Advance to Contract
The podcast where where we explore how SMEs can break into, engage with, and secure contracts in the UK Defence sector. Join us as we share insights, strategies, and real-world experiences to help you navigate this complex but rewarding market.
Advance to Contract
The Innovation Trap
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In this episode, we’re looking at a common issue within Defence – getting a technology solution across the valley of death. In other words, how to best prepare to exploit your product offering for commercial success.
So hi, I'm Stuart Alden.
SPEAKER_01And I'm Georgina Wilson Ayolara. And together we present Advanced to Contract, the podcast series where we explore how SMEs can break into, engage with, and secure contracts in the UK defence sector.
SPEAKER_00So join us as we share insights, strategies, and real-world experiences to help you navigate this very complex uh but at the same time rewarding market. Uh welcome back to Advanced to Contract, the podcast that helps innovative engineering and technology businesses navigate the defence sector and most importantly, wing work. I'm Stu, and with me is Georgina again. Welcome, Georgina.
SPEAKER_01Hi Stu. Good to be here. Um yeah, so hi everyone. Uh today we're looking at a common issue in defence and technology, looking at how we cross the valley of death.
SPEAKER_00Excellent. Sounds painful.
SPEAKER_01It does, doesn't it? Not on a motorbike.
SPEAKER_00No evil can evil's here.
SPEAKER_01No, no, no, no, at all. Uh so in other words, how do we get best prepared to commercialise our product offering for commercial success? Yep. So no further ado, really excited for this one. Uh Steve, so what is what is the commercialisation gap in defence innovation?
SPEAKER_00Yeah, uh, good question. How how long have we got? Well, 40 minutes, I think. So um so I think uh everyone has really good ideas, really good technology. The UK is well known for being a strong innovator. Um but sometimes we kind of fall down on the commercialisation uh aspect. So what do I mean by that? Well, it's taking that good idea and it's making it into a sort of revenue um uh building business. So it it's it's commercialising it from a from a sort of um you know uh concept and taking it through into a product or service that that the end customer can can use. So from a defense point of view, that's really looking at um demonstrating a proof of concept from that idea, so taking it from a clean sheet of paper, um, maybe building a sort of concept prototype of a product. Um and then uh the the key thing is going from that concept into uh low rate production. Uh and you know there's a massive gap there because uh it's all about how you prove that your uh product is what the end customer requires, um, how it whether it's safe uh and whether it meets all of the requirements that that the uh the end customer is is looking for, really. Um and that that stall that happens, that value of death that you talked about, where people fall down into often happens between the concept and that prototype or the or low rate in uh initial production. And we can talk through you know the factors that we need to go go through from there. So that's that's kind of what I mean by that by that.
SPEAKER_01Would it be worth that definitely better from understanding from your experience what the reasons are for that ballet of death?
SPEAKER_00Yeah, sure. Um there's I mean or stall. Yeah, absolutely. I think one of the key things is cost. Uh you know, people don't quite understand uh or perhaps haven't thought about the cost of taking it from that concept and prototype into production, into a a product that other organizations are going to use. Um and that's the same for any sector, but in defence, uh it there's another added layer uh really because uh of the uh you know the the safety, the security aspects, the ruggedization, there's there's a whole host of of aspects that where that cost starts to start to build. Um there's also certification. So uh defense has a lot of standards and regulations that you need to go through to make sure that you comply with those. Um, so uh there's you know the the test and evaluation process that you need to go through can be quite quite expensive. Um I think another aspect and perhaps something that's outside of an organization's um sort of sphere of influence is the fact that and we all know and we've heard a lot of it in the news recently about the long procurement cycles. So um you've got to be patient uh and you've got to make sure that your product or service offering is aligning with a funded program in defence. Because if there isn't a funded program, you you either have to wait until there is um or maybe switch it to another sector that you can prove that concept uh and then bring it back into defence when there is a demand. Uh, I mean the the rise of of drones, for example, in defence has been absolutely incredible over the last couple of years. Uh that's something that that was wasn't even heard of two years ago. Um and it's proven in other uh in other environments. Of course, the Ukraine war has has accelerated it in the way that they've utilized commercially available products and and brought it into the defence environment. But in order for us to, and we are, learning lessons from the Ukraine war, um, we've then got to bring it back into our procurement system and make sure it um meets the demands of our our uh you know safe certification, um, safety cases, etc., that that needs to be met in order to give it out to our troops. So uh there's there's there's all of those aspects that that we need to we need to look at.
SPEAKER_01You've triggered a thought which is I I just thought when you were talking is how much more effective it would be if the procurement was similar to the private sector procurement in that sense, which is a downfall in in that sense, but because you think of I think your like automotive, how fast they go through that pardon the button, go through all of that and you know from concept. Yeah. So have you seen where that's where defences learnt from that, or is it is it also quite slow?
SPEAKER_00Uh absolutely, and uh I think we'll we'll get onto it in a bit, but I'm happy to jump around. So the the the the defence reform um aspect that that's been going through the MOD at the moment um that that came out of the strategic defence review was all about how do we learn from uh other sectors, adjacent sectors. And the UK Defence Innovation Centre that's been set up um is uh very much charged with uh accelerating equipment into into the use of uh of the troops that that need it. Um so yeah, we'll we'll touch on on that a little bit, but I think uh I think defence is certainly learning lessons, but there is a long way to go uh in that in order to help SMEs to get through that uh you know that commercialisation gap. I think.
SPEAKER_01The question I had, Stu, is I guess what are your thoughts on the role or the importance of the role of that pre-market engagement in that?
SPEAKER_00I don't know if that's something you plan to cover a bit later or Yeah, no, I think that's that's that's hugely positive and and it's it's been something that I think has really benefited organisations. Um and for those that don't know, the pre-market engagement is outside of or prior to the the commercial contracting aspect that that forces uh and we're talking um uh the the public procurement, it's so the MOD procurement area here, that that forces uh the commercial lockdown, but you know, more more restrained uh activity because you're actually under competition with other organisations. So um the the pre-market engagement gives the ability for both the MOD and primes and SMEs to talk openly about um their requirements, their needs, um, the outcomes. Um they started to move away from detailed requirements documents to problem statements now, such that they're going out to the market and saying, this is a challenge we're seeing. We're learning lessons from other areas such as Ukraine. How can we bring this back into the UK? Um and on the flip side, industry is saying, well, this is the art of the possible, this is what's out there at the moment, maybe in a dual sector uh or adjacent sector role that can be brought in. It's high technology readiness level, high TRL. Um, so the the it reduces the amount of development activity that needs to be done. Um, and we can bring it in, and they can have those open and honest uh conversations outside of the commercial um uh restraints, and therefore they can they can enter into that commercial competition with more detailed knowledge of uh of the market and and and and uh what's available.
SPEAKER_01So that's a good very important role then.
SPEAKER_00Yeah, absolutely.
SPEAKER_01Great. And so I suppose looking at the SME in in its entirety and like I've always seen that great for innovation, but I guess how how or what is the misalignment with the MOD priorities, would you say?
SPEAKER_00Uh so I I think um it it's I don't know, I don't know whether it's misalignment, it's just understanding the need. Um and and there is a big gap at the moment between the articulation of that need and communicating it out to the widest um sector and uh sectors possible that can answer that that problem statement. Um so you know, we the the key themes are that there are numerous frameworks, there are numerous portals that are out there. Um you know, SMEs who think they've got a good offering into defence need to be monitoring quite a wide wide range of uh of sort of frameworks and portals. So there does need to be simplification there, and I I think we're gonna talk about how that perhaps could could happen through uh some of the um activities that are going through the defence reform at the moment. Um but I think the key themes of uh making sure an SME can align their innovations is a bit like we talked about in a previous episode, is understanding customer pain points, um uh do your research, um, network. Um, don't think that you can sell into defence without building relationships. Uh it's a hugely relationship-driven business. So make sure that you are talking to organizations that you think best align uh with your product or service, and that's what we spend most of our time doing uh with our clients is um uh helping them to understand where they best fit uh so that they're not wasting a lot of time and resource by talking to a wide range of organisations, but they're very much focused on uh uh customers that potentially require their their their product or their or their service.
SPEAKER_01So do you do you get the opportunities to to help your clients develop or package the innovation? You know, so there's because I'm thinking there's like quite a lot of like artifacts, isn't there, that is needed to support the innovation. And if it's not developed in parallel, then like you say, you get that. So do you get the opportunity to help your clients shape?
SPEAKER_00Yeah, and that's critical. Um again, we've we've talked previously about it's not just the technology, often the technology is the easy bit. Um you know, uh it's it's how that is articulated and how that's put across to to potential buyer. So what are we talking about there? Simple things like um, you know, are you speaking the right language? Are you searchable? You know, is your website um uh sort of searchable for the product that you're offering and relates to the defence sector? Um, because a lot of procurement uh organizations will will sort of um search uh for companies just literally via website search. So if you're not visible, they're not gonna come to you. Um you know have you have you uh got uh backup material that you can send to organisations that you know are are written in plain English that that lay it out very clearly uh about what your offering is, how you add value, uh, and uh what sort of maturity that product is uh and and what case studies you've got. Uh because is it being proven in other sectors? Because that's what um MOD and Primes are looking for now. They're not looking for long, drawn-out development programmes, they're looking for tech that they can bring into service very quickly. So, what have you done done to do that? So, yes, there's you know, we look at marketing for our clients, we look at how they fit in the market, uh, we look at how they um articulate themselves in uh marketing collateral. Um, but most importantly, we we get them in front of customers to talk about their pain points. Yeah, uh, because unless you're talking to an organisation, you don't know whether your product or service is actually required.
SPEAKER_01Yeah, yeah. That sounds very good.
SPEAKER_00Yeah.
SPEAKER_01We've spoken about pre-market engagement, haven't we?
SPEAKER_00Yeah, we have.
SPEAKER_01So why is proof of value so critical, Stu? Um, as you mentioned, maybe even more so than technical performance? Why is that so?
SPEAKER_00Yeah, absolutely. Um so I think what we're talking about proof of value is that cost benefit, value for money. Um, have you thought about all of the aspects uh in terms of how that product will integrate into the system uh and the environment in which you're you're putting it into? Um so um we in the last episode we talked about defense lines of development in a tepid oil. Have you thought about not just the product but the training behind it, the the publications that's needed uh for for that to in order to operate the spares, how you're gonna maintain it, uh what's the operational life of that that um that particular product? So there's all of those aspects to to sort of prove value to the client in order to in uh in order to sell send that in. And and that'll help you to get over that that valley of death because you will be um you'll be proving to the organisation that you've thought about that wide, a wider aspect of of the product that you're offering in. And hopefully you'll proven it via case studies, evidence, trials, tests, uh evaluation, that side of life. So that's very much.
SPEAKER_01How would you prioritize?
SPEAKER_00I'm thinking that's a lot of artifacts and there is there is a lot there.
SPEAKER_01Yeah.
SPEAKER_00Um obviously you want to get most of that paid for, you don't want to be doing it out of your own budget.
SPEAKER_02Yeah.
SPEAKER_00Um, so I think what you need to be doing initially as a as a small organisation, um, as an SME, is finding ways in which you can get that funded. Um, and there are uh you know a variety of aspects there, uh, or sorry, uh solutions there. So uh Defense and Security Accelerator, now UK Defense Innovation, uh run a wide range of programs, both themed and open calls, um, where you can feed uh maybe lower TRL uh capabilities into and help them uh well they'll help you to not only uh put it in front of a potential end user, but also help fund some of the development activity. And the and the benefit of um UKDI funding is that it's 100% funded, it's not a 70% funding that you perhaps get from a UKRI or an ATI or an APC uh bid. Um so so that's that's quite key.
SPEAKER_01Yeah, it's a good position to how is that process to apply?
SPEAKER_00So yeah, look at look at the website. Um uh it's gov.uk website, just type in UK Defence Innovation, uh, go on there, and there's a variety of calls that you can you can monitor, you can sign up for their newsletters and and email uh weekly emails and and you'll get them get them through there. Um but again um you may find that you can also get funding through a prime uh that is looking to do research and development in that area. Okay. So if you've got a if you've got a capability that helps them to accelerate their development through those technology readiness levels because you've already done that activity, then they'll be very keen to to to help you.
SPEAKER_02Okay.
SPEAKER_00The difficulty is finding the right person to speak in that right into that prime. Uh and and that's our day job. Yeah, that's it. Yeah, yeah. That that's what we do every day. But um, but but if you can find that sponsor, uh be it MOD or Prime, then then obviously that's going to be a benefit. Yeah.
SPEAKER_01Yeah. But that's that's good.
SPEAKER_00Um I think one thing I would I'd probably add to the the the proof of value bit is what differentiates you from your your competitors as well. So think about your unique selling points value proposition into the client and how um easy will uh it be for the client to work with you because you are differentiated and you're providing uh you know a um a viable product that they're looking for and that will answer their pain points. So uh have a have a look at that and um how you can make it easy, as we've said in previous episodes, make it easy for the customer to to work with you. Say yes. Yeah, yeah, exactly. Yeah.
SPEAKER_01I suppose do you think what's your thoughts on the importance of co-creation with the customer and how I think sometimes that can be quite a fluffy thing to talk about, can't it? Um and it seems like risk, control, all those things are undefined, but I've also seen co-creation work well when it's you know got an outcome, it's got a time bound, and risks have been identified. What what's your thoughts on co-creation?
SPEAKER_00Uh when when those words get get said to an SME, I think the hairs on the back of their neck go up because of intellectual property.
SPEAKER_02Oh, I see. Okay, yeah.
SPEAKER_00So I think that's that can be a concern. Um so that's a that's a key message, I think, to to understand what you're getting into commercially while uh before you start to get into the detail of the technical uh side. Um but yeah, I I think if you can primes are uh and uh coming out to SMEs now because they realise that they are quite agile and they've they've got some really interesting um specialist capability and and products. Um and they want to be able to, you know, help those organizations to to get that equipment uh in. And obviously if they can you know make money and and do business on the on the back of that, then everyone's everyone's a winner. Um but just be careful of the the commercial aspects and make sure you know what you're getting into before you before you sort of start to talk too much around the technical solution. Um you know it's it's not it's nothing to be scared of, but you just need to go in with eyes wide open, I think. Um so on that side. Yeah.
SPEAKER_01Great. It's good to know that there are different routes and options, isn't it, for what you're trying to achieve.
SPEAKER_00Yeah, uh absolutely. I think we've talked before about frameworks and you know there'll be a number of there's a number of frameworks out there, but um you know, and and just there will be there will be one that aligns with what you are looking for and and to get opportunities from to help you to get over that innovation gap. Yeah, basically.
SPEAKER_01I've so after our like conversations, yeah. I'm seeing a wooden bridge with slats and each thing, each nugget of information you're given is like a slat going across the valley.
SPEAKER_00Absolutely, yeah. And it's it's it's helping you to to cross that without falling in between.
SPEAKER_01Yeah, falling in between.
SPEAKER_00Hopefully.
SPEAKER_01Yeah, wear a helmet.
SPEAKER_00Yeah, yeah, exactly.
SPEAKER_01Yeah. So I suppose it talking about that crossing the bridge then, what strategies have you seen um or would recommend to SMEs to help build that compelling business case to do exactly that kind of thing?
SPEAKER_00Yeah, um, I think make sure that you've thought about scalability, um, because often uh you know uh as you have a new idea, and as we talked about right at the beginning of the episode, you've got that concept, uh, you've trialled it, um, but there's a whole world of difference between having a prototype and it being a manufacturable at rate product. Um, so all the aspects of sort of designing for for high volume manufacture, have you thought about how you're going to maintain that product, how how that uh, you know, w what the actual cost of the the product is going to be per per unit price and and to to sort of utilize it in service because it may be that the price excludes it from from uh a buyer buying it because it's it's too exquisite, you know, or it it costs too much. So um just think of all of those those aspects over and above the the the technical side. Yep. Um Think about that long-term sustainment bit of the of the products. It's all well and good selling it to a uh to a customer, but um what are the aspects they need to be understanding about how long it's going to be uh viable in that particular operational requirement? What are the users going to need to do to maintain it? Uh have you thought about spares that are easily replaceable? You know, and even things at the moment, one of the key topics is spiral development so or incremental um acquisition, which is all about having a base product that is then able to be upgraded through its life rather than having to be replaced because you've already paid for that upfront development. You what you don't want to do is throw a product away and then having to develop another one. So a lot of the I keep on going back to drones in our discussions, but it's the topic of the month.
SPEAKER_01And it's a growth, it's a growth area. It's a huge growth area.
SPEAKER_00And and a lot of those a lot of those solutions that organizations are now putting in, um, you've got the base hardware, um, but it's generally the software or the uh the onboard systems that can be upgraded through life. So you're you're sweating the asset, as as they say. Yeah, so so think about that. Um again, it's all about putting yourself in the the shoes of the of the client to say, well, if I was buying this product, what would I want to use it for? And how long would I want to use it for? And how could I ensure that it stays at pace with what our advertis adversaries are are doing, and that's again, that's a huge lesson from Ukraine. Um I think someone said the other day um that it's you know every 24 hours um they need to think about changing the the software element um you know from a from a uh not being compromised from a software element every sort of um six weeks they're changing some hardware on the on the drone and then every six months they're they're replacing some of the major aspects of of of that.
SPEAKER_02So long at all, isn't it?
SPEAKER_00No, it's not long and it it's all it's it's constantly recycling it to make sure that you're keeping up. I think long long gone are the are the days that we fielded a bit of equipment and just left it to be to be used. So think about think so that's a very long-winded way of answering your question. That that compelling business business case.
SPEAKER_01Yeah.
SPEAKER_00Yeah, absolutely.
SPEAKER_01Even more the need for that agile approach, then really, if you if we're adding to have supply chains that can facilitate that.
SPEAKER_00The agile approach is is definitely uh what it's what it's about, and that's what um the end client is is looking for at the moment. Um so in terms of sort of valley of death, uh I think just to recap, we've talked about looking at um how an organization puts itself in the in the shoes of the client, um, how it makes sure it understands the development and testing activity that will need to be done to bring it into service. So don't head off down the line uh of development before you've really done that costing exercise and understanding exactly what's needed. Make sure that you are developing something that is required. You know, you're not just looking at it inwardly and and developing it, thinking it's a it's a good product, but you haven't tested it with the client. So engage with stakeholders, ideally get a sponsor, uh, you know, an MOD or a prime sponsor to pull you through. And also look at all of the available assets that are out there to help you, both financially uh and uh provision of advice, um, and utilise them. Um, there will be something out there that will help you uh to to develop, and hopefully then you'll be able to build those slats on that bridge. Yeah, yeah, definitely.
SPEAKER_01Yeah, no, that's that sounds very good. Is that yeah, I'm glad that there are options there because it's what we need, isn't it, in terms of innovation.
SPEAKER_00And certainly uh now we're we're gonna um we're gonna need to be developing product at a far higher rate um to keep up with um adversaries and keep up with what our troops need on the on the battlefield. Uh definitely.
SPEAKER_01Oh great, Stu. So building on some of the points we've discussed uh in this podcast, be keen to know what additional aspects over the technical side of things would you recommend companies um to do to make themselves market ready?
SPEAKER_00Okay, yeah, interesting. So um I think uh a lot of what we talk to clients about is um being able to understand things like uh their quality processes because they will get asked um what what those are, even if they're not ISO 9001 or haven't they haven't gone through that accreditation. Do they have a quality management system that they can uh demonstrate to the customer they're following set process processes? And and why they ask for that is because they want to see repeatable processes uh and they want to understand that that that company, you know, when they produce a product in week one, it will be the same as in week 10. Uh so they're following the same the same process. Um other accreditations, some simple things that clients can do that that we ask them uh look to look at is things like cyber essentials, um so critical for the defense industry. Um it's fairly simple to go through an audit process. The cyber essentials basic is just a self-certification, it's just a questionnaire. Uh Cyber Essentials Plus is an external audit, but it's it's not it's not too invasive, so so that's fine. Um, and then something else that I think we've talked about in previous podcasts is um uh JOSCAR registration, which is the um the uh supply chain register uh that that people can get onto. Um and that uh JOSCAR basically asks for your uh your financials, your insurance details, you know, the your quality management, etc. So make making it easier to get on board with a a prime or or if you're selling into the MOD. So those are some of the things that you can look to to get yourself market ready. Uh another aspect is don't just look inwardly while you're developing your product. Um, you know, very very conscious that organizations are trying to improve the product all the time, but unless you're speaking to um somebody who's going to use it, the the end customer, and helping them understand uh perhaps where they would use that that product or service uh in operations, um, they can then give you feedback as well and perhaps help you to develop that that product or service um uh to be better and and to be to be optimized for that that end requirement. So there is um you know, speak to the client, um get engaged with with organizations that are going to use it, network with other um uh potential partners. Uh I think we talked earlier about organizations that you could potentially partner with that that would help you accelerate to market. Um yeah, so you definitely network and sort of make sure you understand the defence landscape that you're you're gonna go into. So I think all of those aspects in conjunction with the technical development will help you uh deliver a rounded product to the end customer.
SPEAKER_01Yeah, and that sounds really good. Have you have you seen where we've or you've encouraged clients to look at bid readiness at that early stage in terms of any of the bid artifacts?
SPEAKER_00Yeah, absolutely. So building evidence, case studies, yeah. Make sure that you've got that in you know locked away in a in a cupboard for for to be used in in bids. Um you talked about your capture planning before, um making sure you've got all of those aspects um covered. Uh and look at how yeah, uh a lot of that um activity will help you accelerate your bid process as well if you've got all of those those aspects um uh sort of uh already developed. So yeah, absolutely, definitely.
SPEAKER_01Sounds good. Definitely cross the bridge. Yeah, cross the bridge, the valley.
SPEAKER_00So I think that's it for this episode. Um and next time we'll be diving into another key topic to help SMEs navigate the complex and often challenging environment of defence. We'll continue unpacking practical insights, strategies, and lessons to support your journey from innovation to contract. Uh so that's it from me. Um, thank you very much, Georgina, once again. Uh insightful conversation. So thank you.
SPEAKER_01Thank you.
SPEAKER_00And uh look forward to the next episode.
SPEAKER_01Yes, likewise.
SPEAKER_00Thank you.
SPEAKER_01Thank you. Okay, so that's it for today's episode of Advanced to Contract, where we help SMEs navigate into the defence landscape with clarity, confidence, and purpose.
SPEAKER_00So if you found today's discussion useful, don't forget to subscribe, share it with your network, and leave us a review. And if you've got questions or topics you'd like us to cover in future episodes, we'd really like to hear from you. You can download our top tips and resources from the website link in the episode description.
SPEAKER_01Thank you for listening. And remember, every big contract starts with a single conversation. Until next time, keep advancing.