Hugh Griffiths, the chief executive of Inzpire, discusses the company’s new simulator, changing flight training and QinetiQ’s acquisition of an 85 percent stake in the UK firm and more with Defense & Aerospace Report Editor Vago Muradian at the DSEI 2019 conference and tradeshow in London. Our coverage is sponsored by L3Harris and Leonardo DRS and in partnership with Clarion Events — DSEI’s organizer — and working with the UK Department of International Trade’s Defence & Security Organisation to bring our audience the best in British defense and security.
Vago Muradian: Welcome to the Defense and Aerospace Report. I’m Vago Muradian here at the Excel Center in London where we’re covering this 20th anniversary edition of DSEI, one of the world’s truly great defense and security exhibitions. Our coverage here is sponsored by L3Harris and Leonardo DRS, and we’re partnered with Clarion Events, the organizer of this great show that puts on many many other great exhibitions all around the world. And we’re working together with the UK Department of International Trade, Defence and Security Organization to bring you the very best of British defense and security.
Part of that mission is to be here at Inzpire, an innovative and inventive training company to talk to Hugh Griffiths, a good friend who’s also the Chief Executive of the company.
Hugh, great seeing you again. And congratulations. This is the first time you and I are having a formal interview in the wake of QinetiQ acquiring an 85 percent stake in the company. Well done. You guys are 170 people, highly innovative. Talk to us about what’s new, how much more growth that investment is helping you guys in the new products and services you’re developing, including the new simulator you have.
Hugh Griffiths: Hello, Vago. Really good to see you again. We’ve had a tremendous year this year, and obviously the highlight of that has been the majority investment in our business by the great British defense company QinetiQ. So that’s been actually quite a seminal moment for us in that it’s taken us from where we were which was essentially sort of an organic entity but without any major support into this group of companies that QinetiQ owns now which has got considerable backing from one of the most technically capable companies in the UK.
So if you look at our simulator behind us which is something we developed before the QinetiQ era, their investment in us is now going to allow us to take this forward and start selling something that’s truly innovative around the world far better than we were able to do that before. And also we’ve got access to all their skills and their knowledge and their expertise, access to their capital, access to their distribution channels, access to some very clever people and advice. So we’re really excited by that. And it’s just going to help our innovations grow and prosper.
Mr. Muradian: Talk about the new simulator you guys have. Higher fidelity than what I — I had one of the most amusing simulator rides ever courtesy of Johnny Priesta [phonetic], who’s just hanging off-screen there, although you were part of this as well.
For anybody who’s not used to flying a Lynx, it is a positively terrifying experience when you actually pull the power and you corkscrew up into the air, and I don’t believe anybody can give color commentary better than Johnny on that, but I digress.
So tell us about the new simulator and the kind of capabilities that you’re bringing to market with it. Because it is very, very unique, in how you guys both conceived it, engineered it, developed it, and delivered it.
Mr. Griffiths: So this device behind us is an incredibly high value device. Basically it fits into a gap in the market between very, very expensive and all-moving simulators, what are called Level D simulators that cost tens of millions of pounds and small desktop devices. So you get about 90 percent of the capability of a very, very sophisticated simulator for about 10 or 20 percent of the cost. So it’s a truly innovative product. And the investment by QinetiQ has allowed us to now take this and try and export it. We’re hopeful that we’re going to sell this to a customer in the Far East very very soon, and certainly also to European customers.
Mr. Muradian: As somebody who’s covered mergers and acquisitions for a very long time, there are very innovative companies that get bought by big companies that suddenly become very uninnovative companies and start to just rely on sort of the heritage of the name as opposed to actual innovation. How do you work this? And it’s fortunate that it is QinetiQ which is the heritage of the Defence Engineering and Research Agency or establishment originally that is still in the DNA of the company. The British DARPA that it was. But it is privatized. It’s a company that returns value to shareholders.
How do you maintain that innovative spirit, that mission that you guys have, which has been to come into this business and to disrupt it, but in a positive way, working very closely with your customers?
Mr. Griffiths: Okay, so we have no intention whatsoever of losing our innovative touch. It’s written into the terms of the deal with our QinetiQ parent that we will be essentially allowed to operate as an operationally independent entity so there’s no risk whatsoever that QinetiQ is going to somehow squash all the innovative aspects of Inzpire.
They’re actually a very innovative company themselves as well. And they’re also very intelligent people, so they wouldn’t be so stupid as to do that. And we’re not going to allow that to happen in any case. So that’s point one. It’s structurally written into the nature of the deal.
Point two is, where does innovation come from? Right? It comes from people. It doesn’t come from chairs and machines and computers, it comes from people. And the people we employ are highly innovative people.
So irrespective of who owns us, we’re still going to be doing extremely innovative stuff because the source of innovation is actually the people in a company and how a company operates.
I always say, Vago, that all companies claim to be innovative, and yeah, they may produce one or two innovative products. But truly innovative businesses are innovative in everything they do, in the way they treat their staff, to the sort of people they employ. They have an innovative whole, holistic model about them. And that’s very much Inzpire. We do kind of some crazy, crazy things. Like we talked last time, we give people unlimited holiday, paid holiday. We have a lack of appraisals and the traditional paraphernalia of business. We don’t do that because we think it’s pointless. Because of those things our innovation will continue whoever owns us, and we’re fortunate to have QinetiQ own us — a very innovative movement.
Mr. Muradian: Exactly. As long as you’re giving them the return they want, that’s the way that it should be.
You know, innovation is really the name of the show, and I think that folks don’t fully appreciate the degree of change that’s actually happening in the UK. When Sir Nick Carter was Chief of the British Army, he drove some enormous innovation. He’s now Chief of Defence Staff. Each one of the service chiefs, and this is not to put any preceding service chiefs down, but we really are on the cusp of even more change.
I think many people two years ago when Phil Jones, when he was First Sea Lord, announced that there would be a Type 31, I think there was a lot of skepticism in this hall that it would actually be awarded two years later, and it was. Babcock won that with the Arrowhead. And we heard Sir Nick, as well as Stephen Lovegrove, the senior civil servant in the Ministry of Defence talk about the need for deeper partnership with industry because the military side is working the innovation and agility issue. The key is to bring industry in on this as well.
From the standpoint of an innovator, what’s the right way for the department to go about doing this? Because there are concerns from some in this hall that there will be a mismatch between the department’s ambition for innovation, the expectation that industry will make massive investment for stuff that they may not buy. What’s the right way to do this and for the UK Ministry of Defense or the UK Defence Enterprise to get this right at the end of the day, to be agile, and yet satisfy everybody’s equities in it?
Mr. Griffiths: I have some pretty strong views on this.
Where does innovation come from? Innovation comes primarily from small businesses. It’s a well-known fact. The vast majority of innovation that happens in the world comes out of small companies. And perhaps that shouldn’t be a surprising thing, when you look at the amount of small businesses that are there.
So in the UK, for example, we have about six million businesses in this country. 99.9 percent are small business. 99.9 percent. Therefore, is it any wonder that most of the innovation comes out of these small businesses? They employ the majority of the people in this country and they also generate the majority of the wealth of this country. So the UK is a very innovative country. UK armed forces are very innovative armed forces. You mentioned a few examples.
To answer your question specifically, what should they be doing to drive toward the innovation agenda, they should be contracting and engaging much, much, much more directly with SMEs, and not putting this faith that they seem to have in huge industrial multinational corporations to act as a kind of integrator and essentially sort the problem out for them and take control of the innovation agenda and then subcontract it all down to small businesses. No, no, no. That’s completely wrong.
What they should be doing is the exact opposite of that. They should be encouraging the SMEs. The UK government itself has a very powerful agenda on this. By 2022 it is supposed to be spending one pound in every three across government, across all government departments, with SMEs. 33.3 percent with SMEs directly or indirectly.
So Defence should be doing the same, and it should be engaging strongly with the SME base rather than through a layer of primes. That would be my advice.
Mr. Muradian: Do you think, just another question that popped in my mind. If you go back to World War II, whether it was the United States or UK or other nations, had a tendency that if a smaller company had a very good idea, the smaller company would actually be in the lead and actually the bigger company might help that smaller company execute. Right? For example, the Jeep was a small company that came out with it but then other manufacturers built to that design because the U.S. Army looked at it and said wow, that’s the right vehicle. They don’t have a big mass production capability. You guys work with them.
Do you think that we need to get into an era where if you’ve got a better mousetrap, the small company is actually in the lead working with a larger company to help it maybe execute at scale for things that are require that kind of big scale heft and muscle behind it?
Mr. Griffiths: Yes, I do. I think small companies can lead on innovative ideas. Where they may not be able to have the financial muscle to productionize something, but I think in terms of actually driving forward a program, I absolutely see that the MoD should be engaging much more with the SME market because that’s where so much of the innovation comes from. And why wouldn’t we do that?
I’ll tell you why it’s not happening. Because it’s not convenient, because there is not enough resource to deal with hundreds and hundreds and hundreds of SMEs so it’s much easier to give everything to large industrial primes and let them subcontract and push it down through the supply chain. I totally get that. I understand that. But actually if you truly want innovation you should be engaging with smaller businesses. You get it much more cost effectively. You know, you get much more value for your pound spent rather than everything going through multiple layers of the supply chain ending up with the MoD on top of it with every person and every company along the way taking its cut out of it. Just engage directly with the source.
Mr. Muradian: Although they would say, the big primes would say well look, we bring all this heft, we have an ability to deliver at scale, are some of the points that they have a tendency of making. And they do say that look, we are first rung innovators because we draw so many ideas from off the supply chain and can move it to the top.
Mr. Griffiths: And they may well do that. I’m not saying that they’re not very good at doing that. They probably are. But I completely disagree with the argument that actually small businesses can’t do that. I mean look at our business. We’re 170 people. We’re training the British Army to fly the Apache helicopter, we’re training them to fly the Wildcat helicopter. We’re doing a huge amount of training at the Air Battlespace Training Center. We’re producing products like this that are disrupting. We’re producing products like that which is a Gecko product which is being used across the world. We can do this. It’s not just us. There’s hundreds of SMEs out there. There’s hundreds and hundreds of companies out there that are being essentially having to work through primes when the MoD could be getting so much more value out of them with engaging directly with the SME base. I think they’ve got it wrong.
Mr. Muradian: Let me take you to a British industry question. Every show there is this defense growth agenda, defense prosperity agenda, now it’s Global Britain added to this because we’re in Brexit season. The Defence Select Committee is taking testimony on the new Defence Industrial Strategy. What’s the input you want to put into that? Because there are a lot of innovative British companies that feel that they do have cutting edge technology, that they can do and provide that capability at value, but that the British military has a tendency of buying overseas systems often or systems from abroad that are seen as either better or a better value. What’s the point you would make in there for British pounds going directly to British companies?
Mr. Griffiths: I think that there is a tremendous amount of innovation in the UK. I don’t think it’s necessarily always better to buy from companies that are overseas. And I can’t comment on why the government policy, it’s not my place to comment on that. I can’t comment on that.
But look at QinetiQ, our parent company. Born out of Defence Evaluation Research Agency, got tremendous capabilities in all sorts of innovation and delivery and expertise. They’ve achieved some quite amazing things over time. It doesn’t necessarily have to be that we always buy from overseas. I don’t see why that has to be the case.
Mr. Muradian: So if parliament is working on developing a new industrial strategy, so what’s the specific input you would give them to consider? We talked to Nick Ames at Supacat and talked to some other executives about some of the input they would have. What would you put in there as a UK defense innovator?
Mr. Griffiths: I would say buy British when you can because it gives you operational sovereignty. It gives you control of your own supply chain. It supports the UK political agenda as a prosperity agenda. It helps the UK [stop] power overseas. It generates jobs and income and wealth for the UK. And actually, it supports internally the growth of all these capabilities in the UK itself. Once you start outsourcing your core capabilities to other countries, you tend to lose them forever. So I would say focus on what we do in this country and try and grow it forward, but focus not just on the big primes, on the wealth of SMEs that are here.
Mr. Muradian: Hugh Griffiths, CEO of Inzpire, one of Britain’s innovative companies, now part of the QinetiQ family. Hugh, it’s always a pleasure. Thanks very, very much. I appreciate it.
Mr. Griffiths: Thank you.
Mr. Muradian: And as long as Johnny is commentating I’m willing to take another ride in the simulator because I understand it’s not quite as sparky as it was the last time.
Mr. Griffiths: It’s got a full flight model in it now, so it flies just like the real thing.
Mr. Muradian: Wow, okay. So now he can bust on me — [Laughter].
Thank you very much. Best of luck to you. Cheers.