The partnering phenomenon in aerospace and defense

Aerospace and Defence companies have traditionally been engaged in "co-opetition" – simultaneously competing in some programs and sectors, and co-operating in others. However, in recent years a new phenomenon, that of companies partnering either formally or informally, has become increasingly common.

These relationships have ranged from the multi-national partnerships for the JSF program, to the collaborative supplier arrangements increasingly used on commercial and defense aerospace programs. Many commentators are sceptical about the benefits of partnering, but undeniably partnering has become a defining characteristic of the A&D sector.

While companies are partnering for many reasons, the most common have been to share risks, spread investment costs, influence national politics, and capture and insert new technologies. The partnering imperative is therefore based around "push" factors (offsetting risks and cost) and "pull" factors (gaining new capabilities, addressing customer demands). The key for all companies has been to reconcile these dimensions so that all parties recognize the long term benefits of the partnership.

The key to sustained and successful A&D partnerships is becoming clearer. Fundamentally, it is that partnering is difficult and requires compromise. Partnering creates dependencies and distracts management attention. Partnerships are therefore only fully justified when the program situation is complex, risky, and requires collaborative effort. Typically it involves fusing technical capabilities and personal relationships around a core set of objectives and mutually beneficial contractual arrangements (see figure below).

A&D partnerships for complex and uncertain programs
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Typically partnerships for new aerospace programs entail collaboration in engineering and supply chain, information sharing, integrated ways of working, and risk and reward contracts. As the industry becomes more accustomed to partnerships, it is also becoming clear that the most successful tend to have certain characteristics:

  • Recognize that partnerships evolve over time and have a life-span, typically defined by the life of the program to which they are related
  • Have clear aims and deliverables, which may be limited in time and scope
  • Are based on hard-headed business and commercial arrangements but also recognize and emphasize the importance of relationships and confidence building
  • Are driven and sustained through close attention to performance management tools and techniques

Going forward, more sophisticated partnering concepts will continue to emerge, which will help partnerships become more sustainable and better aligned to program life-stage. Examples include "best person for the job" and "top-table of equals." These new partnering models evolve with the program, so that lead and follower roles are interchanged, depending on technical requirements and contractual responsibilities.

The Oil and Gas industry and other program-based, high capital expenditure (CapEx) sectors offer A&D useful lessons for potential partnerships. Based on multi-sector experience, including A&D, A.T. Kearney has developed a proven methodology that addresses the key building blocks for successful partnering (see figure below).

Partnering framework - key building blocks for success
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