For a company as large as Airbus Group, the loss of any one employee should not pose a particular threat; well-managed operations will carry on and typically have many, indeed many good, options for succession via promotion or external recruitment. But for Europe’s aerospace champion, the imminent departure of one particularly influential individual is kicking off a review of the structure and even purpose of his area of responsibility.
When Airbus announced at the end of January that chief technology officer Jean Botti would leave the company in April, Airbus noted: “Botti’s succession is subject to the outcome of a comprehensive review on the future set-up and structure for innovation and research and technology at Airbus Group. The review’s objective is to define a new mission and perimeter for the future Corporate Technical Office function.”
What, then, should that “new mission” be? And, what about the “perimeter”? Airbus understandably has nothing more to say for the moment. But how it answers those questions could have profound implications for a company whose long-term health depends critically on innovation. And, those same questions are existentially relevant to all its aerospace peers and, indeed, to every company operating in a high-tech market.
By any measure, Botti – who is to join the Dutch technology group Philips as chief innovation and strategy officer and a member of the executive committee, with a particular remit to develop healthcare technology opportunities – will be a hard act to follow. As Airbus chief executive Tom Enders noted, during a decade as CTO: “Jean has been and is a great innovator, change manager and a true technological visionary.”
Botti joined Airbus in 2006 from the automotive industry (directly from Delphi in Michigan; before that Renault) and is perhaps now best known outside Airbus as the enthusiastic, indeed charismatic, driving force behind the company’s serious effort to develop electric aircraft. The E-Fan all-electric project – which he clearly identifies as a step along a planned path to hybrid electric regional transports – made history with its 2015 crossing of the English Channel and went on to be declared the “Best Aviation Technical Development of the Year 2015” at the Living Legends Of Aviation Awards in Los Angeles.
His name is also associated with transformative technologies like additive layer manufacturing. Airbus engineers were, for example, instrumental in helping push 3D printed structural parts into Formula 1 motor racing.
More fundamentally, Botti will be remembered at Airbus for fostering an innovative organisational structure of what is, in a company of many countries and several divisions, a complicated network of research units. That structure – designed to foster a virtuous cycle connecting in-house and partnered research with business-unit engineering and, ultimately, product strategy – is what Airbus is now presumably to review.
Indeed, his recent remarks within Philips’ statement on his appointment give some insight into the nature of the problem facing Airbus, Philips and other innovation-reliant companies. Said Botti in January: “I am convinced that my experience in the automotive and aviation industries in terms of digital transformation and process optimisation will support Philips’ ambitions to drive the personalisation and industrialisation of care.” Digital transformations have been nothing but disruptive; similarly disruptive are personalisation and industrialisation, a pair of goals both complementary and conflicting.
GENERATIONAL TRANSITION
Professor Jaideep Prabhu of Cambridge University’s Judge Business School studies innovation in large companies, and sees the challenge in terms of a generational transition. The 20th century, he notes, was a time when “research and development became industrialised”. Big companies – he likes the term “behemoths” – spent large sums on R&D, maybe 10% of revenue, and they spent it largely in-house. Research was done close to headquarters, and it rarely crossed national boundaries. When it did, it was kept in other advanced countries.
Such a structured approach to long-term projects and technology development helped big companies to become 20th century giants; it also helped them to stay big, because it bought them vast amounts of intellectual property, the currency of high-tech industry. But, says Prabhu, it also left them vulnerable to attack by new giants, whose 21st century approach to innovation is frugal, global, networked and agile, close to customers and reliant on very few fixed assets. Companies like Google, Amazon or Apple got big very fast – and he says they are now a threat to the industrial giants because scale garnered by dominating software is giving them the financial power to move into hardware.
What Prabhu describes as a “smart” way to grow has also sprung new ideas, such as the driverless car. Perhaps the most visible example, then, of a traditional sector under threat is Botti’s old stomping ground, the automotive industry.
In this new era, the cost of innovation has come down dramatically. Today, notes Prabhu, small teams can achieve the sort of technical advances that in the 20th century would have been the domain of the behemoths, backed up by government cash. An aerospace example is SpaceX, which had the “organisational advantage” over established launch industry behemoths of starting from scratch to build a very cost-effective service.
Herewith the crux of the dilemma facing Airbus and its aerospace peers, and indeed Jean Botti and his new colleagues at Philips. The behemoths, says Prabhu, can all see that the in-house research model can no longer match a more agile approach, but the challenge is to come up with an effective response.
There have been notable failures. Two are Sony – “big, bureaucratic and siloed”, with internal rivalries that prevented it from using technology it had in-house to turn its Walkman into a digital product, leaving the market to Apple’s iPod – and Kodak, which invented the digital camera but went bust while others commercialised the concept.
Much, he says, has already changed. For a decade now, big companies have been siting research teams far beyond their traditional core sites. India, China and Brazil all figure heavily in the research efforts of behemoths headquartered in the US, Europe and Japan. And, some firms are starting to embrace what he calls the “Apple model”, which is to develop a platform for which others can develop apps.
But all behemoths, says Prabhu, face an existential dilemma. They must develop “incremental gains” while making “big bets on the future”. Pharmaceutical companies face this problem acutely, as breakthrough drug development efforts take heavy investment. Failure is costly, but so is waking up to find that a rival has made a big breakthrough. This is a dilemma all too familiar in aerospace.
Prabhu admits that he does not envy companies who find themselves squeezed between agile, upstart rivals and impatient shareholders. But in order to hold onto advantages that have been built over decades – and, indeed, to hold on to assets like talent – there is no choice but to find a middle way that makes it affordable to invest in “moonshot” technology gambles while also playing the nimble, low-cost innovation game known so well to new rivals. What’s needed, he says, to globalise innovation by networking with small partners, even “makers and tinkerers”.
Big players like Airbus can take some comfort from his conviction that far-flung, overseas research networks can still produce results that are owned in-house. That is not to say, of course, that it is easy.
Source: FlightGlobal.com
