A jetliner sporting a shark face, to show off its range and great fuel use. An Aston Martin short-hop flying vehicle design like some Martian hybrid. And a “Tempest Fighter Jet” that looks every bit as fierce as its name.
In case you haven’t caught glimpse of the annual Farnborough International Air Show in the U.K. this week, the big aerospace and defense industry firms have been putting on an awe-inspiring show of some nifty glimpses into the future. And why not? On the surface at least, it looks like nothing but clear skies, with defense budgets across the globe either coming back or robust, and with demand for new commercial aircraft strong too, particularly from China, Japan and other Asia-Pacific region countries. Indeed, Boeing and Airbus announced at the show more than $130 billion in new aircraft sales to carriers in China, Kuwait, Qatar, and Vietnam, among others.
But, similar to the financial sector, aerospace and defense industry leaders need to keep their radars up for possible turbulence ahead. “The overall environment is positive, but industry leaders are still concerned about the impact of a trade war, the speed of innovation and the rise of new, more agile competitors,” says Jon Barney, senior client partner specializing in aerospace and defense with Korn Ferry. As the country's biggest industry exporter (aviation analysts estimate upwards of 80% of U.S. commercial aerospace is exported) the increasingly hostile trade rhetoric between the U.S. and China is unnerving.
Longer-term, aerospace and defense company leaders are still struggling to innovate. It is an industry conundrum that aerospace and defense organizations work with some of the most advanced technologies in the world—Lockheed Martin won a $31 million contract to build a new U.K. spaceport at Farnborough this week, for instance—but a majority of leaders still feel their companies are not set up to foster innovation. According to a recent Korn Ferry survey of more than 100 aerospace and defense industry leaders, including 35 talent heads, only 26% of respondents said their organizations were structured properly for the digital age.
Barney attributes that feeling to two main factors: competition and difficulty recruiting new talent to the industry. Similar to other legacy industries, aerospace and defense organizations are undergoing a demographic shift in talent, with older engineers who came up in ‘80s retiring and younger ones more attracted and incentivized to work with Google, Amazon, and Tesla, among other technology companies. Not surprisingly, those companies are among the biggest and most formidable new competitors to shake up the industry. It isn’t just that billionaires like Jeff Bezos, Richard Branson, and Elon Musk, to name a few, have deep enough pockets to compete with legacy companies. It’s that they are more agile as well.
“Traditional aerospace and defense companies can never be Google in terms of speed of innovation or risk tolerance,” says Barney. “But they can be quicker to respond to shifting industry and consumer dynamics and increase their risk tolerance.” On the innovation side, as a recent Wall Street Journal article noted, one of the avenues the industry is collective pursuing is investing in startups and providing other resources to help increase their metabolism and inject some entrepreneurialism in their organizations.
“The industry is competing very strongly to attract the kind of talent that can position it to be more innovative and agile,” says Barney, “ but the consensus across the sector is that more can be done.”