Title: Page born: April 01 2002

Kelly's Rules

Kelly's Operating Rules

In the late 1940's Kelly set down fourteen basic operating rules that were to govern the conduct of all his projects. These rules came to be as revered by his staff as the ten commandments are by the Church. Although the language does not sound as if it would be applicable in today's environment, the basic principles were relevant and were applied in current Skunk Work's operations on a regular basis. The following is from an Augest 1992 Lockheed Skunkworks document. (Parenthetical comments expand the reasons behind the rules.)

Rule No. 1
"The Skunk Works' program manager must be delegated practically complete control of his program in all aspects. He should report to a division president or higher." (It is essential that the program manager have the authority to make decisions quickly regarding technical, financial, schedule, or operational matters.)

Rule No. 2
"Strong but small project offices must be provided both by the customer and contracter." (The customer program manager must have similar authority to that of the contracter.)

Rule No. 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 percent to 25 percent compared to the so-called normal systems). (Bureaucracy makes unnecessary work and must be controlled brutally.)"

Rule No. 4
"A very simple drawing and drawing release system with great flexibility for making changes must be provided." (This permits early work by manufacturing organizations, and schedule recovery if technical risks involve failures.)

Rule No. 5
"There must be a minimum number of reports required, but important work must be recorded thoroughly." (Responsible management does not require massive technical and information systems.)

Rule No. 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." (Responsible management does require operation within the resources available.)

Rule No. 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." (Essential freedom to use the best talent available and operate within the resources available.)

Rule No. 8
"The inspection system as currently used by the Skunk Works, which has been approved by both the Air Force and the Navy, meets the intent of existing military requirements and should be used on new projects. Push more basic inspection responsibility back to the subcontractors and vendors. Don't duplicate so much inspection." (Even the commercial world recognizes that quality is in design and responsible operations - not inspection.)

Rule No. 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."(Critical, if new technology and the attendant risks are to be rationally accommodated.)

Rule No. 10
"The specification applying to the hardware must be agreed to 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." (Standard specifications inhibit new technology and innovation, and are frequently obsolete.)

Rule No. 11
"Funding a program must be timely so that the contractor doesn't have to keep running to the bank to support government projects". (Rational management requires knowledge of, and freedom to use, the resources originally committed.)

Rule No. 12
"There must be absolute mutual trust between the customer project organization and the contractor with very close liaison on a day-to-day basis. This cuts down misunderstanding and correspondence to an absolute minimum." (The goals of the customer and producer should be the same - get the job done well.)

Rule No. 13
"Access by outsiders to the project and its personnel must be strictly controlled by appropriate security measures." (This is a program manager's responsibility even if no program security demands are made - a cost avoidence measure.)

Rule No. 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 simply related to the number of personnel supervised." (Responsible management must be rewarded, and responsible management does not permit the growth of bureaucracies.)

Rule No. 15 (unwritten rule from Ben Rich's memiors)
"Starve before doing business with the damned Navy." (They don't know what in hell they want and will drive you up a wall before they break either your heart or a more exposed part of your anatomy.)

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