Skunk Works®

The Skunk Works® was formed in June of 1943 in Burbank, Calif. The Air Tactical Service Command (ATSC) of the Army Air Force met with Lockheed Aircraft Corporation to express its need for a jet fighter. A rapidly growing German jet threat gave Lockheed an opportunity to develop an airframe around the most powerful jet engine that the allied forces had access to, the British Goblin. Lockheed was chosen to develop the jet because of its past interest in jet development and its previous contracts with the Air Force. One month after the ATSC and Lockheed meeting, a young engineer by the name of Clarence L. “Kelly” Johnson and other associate engineers hand delivered the initial XP-80 proposal to the ATSC. Two days later the go-ahead was given to Lockheed to start development and the Skunk Works was born, with Kelly Johnson at the helm.

The formal contract for the XP-80 did not arrive at Lockheed until October 16, 1943; some four months after work had already begun. This would prove to be a common practice within the Skunk Works. Many times a customer would come to the Skunk Works with a request and on a handshake the project would begin, no contracts in place, no official submittal process. Kelly Johnson and his Skunk Works team designed and built the XP-80 in only 143 days, seven less than was required.

What allowed Kelly to operate the Skunk Works so effectively and efficiently was his unconventional organizational approach. He broke the rules, challenging the current bureaucratic system that stifled innovation and hindered progress. His philosophy is spelled out in his “14 practices and rules” that he and his team followed. Many of these “rules” are still considered valid today.

Kelly’s rules got their start on the XP-80 project in 1943, but it wasn’t until the early 1950’s that they were formalized and set in place as the Skunk Works’ rules of operation.

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.