As our work with Meridian's inaugural cohort progresses, we're seeing how the route from developing promising technology to securing defence customers is rarely straightforward.
A company may have developed a capability that addresses a genuine operational requirement, but bringing it into service often depends on navigating complex procurement processes, establishing the right industry partnerships and understanding how the technology fits within existing systems and delivery structures.
At the same time, we're finding that the potential applications of these technologies often extend beyond the markets their founders initially set out to serve. As defence, national security and wider government requirements increasingly converge, understanding where a capability can create value, and how to reach those customers, is becoming an important part of our work with the cohort.
Two observations in particular are worth exploring.
Channel strategy can be as important as the technology
One of the themes being reinforced through our conversations with the cohort is the importance of understanding how defence customers actually buy technology.
A business can have excellent technology, a clearly defined customer problem and even strong interest from potential users, yet still face considerable difficulty translating that into commercial activity.
Part of the challenge is that the person who recognises the value of a technology is not necessarily the person who can procure it. Equally, the organisation that ultimately benefits from a capability may not be the organisation responsible for integrating, delivering or supporting it.
For an early-stage company, understanding those relationships can be just as important as understanding the technical requirements.
Defence is not a single market with a single route to the customer. Depending on the capability, the opportunity might involve selling directly to a government customer, working through a prime contractor, partnering with an established delivery organisation or becoming part of a larger system or platform.
Each route creates different requirements for the business.
A company pursuing direct customer relationships may need to develop its own commercial, procurement and delivery capabilities. One working through an established partner may gain access to customers and programmes that would otherwise be difficult to reach, but it also needs to understand where its technology fits, how it integrates and what value it contributes to the wider solution.
Neither approach is inherently preferable. What matters is identifying the route that gives the technology the most credible opportunity to reach the end user.
This is particularly relevant for emerging software and AI businesses.
A founder may develop a capability that performs an important function exceptionally well, but the customer may not be looking to procure that function as a standalone product. It may need to sit within an existing operational system, complement another supplier's technology or form part of a broader capability delivered by an established contractor.
That doesn't necessarily reduce the value of the technology. In some cases, it may considerably increase its commercial potential by placing it within a system or programme that already has an established customer and route to deployment.
But it does change how the company needs to think about its product.
If integration is likely to be central to adoption, interoperability and architecture become important development priorities. If the route to market depends on a strategic partner, the company needs to understand that partner's requirements and commercial incentives. If the customer expects a fully supported capability, the business needs to consider whether it can deliver that independently or whether it requires a wider delivery ecosystem.
These are not decisions that can always be deferred until the technology is finished.
One of the questions we're exploring with the cohort is whether companies have identified the most realistic route to market for their capabilities, and whether that understanding is reflected in their development priorities.
It is an important distinction because a company can spend considerable time building a technically sophisticated product only to discover that the route through which customers are likely to adopt it requires something quite different.
There is also a broader commercial consideration.
Founders understandably want to establish direct relationships with customers and retain control over their technology and commercial proposition. But in defence, the fastest or most credible route to adoption may sometimes involve becoming part of somebody else's solution.
That can require a different way of thinking about commercial success. The objective isn't necessarily to own every part of the customer relationship. It is to establish a valuable and defensible position within the environment in which the technology will be used.
This is also where I believe Meridian has an opportunity to play a more active role in the wider defence technology ecosystem.
We want the programme to become a meeting ground between emerging technology businesses, prime contractors, established industry partners and the customers they ultimately serve.
For emerging businesses, relationships with primes and established suppliers can provide access to programmes, integration expertise, customer relationships and delivery infrastructure that would be difficult to develop independently.
For established industry participants, engaging with emerging technology companies offers access to specialist capabilities, new approaches to solving operational problems and innovation that may complement their existing products and programmes.
The challenge is creating relationships that work commercially for both parties.
Too often, engagement between established suppliers and smaller technology companies can become focused on an immediate bid, procurement requirement or demonstration. While those activities have their place, they do not necessarily provide the foundation for a sustainable commercial relationship.
I think there is an opportunity to take a longer-term approach, bringing businesses together earlier to understand where their capabilities complement one another, how technology might be integrated and what commercial structures would allow both parties to benefit as opportunities develop.
That means recognising the different motivations involved. Emerging companies need access to customers, commercial traction and the opportunity to build sustainable businesses. Established suppliers need confidence that new capabilities can be integrated, supported and delivered reliably, while providing a credible commercial return.
A successful relationship needs to accommodate both.
For Defence Holdings, this is consistent with our wider Operating Model, which brings together sovereign software development, strategic partnerships and investment activities. We recognise that getting technology into operational environments frequently requires capabilities and relationships beyond the technology itself.
Through Meridian, we have an opportunity to develop those relationships at an earlier stage, helping emerging businesses understand where they fit within the wider delivery environment while giving established industry partners greater visibility of relevant innovation.
We would welcome engagement from prime contractors and other established defence industry participants who share that ambition and want to explore how more sustainable partnerships with emerging technology businesses can be developed.
The observation I keep coming back to is that a credible route to market needs to be developed alongside the technology, not after it.
The convergence of defence and national security
A second observation emerging from the cohort is the increasing convergence between defence, national security and wider national resilience.
I see this as a particularly important development for the UK.
Defence and national security are both areas in which the UK has considerable expertise, established international relationships and a strong reputation. As the technologies and operational challenges across these sectors increasingly overlap, there is an opportunity to build on those strengths and support the development of businesses capable of addressing a broader range of requirements.
This is particularly apparent when looking at technologies associated with AI, autonomy, cyber, communications, information analysis and infrastructure resilience.
Many of the underlying problems these technologies are designed to address are not exclusive to the military.
The need to process large volumes of information, maintain communications in difficult environments, protect critical systems, identify threats and support faster decision-making exists across defence, intelligence, policing, emergency services and critical national infrastructure.
The operating environments and requirements may differ, sometimes considerably, but the underlying technology can have relevance across several of them.
I think this has important implications for how emerging businesses define their markets.
A company may initially describe itself as a defence technology business because that is where its founders have experience or where the first customer requirement has been identified. But the capability it is developing may address a broader problem that exists across multiple areas of government and national resilience.
Equally, a company developing technology for policing, infrastructure or commercial security may discover that the same underlying capability has a valuable defence application.
However, the fact that two organisations face similar technical problems does not mean they approach those problems in the same way.
Defence organisations, police forces, intelligence agencies and operators of critical national infrastructure have different missions, motivations, operational cultures, procurement structures and measures of success.
A defence customer may be focused on maintaining capability in a contested environment, while a police force may be more concerned with evidential standards, accountability and the practical requirements of frontline operations. An operator of critical infrastructure may approach a similar technology through the priorities of continuity, resilience and regulatory compliance.
The underlying capability may be relevant to all three, but the way it is positioned, developed, integrated and delivered may need to be very different.
This is where I think there is an important role for organisations that can help translate between those environments.
Through Meridian, we are working to understand not only the technologies being developed by the cohort, but the customer problems they address and the different operational settings in which those capabilities may have relevance.
That involves helping founders distinguish between the technical potential of a product and the specific requirements that would need to be satisfied before a customer could adopt it.
For example, a technology designed to improve the speed and quality of information analysis may have applications wherever organisations need to make decisions using large volumes of complex or fragmented data. The precise requirements will differ, but the underlying capability may remain relevant.
Similarly, technologies designed to maintain connectivity or support autonomous operations in difficult environments can have potential applications beyond their original defence use case.
The opportunity is not simply to identify as many possible customers as we can. As I discussed in the first article, attempting to pursue several markets simultaneously can place considerable strain on an early-stage business.
The more useful question is whether understanding the wider relevance of a technology can help a company make better decisions about its architecture, development priorities and future commercial strategy.
There is also an important distinction between identifying a potential application and demonstrating a genuine customer requirement.
It is relatively easy to construct a list of sectors in which a technology might be useful. It is considerably harder to establish that customers in those sectors recognise the problem, have a requirement for the proposed capability and possess a credible route to procuring it.
That is where the work of understanding the customer becomes essential.
For Defence Holdings, this convergence is particularly relevant because our activities already extend beyond traditional defence environments, including work associated with operational policing through our strategic partnership with Whitespace.
That experience reinforces the importance of understanding how different customers operate and how technologies can be adapted to meet their specific requirements.
Meridian provides another route through which we can develop that understanding, working with emerging companies to explore where their capabilities may be relevant and what would be required to bring them into use.
The increasing convergence between these markets creates an opportunity for the UK to build on its established strengths in defence and national security, while developing new technologies and businesses capable of serving a wider range of operational needs.
Realising that opportunity will depend on more than recognising technical similarities. It will require a detailed understanding of the customers, delivery environments and commercial structures involved.
What comes next
These two observations are closely connected.
Understanding where a technology has potential value is only part of the challenge. A business also needs to understand how customers will access, procure, integrate and deploy that capability.
The route to market may involve relationships and delivery models that aren't immediately obvious to a founder developing the underlying technology. Equally, the most relevant customer may not sit within the sector the company initially expected to serve.
For Defence Holdings, working through these questions with the cohort provides useful insight into emerging capabilities and the wider ecosystems through which they may reach customers.
It also helps us understand where there may be opportunities for our existing relationships, technical capabilities and commercial activities to support the development of those businesses.
The intensive, individual nature of Meridian's engagement is particularly important here. By working through each company's product, commercial, technology and operational roadmaps together, we can explore how decisions about customer focus, product architecture, partnerships and delivery affect one another.
Not every technology will be relevant to Defence Holdings, and not every company will pursue the same route to market. But understanding those distinctions is part of what makes the programme valuable.
In the next article, I'll turn to two further observations from our work with the cohort: how AI is changing the nature of technology defensibility, and the challenges of assessing the value of early-stage businesses when the commercial evidence is still developing.
Both are generating interesting conversations, particularly as the pace of technological development changes some of the assumptions on which emerging technology businesses have traditionally been built and valued.
