Opinion: The South African defence industry and the God of Opportunity


defenceWeb recently published an article indicating that aerospace, maritime and defence industry association AMD, and I assume the whole member grouping, is looking to reposition the SA Defence Industry (SADI). Denel is also in dire straits with losses and delayed AGMs, a turnover that is drastically declining, and no support from the shareholder if the article about the lost Umkhonto missile opportunity is to be believed.

This made me think of the Greek god of opportunity, Caerus.

The story about Caerus goes as follows. Caerus is depicted as very fleet footed with only one lock of hair to grab hold of in order to capture him. Caerus (Opportunity) can be seen approaching from a long way off. In the distance it is easier to track Caerus (Opportunity). When Caerus (Opportunity) is upon us, you see that rapid movement coupled with a small grabbing surface makes seizing Caerus (Opportunity) very difficult. If you miss Caerus, he is gone from you forever. The moral of the story of this god is that when the opportunity is presented it must be taken, or alternatively, if you miss the opportunity, it is gone forever.

The Greek god of Opportunity, Caerus, is described as the god that brings about what is convenient, fit and comes at the right time. I would like to be so bold as to suggest that this should be the mantra of AMD if it is seeking to reposition the SADI. Re-establish a base that is convenient, fit and comes at the right time.

Defining a strategy is not as simple as it can seem. For business, and dare I say the military, ‘Winning’ should be at the heart of any strategy. According the book Playing to Win: How strategy really works, “a strategy is a coordinated and integrated set of five choices; a winning aspiration, where to play, how to win, core capabilities, and management systems.”

What is the SADI’s Winning Aspiration?

This sets the framework for all other choices. The SADI need to set the framework to win in a particular space and in a particular way. Important is that if the SADI doesn’t seek to win then it is wasting the time of companies and people, as well as the investments of the providers of capital.

Winning is in itself abstract. The concept of winning can be translated into defined aspirations. Aspirations are statements about an ideal future.

The key challenge for the SADI is going to be to agree on a strategy that the many diverse entities can become aligned behind and committed to delivering.

In the article, SA Defence Review – Good to Great Capability I offer a starting point for SADI evaluation.

The goal was to see if there is a chance to: a) Provide a secure and satisfying environment for companies and employees now as well as in the future (Based on SANDF, SADI & employee passion), b) Provide satisfaction to the market now as well as in the future (provide a best in world solution), and then c) Make money now as well as in the future (understand economic engine).

My output SADI Winning Aspiration would be to focus on Meeting Sub-Saharan Africa Special Operations Forces Needs. This is convenient, fit and comes at the right time.

The questions of “where to play” and “how to win” are tightly related and form the strategy core. These are the two most critical questions as they form the opportunity identification domain.

In order to define where to play and how to work, the SADI needs to understand and reflect on its position in the market. The SADI needs to examine the following four dimensions: 1) What is the structure of the industry? Identify the strategically distinct segments and ask how structurally attractive are the segments. 2) Analyse customer value. This means understanding the underlying needs and desired outcomes of the customer buyer channel, as well as the end-user. 3) Analyse the relative position of the SADI relative to competition. How do SADI capabilities and SADI costs compare with the competitors? These first three dimensions provide input into 4) Competitive Analysis. The competitive analysis provides a range of predictions of how the SADI thinks that the competitors will react to a selected “where to play” and “how to win” strategy. Make a strategic choice based on the competitive analysis.

Where to Play?

The question of where not to play is just as important as where to play.

Firstly, look at regions as segments. The SADI is not big enough to compete in developed nation defence solutions. The Middle East window is starting to close. All Middle East countries have a set of 2030 goals, and one goal is to establish local aerospace and defence capabilities. This does narrow the field down. The logical selection would be to examine meeting Sub-Saharan needs. In meeting Sub-Saharan needs, the SADI could unlock opportunities in areas that would operate similarly to our selected region. Here we can think of certain smaller eastern bloc countries, South & Central American countries and South East Asia.

Secondly, look at product offering as segments. As much as it is very lucrative, the SADI is not positioned to offer a large portion of the heavy fighting elements of a conventional war fighting machine. The SADI has the potential to fill the niche of supplying the needs of Special Operations Forces. The SADI has a can-do integration capability. The SADI also has a track record of projectable, multi-roled solutions with enhanced fire-power, manoeuvre and protection making them suitable for a range of applications. The SADI is in the fortunate position that the local customer, the South African National Defence Force, has in recent times embraced this approach. Think of multipurpose infantry fighting vehicles, multi-mission IPV/OPV, mobile & transportable camp solutions, mobile & transportable power generation, and transportable mine warfare capability. The SANDF is gearing for projectable, multi-roled solutions.

Is the new focused market segment big enough to matter, yet small enough to win decisively?

Is this market segment convenient, fit and does it come at the right time?

How to Win?

How to win defines the choices for winning in the chosen where-to-play markets.

In determining how to win, the SADI needs to decide on how to create unique value for the chosen market. The SADI also need to determine how it can sustainably deliver this unique value in a way that provides separation from competitors.

The SADI needs to start by analysing the Core Problems for the targeted market segment. This analysis gives insight into what needs to change. The compelling reason for customers to buy is driven by offering a Total, Value-based Solution that implements the change.

It is critical for the value proposition to address the reasons why the target market would currently choose not to buy the SADI solution. A mature approach is needed from the SADI to accept that there is a negative connotation related to South Africa in the Sub-Saharan region. The second negative issue is that most of the solutions available from SADI members are not in operation with, or even promoted by, the home country defence force.

Sub-Saharan Africa wants core systems to protect sovereignty. The systems need to have a credible defence capability in a changing threat environment, but at the lowest cost. A potential solution would be for the SADI to offer solutions focused on meeting the special operations forces requirements of the region, not just South Africa. The SADI need to scope this whole product complexity. The SADI then needs to promote the products from within the SADI team first for a solution. This actually means working together. As an example, offer a new SA designed and developed Offshore Patrol Vessel that meets regional needs. This can be offered with a unique value proposition.

Would meeting the special operations forces requirements for Sub-Saharan Africa be convenient, fit and come at the right time?

Can the SADI make a strategic choice and agree on the Opportunity Identification element. The SADI can then target a specific “where to play” and “how to win” outcome.

The Opportunity Exploitation elements can then be determined. The next steps would be to determine what AMD/SADI capabilities are required to win. AMD/SADI can then determine what management systems are required to support the winning mindset.

Using the Caerus analogy, Caerus is upon us, can SADI grab the opportunity that is convenient, fit and comes at the right time?

The opportunity is now. Can we catch Caerus?

Written by James Kerr, Orion Consulting CC, which provides Market Entry Strategy and Bid & Proposal services to the Aerospace & Defence related industry and assists international SME mission system product suppliers to gain traction in South Africa. Kerr has assisted various companies to enter, or expand footprint in, the defence industry with air, land and naval systems. He also served as a navigator, and completed an engineering degree, while in the South African Air Force for 13 years.