Mark Aslett is the president and CEO of the Andover, Mass.,-based company, which ranks 27th on Fortune’s
list and builds sophisticated real-time processing subsystems. Mercury Systems photo.
The only aerospace and defense firm among Fortune's 100
Fastest Growing Companies is Mercury
Systems, which is not your typical defense company.
“I like to say we’re a high-tech company operating in the defense
marketplace, as opposed to being a defense company that develops high-tech
technology,” Mercury President and CEO Mark Aslett told Air Force Magazine.
“We’ve proven at scale how a high-tech commercial business can be successful
inside the defense industry.”
The Andover, Mass.,-based company, ranks 27th on Fortune’s
list and builds sophisticated real-time processing subsystems, that go in everything
from radars to electronic warfare systems.
While most traditional
defense suppliers invest just 2 to 3 percent of revenue on internal research
and development, Mercury pumps 11 to 13 percent of total revenue into R&D.
That’s “very much in
line with what the [Defense] Department wants,” Aslett said.
Mercury’s growth is
driven by an acquire-to-grow strategy. The firm invested more than $600 million
on seven corporate acquisitions in the past 32 months as it seeks, in part, to
grow its expertise in command and control. That is “an enormous market” Aslett
said, and the company will “continue to invest.”
Once new firms are added, Aslett said, R&D spending is
ramped up. “We’re doubling or tripling the amount of R&D” in those
companies, said Aslett.
Mercury is “aggressively investing in open system
architecture” that allows the company to “rapidly pre-integrate the technology”
at its own expense, he said. “In
essence, what we’ve developed is a much more agile approach to the
For a Pentagon desperately trying to innovate without
getting caught up in bureaucratic red tape, that should be an exciting
proposition. Yet as an established firm, Aslett said Mercury is often pressured
to fall back into more traditional acquisition models.
“The acquisition policies haven’t yet caught up with
something we’re doing very, very successfully,” Aslett said. “We’ve been able
to figure out how to leverage the investment of high-tech commercial companies
and we’re adapting that technology for use in defense.”
Innovation efforts like AFWERX and DIU, formerly known as
DIUX, focus heavily on startups, but those firms lack the wherewithal to
weather program delays and the complexities of doing business with the
government, and they lack the resources to go it on their own. Aslett said that’s a
‘The department … is experimenting in different things, but
they have a company right under their nose that’s figured out,—at scale—how
to operate and how to do the things you’re looking to do.”
The next Daily Report will be Tuesday, Feb. 19, due to the Presidents Day holiday.
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