Global Leaders Series

A conversation with Pascale Sourisse - Senior Executive Vice President of International Development, Thales

Virtually every aerospace company of any significant size has stepped up efforts to identify business opportunities outside of their domestic markets to offset declines in defense spending. At Thales—a major electronics supplier based in France serving aerospace/defense, space, security and transportation customers—Pascale Sourisse, senior executive vice president of International Development, is leading that effort. In an interview with Tony Velocci, former editor-in-chief of Aviation Week & Space Technology, she discussed Thales’ growth strategy, and also shared her thoughts on the customer experience, leadership and valuable lessons in her career as an aerospace executive.

Extract

Last year you were appointed senior executive vice president, International Development. What is your mission?

Grow our business internationally, and in particular, in emerging markets. We’re still focusing a lot of attention on business opportunities here in Europe, although the French market represents only 25 percent of Thales’ revenue. However, we need to establish a stronger position in other countries that offer very significant growth potential.  For example, we expect double-digit growth in the Middle East, making that region very attractive.

Growing our international business, however, means that we must fully understand all of the requirements, which go far beyond what we probably considered in the past. If you look carefully at what customers in these regions actually expect, they want companies like Thales to not just serve their domestic needs, but also to export products to other parts of the world. They expect us to help develop their economies, including helping to build their indigenous [aerospace-related] capabilities, and provide employment opportunities. This means Thales will need to develop a strategy that corresponds with serving as a good long-term partner. The approach we take in these efforts will vary from country to country, based on their particular expectations. The bottom line is that the growth strategy Thales is implementing involves a sort of industrial policy on a global basis.

Thales Aerospace is hardly the only player in the markets in which it competes—avionics, training and simulation systems, and air traffic control (ATC) electronics. What distinguishes Thales from the rest of the competitive field?

A key differentiator is that we have very motivated people who are passionate about their work. The other differentiator is innovation around our technology, as well as the way we do business. Our core competencies include software, electronics activities and large systems integration. By using them in various domains that have common points between them, we can combine new approaches to solutions for one sector together with solutions for another sector.

Delivering quality products to aerospace customers is far more challenging that it was, say, just a decade ago. For one thing, they have made it abundantly clear they have zero tolerance for cost and schedule overruns. In addition, R&D budgets are under pressure as companies try to preserve operating margins. What is Thales doing to make sure that it remains focused on the technologies that are critical to its future competitiveness?

European aerospace companies have been more accustomed than their U.S. counterparts in operating under fixed-price contracts, with firm commitments on schedule and price.  So, if you deliver a product late you are obligated to pay damages, and if your costs exceed the allowable limit, that’s too bad for your profit margin. In Europe, we have worked for many years under quite severe budget constraints. In the U.S. it’s a very different story. 

Our challenge has been to generate sufficient margins to invest in R&D.  If we don’t make such investments we will be unable to develop news products for customers who require technology solutions.  At Thales, a high level of R&D investment is inherent to our overall business strategy. We invest about [...]

The process [of delivering the optimum customer experience] needs to start very early, when you are preparing your contract proposal. You need to understand exactly what’s important to the customer, and also what you are capable of delivering.

Pascale Sourisse Senior EVP, International Development, Thales