At Tech.eu, I spend a lot of time talking to startups in sectors such as defencetech and spacetech. But startups are only one part of the innovation ecosystem.
For founders, understanding how the defence primes operate matters: they can be customers, partners, investors, routes into government procurement, and a bridge between emerging technology and deployment at scale. So what happens inside these huge companies, which are expected to develop cutting-edge technology while operating at a very different scale, speed, and level of scrutiny?
Leonardo is a global aerospace, defence, and security group employing more than 62,000 people across electronics, helicopters, aircraft, cyber and security, and space. In 2025, it recorded revenues of €19.5 billion and an order backlog of €46.6 billion.
In the UK, Leonardo is a roughly £3 billion business employing more than 10,000 people. Its activities range from helicopter manufacturing, defence electronics and counter drone systems to autonomous systems and space, cybersecurity and protecting critical national infrastructure, ports, and borders.
I spoke to Prof. Simon Harwood, UK Capability Development Director for Leonardo, to learn more.
Harwood has an unusual background spanning government, industry, and academia, spending around a decade in each. “We call that the ‘triple helix’,” he shared.
His career includes Boeing Phantom Works, collaborations with DARPA, and work alongside Lockheed Martin’s Skunk Works. At Leonardo UK, he serves as Strategy Director and Chief Technology Officer and also oversees M&A and intellectual property.
He has, however, reframed M&A internally as “MAP”: mergers, acquisitions, alliances, and partnerships.
“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,” he shared.
How does a defence prime innovate at startup speed?
Much is made of the speed of innovation in Ukraine’s defencetech sector — many people tell me that electronic warfare is almost unrecognisable from the early days of Russia’s full-scale invasion. But I also hear far more discussion about regulation than in earlier years.
It made me curious how a prime like Leonardo maintains urgency while developing products that must meet stringent certification, safety, and repeatability standards.
Harwood explained:
“Our customers expect the products we build to work first time, every time. They have to be repeatable, consistent, and perform against the requirements.”
That creates a fundamentally different environment for innovation.
Emerging technologies can often be tested quickly and abandoned if they fail, while defence systems have to deliver reliably in the field. But Harwood pushes back against the idea that this means meaningful innovation happens primarily in startups.
“Innovation absolutely happens in SMEs. It also happens at scale inside the primes. Leonardo invests more than £500 million a year in UK research and development. The real opportunity is combining the two.”
For Harwood, the distinction is less about whether large defence companies innovate than about the kind of innovation they undertake.
From acquiring startups to partnering with them
Three years ago, Leonardo had basically two ways to work with SMEs. It could bring them into its UK supply chain, which comprises several thousand companies providing everything from fasteners and software to advice and R&D. At the other end of the spectrum, if Leonardo identified a company it particularly liked, it could acquire it through M&A.
According to Harwood, those were two very different relationships. Leonardo has since developed what he calls a “strategic collaboration 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.”
The first thing is continuity.
“Government R&D contracts are great because you get a pile of cash, but then typically you get nothing for several years afterwards. asserts Harwood.
“We might provide a smaller amount of money, but provide it over several years.
That means a company can hire staff, secure buildings, and go to a bank and use our funding as evidence of consistent income and growth. We provide that consistency and stability.”
Primes can also provide startups with access, for example, what Harwood calls “the demand signal”:
“Governments and ministries of defence can't always be particularly clear about what they want at the very beginning.
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.”
The second part is access to things they otherwise wouldn't be able to access: anechoic chambers, test and evaluation facilities, classified computing, and security clearances. Those kinds of things simply aren't attainable for many small companies.
Leonardo also introduces startups to investors, effectively validating technologies investors may struggle to assess on their own.
Taking defence technology into civilian markets
That approach to working beyond Leonardo’s own walls extends to commercialising technology developed inside the company.
Leonardo recently announced a partnership with Ploughshare, the MoD’s commercialisation partner, to identify untapped IP within Leonardo UK and find applications beyond defence.
Leonardo invests more than £500 million a year in UK R&D, creating a substantial catalogue of technologies spanning areas including sensing, communications, cybersecurity, autonomous systems, and advanced materials.
The partnership will explore routes including licensing technologies to existing businesses and creating new spin-outs. Ploughshare has already brought more than 140 technologies to market and created 16 spin-outs.
Check out our earlier interview with Ploughshare CEO Hetti Barkworth-Nanton.
Bridging the gap with “prototype warfare”
For Harwood, the challenge is turning emerging technologies into capabilities that can actually be deployed.
“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 someone's head to defeat the enemy.
The AI has to be in something. It has to do something.”
Harwood calls his approach “prototype warfare” — advanced prototyping and evaluation that brings technologies together around specific military capabilities.
Leonardo works across AI, machine learning, autonomy, space sensing, advanced weapons, cybersecurity, and other emerging technologies. Harwood groups these around six capabilities: dynamic targeting, mass via autonomy, faster decision-making, freedom of manoeuvre, long-range precision strike, and UK resilience.
To bridge the gap between TRL 3 and the market, Leonardo embeds these technologies into systems and tests them through regular sovereign trials.
“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.”
Harwood recalled trials where everything worked in testing, only for the team to arrive at an airfield facing a 450-knot crosswind.
“Somebody says, ‘We can't fly today because there's a 405-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.”
Can defence primes compete in a high-volume, low-cost world?
But proving that emerging technology works is only part of the challenge. The economics of producing it at scale present another. Leonardo produces high-capability, high-cost systems: low volumes of very sophisticated equipment. This is at odds with for example, Ukraine, with its growing demand for very high volumes of low-cost systems.
“You only need to look to your local business school to realise that high-end sports car manufacturers don’t do a great job of producing low-end cars. You're set up to produce a certain type of thing,” admits Harwood.
For big primes, one question now is how to participate in a high-volume, low-cost marketplace where the economic model is completely different. This brings it back to the importance of partnerships.
What happens to Ukraine’s defence startups when the war ends?
Harwood highlights the need to separate Ukraine from conventional defence markets.
“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.
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?”
Harwood is seeing growing outreach from Ukrainian companies looking to take technologies proven in theatre into wider markets and put them on a more stable commercial footing. That brings questions around assurance, repeatability, and capability to the fore.
“That's when they come into our world: what assurances do we have? What's the repeatability? What's the capability?”
Preparing for the next war, not the last one
Harwood says one of the biggest mistakes the world makes is always fighting the last war.
As you look towards more peer-to-peer adversaries, you have to ask: do we have technological superiority? And if we don't, what does a fight look like when you're technologically inferior? 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 still need advanced capabilities alongside mass. That's where we talk about mass via autonomy: adding autonomous systems to complement the mass you've got.”
Then there’s the challenge of maintaining manufacturing capacity between conflicts, which Harwood admits presents a difficult paradox. Keeping thousands of systems sitting on shelves in anticipation of a future conflict is not necessarily economically viable. Yet manufacturers also need to retain the ability to ramp up production quickly if demand suddenly surges.
Harwood explained:
“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."
At the opposite end of the spectrum, how do you maintain production capacity that's ready to switch on and go from making five of something a month to making 5,000 a week?
“That's a very difficult paradox we face in preparing for the future.”
The problem is particularly acute after decades in which defence manufacturing capacity has declined during relative peacetime.
“Various ministers have described this as a ‘1939 moment’ or a ‘1937 moment’. Different people use different years. But the point is that we're potentially in that interwar-type phase where capacity has dropped off after a long period without major war.
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.”
“Quantum and photonics are the next AI” — but can the UK scale them?
So where do the UK’s strengths lie in defencetech? Harwood points to the country’s breadth of expertise, spanning digital technologies through to ships, warships, and aircraft.
Two areas he is particularly interested in are quantum and photonics, and biotechnology and bioengineering.
“Quantum and photonics, without a doubt, are the next AI.”
However, he says much of that innovation remains around TRL 3. The challenge is not necessarily developing the technology, but building the supply chains and customer demand needed to scale it. “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.”
Harwood points to the US and China as markets where that demand is already helping technologies move towards commercial deployment.
“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.”
The UK, by contrast, has a strong academic base and initiatives such as the Defence Universities Alliance, which Leonardo works with, but Harwood argues that promising technologies can struggle to make the next step. Without sufficient customer demand, technologies developed in the UK can ultimately be scaled elsewhere.
He points to 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.”
Making secret innovation visible
Harwood admits defence and security is a strange beast because of a lack of public understanding.
“Unfortunately, we often can't tell people about the exciting things we're doing, and sometimes people misconceive the reasons we're doing them.”
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 is not a defence award. Harwood said:
“I was absolutely delighted. What really enthused me was that we won somewhere that wasn't just defence people judging defence people.”
The recognition also gives Leonardo a public way to showcase its work to prospective recruits.
“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.”
Lead image: Dr Simon Harwood, UK Capability Development Director, Leonardo. Photo: Leonardo.