Tom Enders closed 2013 with some inspiring words on innovation. Giving the annual Wilbur and Orville Wright lecture at the Royal Aeronautical Society in London, the EADS chief executive urged a packed house to support the aggressive pursuit of new technical horizons. The alternative is stagnation in aviation and spaceflight, and the loss of the spillover benefits that for a century have supported other industries and a vibrant economy.
Noting that every dollar of investment in aerospace translates into twice that across the economy, he said: "An investment in aerospace is an investment everywhere."
And, stresses Enders, the value of support for education – and particularly for encouraging young women to pursue careers in engineering, whose relative absence in the aerospace industry amounts “to leaving half your team on the bench” – cannot be understated: "To have an innovation pipeline, you need to have a talent pipeline."
He is also lavish with praise for the UK’s dedication to global free trade, especially the country’s eagerness to pursue international partnerships. Globalisation, says Enders, is irreversible and must be embraced, because investment "is not about protecting your innovation legacy - it's about protecting your future".
The boss’s fine words are backed up by action at EADS. EU statistics from 2011 place the company 33rd in the world for research and development spend – €3.25 billion ($4.48 billion) – and first among its aerospace and defence rivals.
But even heavy spending on R&D is no guarantee of a company’s technological competitiveness, let alone sustained profitability. EADS, however, is pursuing a systematic approach to the notoriously difficult problem of managing innovation.
Ian Risk, who started up EADS’s Innovation Works R&D department in the UK in 2007, observes that his assignment was to build it up. But, he says, it was obvious that he could not rely on the steady flow of money – typically from the government for defence work – that historically sustained such units as “all behind the wall” operations. So, Risk set out to establish a new model for organising R&D that could ensure Innovation Works did quality work, was cost-effective and had the UK “punching above its weight” within EADS’s broader research efforts.
In very fast-moving technology markets self-contained R&D units can be effective, he says – Apple works that way. But where the technology cycle is longer – aerospace clearly fits here – a self-contained research unit risks being a “valley of death”, where laboratory successes languish, never to reach marketable maturity. That pitfall looked especially deep at EADS, where Innovation Works has four business divisions to support, he says. That corporate structure also mitigated against a second model – the “virtual” R&D centre that relies heavily on joint projects with academia.
What Risk settled on was a third way, where Innovation Works is a “core brand” for EADS research, but maintains much of its capabilities inside the walls of the corporation's civil airliners, helicopters, space and defence businesses.
Risk’s key insight is that as an independent R&D unit that is also an integral part of each business unit’s engineering effort, Innovation Works acts to cut the risk associated with transferring technology from the laboratory to the production line. Risk’s goal is that the output of Innovation Works research be “embedded” in the business units’ product strategy – which stems from its engineering strategy, which is in turn influenced by research.
The other key aspect of Risk’s plan for Innovation Works was to create a fluid, flexible, partnership approach to the operation. Since starting alone in 2007, he has built the department to include around 130 engineers – a core of permanent staff, working with contractors and university-based researchers, some 30 of whom are funded by EADS – what Risk calls an “onion model” of organisation.
That flexibility helps avoid the valley of death by maintaining a dynamic relationship with other industries, says Risk. If a technology does not fit aerospace, perhaps it can be demonstrated in another environment. As Risk’s boss, Sebastien Remy, said in October, a few months after being appointed group head of Innovation Works to report directly to EADS chief technology officer Jean Botti: “The preparation of the future is not something you can do by yourself.”
The “onion” approach is also flexible, and capable of adapting to changing financial circumstances.
That aspect of the Innovation Works UK system proved fortunate, given that the 2008 financial crisis struck so soon after the unit was established. But, says Risk, budgets have “pretty much stuck on track”, as EADS’s world ranking for R&D spend illustrates.
“I have to take my hat off to my own organisation,” he says. “The level of investment we’ve received has not wavered.
“We’ve had very, very strong support.”