Page 20 - Australian Defence Magazine October 2019

NEWS REVIEW
INNOVATION COLUMN
Innovation: You’re not a snowflake
So, you’re in the defence industry. That means you’re unique, right? Wrong!
GREGOR FERGUSON | SYDNEY
IT’S easy to assume the defence industry is unique: you’ve got sexy, high-tech equip- ment that only government employees are allowed to operate (legally, at least); wicked operational requirements; (almost) impossi- bly high standards for quality and precision; and stuff that’s not only dangerous in itself, it’s actually designed to kill other people.
Wait a moment, though: we’re talking about high-technology engineered products and services. What’s so different about the design and engineering processes that de- liver, say, a jet fighter and an airliner? Or a main battle tank and a high-performance sports car? Or a mine-hunting submersible and a remotely operated container terminal?
When you look at the hardware, the services and the organisations that create and deliver them, the defence industry isn’t actually that different from any other high-technology sector, whether it’s bio- technology, software, AI, machine tools, offshore oil and gas, advanced manufac- turing or cyber security. It’s not the tech- nologies that are different – it’s the mar- kets, and the way they operate.
Is that a good or a bad thing? Actually, in some ways it’s a good thing. It means the defence sector, which is surprisingly
poorly studied and docu- mented, can learn from the non-defence sector, which has been studied and ana- lysed exhaustively.
Ifyouwanttobeasuc- cessful defence equip- ment manufacturer, you need to embody the attri- butes and behaviours of successful manufacturers of machine tools, or med- ical equipment, or airlin- ers, or ATMs.
And that applies to in- novation, as well: the drive to innovate, the techniques for unlocking the innova- tiveness in your organisa- tion and the tools you use to make your innovations relevant and effective are
just the same. Google ‘industrial innova- tion’: you’ll learn lots about non-defence companies that you can apply directly to your work in the defence sector.
Adjacent markets
That market thing’s a bit of a killer, though, isn’t it? What exactly are the differences between Defence and just about all of the other markets, and do they matter?
The obvious difference is that Defence is a monopsony – it’s the only domestic customer for your goods and services, so its acquisition and sustainment budgets and policies absolutely define the size and behaviour of the market, including its ap- petite for Innovation, and the barriers to entry. It’s not like Australia Post is going to buy Land 400 vehicles.
Defence is also monopolistic. It’s reason- abletotalkabouta30or50or70percent share of the national market for MRI ma- chines, or 3-axis milling machines, or dia- betes blood testers. And there’s usually con- stant demand to stimulate the incremental and disruptive innovation that keeps prod- ucts and companies competitive.
But when you’re talking advanced jet train- ers or infantry fighting vehicles your market share is typically either 100 per cent, or zero. And you won’t get a chance to re-compete for 30 years, by which time user require-
ments and technology will have changed beyond recognition – both you and the cus- tomer are forced to think disruptively.
Thirdly, Defence does anything really important in secret. Defence’s need and appetite for innovation is determined by a community of expert practitioners whose perceptions of threats, opportunities and needs are based partially on knowledge and assumptions that aren’t necessarily made public. Hypersonics is a good exam- ple of this (see P 48 for more).
None of this really matters if you have privileged access to your allies’ equipment and intelligence, and can afford not to worry about the local industry base. But now that the health and innovativeness of our industry base is an issue for Defence, industry policy needs to address both the quantity and quality of work cycling through Australian industry.
Local firms must innovate to satisfy a demanding and choosy customer and Defence industry policy needs to help cre- ate a business environment and culture in which innovation flourishes.
This train of logic has led us to where we are today. Our defence industry policy now embraces innovation, and Defence and the ADF are trying to create an in- novation culture that can both meet the ADF’s needs and help industry and the research sector.
The big challenge is to overlay this in- novation culture on a conservative, risk- averse acquisition and enterprise manage- ment system. At its core, when billions of dollars are at stake, that system probably won’t change much – innovators need to understand that, and how the system works. Why? Because that’s how this mar- ket works.
For all that Defence is trying to close the gap that’s traditionally existed between it- self and industry, it’s still up to industry to understand better how Defence works, both in acquisition and innovation, in order to prosper in this market. And to apply the abundant lessons from the non- defence market.
Dr Gregor Ferguson Ph.D is a former Editor of Australian Defence Magazine and organ- iser of the Pacific 2019 Innovation Awards.
20 | October 2019 | www.australiandefence.com.au
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