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outlook Edward Talerico To Survive A&D Industry Transformation,


Redefi ne Innovation A


s A&D companies strive to adapt to a faster-moving marketplace, they need to redefi ne what innovation means for their business. This can be a challenge.


Here are some of the underlying factors: Lack of marketplace insight: The necessity of A&D compa- nies to pursue business in new industry segments and new countries is making innovation more diffi cult. It can be hard to create a successful innovation for a market segment, unless personnel have a deep understanding of the underlying issues and opportunities in that new market. Getting this level of mar- ketplace insight isn’t easy, and it doesn’t happen immediately. Diffi culty in protecting intellectual property: A&D compa- nies face the risk that their new intellectual property (IP) will be stolen or compromised in some way. Globalization makes it diffi cult to thwart this risk.


A&D innovation needs to solve a recognizable customer need.


No margin of error for misguided innovation: The A&D marketplace is becoming less forgiving of research and de- velopment that doesn’t produce tangible business value. This can be a sea change for defense companies, many of whom have traditionally had their investment in innovation paid for as part of a government contract. A&D companies can better meet today’s industry chal- lenges by systematically bringing new ways of thinking and working to their organizations’ processes and products. Innovation doesn’t mean chaos, and—when done thought- fully—enhances the work already happening across the organization. Here are a few ways to introduce more innova- tion without disrupting your business: Make it pervasive: Innovation shouldn’t be confi ned to


your research and development activity. When A&D compa- nies create a culture of innovation throughout their organiza- tion, they can derive more business benefi t. To create a culture of innovation you fi rst need to create collaborative work environments. IT has a key role to play


Industry Strategy Director, Aerospace & Defense Infor


Alpharetta, GA


here. According to IDC, enterprise resource planning (ERP) systems will continue to be the backbone of A&D manufac- turing. But the A&D business now requires the use of a new generation of ERP systems that take advantage of cloud computing, mobile computing, social business tools and big data analytics.


Make it market driven: A&D innovation needs to solve a


recognizable customer need. “Innovations that customers don’t value are essentially worthless—no matter how techni- cally sophisticated they may be,” says a PwC report. “So it’s critical to understand what your customers need and work together with them as the fi rst step to innovation success.” Make it fi nancially sound: To make innovation more pervasive and more market driven, you need to measure it against the fi nancial metrics that you apply to other parts of your busi- ness. Given the high cost of innovation in the A&D industry, it’s critical to know what kind of return you’re getting. Make it agile: With innovation, it’s important to get your successes to market faster. And given the complexity of most A&D innovation projects, this is harder to do than in many other industries. Just as important is the ability to identify innovations that aren’t going to meet essential fi nancial metrics and to cut your losses quickly so you can move onto something more promising. Make it comprehensive: New innovations don’t have to be limited to new products you develop. In many scenarios, entering into partnerships with other companies can produce a new innovation better than investing in new technology. Make it secure: In light of the risk of IP theft, companies need to make sure they have protections in place while still actively working with new partners in new markets. Imple- menting the right data management structure is essential. Embrace change: Transformation is the new normal in A&D. Make innovation a strategic initiative for your company. Transform your view of what innovation entails. Make innova- tive thinking pervasive throughout your organization. And make customer value front and center in all your innovations, including those you will sell to customers and those that improve your overall business operations.


41 — Aerospace & Defense Manufacturing 2015


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