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.”