The Universe is under no obligation to make sense to you, but in business profitability is non-negotiable.

Co-authored by Brian Miske and Zaheer Ali

"All this has happened before and all this shall happen again" is a quote from the sci-fi TV series Battlestar Galactica, but it has become increasingly relevant to the world of economics. Economies go through cycles, with booms and busts of varied frequency and amplitudes; we are currently living through a major transition. The pandemic accelerated many trends that were already underway, such as the digitization of the economy, the rise of e-commerce, and the growth of remote work. On the heels of that, certain new sectors have emerged as hot, such as the space economy. Organizations that can position themselves to take advantage of these trends and invest for the future stand to gain a competitive advantage. With volatility in the world and more reasonable valuations on the books, now is a particularly good time to do it.

The Megacycle

The concept of the megacycle was introduced by Nikolai Kondratiev, a Russian economist who studied long-term economic cycles. According to Kondratiev, economies go through long waves of growth and decline that last around 50-60 years. During the growth phase, new technologies and industries emerge, leading to a period of prosperity. However, eventually, the economy becomes overextended, and there is a crisis, leading to a period of decline. Eventually, the economy bottoms out and starts to recover, leading to a new period of growth. The hope has always been that the cycles are riding on a general upward trend.

We are currently in the declining phase of the fifth Kondratiev wave, which began in the 1980s with the rise of information technology. The decline phase is characterized by a period of turmoil and uncertainty, as old industries and business models are disrupted, as new ones emerge. This is a challenging time for organizations, but in chaos is often found great opportunity. To gain a competitive advantage and indeed survive, organizations must adapt, anticipate, and invest for the future in a global market, despite the environment of near-constant disruption.

The Space Economy

One area that is ripe for investment is the space economy. The space economy is a vertical in itself and a multi-sector entity that horizontally spans existing and emerging value chains. It includes everything from satellite manufacturing and launch services to earth observation, research and manufacturing in space, and even space tourism. According to a report by Morgan Stanley, Bank of America and others, the global space industry could generate revenue in estimates between $1.1 to $4.0 trillion by 2040, up from $350 billion in 2020.

There are several factors driving the growth of the space economy. Space is both a vertical and horizonal with growth on both axes. ?There is a growing demand for exponential satellite-based services such as telecommunications, navigation, and remote sensing – making Space a horizontal. Secondly, there is increasing interest in space exploration and research, both by governments and private organizations. Ultimately there is the direct potential for space-based manufacturing and resource extraction, which could lead to a new era of space colonization and life on Earth.

Investing in the Space Economy

Investing in the space economy requires a long-term perspective and a willingness to take calculated risks. However, there are several ways that organizations can capitalize and get involved in the space economy without breaking the bank. One option is to evaluate different partnership and venture models with existing space organizations to develop new business models, applications, or services. For example, a company could work with a satellite operator to develop a new sensor or payload for a satellite, or with a launch provider to develop a new launch vehicle.

Another option is to invest in space-related startups. There are a growing number of startups that are developing new technologies or business models in the space industry, and many of them are looking for funding. While investing in startups will always have an element of risk, it can also be highly rewarding if the startup is successful. ?A balanced approach to corporate venture and development could be transformational over time. In the short term, boards and corporate officers should be asking, “what if we do nothing?

Finally, organizations can invest in their own space-related R&D. This could involve developing new technologies or algorithms that have space-related applications or building partnerships with universities or other research organizations to explore new areas of space technology.

Reducing Costs

One of the advantages of investing in the space economy at this time is that costs are lower than they might be at other times. Launch costs have been falling rapidly in recent years, thanks to new technologies such as reusable rockets and competition among launch providers. This makes it more affordable for organizations to put satellites into orbit and access space-based services.

In addition to lower launch costs, there are other ways that organizations can reduce their costs when investing in the space economy. One approach is to leverage existing infrastructure and technologies. For example, organizations can use existing satellite constellations to provide new services, rather than building their own satellites from scratch. They can also use commercial off-the-shelf components and technologies that have already been developed for other industries. The ability to leverage the existing ecosystem will rely heavily on an understanding and engagement with it.

Another way to reduce costs is to collaborate with other organizations and organizations. Reimagine Opensource and Agile methods to merge competitiveness and creativity. By sharing resources and expertise, organizations can achieve economies of scale and reduce the cost of developing new technologies or services. This could involve forming industry consortia, partnering with research organizations, or sharing data and resources with other organizations in the space industry. Significant resources for this already exist.

Organizations can take advantage of government incentives and funding programs. Many governments around the world are investing in the space industry, both to support national security interests and to promote economic development. By participating in government-funded programs, organizations can reduce their costs and access new markets. Of these governments, many are willing to partner with transnational organizations to accelerate their path to space.

Summary

The current economic environment is part of a megacycle, with old industries and business models being disrupted, and new opportunities emerging. A key change from the past is that these cycles are more frequent and fast in evolving. The space economy is one area that emerged as ready for investment, with the potential to generate significant revenue and drive economic growth. Organizations that can position themselves to take advantage of these opportunities and invest for the future stand to gain a competitive advantage.

Investing in the space economy requires a long-term perspective, a willingness to take risks, and a focus on reducing costs and controlling risks. By leveraging existing infrastructure and technologies, collaborating with other organizations and organizations, and taking advantage of government incentives and funding programs, organizations can reduce their costs and access new markets with less risk. With a growth mindset, moving beyond managing to the quarter, the right strategy, experimental mindset and pragmatic approach, the space economy could be a game-changer for businesses models across a range of industry sectors for companies with the vision and courage to get in the game now.

Stay tuned for next article:

The next article discusses the need for companies to adapt to new technological paradigms and embrace space as the next big frontier for business. Private sector involvement in space exploration is increasing with traditional and non-traditional organizations pioneering new technologies. The potential benefits of space exploration are vast, including the development of new materials, medicines, and technologies, the extraction of valuable resources, and societal and cultural impact.