Innovation — the SME super-power of Welsh Aerospace?

Why the Welsh Aerospace & Defence industry wants more innovation from its SME supply chain.

The innovative Airbus Zero-e blended wing craft. Copyright Airbus media

Did you know that the Welsh aerospace and defence sector includes 7 of the world's top 10 aerospace and defence companies? It's a sector that directly employs over 23,000 people across more than 160 businesses.

These headline statistics were the backdrop to a fascinating series of presentations, meetings and conversations that my colleagues and I recently had. We were delighted to be a part of Aerospace Wales Expo 2021, hosted by Coleg Cambria in Flintshire.

Our company stand was one of about 90 exhibitors among 300 delegates, and the only one dedicated to helping organisations learn how to innovate.

With our 'innovation' ears wide open, we were intrigued by what we learned at this dynamic event...

Big aerospace players are looking to SMEs to build their future

With her plenary speech, Airbus UK's Helen Swift signalled that her organisation was gearing up for growth. They anticipate a 75% increase in client-led demand off an existing £3.9 billion turnover for 2020. How will they achieve this? With a little help from their friends: Airbus will be leveraging the capability of some 2,374 UK-based suppliers, about 50% of which are SMEs.

Swift summarised her organisation's forward-looking expectations on suppliers, like this: "Innovation from the supply chain will be key for Airbus to achieve its objectives on sustainability, competitiveness and industrial performance..."

It quickly became the theme of the morning, as Andy Burn of BAE Systems, explained that in addition to their ongoing focus on continuous improvement, BAE wants to develop new products and new manufacturing processes with the help of an agile UK supply chain. Burn said innovation would be crucial to delivering competitive advantage for their customers, reducing lead times, and offering high quality solutions.

Then, in his address, Prof. Ed Rochead from the Defence Science and Technology Laboratory (DSTL) spoke about the enormous challenge of modernising the UK's defence capability. He outlined how £1 billion of funding over the next four years would be used to leverage technology and innovation in order to level-up UK defence.

Smaller businesses may be more innovative...

Interestingly, Prof. Rochead acknowledged that "typically 'smaller' businesses are able to bring innovation with them". Almost 30% of DSTL's spend — some £223 million each year — goes to SMEs in their supply chain.

Thales' Rob Hodges closed the plenary with similar observations and some practical examples of how their organisation would use the new Digital Trust and Resilience Centre (DTRC) in Wales to build future skills and provide a route for industry and academia to test innovative approaches.

It's time for aerospace SMEs to invest in their innovation capabilities

For us, the take-away from Aerospace Wales Expo 2021 was very simple: major players in Wales' aerospace and defence ecosystem need to grow their SME supply chain, and they are looking to SMEs to bring fresh, big and bold ideas for the future.

They want a pipeline of innovation from their smaller and medium-sized partners, and they want it very soon.

Where can organisations learn to innovate?

If your organisation — big or small — wants to explore how to innovate using a proven, total system called Innovation Engineering, the Welsh Government will fund your training up to 50%, subject to eligibility criteria.

Find out more from Rachael Blackburn about the first Aerospace Wales Forum innovation training programme starting on 21 January 2022, or contact Philip Pozzo di Borgo-Oliver at Eureka!Europe 👇🏻

🎬 Start your innovation capability building journey today

Do finance professionals count - when it comes to organisational innovation?

Are finance professionals key players or just cheerleaders on the fringes of innovation. Does it matter...?

Help us find answers to this question! Click on this image 👆🏻to take our 5-minute survey.

My partners and I at Eureka!Europe, and our colleagues at AICPA-CIMA, are intrigued by the role of finance professionals in enabling innovation in organisations.

In our experience, the process and practice of bringing to market successful new business models, products and services is a team sport. Rather than the preserve of a few clever individuals in a back office somewhere, effective and sustained innovation is driven by collaboration, diversity and informed participation.

Rebecca McCaffry, in her article, 'Risk and Innovation - Polar Opposites' (CGMA) quickly gets to the heart of challenge when it comes to the role of finance professionals in innovation: "We don't like failure, losses, negative net present value (NPV), unbalanced balance sheets..." It's a professional culture thing; a preference for precision, certainty, and facts. Perhaps it's a 'right-brain preference' thing...

"[As finance professionals] we don't like failure, losses, negative NPVs, unbalanced balance sheets..."

But beyond the territory of cliches and stereotypes lies the simple reality that finance professionals hold privileged positions in organisations. They have excellent analytical and problem-solving skills. Paraphrasing AICPA's Dr Martin Farrar in a recent report, finance professionals are at the heart of organisational governance, strategy, risk management and business performance. They usually own the processes, systems, and management information that control change and measure value.

So, does this particular community of organisational influencers impact the process and practice of effective innovation? How do they interact with innovation currently, what role might they play, and what challenges do they face in doing so?

We suspect that CFOs, FDs, Management Accountants, and Commercial Directors are often left out of the innovation process. Or perhaps they're engaged only when it comes to asking for money to fund an innovation project; usually, when it's too late for them to help shape the assumptions and thinking at the heart of the concept.

This is a frustrating experience for everyone involved, and the 'big idea' loses value along the way.

Gate-keeper behaviours can erode innovation value by an average of 50%...

In fact, research from the Innovation Engineering Institute shows that reactive, 'gate-keeper' behaviours and corporate processes (focused more on risk elimination than value creation) can erode innovation by an average of 50%...

That's how big and bold ideas become boring 'safe bets'… It doesn't have to be that way.

So how can finance professionals help? What role should they play in innovation as value creation? What innovation skills might they need?

What do you think? Share your experience and help us get smarter by contributing to our 5-minute survey ... click on the button below 👇🏻

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