What Does The “O-Ring” Theory — Named After The Challenger Disaster — Mean For Us?

What we can learn from an economic theory of development, that many of us have not heard of.

The 1986 Challenger shuttle explosion’s culprit — the “O-Ring” — inspired the name of Michael Kremer’s “O-Ring” production function. What is an “O-Ring”? And how could it caused an explosion of an entire space shuttle 73 seconds after launch, killing seven astronauts?

Anyone who has seen an O-Ring will not find it significant. It is a rubber ring that seals two machine joints together, to prevent any air from leaking. Yet, the failure of this small part led to the disaster. The O-Ring’s inability to seal the joints led to gas leaking, which led to the explosion of a booster, leading to the shuttle’s explosion. All in rapid succession.

It did not matter that everything else went right.

As Kremer describes in his seminal paper, published in 1993, setting out the production function -

Production consists of many tasks, all of which must be successfully completed for the product to have full value.