Leonardo represents the main Italian group in the field of high technologies and is, therefore, a real "national champion". The company has a vast heritage of technological and human know-how, strategic products, plants set up in the area which act as catalysts for research and training, a driving force for the entire SME sector.
The strategic importance is also found in the productions that express Italy's international projection capacity, thanks to the mastery of technologies that are contained in the platforms (helicopters, planes, satellites) or in ICT systems. All this in an era in which, more than ever, technological domination represents a fundamental element for the strategy of the country-system which then has to compare itself with the more advanced nations.
A market that evolves between the EU and the US and elsewhere
Leonardo operates in an international market that has been changing significantly in recent years. Within the European Union, the institutions, and in particular the Commission, are making an effort to favor the integration of the European defense and security market through a policy of incentives.
Hence the forecast of launching a European defense research program with a budget of 3,5 billion euros, of co-financing the development phase of the new European collaboration programs and of stimulating the relative national investments.
In one way or another, therefore, defense will go beyond the confines of intergovernmental activities and will be extended to community activities. At the same time, the Union will lose an important piece, the United Kingdom (very important for Italy, in aeronautical, electronic and missile programmes, and for Leonardo, given its strong industrial presence).
The United States has decided to start a new cycle of military investments, but has chosen to accentuate the closure of its market towards foreign competitors. European industrial groups already present in the American market will be able to derive financial advantages, but with limited prospects for technological return.
On the international market, competition will become even fiercer as the cycle of renewal of the major equipment by the economically strong states has in part already started and the orders assigned, the oil producing countries discount the fall in its price, the old (Russia) and new suppliers (Brazil, Israel, China, Japan) are making their way, used but relatively new equipment is widely available, many customers want industrial involvement.
The remaining challenges after reorganization and cost reduction
Leonardo has been very concentrated in recent years on its reorganization and cost reduction. The results can only be evaluated over the next few years, but, inevitably, the energies absorbed by this internal effort have gone to the detriment of the external effort both in terms of projection on the international market and of innovation. Hence the challenges that the new top management will have to face.
1) The first challenge to face is to strengthen the order book. It is necessary to invest in the direct and indirect commercial network, with the awareness that to bring home new contracts the growing commitment of diplomacy will not be enough, but it will be necessary to field one's own men and find allies on the spot. Government agreements – (as happened for Kuwait and Qatar) are useful, but they cannot solve everything. This relaunch will in any case have to be coordinated with the Government and the Ministry of Defense who are already supporting the international projection of Italian industry, but who, in a climate of renewed collaboration, will be able to do so more systematically.
2) The second challenge is to ensure customers more efficient logistical support. Leonardo pays for the faults of the past, but changing the logo is not enough to make some buyers forget the dissatisfaction. Long and uncertain times, a complicated and sometimes incomprehensible export authorization system, carelessness and high costs reduce the availability of vehicles in service and risk giving the group bad publicity.
Innovation and leadership
3) The third challenge is the need to focus your skills on fewer product lines. No other international industrial group has such a large range of products, despite having higher turnovers. This means that human resources (managerial, technical, commercial) and financial resources (research, investments) are distributed in too many directions and that in each area there is a critical mass lower than that of the competitors. In this rationalization, one could also look for opportunities for international integration, implementing a more effective strategy of alliances.
4) The fourth challenge concerns innovation and is linked to the previous one. By selecting the portfolio, the limited resources that the country can make available for technological research will be able to reach more adequate levels, especially if aimed at improving the positioning to participate in future European funding. The definition of a clearer and more effective technological strategy will thus be able to link up with the Defense Technological and Industrial Strategy, launched by the National Armaments Directorate as envisaged by the White Paper on International Security and Defense. The synergy between Industry and Defense will thus be able to represent a useful contribution also to the process of modernization of the country-system.
5) The fifth challenge concerns Leonardo's management. It is one of the most important parts of the company's assets and must be valued. Selection and growth paths based exclusively on skills and results, assignment of different but coherent tasks, rejuvenation of managers, should be taken for granted for a company that wants to make innovation its distinctive feature.
However, the times for this revitalization are very short. The future of the main Italian group in the high-tech sector depends on this.
Source: International Affairs
