this early. Even though they're not there yet, I see a need for doing that."

Steve Cook (25:48): A lot of people looked at Dynetics in 2011 when we were starting to really more publicly make this shift, and we did it by, a statement was building a new facility in Huntsville, it was a state-of-the-art facility that was set up for engineering, research development and production. In 2011, we were in the depths of the cuts to the defense budget and people looked at us like we'd lost our mind. They're like, "Why would you be doing this now?" The point was we saw a need coming and we said, "We need to get ahead of that." That's exactly what we did. That's not always going to work out, but that's where it gets into the ability to take risk and wisely take risk.

Steve Cook (26:28): The other piece of it is you have to be fast and you have to be agile in your decision making and in your execution, and your abilities to decide what areas to get into, you need talented people that can help you make those decisions quickly, you need the tools and the processes only that are needed to get the job done. You don't want any more than you need, but you do need enough. Because if you don't have enough, then you don't always know where you're at in the process, and if you have too many, it can slow the whole process down. That's one of those, it's like grandma's apple pie, you know you put enough sugar in when it tastes right, but nobody really knows how much to put into that recipe, except what's going along the way.

Steve Cook (27:13): So part of this is learning and developing, and when you're walking through that valley of death, you're walking through areas that others haven't walked before. So sometimes you're going to get yourself into areas that you've never expected before, and there's no checklist that will solve that problem for you. It's really easy in programs and projects, I've seen this throughout my career is people will say, "Well, here's a checklist for how a good program is managed." Whether this was at NASA or wherever, and checklists by the way are incredibly helpful. I'm a pilot, and so I use a checklist every time I fly, and it's super important and if I miss something on there I'm like, "Oh, why did I forget that?" It's there for a reminder. But you know what? What doesn't the checklist do? Checklist doesn't fly the plane.

Steve Cook (27:58): So checklists and process and bureaucracy don't build products. They can be helpful in building those things, but they don't ultimately do that on their own and we can't fall under that trap. We have to be willing to take the risk and actively manage, passive will not work. We cannot do that. Then building out our partnerships is incredibly important, because you can't go completely vertical and cover the kind of ground we're trying to cover when we're talking about seafloor to space. We have a lot of internal capacity and a lot of internal capability in key areas of what we're trying to build, but we partner with so many other companies. So developing those relationships and understanding those relationships over the long-term is absolutely important.

Steve Cook (28:47): So overarching to all this is it all comes down to relationships, relationships with your customers, relationships with your stakeholders, relationships with your employees, relationships with your partners and your supply chain are all important, and that's how you get yourself across that valley of death quickly and successfully.

Bridget Bell (29:10): Well, thank you so much, Steve, this has been a joy speaking with you.

Steve Cook (29:14): My pleasure.

Katea Murray (29:15): And thanks to our audience for listening to MindSET. If you enjoyed this episode, please share with your colleagues and visit Leidos.com/MindSET.