Flight of the Drone Maker

strategy+business

ISSUE 71 SUMMER 2013 Flight of the Drone Maker

How a small firm named AeroVironment is changing the course of airplanes, automobiles, and warfare.

BY LAWRENCE M. FISHER

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This article was originally published by Booz & Company. feature

innovation

1 by Lawrence M. Fisher FLIGHT OF THE DRONE MAKER Many of AV’s small unmanned aircraft systems, including the Wasp, can be carried in a backpack and launched from almost anywhere. feature

innovation

2 How a Small Firm Named AeroVironment Is Changing the Course of Airplanes, Automobiles, FLIGHT OF THE and Warfare DRONE MAKER Lawrence M. Fisher broad advances such as sweeping changes in military [email protected] is a writer and consultant power and the globalization of the market for meat. based near Seattle. A contrib- If roads full of electric cars and skies full of pilot- uting editor to s+b, he covered less aircraft seem like a relatively distant prospect, re- technology for the New York Times for 15 years. member that the substitution of steam for sailing ships once did as well. AeroVironment’s first-mover status, its relatively large installed base (compared to those of its direct competitors), and the 85 to 90 percent share it claims in each of its markets allow it to define standards in both unmanned aircraft and electric-vehicle charging. But the path to more widespread adoption of AeroVi- ronment’s products is anything but clearly marked, and the twists promise to be as political as they are techni- cal. In addition, as a relatively small company that an- The late Paul B. MacCready earned his reputation as swers to shareholders, AV may struggle to scale its op- an inventor, a pioneer in environmentally friendly tech- erations adequately to seize the opportunities inherent feature nologies, and a daredevil. In 1979, he oversaw a trium- in its products. phant flight over the English Channel in a seemingly And yet, the firm has some powerful assets to draw

impossible machine: a human-powered aircraft kept from. AeroVironment is a small, nimble company with innovation aloft by pedaling. He also left his adventurous mark on a catalog of breakthrough innovations belying its size. AeroVironment Inc. (AV), which has had a rich history It possesses a distinctive and systematic approach to of seemingly impossible innovations ever since Mac- R&D that extends deep into its customer relationships. Cready founded the company in 1971. Today, more It remains committed to a culture that promotes in- than 40 years later, AeroVironment may be poised to dividualism as a means of enhancing collaboration. It lead the next wave of major change in the way people knows what to knit and sticks to it. fuel their vehicles, go to war, and make use of flight. The AeroVironment story is not a playbook for AeroVironment holds dominant, market-leading other companies to follow wholesale—for one, its positions in two seemingly unrelated technologies: un- heritage cannot possibly be duplicated—but it’s a fas- manned aircraft (including those commonly known as cinating tale rich with lessons for any company. Most drones) and charging systems for electric vehicles. These of all, AV shows how disruptive technologies can might seem like products for niche markets, but they evolve and shake up their industries, even when mul- 3 are also the kinds of products that can gain broad im- tiple market forces exist to hold them back. It also pact when networked into a new and expanding infra- offers companies guidance about when to evolve to structure. Developments like these, because of the way meet the needs of the future and when to stay true to they fit with other technologies, end up changing the their history. way people live. Indeed, the executives and researchers of AeroVi- Makers, Builders, and Dreamers ronment, who regard MacCready’s bold, experimental By their own account, the engineers and executives who approach to life as a core cultural element of their com- run AeroVironment are pragmatists. They are makers pany, have deliberately set up their battery systems and and builders, not TED talkers. In some respects, CEO unmanned aircraft to be quietly disruptive to conven- and chairman Tim Conver and his fellow members tional industry. They believe this disruption is similar of the company’s top leadership team resemble their to what occurred as personal computers forced change company’s founder. But in other ways, they couldn’t among a host of other technologies, from mainframes be more different. For one thing, Paul MacCready was to typewriters to recorded music. AeroVironment’s in- a dreamer. ventions offer the prospect of a systemic transformation, MacCready, who died of metastatic melanoma potentially akin to the transition from sailing ships to in 2007, was a passionate environmentalist who loved

steam, which spanned more than a century and led to airplanes, hence his company’s somewhat awkward All photographs courtesy of AeroVironment unless otherwise noted. featuresfeature title innovation of the article 44

------After earning in a doctorate aeronautics from the The first shift major fate camein inthe company’s a cross-countryOn trip with his family that year, MacCreadyassembled a wonderfully heterogeneous The team rallied around a shared They vision. were full name, which is often shortened to AV. As a boy, As boy, a full name, which is often AV. to shortened built andhe flewmodel airplanesAs a competitively. young gliders, man, piloted he winning soaring cham States in the andpionships United Europe. Dyslexic, slight stature, of andphysically uncoordinated, Paul charismatic a idea of MacCready leader. was one’s no the by time his of deathYet had he been called the poet laureate flight.of National The Aeronautics Association and the American Society Mechanical of Engineers in named and Timehim “Engineer the 1980 of Century,” magazine called the him of 20th most one century’s 100 creative minds. MacCreadyCalifornia started Institute Technology, of his first company in new of the weather modifield then fication, wasand the first to use small instrumented aircraft After study to interiors. storm selling the com it intended He in started 1971. he pany, AeroVironment be anto environmental consulting firm,it was and for a while. after in Deeply debt acting as1976. cosigner a bad for loan, MacCready heard a cash about prize £50,000 of being offered British by industrialist (US$87,700) Henry Kremer the for firsthuman-powered flight.And realized he before MacCready it, was settinghimself andhis company in an entirely new direction: upward. MacCready had an aeronautical while epiphany watch ingvultures circling the above desert. Although vultures are weak flyersrelative to hawks birds,other and the shapeand length their of wings allows them stay to aloft periods. long Infor that glide, vulture’s MacCready saw what a person could given the do right wingspan. specifically,realizedhe More that he if could increase the wingspan a plane increasing of without weight, its a bicyclist fit could likely pedal fast move enough the to craftforward and lift. generate test— now would He and prove—that theory. teambuild as to the Gossamer his firsthuman- Condor, planepowered was called. engineers Ph.D. There were and physicists like himself, also but a swell self-taught of enthusiasts polymaths and nerdy from the lively south ern California hang-gliding scene. Several “recruited” themselves, in drawn inter reputation MacCready’s by national glider competitions—and nature the by heroic hisof quest.

Paul MacCready MacCready Paul OFFLIGHT. THE POET LAUREATE THE POET LAUREATE HE HAD BEEN CALLED CALLED HAD BEEN HE TIME OF HIS DEATH TIME DEATH OF HIS LEADER. YET BY THE THE LEADER. YET BY PAUL MACCREADY MACCREADY PAUL A CHARISMATIC OF Cap Gris-Nez, France, 1979 Cap Gris-Nez, France, NO ONE’S IDEA WAS Gossamer Albatross landing at Albatross Gossamer out not to simply win the Kremer prize, but to break a barrier that had tantalized humankind at least since Leonardo da Vinci first penned drawings of human- powered airplanes. Many people in the group had already achieved a high level of personal mastery in the design, building, and flying of gliders and ultralight powered airplanes. Human-powered flight was an irre- sistible next step. Earlier runs at the Kremer prize had attempted to beat gravity through exquisitely elegant aerodynamic wing designs, which inevitably made the aircraft too AeroVironment’s heavy to fly very far. MacCready approached the prob- electric-vehicle chargers can be lem from the perspective of making the most of the incorporated into human pilot’s limited power. Build the aircraft light parking garages. enough, he reasoned, and at the slow flying speeds he projected, the aerodynamics would hardly matter. The Gossamer Condor was a crude assemblage of piano “THERE IS A VALUE,” feature wire, aluminum tubes, bicycle parts, Mylar film, and a propeller. But it was light, efficient, and effective. It flew ACCORDING TO PAUL

successfully just a year after work began; others had innovation MACCREADY, “IN SOME spent decades to no avail. Three years later, the same team produced the Gos- WAY-OUT IMPRACTICAL samer Albatross, which became the first human-powered aircraft to fly across the English Channel, captur- PROJECTS THAT ARE ing a second Kremer prize. DONE FOR PRIZES, The Snaking Path of Commercialization SYMBOLISM, OR THE Having conquered human-powered flight, the Aero- Vironment team set its airborne sights even higher—on FUN OF IT.” harnessing the power of the sun. For the flight of the Solar Challenger, which in July 1981 flew the 165-mile distance from Paris to London under solar power at 5 an altitude of 11,000 feet, AV had the sponsorship of DuPont, which manufactured the Mylar material used to skin the fuselage and wings. But the company’s market focus developed in fits and starts, and the link between its achievements and commercially viable products was still often tenu- ous. Indeed, a flapping-wing replica of a pterodactyl, produced for an Imax movie about creatures in flight, remained typical of projects the group took on—it was done as much for the sheer challenge and pleasure of producing cool things that fly as for commercial considerations. “There is a value in some way-out impractical projects that are done for prizes, symbolism, or the fun of it, where you don’t have to worry about production,” Mac- AV technicians discussing the assembly of small, unmanned Cready told this reporter in 1990. “You can focus on ex- surveillance vehicles. tremes; when you do that you’re able to go way beyond featuresfeature title innovation of the article 66

------AeroVironment found its first its found Mo believersFord at AeroVironment Just asJust was it recharging its developing business, AV Although make the firmlargethe doesn’t lethal has than more just military AV But operations in its of directors since 1988.) This meant maintaining directorsof since 1988.) huge a with“battery three batteries room,” each for vehicle, so two could always be charging while was one in use. convinced the industrial “We market that fast-charging wouldn’t destroy their batteries and could even increase their life.” tor Company andtor American Airlines. the ap At Ford, “smart” recharging systems AV’s plication for was the forklifts used inside factories; American, for the target was the many vehicles support aircraft used move to and luggage around the had ground on been (which identified significantas a source of at pollution air air adding By a microprocessor the to batteryports). that could communicate with thecharger, AeroVironment’s systems reduce charging to able were time minutes to fromhours, while increasing battery life and eliminat ing the battery need for has rooms.The company now thanmore a 90 sharepercent the of market airport for charging. issupport-vehicle also It the charger supplier electricfor cars and Ford, from Nissan, Renault, BMW, Mitsubishi. wasdiscovering substantial its newways put to knowl profitable use. Re flightmore to edge low-powered of aircraft, piloted mote their most of nearly for 100-year mis had beenhistory, used low-level the of for lowest likesions, had target a practice. AeroVironment But different idea: an develop to “unmanned tactical recon naissance Resembling a large vehicle.” model airplane, climbsthe aloft hand-launched a small Pointer on elec and carriestric motor a video camera that relays images the is a lower- ground. on It monitor anto observer’s cost and less-observable surveillance vehicle than a pi aircraft.loted models such as Subsequent the Raven, the and the PumaWasp, offered have reduced size and in creased capabilities. are Some even small enough fit to backpack. in a soldier’s drones that get headline such as attention, General diminutive its andAtomics’ Predator Reaper, hand- launched planes—the instance, Raven, for which has a wingspan inches and weighs just 55 of a little more thanthe pounds—now4 of un percent account 85 for manned aircraft purchased the by Department De of fense (DOD). sights. cost, relatively The drones’ low compact size, and quiet operations are opening all up sorts new pos of

------MacCreadypie-in-the-sky thinking and his team’s theGM barely showed finished initiallycar, General was in Motors inconsistent for support its find to setThefresh out company now commercial

came firmly more downto earth with a Sunraycer, the race carsolar-powered commissioned General by Mo thedubbed Impact, the at January Los Angeles 1990 was It such that a hit Earth by three Show. Auto Day, the company had manufacture decided to later, months In December name under the 1996, production it EV1. a limitedGM provided launch the of pure electric car lead-acid batteries, by the first- Powered leasefor only. miles could 100 to EV1 re before travelgeneration 70 and the oil companies theEV1, did their best un to succeeded— it before long opportunities,wasn’t and it this time there in the out found industrial “We sector. wasan installed million1 base over of forklifts that were conventionally charging because everybody ‘knew’ you couldn’t fast-charge batteries without destroying them,” CEO and chairman recalled. Conver (Handpicked by has Conver servedMacCready, sinceas 1991, president the and of board a member chief executive since 1993, prescribed limits new to frontiers.” Infused (GM). tors with the expertise that AeroViron had developed inment solar flight, Sunraycer the won race across Australiafirst1,867-mile 1987, place in a in with an average speed 42 miles of While per hour. GM was still basking MacCready in branded its glory, per suaded the his let company to team a prototype develop anof electric car that production. could go into possibly charging. using nickel-metal (A version, later hydride cells, thena shift But could miles.) travel 120 to up in policy intervened: The California Air Resources Board the of first agreedphase delay implementation of to a zero-emissions vehiclemandate that had been sched uled and effect go into whatever to momentum in 1998, had been building the died. GM for at EV1 dermine electric car development altogether. As shown inthe documentaryfilm Who Killedthe Electric Car? and oil industries(2006), the when automobile joined theforces block zero-emissions to mandate, they sacri ficed prototype the electricvehicles. candlelightDespite vigilsowners, EV1 GM recalled by leased its cars and crushedwhich donated—minusall were a few, their but drivetrains—to museums. That left decision AeroVi with painful some ronment lessons the about capricious effects policy public and of corporate influence, but also knowledge with hard-won electric about some vehicles, batteries, and fast-charging equipment. Photograph bottom left by David Butow David by left bottom Photograph Factors beyond ity would need to go up. come down more rapidly than antici- Safety regulations also loom pated, the fully electric car could Their Control large. The cars hypothesized in Re- be sidelined. inventing the Automobile are smaller And although drone aircraft s with all technological change and lighter than today’s average auto, are an increasingly common, albeit A (remember the Segway?), the and they achieve safety goals partly controversial, feature in foreign war evolution of infrastructure and policy through robotics. They can in some theaters, their appearance in domes- is highly uncertain. In this case, the cases drive themselves, and they tic skies has prompted a multiyear way that commercial drones and are designed to avoid crashes in the policymaking effort by the Federal electric vehicles evolve depends on first place, not to provide a rolling Aviation Administration and may public policy, market acceptance, and fortress. If autonomous autos are to require involvement from the Federal many other factors beyond the direct share the roads with conventional Communications Commission as control and influence of AeroViron- vehicles in any number, new regula- well. Most unmanned aircraft are ment or any other single company. tions will be essential. The autos’ actually piloted remotely by human Although the electric car mar- safety in traffic must be proven, beings, but AeroVironment’s systems ket is growing rapidly, just 10,000 and the kinds of bugs that exist in also have substantial autonomous feature battery-only electric vehicles (BEVs) software (where the only negative ef- capability, such as the ability to fly a were sold in the United States last fect of a failure is the need to reboot) preprogrammed GPS course. Both

year—and those sales were stimu- must be eliminated (see “The Next Boeing and Airbus have talked about innovation lated in part by a US$7,500 federal tax Autonomous Car Is a Truck,” by Peter unmanned cargo aircraft, and jetlin- credit on each vehicle. Were electric Conway, s+b, Summer 2013). ers have actually been capable of car sales to grow to 1 million units, Next, mass-market penetration autonomous takeoffs and landings that would be a $7.5 billion cost to by electric cars is predicated upon since Lockheed’s L-1011 was intro- taxpayers, which is clearly not sus- fossil fuel costs remaining high. If duced in 1970. But that doesn’t mean tainable. For the industry to be viable fracking eventually produces vol- public sentiment or policy is ready for without subsidies, battery prices umes of new oil at attractive prices, large fleets of robotic planes. would need to come down and capac- or if hydrogen and natural gas costs

sibilities. Researchers with the U.S. Geological Survey proclaims, “The future is unmanned.” 7 (USGS) and the U.S. Fish and Wildlife Service have AV’s plans for the electric car are similarly ambi- used ex-Army Ravens to count the number of sandhill tious. It is already building the infrastructure required cranes that visit the Monte Vista National Wildlife Ref- for the truly transformative vision of the electric car uge, for example. They have been deployed to examine that MIT professor William J. Mitchell and GM ex- the drainage infrastructure at a West Virginia surface ecutives Christopher E. Borroni-Bird and Lawrence D. mine. They have been used to monitor forest fires. “We Burns offer in their book, Reinventing the Automobile: expect that by 2020, unmanned aircraft will be the pri- Personal Urban Mobility for the 21st Century (Massa- mary platform [for data collection] for the Department chusetts Institute of Technology, 2010). of the Interior,” Mike Hutt, USGS’s unmanned aircraft The next generation of electric vehicles, according project manager, told Air&Space. to Mitchell, Borroni-Bird, and Burns, will essentially AeroVironment also believes small drones will be “consumer electronics devices—networked comput- eventually be used to perform myriad other tasks for ers on wheels—relying for their functionality far less on which autonomous mobility will be indispensable— mechanical and structural components, and far more issue 71 such as delivering small, high-value payloads (pharma- on electronics and software, than traditional automo- ceuticals, for instance) to areas not served well by roads, biles. Thus their costs can continually be driven down, or replacing bike messengers delivering documents in and their performance improved, in the same ways as

congested cities. As the company’s mission statement the costs and performances of computers.” strategy+business featuresfeature title innovation of the article 88

------see ). So they have). Consider the firm’s use of lithium-ion batteries. of use lithium-ion theConsider firm’s The firm has andgrown steadily is profitably, and Street Wall is believer—ata least in the unmanned The electric vehicle charging business may be An Innovation System An Innovation two businesses discrete, look and in AeroVironment’s deed Street Wall analysts treat the company as an un mannedaircraft ignoring the charging systempureplay, business. the two But operations its are, sides of in fact, tightly linked, and the capabilities strength built in one en the other. First developed for laptop computers and cell phones, these the for new power genera batteries provide now electric of tion cars, like the Nissan Leaf and Tesla’s in Roadster and S. Model Although AeroVironment’s dustrial charging business has relied primarily con on they can influence it. the future, control they can’t Many of the factors governing when their technologies reach their full potential—or determining whetherthey ever will—are reach well ( beyond AeroVironment’s “Factors beyond page 7 Their Control,” built a company that can moon-shot pursue multiple prospects putting without immediate its survival risk. at has and It debt likely has no so. doing continue to about $200 million in cash andfinances investments. It its more outlandish projects with other so money, people’s the company is buffered those should fail, projects but reaps they when the upside succeed. aircraft systems. “They an have market enviable posi with tion high barriers entryextremely to [and] strong pastperformance with their military customers, and they also be happen into an extremely well-defined Devaney, nichein the military W. said Jeremy budget,” equitya senior analyst with Capital BB&T Markets. difficultmore AV hasdefend.to mosthad Although theof market itself to the for last 20 years, if elec triccars are fully embraced in the mainstream, chargers will a consumer of electron become more is adapting new to re ics AeroVironment product. alities—it already electric its offers of vehicleone charging units Amazon—but on clear is not it that the company can compete effectively in a higher- volume, lower-profit-marginbusiness. In addition to electronics giants like facesand GE it Siemens, com petition from fast-moving, aggressive startups, such as Coulomb Technologies,which has already installed thousands charging public ChargePoint its of stations around the world. ------The authors say much of the wirelessof Thesay much authors communica Instead, thefirm plans to itsorga use to continue strategyCentral ispractice its fast AV’s to of pro outsourcing to is approach a criti AeroVironment’s and hisConver team understand that although tionsand sensor technology needed to implement their can it Indeed, of is much vision already available today. The futurebe purchased is also from AeroVironment. electric. eral Electric in andelectric Siemens vehicle charging. maintainsAlthough AV a modest presence in Wash ington, DC—and briefs lawmakers and staffers it when gets the chance—it has nothing like the resources the of large aerospace technology or companies. And doesn’t it acquire to intend them. nizational compactness asmuch a benefit—in samethe way that has it seized small size product as a competitive advantage in the market—while drone remaining agile and hasopportunistic. established AeroVironment a that play way to is easy describe, to difficultto emulate, is a serialand It duplicate. nearly to impossible innova with andbroad a deep portfolio successful of tor, inven tions and the intellectual property It back to them up. to words, is devoted, also in founder’s its a value player, with less.” “more doing totyping, that is, building a full-scale working model as product a proposed earlyof as in the possible R&D try a customer dialogue into phase. move to “We sooner tryingrather than as [just] we’re discern to later, what’s goingchange to the what’s interesting and [versus] cute said Conver. world,” ability its cal of scale to component the business without sacrificing “Inour businesses, bothof agility. develwe theop products initially and can’t we when internally, said. when Conver things, “But buy them,” invent we outsource we everything, transitionwe production, to with internal quality and testing. control As the prod uct matures and the market grows, push we even more think thatour strategic as We of of out. market- intent arrogant leading growth important doing We’re work. enoughthink to can we be successful different in of lots things, choose so we focus to things on can we where achieve both those of goals simultaneously.” Think Big, Move Fast, Stay Small Stay Fast, Think Big, Move Small is a recurring With theme with AeroVironment. it million, dwarfedis $325 of revenues fiscal 2012 like competitors by Lockheed Martin, Boeing, and Northrop Grumman the defense on and Gen side, by ventional lead-acid batteries, the company uses lithium- three aircraft, two ground stations, and varying levels ion cells in its unmanned aircraft, taking advantage of of personal support, for a complete cost that ranges the new technology’s superior power-to-weight ratio. from $100,000 to $200,000. AV has support personnel Because thousands of its airplanes are operating in war on the ground in Afghanistan and other conflict sites theaters around the globe, the company has developed around the globe. More than 10 percent of its employ- an unmatched knowledge of how lithium-ion batteries ees are veterans, and many have Special Operations ex- respond to hard use and frequent recharging—intellec- perience. As with the battery chargers, the customer is tual assets it has now successfully leveraged in the con- buying not just equipment, but also the framework that sumer auto market. enables it. But given the long stretch of hurdles that still block “If you want an unmanned system, but for what- the path to widespread adoption of electric vehicles, ever reason you’re not comfortable flying it yourself, or superior charging technology alone is no guarantee of want to test it in another country, they’ll come out and commercial success. The infrastructure to support it is deploy their team of former Navy Seals, and backpack every bit as essential. Indeed, what made the difference in with your group and show you how it works, and in AeroVironment’s win of the Nissan Leaf contract was be responsible for it,” said Gregory McNeal, a professor the combination of AV’s field experience and the sys- of law at Pepperdine University specializing in public tems approach it took to recharging. Its bid on the job policy and security issues. “They deploy demonstration feature not only specified the capacity and cost of its chargers, teams with the military, and they’re certain that when but also spelled out how the company would create a they’re done, you’ll say ‘I wish we had those guys back.’”

nationwide network of trained installers, so that Leaf “They have blocked out the larger primes by work- innovation customers would have a seamless purchase and delivery ing very closely with their customers,” said BB&T’s experience. Today, all the public and private chargers Devaney. AV has installed are linked through the Internet to serv- ers that monitor the health of every battery in the field. Where the DOD Meets Silicon Valley In the future, they will communicate wirelessly with ev- A walk through AeroVironment’s aircraft production ery electric vehicle, so finding a quick charge will be no facility in Simi Valley, Calif., brings to mind Kelly more challenging than finding a gas station. Johnson’s famous Lockheed Skunk Works. Several of The casual observer may be tempted to find a dis- AV’s historic aircraft hang from the ceiling; others are connect here. On the one hand, AV prays to the gods on permanent display at the Smithsonian National Air of high risk and fast experimentation. It is steeped in a and Space Museum in Washington, DC. And it’s not tradition of jumping on challenges for challenges’ sake unusual to spot a senior executive proudly wearing a and of creating new technologies to meet needs yet to badge from the AMA—not the American Medical As- 9 be defined. The company can appear downright whim- sociation, but the Academy of Model Aeronautics, a sical. On the other hand, it is winning business through nonprofit organization dedicated to the promotion of a shrewd commercial mind-set, one that displays a deep model aviation as a recognized sport as well as a recre- understanding of the needs of its customers. In reality, ational activity. however, these two seemingly disparate mind-sets are AV has the casual atmosphere of a Silicon Valley highly complementary. Great change starts with crazy software company. Long before Google or Genentech ideas, but true disruption occurs only when there are empowered employees to pursue individual interests on ways to carry those ideas forward. This is not a revela- company time, AV’s talented engineers were encour- tion that emerged overnight, but what AeroVironment aged, even expected, to engage in pet projects. has learned is how to build a system for disruption. AeroVironment employees are also expected to That system is a way to innovate and a way to mar- speak their mind whenever they believe the company’s ket. It is even a way to think and to talk. Semantics actions are at odds with its stated values of innovation, count for a lot at AV. Just as the company always speaks a great workplace, trust, and technological innova- of efficient energy systems when referring to its chargers tion. “We have an open invitation, and really an open and battery analysis equipment, its aircraft are never requirement, for employees to speak out if they think referred to as drones, but as unmanned aircraft sys- the company is operating inconsistently with any one

tems. One system, the Raven, for example, is sold with of those four,” said Conver. “Our intent is when that Photograph top right by David Butow featuresfeature title innovation of the article

1010 ------Onedevelopment that prompted a company-wide The Switchblade, inThe contrast, Switchblade, launches from a tube, pursues new markets as existing AV its Even for Global Observer AeroVironment’s the side, On big happens, we’ll comply to doing change either what we’re with we’ll or what said we going do, to were change we operating.” saying with we’re how comply to whatwe’re forum was AV’s the the introduction of Switchblade, firstlethal unmanned aircraft. Because the company’s previous models were non-weaponized and primarily usedreconnaissance, for could reasonablyit makethe case that they lifesaving were devices. unfolds wings, its and converts a guided into missile, industry some prompting the observers kami it dub to kaze The drone. rationale was behind development its that an when intelligence and surveillance team comes under hostile fire, they hunhave littlerecourse to but ker down and support, which wait helicopter could for take arrive. hours to “Our engineers said could we solve that, and a small conceived of tube-launched vehicle team)that could carry (the around in rucksack,” a said that “In scenario, allowsConver. it them pull to that in go a minute, find who out are people the firing at them, verify a streaming on it designate video, [and] the target.And turns then thatit munition a tracks into that target and, down, in the vernacular, ‘services’ that target. That seemed like also a good thing We do. to realized that was it a real digression from the kind of we’d been work doing, and had the potential bein to view what of our with employees’ consistent of some all-hands In one important is.” meeting work where there was heated dialogue a much-decorat the topic, on ed Vietnam veteran his story told having of un come fire sniper der and eventuallyleaving field in a the body bag, badly and wounded presumed dead. As pointed he devicea out, like could the saved the have Switchblade lives several of his of comrades. His story quieted most and launch. development its to objections drones, research its team and is development pushing theunmanned aircraft with design drones envelope both really current and big proj extremely small. Two ects in particular evoke the legacy MacCready Paul of while pointing the an way to exciting future. calls early mind to experiments the company’s in hu flight.man-powered and solar-powered With a wing span equal and a weight roughly that to a Boeing of 767 equivalent a typical to SUV’s, the hydrogen– liquid planepowered is designed stay to aloft seven for days at feet. The 65,000 idea is to up that the Global Observer

The Puma, like other unmanned aircraft, other unmanned aircraft, The Puma, like

ITS STATED VALUES. STATED ITS as an intelligence, is used primarily asset. and reconnaisance surveillance, ARE AT ODDS WITH WITH ODDS AT ARE COMPANY’S ACTIONS ACTIONS COMPANY’S THEY BELIEVE THE THE THEY BELIEVE THEIR MIND WHENEVER MIND WHENEVER THEIR EXPECTED TO SPEAK SPEAK TO EXPECTED EMPLOYEES ARE ARE EMPLOYEES AEROVIRONMENT AEROVIRONMENT AV employees at a brainstorming employees AV session for a new charging device. device. charging a new for session could fill a gap between the capabilities of observation The Nano in flight and communications satellites operating at low Earth orbit and the flexibility of airplanes flying in the lower atmosphere. One function would be as an alternative to cell-phone towers, but with a much greater range. At the other end of the spectrum is the Nano Air Vehicle (NAV), which mimics a hummingbird in its size and flight characteristics. It can hover in place and fly backward and forward in restrictive areas, such as inside a building, that are inaccessible to conventional drones, at speeds of up to 15 miles per hour. It calls to mind flapping-wing ornithopters and pterodactyls— such as the one MacCready’s team built years ago—but actually uses the wing motion of real hummingbirds, a motion that has never been successfully modeled before. The NAV beats its tiny wings a remarkable 70 times per second, with the tips nearly touching, like a humming- feature bird, but unlike any other winged creature. Either or both of these projects could reach the

market within a few years. “We look at opportunities in innovation a different way based on where they are in a continuum from idea to market launch, and getting through the wickets gets (increasingly) data-based and ROI-driven as you move from a zero point of ‘what about this idea,’ to a 10 point of ‘let’s launch this in the market,’” Con- ver said. “By the time we are allocating significant resources, whether human or capital, we’re getting more and more rigorous about the market and the value proposition and our ability to support that adoption.” That’s systems thinking in full, and a long trip into the future for a company that has already made a lot of history. + The Nano employs biological 11 Reprint No. 00187 mimicry at an extremely small scale.

Resources

Paul Ciotti, More with Less: Paul MacCready and the Dream of Efficient Flight (Encounter Books, 2002): A reporter’s take on the story of human-powered flight and the characters involved in it, along with the MacCready team’s accomplishments in solar-powered aircraft and flapping-wing ornithopters, including a life-sized pterodactyl replica. Scott Corwin and Rob Norton, “The Thought Leader Interview: Lawrence Burns,” s+b, Autumn 2010: More insights from the coauthor of Reinventing the Automobile. Morton Grosser, Gossamer Odyssey: The Triumph of Human-Powered Flight (Houghton Mifflin, 1981): An insider’s account of the development of human-powered flight, culminating in the launches of the Gossamer issue 71 Condor and the Gossamer Albatross. For more thought leadership on this topic, see the s+b website at: strategy-business.com/innovation. strategy+business strategy+business magazine is published by PwC Strategy& Inc. To subscribe, visit strategy-business.com or call 1-855-869-4862.

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