ISRO’s Strategic Success

ISRO was first conceptualized as INCOSPAR (Indian National Committee for Space Research) in
1962 with the motive of establishing a rocket launching station at Thumba, Kerala (TERLS), by the
great visionary scientist Vikram Sarabhai. He realized the need for an Indian Space Program is
India is to leapfrog into the future. It later grew and became ISRO in 1969.
The success story of ISRO can be attributed to the vision of Vikram Sarabhai and the relentless
and determined work put on by hundreds of brains that made up this organisation, some of
whom were personally selected by Sarabhai to start the program. Sarabhai picked young
engineers and scientists to form the first team of ISRO who were tasked of establishing TERLS, a
launching station in Kerala. Sarabhai searched for passion and hunger in these individuals as he
knew that the technology did not exist in India and had to be developed from scratch which could
only be possible with long standing determination and passion for the dream. He chose hungry,
intelligent individuals from the top institutes of the country and also went to the extent of getting
Indian scientists working abroad to come back to work on the space mission. He always dreamt
of the future. He had setup multiple parallel projects so that India could leapfrog into the future.
While he was setting up TERLS, he initiated the planning for the development of space technology
and its application for national growth.
When ISRO started with TERLS program, the technology for launching stations had to be
developed. The workers had to learn on the go through trial-and-error. Due to the security
concerns regarding space research, other countries were unwilling to provide knowledge transfer
and could only help by contributing equipment. Due to high uncertainty about the projects w.r.t.
political and technological environments, it was not feasible to contract it to other countries. The
technology did not exist in India so contracting it to domestic industries was not an option. Thus,
due to high uncertainty and high asset specificity, ISRO had to go the firm way and develop all
the technologies in-house.
ISRO could also not invite space agencies of other countries to setup in India as an MNE (Hennart)
as no country would agree to take up such a project due to security issues and India wanted its
own space program.
ISRO had to face hurdles right from the beginning as they were starting from scratch. The basic
requirements of infrastructure and transport facilities were missing and they had to innovate on-
the-go to overcome them. From acquiring land from fishermen, getting equipment from different
sources, arranging for transport of the heavy equipment via the miserable Indian roads, to
working from a church building, the struggles were never ending. Success in these uncertain
working conditions could only be achieved by internalizing through a firm as the transaction costs
for the market systems were either too high or not possible to do at all, as discussed by Coase in
‘The Nature of the Firm (1937)’ .
Selection of intelligent and passionate scientists and engineers who had to learn to do things on
the job created high human asset specificity. It was almost impossible to replace workers; hence
work could not be assigned through a contract. Due to uncertain projects, measuring the output
of their work also became extremely difficult. It became imperative to maintain ISRO as a firm
with a “clan” type organization structure having a common vision and all employees conforming
to that vision, as discussed by Williamson in ‘The Economics of Organisation (1981)’.
Another major cause of the success of ISRO was the clan environment in the organisation. The
seeds for a common and dedicated vision at ISRO were sown by Sarabhai right from the start
when he recruited hungry and passionate young engineers and scientists. He trusted them to do
the right thing and rarely interfered in the day-to-day affairs. He did not question any document
or proposal that they brought to him to sign on. The monitoring costs were almost nil since all
the employees wanted to prove themselves and make ISRO and India proud (Hennart, 1993).
Every achievement was a family achievement and all setbacks were personal. Sarabhai sent two
employees, the author and another colleague, around the world to visit different space centres,
to learn from them and apply the learnings to our space program. This could only have been
achieved because Sarabhai had trust in his employees that they would not cheat or free ride. The
two employees also responded with equal zeal and fervor towards the goal of learning and then
applying it to setup their own space research center. This camaraderie and passion were vital in
a clan like environment of a nascent ISRO which was fighting hard to establish its foundations like
a start-up. This commitment was instilled through selection of candidates and placing trust in
their abilities and was not coerced through training as discussed by Ouchi (1979). This ensured
that both the organisation and the employees were satisfied and successful.
The basic tenets of a clan were so strong in ISRO and the common vision to take ISRO to new
heights was so deeply ingrained that even in the later stages of the author’s career, when he was
the director of ISAC, he still was eager to learn how other countries carried out their launch
sequences.
Both bureaucratic and clan environments require an authority figure, a leader, whom the
employees can respect in whom, they can place their trust. Vikram Sarabhai was undoubtedly
the man who ticked all the boxes. He empathized with his employees and helped them in
whatever way he could, be it calling up the finance minister to speed up the process of getting
forex, or arranging a waiting room for the waiting ISRO employees at PRL, we always went out of
his way to help them. He made sure to know everyone by name. He trusted their abilities and
their decisions and thus, didn’t micro-manage. This provided stability to the organisation
structure of the newly built ISRO. Hence, his death was even more tragic as it left the organisation
leaderless. To appoint another one with similar authority was a huge challenge as the next head
would have to fill some big shoes.
The nascent ISRO environment, while under Sarabhai, operated perfectly in a fragmented and
informal horizontal structure. His management style was of a patriarch dealing with a small well-
knit family. There were no formal systems in place, with parallel technical teams operating. After
his demise, the need was of formalized management structures as the organisation expanded.
Satish Dhawan, the new head, brought order to this situation by changing the organisation
structure and incorporating proper firm like hierarchical systems in place with dedicated teams
and accountability. As the organisation grew and tasks became more complex, this change was
inevitable. “If the price requirements of a market cannot be met and if the social conditions of
the Clan are impossible to achieve, then the Bureaucratic mechanism becomes the preferred
method of control”- Ouchi (1979). Hence, huge organisations like ISRO have to follow hierarchical
structures inevitably.
It was only through hierarchical measures that ISRO was able to navigate through its failures,
learn from them, and turn them into successes. The accountability of mistakes was fixed and thus
it became easier to track them and rectify them. Fast decisions were required and the autonomy
of different divisions ensured that precious time was not wasted in contemplation. The formation
of specialized teams to rectify errors and suggest solutions, of which the author was a part of
multiple times, was only possible due to the clear hierarchical processes. Also, in an unforgiving
field like rocket launching, where many stakeholders are involved like politicians, media, public,
a disciplined approach is needed to ensure quality and reliability which can only be achieved by
a hierarchical firm. The fact that ISRO was able to perform smoothly even after multiple changes
in leaderships and team compositions proves that efficient hierarchical systems were in place
and the employees trusted and respected each other like in a clan.
As the organisation expanded, Satish Dhawan wanted to include industries and academic
institutions to partner with ISRO so that production could be outsourced while these institutions
could benefit from the knowledge transfer. He wanted the fabrication should be done by the
industries so that ISRO could focus on R&D. Satellite building was shifted to Bangalore as it had
better support infrastructure with established companies like HAL, BEL and other private firms.
When uncertainty reduced, operations became streamlined and handing out contracts to public
and private firms became feasible. Kalam also roped in private and the public sector for the
making of SLV-3. The transaction costs related to contracting with the markets had reduced.
During the period the author was at ISAC, ISRO also partnered with other space organisations
around to world to launch its heavier satellites, since Indian rockets were not yet ready to carry
these big satellites. They were mainly of countries like French Guiana, Kazakhstan, Russia and the
USA. The transaction costs to carry out this were quite low as no knowledge transfer had to take
place and ISRO was only availing a service by paying a monetary cost. Due to low uncertainties of
a short-term partnerships, contracts could be easily drafted and implemented. ISRO also formed
long term successful partnerships with Kourou launch station, French Guiana. ISRO, being its long
time customer and friend, benefitted from decreased uncertainty as well as opportunism
resulting in successful contracts. Decreased transaction costs enabled ISRO to form contracts
with the market.
The troubles faced by ISRO for the development of cryogenic engines for its GSLV again
emphasized the fact that high uncertainties are accompanied with long-term contracts and the
firm route is a better way. ISRO’s collaboration with the French firm SEC for the engine could not
be done. American companies offering the technology were asking of unaffordable amounts of
money with the prospect of knowledge transfer clouded under political uncertainty. A Russian
firm Glavkosmos agreed to sell this technology at an affordable cost along with knowledge
transfer and a contract was signed with it. But the US accused the agreement to violate the MTCR.
The contract was thus nullified. ISRO was only able to buy the engines with no knowledge
transfer. It had to build a cryogenic engine on its own through a long and cumbersome trial and
error method which took a considerable time. ISRO kept launching GSLVs with the cryostages
bought from Russia and was only able to launch a GSLV successfully with an indigenous cryostage
in 2014, more than a decade after the first GSLV launch. High political uncertainty caused the
contracts to fail and the firm way was to be adopted at the end.
The functioning of ISRO as a firm with democratic systems in place ensured freedom to its
employees to voice their opinions and ideas. This is a critical factor for the success of any
institution because it fosters creativity and sometimes the solutions to most difficult problems
come from a simple idea of an employee at the lowest hierarchical levels. Every issue that was
raised by anyone at ISRO was analyzed and addressed with utmost seriousness. The Mission
Readiness Review (MRR) sessions were called for this where every engineer was present who
was responsible for any particular sub-system and anyone could raise a question. The hierarchical
position of the questioner was never a matter of concern. Such an organisation structure of the
firm was inspired by the innovations of the great Homi Bhabha, who made sure that scientists
should form their policies and should be answerable only to the Prime Minister.
Self-sufficiency in satellites and rockets could be achieved by ISRO only because it acted as a firm
since transaction costs for market and contract systems were simply too high. If it were reliant
on other countries for contracts to make these equipment and technologies, these projects could
have been blocked on a whim. The space communication which is now taken for granted in India,
is a result of long years of hardwork, intelligence and determination to realise Vikram Sarabhai’s
dream to setup an Indian space program and leapfrog India into the future.