Scanning the future: how aerospace and defence companies can tackle the "big tech" threat

by Diane Shaw Strategy& Partner

Email +44 7825 676420

by Hugo Warner Senior Manager, Disruption, Strategy&, PwC United Kingdom

Email +44 (0)7590 352383

Recently Jeff Bezos, chief executive of Amazon, warned that if “big tech” turned its back on national defence, the United States would lose out. Addressing his comments to the country’s military leadership, he argued that the ability of the Pentagon to have access to private sector technology was in the national interest.

At first blush it may seem odd that the boss of one of the world’s biggest package delivery companies should be banging the drum for big tech in the defence sector.

But the fact is that tech companies are making rapid inroads into aerospace and defence (A&D). There are now quite a few high profile, big tech-led projects in the sector, like Microsoft’s HoloLens (augmented reality adapted for military use) and Google’s Maven (drone imagery analysis). Microsoft recently was picked over Amazon for a $10bn contract to handle large parts of the US military’s data and communications in a project known as “JEDI”, or Joint Enterprise Defense Infrastructure.

And while big tech is spending vast sums on these initiatives¹, traditional A&D companies rank as among the lowest spenders on research and development among players in major industrial sectors, at just 4.1% of global spending².

Start-ups are also emerging as potential threats to incumbent A&D businesses, in part because the technologies in which they typically are involved are the key underpinnings of the weapons systems of the not-too-distant future. One example is Anduril, a US-based start-up involved in sensor fusion, optics and data analysis.

With increasingly easy access to venture capital funding, such smaller players can also scale up fast. By contrast, incumbent A&D companies have taken decades to build up their capabilities and assets, and they may therefore lack the organisational agility to change direction.

We think all this shows that incumbent A&D sector isn’t preparing for this future as fully as it could – and sometimes not even in the right way. Building faster fighter jets or bigger aircraft carriers may score points for incremental innovation but the risk is that these assets will be obsolete or need major refits before they deliver their promised performance. We were struck by a recent article in the Economist which went as far as to say that aircraft carriers are already obsolete.

Big tech’s push into A&D is certainly not without controversy; some projects have met with resistance from employees. But it remains the case that incumbent A&D players have a challenge on their hands.

So how do such players respond effectively? In particular, how do they ensure their “internal rate of change” keeps pace with their “external rate of change”?

Enabling clearer thinking about the future

Answering these questions starts with being clear about how the future might unfold – and therefore what responses are needed. At PwC we have developed some new approaches to help company executives get to grips with the opportunities and risks that come with exposure to various technologies and disruptors. “Scenarios thinking” and “weak signal monitoring” are two pillars to this approach.

We’ve also developed a “Horizon” tool that has run the slide rule over 150 megatrends and emerging technologies in over 50 sectors. Specifically, we have analysed technologies for maturity, commercial viability and levels of research and development investment, and evaluated their level of impact for industry players.


We hope that, armed with these tools, A&D executives can be better-equipped to develop tailored responses to some challenging questions:

  • What capabilities do you need to succeed in these future scenarios? Do you break down silos and hierarchies so that you can anticipate and react to emerging trends? Perhaps take a look at what Spotify, the music streaming company, has done in breaking down its workforce down into “squads”, “tribes”, “chapters” and “guilds” to execute projects is a more agile way.
  • Does your business model need to look entirely different? Do you prioritise selling your service over your hardware? Take a look at what Apple has done in building up services, beyond hardware, for example.
  • How can you tap into your organisation’s expertise and creativity, to harness what American consultant Clay Shirky has called the “cognitive surplus”? Do you use crowdsourcing tools, or perhaps set up a “shadow committee”, as Gucci did some years ago, to challenge the existing board’s preconceptions?
  • How will you attract, motivate and retain the best people? Google has freed up 20% of its employee’s time for them to pursue personal projects. That’s one way.
  • Should you build new capabilities in a traditional, capital heavy fashion, or acquire them—maybe from your niche competitors? Should you pivot to become first and foremost a venture capital fund?

We can help you find some of the answers. As the futurist Alvin Toffler said, the future always comes too fast and in the wrong order. The right tools can help you prepare for it.


by Diane Shaw Strategy& Partner

Email +44 7825 676420

by Hugo Warner Senior Manager, Disruption, Strategy&, PwC United Kingdom

Email +44 (0)7590 352383

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