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The aerospace and defense market is one marked increasingly by complexity, uncertainty and a persistent vulnerability to fast-moving and trajectory altering disruptions that are straining both the operational resilience and strategic imagination of companies across these linked industries, particularly the CIO functions within them. Maintaining initiative, agility and resilience demands the adoption of new mentalities that explicitly challenge existing assumptions about the nature of technological innovation; competitive landscapes; and market risks and opportunities driven by five prevailing forces.
New Technologies: The development, implementation and increasing availability of novel commercial and dual use technologies is a particularly powerful driver of future industry disruption. Proliferation and clever use of these technologies, such as 3D printing, autonomous robotics and big data analytics, have the potential to completely transform every element of aerospace and defense business, from business development to sales and marketing to manufacturing to supply chain management to after-market support.
New Actors: Traditional aerospace and defense companies face a competitive environment filled with new actors applying disruptive new business models, many of which provide freedom of maneuver that most traditional A&D companies do not currently possess. Aerospace and defense companies both are competing more frequently with heavily subsidized companies or state owned enterprises— for example, AVIC in China—that have more flexibility to offer advanced “good enough” solutions at favorable terms to competitive export markets than those companies beholden to quarterly earnings statements and shareholder value.
The most affecting long-term development shaping the future of the A&D competitive landscape, though, is the entry of high-tech companies emboldened by Silicon Valley’s innovation culture and risk-accepting “hurry up and fail” mentality into aerospace markets. Google, Facebook, SpaceX and OneWeb’s efforts, among others, to develop new advanced aerospace technologies to fuel the provision of internet services to more isolated geographies is a potent development—one that Airbus CEO Tom Enders referred to as both “frightening and fascinating” in June 2014—that carries both short and long-term risks and opportunities for aerospace and defense.
New Threats: In a 1963 speech at Rice University at the start of the space race, President John F. Kennedy remarked that “space science, like nuclear science, and all technology has no conscience of its own.” President Kennedy’s insight is a useful reminder that the impressive and rapid developments of new technologies that amplify connectivity, accelerate innovation and enable commercial opportunities create vulnerabilities that are being exploited by actors at every level of the threat spectrum—from nation states to ideologically imbued individuals.
Cybersecurity is a particularly acute challenge for the aerospace and defense industry. The potential for disruption of operations through distributed denial of service attacks and the theft of the strategically and economically valuable aerospace and defense intellectual property are currently of most concern. However, an April 2015 report from the US Government Accountability Office highlighting cyber vulnerabilities introduced by in-flight wifi should generate more industry thinking about balancing responses to the market mandate for increased commercial passenger connectivity with mitigation of emerging security risks.
New Rules: Successful innovation in any industry is typically accompanied by competitions to affect regulations that facilitate or legally permit the introduction of new products and services to market. As more actors seek to shape the ‘rules of the game’ at both national and international levels, for example Amazon shaping US policy on commercial use of drones, understanding stakeholder preferences and possible outcomes of various legal and regulatory environments will be essential.
New demands: The intersection of all these shifts with other ‘mega trends’ related to demographics, population movement, sovereignty models, communication, consumption, commerce, travel and transportation will have implications on the market demand emanating from future government, business and civilian consumers.
In such a dynamic environment, integration of three alternative strategy support tools—all with military roots—that seek to challenge inherited or existing assumptions about AandD markets and expand the range of disruptive futures considered will be vital to ensuring agility, flexibility and business and technical resilience.
“The development, implementation and increasing availability of novel commercial and dual use technologies is a particularly powerful driver of future industry disruption”
Red teaming carries varying meanings for various communities, but in nearly all contexts the concept refers to a structured and flexible effort to better understand the proclivities, preferences, processes, mindsets, technologies and objectives of potential competitors and, as in the case of cyberthreats, adversaries. Effective implementation of red team methods can help organizations avoid “mirror imaging”—the temptation to project one’s own mindset on competitors–and build more nuanced and effective strategies rooted in more accurate understandings of competitors and partners.
Scenario planning allows industry CIOs and decision-makers to build more vigorous technical, operational and strategic approaches to uncertain environments by incorporating this uncertainty rather than seeking to eliminate it. By developing and considering as ‘true’ a representative range of plausible--rather than merely probable— outcomes and identifying the signposts that would indicate these outcomes are more or less likely to come to pass, CIOs and other executives can anticipate disruption and develop hedging strategies for mitigating risks of these disruptions and capitalizing on new opportunities or for avoiding them altogether.
Table top gaming helps CIOs and business executives test tactics, operational plans and strategies by playing them out in a controlled, scenario-based, “safe” environment. These group-based role playing exercises are highly effective in revealing second and third order consequences of decisions and forcing decision makers to respond to events in time-compressed environments and frequently generate counter-intuitive insights about both current and future challenges and opportunities.
Successful incorporation of these methods and the questioning mentalities that buttress them can be tricky and must be considered alongside other more conventional business and technological inputs. However, these methods are a critical component in ensuring not only that savvy aerospace and defense companies are able to successfully navigate a suddenly complex and fluid strategic and operational landscape, but also that these companies originate, rather than merely respond to, the next trajectory-altering disruptions in aerospace and defense.