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The conventional point-based satellite system engineering design procedure is insufficient to address the dynamic operations and post-mission reuse of capability-based small satellites. Emerging space systems and missions require an adaptive architecture(s) that can withstand the radiation-prone flight environment and respond to in-situ environmental changes using onboard resources while maintaining its optimal performance. This proactive and reactive response requirement poses an enormous conceptual design task in terms of the trade space - which can be too large to explore, study, analyse and qualify - for a future-generation adaptive small satellite system. This paper involves a careful study of the current and emerging space system technologies, architectures and design concepts for realising adaptive small satellites for future space applications. Adaptive multifunctional structural units (AMSUs) that eliminate subsystem boundaries and enable five levels of inorbit customisations at the system level have been qualified for highly adaptive small satellites (HASSs). The initial system engineering (SE) analyses reveal that the HASS system has mass, cost and power savings over the conventional small satellite implementation. The reported novel research findings promise to enable capability-based, adaptive, cost-effective, reliable, multifunctional, broadband and optimal-performing space systems with recourse to post-mission re-applications. Furthermore, the results show that the developed system engineering design process can be extended to implement higher satellite generation missions with economies of scale.