A SkunkWorks project (also known as Skunk Works) is an innovative undertaking, involving a small group of people, that is outside the normal research and development channels within an organization.
Skunk Works is the name given to a secret R&D team at Lockheed Aircraft Corp. that was tasked with quickly developing a jet fighter for the United States during World War II. The U.S. Army's Air Tactical Service Command approached Lockheed Aircraft in 1943 to discuss the military's need for jet fighters to counter Nazi Germany's airpower. Lockheed Aircraft assigned a team of engineers, led by Clarence L. "Kelly" Johnson to work on the project. Just a month later, the team delivered the XP-80 Shooting Star jet fighter proposal to military officials.
Military officials quickly greenlighted the project based on the proposal, sending a formal contract for the work four months later, according to Lockheed Martin Corp. (as the global aerospace, defense and security company is now known). Johnson and his team delivered the first XP-80 in 143 days, seven days ahead of schedule, an astonishingly quick turnaround for a project of that scope.
Johnson's pragmatic approach is credited with the speed and success of the project.
Origin of the term
The term Skunk Works arose during Johnson's leadership of the jet fighter project.
Because there was no space available at Lockheed Aircraft at the time, as its facilities were fully occupied with its existing commitments to the U.S. war effort, Johnson's team had to work in a rented circus tent next to a manufacturing plant that emitted strong odors. Team engineer Irv Culver jokingly compared the smelly digs to "Skonk Works," depicted in the newspaper comic strip "Li'L Abner" as a remote locale where characters brewed a concoction of dead skunks and old shoes in a still.
Culver's use of "Skonk Works" caught on with his colleagues on the team and eventually morphed into Skunk Works.
It is now a registered trademark of Lockheed Martin.
Transition to business
Johnson encapsulated the strategic management approach he used on the secret project in his 14 rules (see below).
From there, Johnson's management philosophy infiltrated other industries and the Lockheed Martin term Skunk Works evolved to the more generic version (usually lowercased) that today is applied to innovative projects that are done in secrecy, semisecrecy or, at least, outside the usual departments tasked with development within an organization.
As such, SkunkWorks projects focus on disruptive innovation versus incremental improvements to an organization's existing product line or processes.
The differences between incremental and disruptive innovation
And staying true to its roots at Lockheed Aircraft, modern Skunk Works projects are often undertaken without official contracts and with handpicked teams featuring top specialists within an organization.
They also often operate with limited resources and on shoestring budgets, similar in some ways to today's startup companies. Some famous recent examples of SkunkWorks projects include the semisecret Google X lab, founded in 2010 by the search giant, and the lab Steve Jobs formed to develop the Macintosh computer. The latter was a group of about 50 people who worked behind the Good Earth Restaurant in Cupertino, Calif.
The 14 Rules of Skunk Works according to Lockheed Martin
1. The Skunk Works manager must be delegated practically complete control of his program in all aspects. He should report to a division president or higher.
2. Strong but small project offices must be provided both by the military and industry.
3. The number of people having any connection with the project must be restricted in an almost vicious manner. Use a small number of good people (10% to 25% compared to the so-called normal systems).
4. A very simple drawing and drawing release system with great flexibility for making changes must be provided.
5. There must be a minimum number of reports required, but important work must be recorded thoroughly.
6. There must be a monthly cost review covering not only what has been spent and committed but also projected costs to the conclusion of the program. Don't have the books ninety days late and don't surprise the customer with sudden overruns.
7. The contractor must be delegated and must assume more than normal responsibility to get good vendor bids for subcontract on the project. Commercial bid procedures are very often better than military ones.
8. The inspection system as currently used by the Skunk Works, which has been approved by both the Air Force and Navy, meets the intent of existing military requirements and should be used on new projects. Push more basic inspection responsibility back to subcontractors and vendors. Don't duplicate so much inspection.
9. The contractor must be delegated the authority to test his final product in flight. He can and must test it in the initial stages. If he doesn't, he rapidly loses his competency to design other vehicles.
10. The specifications applying to the hardware must be agreed to well in advance of contracting. The Skunk Works practice of having a specification section stating clearly which important military specification items will not knowingly be complied with and reasons therefore is highly recommended.
11. Funding a program must be timely so that the contractor doesn't have to keep running to the bank to support government projects.
12. There must be mutual trust between the military project organization and the contractor with very close cooperation and liaison on a day-to-day basis. This cuts down misunderstanding and correspondence to an absolute minimum.
13. Access by outsiders to the project and its personnel must be strictly controlled by appropriate security measures.
14. Because only a few people will be used in engineering and most other areas, ways must be provided to reward good performance by pay not based on the number of personnel supervised.
Benefits and drawbacks of Skunk Works systems
Lockheed Martin's Skunk Works program, which also uses the more formal name Advanced Development Program (ADP), isn't the only successful corporate innovation initiative of its kind.
Proponents of this approach to innovation say skunk works allows teams to fully break from their usual routines, a separation of duties that allows teams to deliver the kind of innovations that Johnson's team did during World War II.
However, a new school of thought has emerged in the 21st century that believes companies shouldn't have innovation by exception but rather focus on continuous disruption and must build innovation into its core capacities, into existing R&D efforts and into its everyday work.