July 16, 2014
Textron's Market Categorization Problem at Farnborough
The Scorpion Beat the JSF to Britain. Now Starts the Sales Challenge.
By James Hasik
The Scorpion flew over
With only one support plane
Some fuel stops en route
Where is the F-35?
It has been all over the news that Lockheed Martin’s Joint Strike Fighter isn’t making it to Farnborough 2014—apparently it’s unsafe—but Textron AirLand’s Scorpion was never doubted at the show. Textron is hoping to rack up some sales, and a contact at the company sent me some verse (if not quite haiku) to commemorate the occasion. To be fair to Lockheed, building a tri-service supersonic stealth fighter with 360-degree situational awareness is hard engineering work. But twelve years ago, the JSF attracted eight international customers with only a prototype and a promise. As Aaron Mehta of Defense News observes today, that airplane is missing in action this week, but it’s still dominating conversations. For Textron’s part, building a subsonic surveillance-attack jet from scratch in under two years has indeed been impressive entrepreneurial work. But to convert customers to its differing vision of the market, the company has some hard institutional work to do as well.
As the website pitches the concept, "the realization that a significant gap existed between turboprop light attack and… multi-role strike fighters was the impetus for the creation of both Textron AirLand and Scorpion." Textron argues that plenty of air forces could make great use of inexpensive, relatively fast aircraft that can surveil large areas quickly, and employ precision-guided weapons against enemy ground troops. From the 2011 Libyan Civil War to the 2014 Iraqi Civil War, it’s clear that many countries don’t actually need supersonic fighters for ground attack. And if it had a gun, the Scorpion could interest even wealthy countries with modest air defense needs—the sort in which Cessna intercepts Cessna.
The closest alternative in cost, as Defense News showed last week in its discussion of the market in Africa, may be refurbished Russian fighters. That's overkill for most customers, unless they’re just craving supersonic flight. But therein lies the problem. The Wall Street Journal asked some months ago "Is the U.S. Ready for a Cut-Rate Jet Fighter?” We can answer probably not, and possibly others aren’t either.
Strategic needs do vary around the world, to the point that not every mid-sized country needs a fighter wing, or an independent air force. Many have been established not because of military necessity, but in pursuit of institutional legitimacy. This is what Paul DiMaggio and Walter Powell called normative isomorphism—the drive to look like other organizations, so others will accept yours as the real deal. (See “The Iron Cage Revisited,” American Sociological Review, April 1983.) Flying jet fighters signals that you are a serious air force, and not just an air corps.
There are exceptions to this resistance of economy. The RNZAF lost its jet fighters a decade ago, for New Zealand is so isolated that it essentially doesn’t face the prospect of aerial attack. But hardly either does Sri Lanka—which until recently had vicious insurgency problems—and yet the SLAF flies MiGs and Kfirs. As Dave Foster of China Lake has put it, this perception of 'air-force-ness’ extends even to the point of worldwide adoption of similar light blue uniforms. If ever one could be creative, it would be in organizational clothing, but this favored, standard approach shows the importance of an outward perception of professionalism.
So, in marketing to any air force seeking power and legitimacy, Textron must address the question what is this airplane? The immediate question is one of market categorization. The company has staked out clearly its niche on the cost-for-quality curve: faster than turboprops, cheaper than strike fighters. But that’s not enough. The company can’t simply pitch value, for in the minds of some customers, value is what bush league air corps buy for fighting bush wars. Major league air forces buy strike fighters, whether they can afford them or not.
As Elizabeth Pontikes of the University of Chicago has found (“Fitting In Or Starting New”), sometimes new product categories need to be sufficiently distinct to be recognized as a difference worth adopting, but not so different as to be difficult to understand operationally. In defense, the issue is not new. Nexter had this problem initially with its CAESAR howitzer—the French acronym literally means “truck equipped with an artillery system”—but was this a way to motorize light artillery, or lighten up mobile artillery? Force Protection and BAE Systems initially had this problem with their MRAPs—were they selling a truck with armor, or a new kind of armored personnel carrier? Hägglunds still has some of this problem with its Bv-series—are they adverse-terrain vehicles, or amphibious transports? Premier league land forces often care about these questions. And in all cases, the answer needs to be a qualified yes—the new kit is in the sweet spot of what the customer needs, whether or not he knows it yet. In talking them off exquisite solutions, some customers do need convincing that major league ambitions are unaffordable, and that a career in Japanese baseball is a sensible ambition.
While the examples indicate that the problem is not endemic to air forces, it is particularly acute amongst them. To succeed commercially with the Scorpion, Textron needs to change the reigning perception that supersonic means quality in all things. In beating the JSF to Farnborough, the company is aiming to start what Gabriel Rossman of UCLA might call a "diffusion of the legitimate" (Sociological Science, March 2014)—a cascading contagion of acceptance, within that global sense of air-force-ness, for subsonic surveillance-attack jets. Sekou Bermiss of the University of Texas describes this business of starting a legitimate new category a matter of institutional work, and that can be hard work. The beginning of this process is conveying the value of what a marketer at Textron described to me as "strategic tools in a tactical environment, and at a tactical total cost of ownership”. That’s a compelling positioning pitch for customers, for after all, when air forces like things, they call them strategic.
James Hasik is a non-resident senior fellow at the Brent Scowcroft Center on International Security.