With a host of challenges facing today’s aerospace and defense companies, ranging from pressure on costs to scarcity of talent, and from new competitors in emerging economies to a changing industrial footprint, these businesses are becoming ever more aware of the need to work in a different way – as efficient and mature “Extended Enterprises”. But making it happen means resolving tensions between the familiar and the new. It means considering security versus openness, intellectual property protection versus shared innovation, and the pooling of skills versus fiercely competing for talent.
How to turn the Extended Enterprise into a reality?
There are five key streams of activity to consider. Crucially, creating a successful Extended Enterprise rests on the integration of all five of these building blocks – and an understanding of the interdependencies between them.
Collaboration and governance
Working together to achieve a common goal, with mutual understanding of needs and objectives by developing partnerships or contractual relationships.
Flexing to changing needs by enabling agility in new and existing relationships and adapting to changes across the ecosystem which impact processes or product delivery.
Talent and competencies
Developing and sharing the skills and competencies needed across the Extended Enterprise. Nine in every ten aerospace and defense organizations say they are under extreme competitive pressure to extend innovation into their workforce and corporate structure.
Capturing and integrating innovations across suppliers and technology partners. More than 60% of aerospace and defense companies see increased speed and agility in developing solutions as the principal benefit from participating in a digital ecosystem. But only 19% say their organization has a predominantly agile or fluid structure.
Data sensitivity and regulatory compliance
Remaining compliant with the regulatory environment and with legal and contractual requirements. More than 60% of aerospace and defense executives believe government regulations in the industry have not been able to keep pace with technology.
Time to build the Extended Enterprise for the long haul
There is a clear realization within the aerospace and defense industry of the direction of travel. The Extended Enterprise is a key means of securing a profitable future. But it means rethinking existing models and taking a new approach to building trust. And that’s a long-term process, which depends on a whole range of intangible factors. And getting the implementation of the Extended Enterprise wrong can have serious adverse effects on company performance (both operational and financial) and resilience.
The important point is therefore for each business to define the optimal degree to which they want to “extend their enterprise to maximize success.
Understanding the five building blocks set out here – and their interdependencies – is a key means of doing so, and making the Extended Enterprise a reality for any aerospace and defense business.