KiOR: the inside true story of a company gone wrong, Part 2

About NASA syndrome

There are some classic management set-ups that lead to failure, one of which is NASA syndrome. The type of management failures that were prominently on display in the Challenger and Columbia disasters. As the Columbia Accident investigation Board reported:

The organizational causes of this accident are rooted in the space shuttle programs history and culture, including the original compromises that were required to gain approval for the shuttle, subsequent years of resource constraints, fluctuating priorities, schedule pressures, mischaracterization of the shuttle as operational rather than developmental, and lack of an agreed national vision for human space flight. Cultural traits and organizational practices detrimental to safety were allowed to develop, including: reliance on past success as a substitute for sound engineering practices (such as testing to understand why systems were not performing in accordance with requirements); organizational barriers that prevented effective communication of critical safety information and stifled professional differences of opinion; lack of integrated management across program elements; and the evolution of an informal chain of command and decision-making processes that operated outside the organizations rules.

Finally, the Board noted:

The pressure of maintaining the flight schedule created a management atmosphere that increasingly accepted less-than-specification performance of various components and systems, on the grounds that such deviations had not interfered with the success of previous flights.

The NASA cautionary tale is instructive; there are correlations between KiOR and Columbia.

Specifically, reluctance to test to understand why systems were not performing in accordance with requirements, organizational barriers that prevented effective communication of critical information and stifled professional differences of opinion; lack of integrated management across program elements; and the evolution of an informal chain of command and decision-making processes that operated outside the organization’s rules.

KiOR was on a fast-paced commercialization track, as it highlighted in this company slide presentation.

Never commercially viable?

The technology’s progress was under close scrutiny by February 2010, when it was decided to form a Diligence Team consisting of Prof. Vasalos and Dr. Stephen McGovern, a hydroprocessing expert. The review included data and  related information derived from KiOR’s R&D work, as well from literature including patents, and data from the CPERI Pilot plant.

By this time, concerns about the data stream from the pilot also became an issue within the company. Stamires himself recalls six such meetings with CEO Fred Cannon, on February 10, March 13, March 26, April 28, May 7, and May 12. What was Stamires bothered about? Specifically, “manipulation and inflation of the pilot plant Bio oil yield data.”

The results of this comprehensive and in-depth Technology Assessment Review Study by Vasalos and McGovern were published in April 2010. Flat out, the report contained the most dismal news possible. The assessment concluded that the maximum yield, based on the pilot plant, was in the low 40s with 15% oxygen content, using ZSM catalysts.

Recommendations were made for improvement. According to one familiar with the report, by and large, these recommendations “were ignored by the Management Team, and not implemented.”