# On innovation, giants, and skunks

Source: https://abcastor.com/writing/skunk-and-beaver/
Author: Castor
Published: 2026-10-07

7 Oct 2026 · startups, innovation, history

Why big companies get better at everything except the next thing.

In 1943 Lockheed was one of the largest machines on earth for making airplanes.
It had grown from fewer than 2,000 people in 1937 to more than 90,000, it lived
on government contracts, and by the end of the war it would push 23 airplanes a
day out of its doors.[^1] That June the US Army came to it with an urgent
request for something new, and all that size turned out to be in the way. The
plant had no room for the job. So the new airplane was designed under a rented
circus tent, by 22 engineers Kelly Johnson had picked by hand.[^2]

The job was a jet fighter. Germany already had one, the Me 262, about 90 miles
an hour faster than anything the Allies flew.[^3] The Army had a British jet
engine and no American airplane to put it in. Johnson's team delivered the XP-80
in 143 days, a week early.[^4] It came too late to fight in that war. It was the
first of a run.

![A white P-80A marked TEST banking over water][L1]

A P-80A on a test flight, 1948. Photo: NACA, public domain.

[L1]: https://abcastor.com/figures/skunk/p80-1-1400.webp

## Five firsts

The tent became the Skunk Works, named after a reeking still in the comic strip
*Li'l Abner*. A shop that good could afford a joke for a name; the more
competent you are, the less serious you need to be. Over the next four decades
it built five airplanes that each did something no airplane had done, and Ben
Rich, who ran it after Johnson, lists them himself:[^5]

- **P-80 Shooting Star, 1944.** The first jet fighter the US Army Air Forces put
  into service, and the first of its jets past 500 miles an hour.[^4]

- **F-104 Starfighter, 1954.** The first production airplane to fly at twice the
  speed of sound, on wings so thin at the front edge, 0.4 millimetres, that
  ground crews fitted guards over them so nobody got cut.[^6]

- **U-2, 1955.** A jet-powered glider that flew over the Soviet Union from above
  70,000 feet, so high its pilot wore a pressure suit. It still lands with a
  second pilot racing behind it down the runway in a car, calling out the
  height.[^7]

- **SR-71 Blackbird, 1964.** Built mostly of titanium, because at three times
  the speed of sound its skin heated past 260 degrees Celsius. It was made to
  fit when hot: on the ground its fuel tanks leaked onto the runway, and sealed
  only once the skin warmed in flight. Since 1976 nothing with a pilot and a jet
  engine has flown faster.[^8]

- **F-117 Nighthawk, 1981.** The first stealth aircraft in service, shaped like
  a cut gem because the 1970s software that predicted its radar echo could only
  handle flat surfaces. The equations behind it came from a Soviet physicist,
  and the Air Force denied it existed for seven years.[^9]

![A black SR-71 Blackbird seen from above over snow-covered mountains][L2]

An SR-71 over the Sierra Nevada, 1994. Photo: U.S. Air Force, Judson Brohmer,
public domain.

"Best" would be too generous for all of them. West Germany lost 292 of its 916
Starfighters and 116 pilots, and Germans called it the widowmaker.[^6] "First"
holds every time.

The rest of Lockheed had the same name on the door and the same government
paying the bills. In 1971 it was the largest defence contractor in the United
States, and it needed a $250 million federal loan guarantee to survive an
airliner.[^10] So money does not explain the difference.

![An F-117 Nighthawk head-on in flight, its flat facets catching the light][L3]

An F-117 over Nevada, 2002. Photo: U.S. Air Force, Staff Sgt. Aaron Allmon II,
public domain.

[L2]: https://abcastor.com/figures/skunk/sr71-1-1400.webp
[L3]: https://abcastor.com/figures/skunk/f117-1-1400.webp

## Why giants stop inventing

A big company is a machine for repeating what worked. Ninety thousand people
building P-38s need procedures, and good ones: they are why 23 airplanes came
out every day. A procedure is a decision somebody made once so that nobody has
to make it again, and a new airplane is made almost entirely of decisions nobody
has made before. The machine that makes the known thing cheap makes the unknown
thing slow and expensive, with exactly the same parts. And an untried idea has
to compete for money with work that is already earning; Clayton Christensen
called this the innovator's dilemma, and noticed that the firms it beats are
usually the well-run ones.[^11]

Every part is reasonable, which is why nobody removes it. When Johnson was sent
to rescue the Agena rocket stage, he found 1,206 people in quality control and a
reliability of 13.6 percent.[^12] Each inspector had been hired to stop a real
failure. Together they were enough people, he wrote, to design and build the
thing.

Then there is the arithmetic. Every pair of people on a project is a
conversation that might need to happen: five people make ten pairs, fifty make
1,225.[^13] Anyone who has tried to choose a restaurant for twelve knows the
rest. Most of those pairs never talk, but the more people there are, the more
desks a decision has to visit, and every one of them can say no.

And there is pay. In most companies the manager of forty earns more than the
manager of four. Reward a manager for building a bigger department and a bigger
department is a reasonable thing to build. Johnson told Rich the main plant gave
raises "on the basis of the more people being supervised; I give raises to the
guy who supervises least", and he put it in his fourteenth rule.[^12][^14]

## How the skunk did it

Johnson's answer was a small room inside the giant, paid for by the giant, with
the giant's habits kept outside. His third rule says the people connected with a
project "must be restricted in an almost vicious manner".[^14] The U-2 never had
more than 81 people on it, and they handed back $2 million of a $22 million
budget.[^12] Designers sat "two feet apart" from the people who built and tested
what they drew, so a drawing that could not be built got argued over before
lunch.[^12] One person decided, and someone above him took the pressure. Rich
told his engineers: "I'll take the crap from the big wheels, but if you screw up
I want to hear it first."[^5]

![A U-2 a few feet above the runway with a black chase car close behind][L4]

A U-2 landing at Beale Air Force Base, its chase car behind. Photo: U.S. Air
Force, Senior Airman Drew Buchanan, public domain.

Even the great exception worked this way. Bell Labs had about 5,700 people in
1950, paid for by the AT&T telephone monopoly, and the transistor, which the
modern world more or less runs on, came out of one small mixed group of
physicists, chemists and metallurgists inside it in 1947.[^15]

The giant's reflexes are strong, and copies usually lose to them. The Army's
Cheyenne helicopter tried Johnson's method and within six months had a
purchasing department larger than his whole engineering department.[^12] When
investors made Olivetti sell its electronics division to General Electric in
1964, five engineers kept the desk computer they were building by renaming it a
"calculating machine", which was not in the deal. The Programma 101 sold about
44,000 units, and NASA bought some for Apollo.[^16]

[L4]: https://abcastor.com/figures/skunk/u2-1-1400.webp

## What a beaver has

Castor, which is also Latin for beaver, is two people making open-source
software and these essays. Johnson's arithmetic is very kind to two: one pair,
one conversation. Ours never really stops, because we live together, so most
ideas reach the other person while they are still half a thought. Nobody above
us has to approve anything. A decision takes as long as it takes us to agree.

We also have what Johnson never had: agents. They add hands without adding
people who need persuading, and the cost moves to context. People pick context
up fast, in a corridor, and there is a limit to how much they hold; agents pick
up nothing by being in the room, but they can work from far more than a person
can hold, as long as someone wrote it down. So most of our work has become
scoping: saying what we want precisely enough to hand it over, with just enough
structure that nobody has to guess, and a check at the end. The risk is the one
Johnson fought, in a new costume. Generate work faster than we can judge it and
we will have our own sprawling department, conveniently stored on a computer. If
it starts to happen, we make the jobs smaller before we add more agents.

The rule we most want to keep is the one about pay, because growth breaks it
first: the day there is money to hire, the easiest way to look successful is to
have more people. Nobody is offering us that money yet, so we wrote down what we
reward while it costs nothing, in [The myth of values as a competitive
advantage][L5], and why we commit slowly in [Startup decelerator][L6].

Every giant was once a few people who could decide before lunch. The skunk
needed a tent to hide from its own company. We would like to grow without ever
needing one.

[L5]: https://abcastor.com/writing/values-as-advantage/
[L6]: https://abcastor.com/writing/startup-decelerator/

## Notes

[^1]: U.S. Centennial of Flight Commission, "Lockheed in Mid-Century": fewer
      than 2,000 employees at the end of 1937, more than 90,000 by 1943; by
      1945, 23 planes a day and $2 billion in war contracts. [Source][L7]. In
      the war Lockheed and Vega built 19,278 aircraft, six percent of US
      production: "Lockheed Corporation", Wikipedia. [Source][L8]

[L7]:
      https://centennialofflight.net/essay/Aerospace/Lockheed_in_Mid-Century/Aero15.htm
[L8]: https://en.wikipedia.org/wiki/Lockheed_Corporation

[^2]: Lockheed Martin, "Skunk Works origin story": the June 1943 meeting about
      the "rapidly growing German jet threat", the rented circus tent because no
      space was available at the plant, Irv Culver and *Li'l Abner*, and the
      XP-80 "in only 143 days, seven less than was required". [Source][L9]. The
      22 engineers are from Johnson's memoir *More Than My Share of It All*
      (1985), quoted in Gilliam (below).

[L9]:
      https://www.lockheedmartin.com/en-us/who-we-are/business-areas/aeronautics/skunkworks/skunk-works-origin-story.html

[^3]: "Messerschmitt Me 262", Wikipedia: the first operational jet fighter, over
      530 mph, about 93 mph faster than any Allied fighter operational in
      Europe. [Source][L10]

[L10]: https://en.wikipedia.org/wiki/Messerschmitt_Me_262

[^4]: "Lockheed P-80 Shooting Star", Wikipedia: "the first jet aircraft to be
      used operationally by the United States Army Air Forces" (the Bell P-59
      flew first but never went into service as a fighter); built around the
      British Halford H-1 "Goblin" engine; first flight 8 January 1944; the
      first turbojet USAAF aircraft to exceed 500 mph in level flight; two
      pre-production aircraft reached Italy and never engaged in combat.
      [Source][L11]

[L11]: https://en.wikipedia.org/wiki/Lockheed_P-80_Shooting_Star

[^5]: Ben R. Rich and Leo Janos, *Skunk Works: A Personal Memoir of My Years at
      Lockheed* (1994), chapter 1: "some of our inventions", the P-80, F-104,
      U-2, SR-71 and F-117A; and "I'll take the crap from the big wheels".

[^6]: "Lockheed F-104 Starfighter", Wikipedia: first flight 4 March 1954
      (XF-104); the first production aircraft to reach Mach 2; leading edges "so
      thin (.016 in; 0.41 mm) that they were a hazard to ground crews", so
      guards were fitted during maintenance; West Germany lost 292 of 916
      aircraft and 116 pilots between 1961 and 1989, and the German public
      called it *Witwenmacher*, widowmaker. [Source][L12]

[L12]: https://en.wikipedia.org/wiki/Lockheed_F-104_Starfighter

[^7]: "Lockheed U-2", Wikipedia: first flight 1 August 1955; "essentially a
      jet-powered glider"; above 70,000 feet; first Soviet overflight 4 July
      1956; the S1034 pressure suit; the chase car "driven by a second U-2 pilot
      who assists the landing U-2 by reporting the aircraft's altitude"; still
      operated by the USAF and NASA. [Source][L13]

[L13]: https://en.wikipedia.org/wiki/Lockheed_U-2

[^8]: "Lockheed SR-71 Blackbird", Wikipedia: first flight 22 December 1964;
      titanium for 85 percent of the structure; external surface "well beyond
      500 °F (260 °C)" at Mach 3.2; panels that fitted loosely on the ground and
      tanks that "only sealed when the skin warmed", so it "leaked JP-7 fuel on
      the ground before takeoff"; the fastest air-breathing manned aircraft
      since 1976, a record it still holds. [Source][L14]

[L14]: https://en.wikipedia.org/wiki/Lockheed_SR-71_Blackbird

[^9]: "Lockheed F-117 Nighthawk", Wikipedia: "the first operational aircraft to
      be designed with stealth technology"; first flight 18 June 1981; its
      faceted shape "resulted from the limitations of the 1970s-era computer
      technology used to calculate its RCS"; existence denied until 10 November
      1988. "Pyotr Ufimtsev", Wikipedia: Lockheed's Denys Overholser built on
      Ufimtsev's 1962 book on the physical theory of diffraction. Rich's *Skunk
      Works* tells the story at length. The F-22, whose prototype came from the
      same shop, would make the five six ("Skunk Works", Wikipedia).

[^10]: "Lockheed Corporation", Wikipedia: on 13 May 1971 the Nixon
       administration asked Congress for a $250 million loan guarantee for
       Lockheed, "then the largest US defense contractor", and its L-1011
       TriStar programme. Rich (chapter 1) describes Lockheed as "nearly
       bankrupt" from the TriStar.

[^11]: Clayton M. Christensen, *The Innovator's Dilemma* (1997), whose argument
       is that well-managed firms miss new technologies by doing what good
       management asks: serving their best customers and investing where margins
       are highest.

[^12]: Eric Gilliam, "Managing Lockheed's Skunk Works", The Good Science
       Project, which quotes Johnson's memoir and Rich's *Skunk Works* at
       length: the Agena's 1,206 inspectors and 13.6 percent reliability;
       Johnson's raise line to Rich; the U-2 project never passing 81 people and
       the $2 million returned; staff "two feet apart"; the Cheyenne copy's
       purchasing department. [Source][L15]

[L15]: https://goodscienceproject.org/articles/managing-lockheeds-skunk-works/

[^13]: A team of *n* people has *n*(*n*-1)/2 pairs who may need to talk.
       Frederick P. Brooks Jr. made the point about software projects in *The
       Mythical Man-Month* (1975).

[^14]: Kelly Johnson's 14 rules of management, rules 3 and 14. [Source][L16]

[L16]:
       https://www.lockheedmartin.com/content/dam/lockheed-martin/aero/photo/skunkworks/kellys-14-rules.pdf

[^15]: Mervin Kelly, "The Bell Telephone Laboratories: an example of an
       institute of creative technology", *Proceedings of the Royal Society A*
       (1950), quoted in FreakTakes, for the 5,700 people [Source][L17]; "Mervin
       Kelly", Wikipedia, for the interdisciplinary solid-state group
       [Source][L18]; Jon Gertner, *The Idea Factory* (2012), for AT&T's funding
       and the transistor of December 1947.

[L17]: https://www.freaktakes.com/p/bonus-more-details-on-how-bell-labs
[L18]: https://en.wikipedia.org/wiki/Mervin_Kelly

[^16]: Inexhibit, "Olivetti Programma 101: la storia ed il design del primo
       personal computer", for the sale to General Electric, the team of five
       (Pier Giorgio Perotto, Giovanni De Sandre, Giuliano Gaiti, Gastone
       Garziera, Giancarlo Toppi) and the change from "computer" to "calculating
       machine" [Source][L19]; "Programma 101", Wikipedia, for about 44,000 sold
       and about ten bought by NASA for the Apollo programme [Source][L20].

[L19]:
       https://www.inexhibit.com/it/case-studies/olivetti-programma-101-la-storia-ed-il-design-primo-personal-computer/
[L20]: https://en.wikipedia.org/wiki/Programma_101