Cardiff Business Club Event Review: Colin Paynter, Managing Director of Airbus Defence and Space UK

Date Posted: 30 May 2017 Cardiff Business Club Event Review: Colin Paynter, Managing Director of Airbus Defence and Space UK

On Monday 22 nd May, Cardiff Business Club played host to the managing director of Airbus Defence & Space (UK), Colin Paynter. The event, which was held at St David’s Hotel, was sponsored by University of South Wales and attended by over 170 people from across the capital’s business and academic communities.

A holder of degrees in both Engineering and Mathematics, Colin also sits on the boards of two of the UK’s leading research councils, the Technology Strategy Board (now called Innovate UK), and is also a Member of the Space Leadership Council. In his current role, Colin leads over 4,000 employees in the UK.

Colin’s address started on a rather solemn note, as he took time to pay tribute to the late Rhodri Morgan who passed away a few days earlier.

He said that the former First Minister was hugely supportive of Airbus and he recounted several occasions when the two had met to discuss the role of the aerospace sector in bringing high value jobs to Wales.

“Airbus remains committed to supporting the Welsh economy,” he said.

“We employ 6,500 staff in Wales, making Airbus one of the country’s largest employers.

“But while we may be a big company at the top of our game with momentum, we also have inertia – we have to counterbalance that good momentum with the bad effects of inertia.”

In other words, the company needs to ensure it isn’t slow to develop or to react to changing market forces. Airbus, he said, must ensure it avoids its own ‘Kodak moment’.

He said, “Kodak lost its way – not because it didn’t know that the technology was coming, but it didn’t react fast enough until it actually came.” As a result, it collapsed.

“If the aerospace sector wants to avoid its own Kodak moment, we must balance incremental progress with true disruption.” But it’s not easy, and the question is, how can organisations tackle this?

Airbus itself employs 120,000 staff worldwide and within a company of that size that is judged on performance by its shareholders on a quarterly basis, there “is inertia that is difficult to change.”

However, it is essential and there are three things that are needed to ensure this happens: invention, disruption and evolutionary innovation.

“Innovation,” he said, “is a much over-used word. It is often used to mean ‘invention’ or ‘idea’. But in industry the word innovation is about the process – the way in which you take an idea and create value from it.”

To illustrate how these three elements combine, Colin used the example of the electric light bulb.

“The ‘invention’ was the candle becoming the light bulb. As an innovation it had a huge impact on society.

“However, it was only possible by bringing together a range of other stakeholders within the supply chain, such as power distribution. This enabled what was a very smart invention to actually succeed as a piece of innovation.

“That move from candle to light bulb was disruptive, the rest is all about reducing costs or increasing performance, but this is evolutionary rather than disruptive innovation.”

For the latter we need only to look at perhaps the most well-known of disruptor of the current age, Elon Musk.

Colin sees Musk as a “driving force for change” and someone who is uniquely placed to call the tune to which others must dance.

Musk owns each company he runs, from Tesla to SpaceX and this according to Colin puts him at a distinct advantage over companies such as Airbus who are answerable to its shareholders and under pressure to consistently turn a profit.

“It is difficult for companies like ours to have the Elon Musk philosophy - ‘Prototype fast, fail fast, learn fast and improve’.

“Progress is being made very quickly and we have to react equally quickly to these new forces coming into our industry in order to ensure we sidestep that Kodak moment.”

“His [Musk’s] passion and fire is a key driver; he doesn’t need to be evolutionary nor does he have the inertia or the momentum of a large company – he can be disruptive.”

That said, Airbus is looking at its own evolutionary and disruptive innovations. Take the airline industry as a case in point.

Colin said that the airline industry places huge demand on the likes of Airbus to continuously develop new ways that will reduce the cost per seat per mile.

But it is a highly regulated environment where disruptive technology simply does not work. As such, the process is more of an evolution.

For example, the new A350 wing design is a “movement from the normal wing tip to a ‘sharklet’ – an idea that was developed over a six-year period.”

Since being introduced it has been found to drive 3-5% fuel efficiency for the aircraft during every single flight – one of the major cost factors in the airline industry.

“We spend 85-90% of our R&D budget on evolutionary innovation, the rest on disruptive technology. This may be the right balance although we don’t know with any real certainty, time will tell.

“We are learning all the time from the likes of Elon Musk and others but it is impossible to replicate the same fire and drive within everyone in an organisation as large as ours.

“So we have sought to segregate this by creating smaller companies within companies.

“Innovation doesn’t just exist in SMEs, as the UK government alludes. Big companies can also be innovative and disruptive.

“But we have to develop the culture to do that and isolate that element away from the rest of the business.”

Indeed, Airbus has set up a £200 million venture capital fund (Airbus Ventures) specifically to invest in those start-ups that will enable the business to focus on developing that 10-15% of their R&D budget set aside for disruptive technology.

As for how he sees the sector in a post-Brexit future, Colin remains optimistic.

“Airbus as a business is pro-European. The impact that Brexit will have is unknown and it will be some time before we see how it will be manifested.

“That said, I am confident in our ability to remain competitive and efficient and to ensuring we continue to develop our presence here in Wales and elsewhere.”