Despite Decreases in Funding, A&D Industry Develops Innovative Technologies

Aerospace and Defense (A&D) innovation funding has declined sharply since 2009 with independent research and development (IRAD) spending down 26.5% and Department of Defense (DoD) innovation spending down 21.1%.¹

However, according to Deloitte’s Aerospace Innovation – A New Dawn report, despite the challenging environment in today’s sector, A&D companies are taking new approaches to innovation. By incorporating new partnerships, rapidly commercializing core technologies, and collaborating with thought leaders in ideation, companies are forging ahead in innovation, resulting in increased revenues and the avoidance of disruption from new technologies.

“Companies in A&D—the leading industry known for game-changing technology innovations, including commercial aircraft, human space flight, the Internet, GPS navigation, and satellites—have seen the sharpest decline but should not feel discouraged,” said Tom Captain, vice chairman, U.S. Aerospace & Defense leader at Deloitte LLP and Global Aerospace & Defense leader at Deloitte Touche Tohmatsu Limited. “The key to winning in an environment like this is rethinking the traditional approach to innovation and doing things never before done.”

Deloitte’s report also outlines Ten Types of Innovation, a framework to assist A&D companies in thinking about the type of innovation applicable to their company and situation. The framework focuses on evaluating innovation across 10 types of options in three different categories, including configuration, offering, and experience.

“Developing an innovation agenda offers a broader approach to generating and implementing new ideas,” said John Coykendall, principal, Deloitte Consulting LLP and consulting leader for Aerospace & Defense. “A good framework is useful for innovators, whether they are an entrepreneur at a startup or an industry leader at a global company. It’s time to think outside of the box when it comes to innovation.”

¹IRAD spending data based on Deloitte analysis of aerospace and defense sector company annual reports and 10-k statements from 2008 to 2014; Department of Defense innovation spending based on data from the National Science Foundation (http://www.nsf.gov/statistics/).