Addressing budget constraints with innovation and creativity

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The consolidation across the industry during the downturn of the 1990s came to a pause after the attacks of Sept. 11, 2001. The lesson we learned from those actions was those who anticipated the market adaptations and acted boldly did best. Similarly, those who have anticipated and positioned themselves best in the market for this latest downturn will also persevere. I believe this will manifest itself in a number of ways, as follows.

Over the last two years, we have already seen quite a bit of change to aerospace and defense companies. There have been reorganizations, divestitures, voluntary and involuntary separations, and acquisitions. Given the history of the 1990s, this is an obvious first and necessary step in a downturn. However necessary, it is insufficient on its own.
 
A focus on and acceleration in innovation may not seem as obvious as the first steps of cost-reducing efficiencies, but they are just as important. Aerospace and defense customers have increasingly difficult unmet needs. They also no longer have the luxury of lengthy acquisition processes and need innovative capabilities fast and at lower procurement and ownership costs. In short, what worked in the past, will not work in the future.
 
In terms of our customers’ hard problems, here is a summary of their needs:

• They are drowning in data and want to focus on the end intelligence, not necessarily on the sensor or platform.
• They want the commercial capability of cost and speed to apply in their environment.
• There is an emphasis on speed of warfighter need.
• They have zero tolerance for poorly performing programs with insufficient funds to subsidize underperformance.
• There are fewer big development and support programs and therefore need alternative approaches to fulfilling their missions.

These are somewhat different, but still very robust challenges from what we faced during the last downturn. Solutions will come in the form of exploring new business models and new markets, leveraging commercial technologies, and developing product-based offerings. Tight budgets are forcing us to look at challenges more creatively – from contracting, to pricing, to technology portfolios, to offerings.
 
Opening the aperture and examining challenges from a different viewpoint will lead to new ways to help our customers. For example, technology reuse and affordable enhancements to proven offerings are a creative means to address unmet customer needs for necessary capability at lower cost.  Augmenting technical offerings with innovative business models to address affordability is a second example. Aggregation of existing collected data to add intelligence value from which a decision can quickly be made is yet a third example.
 
Finally, and maybe a key channel to helping our customers: Partnerships, to include those between government and industry as well as partnerships within industry. We will see closer collaboration with our customers to find ways to finance needs, like fee-for-service options, for example, and new ways to acquire capabilities. We will see more competitors working together as teammates and new strategic relationships emerge. We are already seeing non-traditional companies, particularly commercial companies, entering the industry, often in collaboration with companies like ours.
 
Addressing constricted budgets is daunting and requires creativity and innovation. Details of every program are under scrutiny with every angle under the microscope. By considering the diversity of voices in the aerospace industry and through innovative thinking, government and industry can partner to find solutions. While government decision-makers are closely examining how to achieve efficiencies without losing capability, we in industry can do the same.

Mitrevski is vice president and general manager of Integrated Geospatial Sensing Systems and Environmental Intelligence, ITT Exelis Geospatial Systems.
 

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