The defence sector operates in a fundamentally different world from consumer technology. While startups can test ideas rapidly and pivot when they fail, military systems must function reliably in the field, every single time. Yet this constraint does not mean that large defence contractors shy away from innovation—it simply shapes how they pursue it.
Leonardo, a global aerospace, defence, and security group with more than 62,000 employees worldwide, generated €19.5 billion in revenues in 2025 and maintains an order backlog of €46.6 billion. In the UK alone, the company operates as a roughly £3 billion business with more than 10,000 staff, spanning autonomous systems, space operations through Telespazio, cybersecurity, and critical infrastructure protection.
Dr Simon Harwood, UK Capability Development Director at Leonardo, brings an unusual career trajectory spanning government, industry, and academia—what he calls the "triple helix." His background includes roles at Boeing Phantom Works, collaborations with DARPA, and work alongside Lockheed Martin's Skunk Works. At Leonardo, he serves as Strategy Director, Chief Technology Officer, and oversees mergers, acquisitions, alliances, and partnerships—a framework he has reframed internally as "MAP."
Rethinking how defence primes work with emerging companies
Three years ago, Leonardo operated with two primary models for engaging with smaller enterprises: incorporating them into its supply chain of several thousand companies, or acquiring them outright through M&A. Harwood recognised that these represented fundamentally different relationships and developed what he terms a "strategic partnership product."
That changes the relationship because we're looking to go to market together. We're embracing the ingenuity and speed of innovation that SMEs have, while providing things that they can't necessarily get themselves.
Dr Simon Harwood
The partnership model addresses a critical pain point for defence-focused startups: funding instability. Government R&D contracts often provide substantial upfront capital followed by years of nothing. Leonardo instead offers smaller amounts distributed over longer periods—typically four years—enabling companies to hire staff, secure facilities, and demonstrate consistent income to banks.
Beyond financial stability, Leonardo provides access that smaller companies cannot obtain independently: anechoic chambers, test and evaluation facilities, classified computing environments, and security clearances. The company also connects startups with investors, effectively validating technologies that venture capitalists struggle to assess.
Harwood emphasises that Leonardo's role extends to translating government priorities into actionable direction. He notes:
Governments and ministries of defence aren't always particularly clear about what they want. Because we're around 100 years old and work hand in glove with government at prime level, we can help provide SMEs with that demand signal: we want swarm drones, we want laser systems, we want aircraft that can achieve certain things.
Dr Simon Harwood
Harwood also pushes back against the notion that meaningful innovation occurs primarily in smaller enterprises. He observes:
People sometimes say innovation happens in SMEs. Well, it does. But do you think that, as a £3 billion company spending half a billion pounds a year on research and development in the UK, we don't innovate?
Dr Simon Harwood
The distinction, he argues, lies not in whether large defence companies innovate, but in the category of innovation they pursue. Regarding artificial intelligence and autonomy companies specifically, Harwood notes:
AI and autonomy companies can be hugely overvalued. So the strategy we're taking is increasingly around alliances and partnerships rather than traditional mergers and acquisitions.
Dr Simon Harwood
From laboratory to battlefield: The prototype warfare approach
Harwood articulates a central challenge facing defence innovation: translating abstract technological concepts into concrete military capabilities. He explains:
People will ask me, 'Simon, what do you think about artificial intelligence in defence?' Or autonomy, or additive manufacturing. I can give you a detailed answer about specific AI technologies in defence, but you're not going to drop AI on somebody's head to defeat the enemy. The AI has to be in something. It has to do something.
Dr Simon Harwood
Harwood's methodology, which he calls "prototype warfare," involves advanced prototyping and evaluation that integrates technologies around specific military capabilities. Leonardo organises its work across six capability areas: dynamic targeting, mass via autonomy, faster decision-making, freedom of manoeuvre, long-range precision strike, and UK resilience.
To bridge the gap between early-stage technology and market deployment, Leonardo embeds emerging technologies into systems and tests them through regular sovereign trials. This approach proves essential because military leaders require tangible evidence, not presentations. Harwood explains:
It's very difficult for a military officer to take a PowerPoint presentation or a thousand-page Word document and say, 'I'm going to change the world if you give me a contract.' It's about spiral development, field testing, and prototyping.
Dr Simon Harwood
Real-world testing often reveals surprises that laboratory conditions cannot predict. Harwood recalls trials where systems performed flawlessly indoors but faced unexpected challenges in the field:
Somebody says, 'We can't fly today because there's a 45-knot crosswind.' And my response is, 'Put it in the sky. We're not going to decide not to go to the fight because it's windy.' That's the point of testing in real conditions.
Dr Simon Harwood
Scaling defence technology beyond the military
Leonardo recently announced a partnership with Ploughshare, the Ministry of Defence's commercialisation partner, to identify untapped intellectual property and explore civilian applications. The company invests more than £500 million annually in UK research and development, generating a substantial portfolio spanning sensing, communications, cybersecurity, autonomous systems, and advanced materials.
The collaboration will pursue multiple routes, including licensing technologies to existing businesses and establishing new spin-outs. Ploughshare has already brought more than 140 technologies to market and created 16 spin-outs.
The economics of high-volume, low-cost defence
Leonardo's traditional business model centres on producing high-capability, high-cost systems in low volumes. This approach sits uneasily with the economics of Ukraine's defence marketplace, where manufacturers operate at high volumes with minimal unit costs. Harwood acknowledges the tension:
You only need to look to your local business school to realise that Aston Martin doesn't do a great job of producing low-end cars. You're set up to produce a certain type of thing.
Dr Simon Harwood
The challenge becomes even more acute when considering what happens to Ukraine's defence startups once the conflict ends. Harwood observes:
When you're at war, everything goes out the window. It's about getting capability into the hands of the user to defeat the enemy in front of them. In that sense, it's the Wild West. Specifically with Ukraine, you also have to consider what the future is for these companies when the war ends. Right now, a company might produce 1,000 drones a week because 1,000 drones a week are being used. When the war stops, that demand could drop off completely. So what is the market from that point?
Dr Simon Harwood
Ukrainian companies increasingly seek partnerships to transition proven technologies into stable commercial markets. This shift introduces new requirements around assurance, repeatability, and capability—areas where defence primes can provide substantial value.
Preparing for future conflicts, not past ones
Harwood identifies a recurring strategic error: nations consistently prepare for the previous conflict rather than anticipating the next. He reflects:
We were still preparing for the Falklands when we invaded Iraq. Afghanistan didn't look much different, but then we became well prepared for counterinsurgency operations in Afghanistan — and then Ukraine happened.
Dr Simon Harwood
As peer-to-peer adversaries emerge, the question shifts from whether technological superiority exists to what military operations resemble when it does not. Harwood argues against abandoning advanced systems entirely:
People talk about the death of advanced, high-end technologies such as satellites and fast jets. But there will always have to be a mix. You'll need fewer advanced capabilities alongside mass. That's where we talk about mass via autonomy: adding autonomous systems to complement the mass you've got.
Dr Simon Harwood
A parallel challenge involves maintaining manufacturing capacity between conflicts. Stockpiling thousands of systems in peacetime lacks economic justification, yet manufacturers must retain the ability to rapidly scale production if demand surges. Harwood acknowledges the paradox:
If the government wants to spend money to stockpile equipment, that's the government's choice. But from a shareholder perspective, it doesn't necessarily make sense.
Dr Simon Harwood
The problem intensifies after decades of declining defence manufacturing capacity during relative peacetime. Multiple government officials have characterised the current moment as a "1939 moment" or "1937 moment"—an interwar-type phase where capacity has eroded. Harwood explains the bind:
If there is a war around the corner, how do you get back onto a war footing? That's extremely difficult when people are also concerned about schools, hospitals, benefits, jobs, and everything else. War is not cheap.
Dr Simon Harwood
Quantum and photonics: The next frontier
Harwood identifies quantum technologies and photonics as areas where the UK possesses particular strength, alongside biotechnology and bioengineering. He states:
Quantum and photonics, without a doubt, are the next AI.
Dr Simon Harwood
However, much of this innovation remains at early technology readiness levels. The bottleneck is not technological development but rather building the supply chains and customer demand necessary for scaling. Harwood explains:
It could potentially be deployed rapidly to TRL 7 or 8, but to deploy that technology, you need a supply chain. You need companies on trading estates making components. Most importantly, you need a demand signal from the customer saying they're going to buy whatever you make.
Dr Simon Harwood
The United States and China already generate sufficient demand to drive technologies toward commercial deployment. Harwood observes:
America, China, and other countries are putting out those demand signals and buying products. That enables supply chains to develop and allows technologies to move from great ideas into implementation.
Dr Simon Harwood
The UK, by contrast, maintains a strong academic foundation and initiatives such as the Defence Universities Alliance, which Leonardo collaborates with, yet promising technologies struggle to advance beyond early stages. Without sufficient customer demand, UK-developed technologies risk being scaled elsewhere. Harwood uses photonic integrated circuits as an example:
We can get technologies out the door. But unless somebody wants to buy the photonic integrated circuit that I integrate onto a radar, put into free-space optical communications, or use somewhere else, I'm not going to manufacture it because there's no demand for it. Nobody's asking for it.
Dr Simon Harwood
Making classified innovation visible
Defence and security operate under unique constraints due to classification requirements and public misunderstanding. Harwood acknowledges:
Unfortunately, we often can't tell people about the exciting things we're doing, and sometimes people misconceive the reasons we're doing them.
Dr Simon Harwood
Leonardo recently won the Defence Artificial Intelligence Centre's Partnership Project of the Year and Innovation of the Year at the National Technology Awards—the latter particularly significant because it operates outside the defence sector. Harwood expressed enthusiasm:
I was absolutely delighted. What really enthused me was that we won somewhere that wasn't just defence people judging defence people.
Dr Simon Harwood
Such recognition provides Leonardo with a public platform to showcase its work to prospective employees. Harwood notes:
It gives us an opportunity to excite and enthuse people about the work we're doing, even when much of the underlying technology itself is classified.
Dr Simon Harwood
Source: Tech.eu
