Europe’s defense industry may be facing a Kodak moment

One of the most fascinating things about disruption is that we almost never get to observe it in real time.

Most disruption stories are told after the outcome is already known. Kodak missed digital photography. Blockbuster underestimated streaming. Looking back, the writing was on the wall for both companies.

Yet that is only because the market has already rendered its verdict.

While disruption is unfolding, the picture is far less clear. New technologies often look inferior, niche, unreliable, or strategically irrelevant. Their limitations are easier to see than their potential. That is why even smart, experienced executives struggle to recognize disruption before it becomes undeniable.

Which is what makes the current debate in Europe’s defense industry so interesting.

When Rheinmetall CEO Armin Papperger questioned the strategic significance of low-cost Ukrainian drones, many interpreted the comments as a disagreement about military technology or simply a CEO defending his company’s position.

Perhaps.But disruption stories rarely begin with a debate about technology. They begin with a debate about the economic model.

Kodak’s first digital cameras were inferior to film. Early streaming services offered less content than video stores. The first smartphones looked unimpressive compared with the devices they would eventually replace.

What changed was not the technology first. It was the economics. That is why drones deserve attention. Not because they are superior to tanks, artillery systems, or advanced missile platforms. They are not. But they may be changing the economics of warfare.

In Ukraine, low-cost drone systems have demonstrated an ability to generate battlefield effects that previously required far more expensive assets. A drone costing hundreds or thousands of euros can damage or destroy systems worth millions or incapacitated an infantryman that took months and thousands of euros to train.

Similar patterns have appeared elsewhere. Recent conflicts in the Middle East have shown how relatively inexpensive drones can threaten assets that cost orders of magnitude more to build, operate, and defend.

For years, military value has largely been associated with sophistication: better engineering, greater precision, more advanced technology.

Drones introduce a different dimension. They force planners to think about the cost of achieving the objective.

A tank, an artillery system, and a drone are not competing products. They are competing ways of producing a battlefield effect, achieving the “job to be done“.

When one approach begins achieving meaningful results at a fraction of the cost, attention should follow. Not because the incumbent solution immediately becomes obsolete. But because the basis of competition may be starting to shift.

This is where established organizations often struggle. The challenge is rarely awareness. Kodak knew digital photography existed. Blockbuster knew streaming existed.

The challenge for incumbents is overcoming the gravitational pull of what made them successful.

Successful organizations are designed to invest in proven capabilities. They improve existing products. They optimize existing business models. They become increasingly efficient at serving existing customers.

That logic is rational. It is also why disruption is so difficult to navigate.

Today, Europe’s defense ecosystem is naturally oriented toward highly sophisticated platforms, long development cycles, and procurement systems built around the assumptions of a previous era of warfare.

Signs of tension are beginning to emerge from within that system.

EU Defence Commissioner Andrius Kubilius recently criticized Europe’s tendency to produce what he called “haute couture” weapons – highly sophisticated systems optimized for technical excellence but often difficult to manufacture at scale and in meaningful quantities.

His concern was not that these systems lack capability. It was that the definition of military value may be changing faster than the institutions responsible for funding it.

The same tension appears in discussions about future industrial capacity.

Recent reports about Volkswagen’s defense-related manufacturing discussions have focused on interceptor production. Europe unquestionably needs stronger air-defense capabilities.

But the discussion highlights a broader issue. If the cost of attacking continues to fall dramatically while the cost of defending remains high, the economics of defence will take a central position.

That is not simply a military question. It is a resource-allocation question. And resource allocation is where disruption ultimately becomes visible.

The timing makes the issue difficult to ignore.

Through programs such as SAFE and broader rearmament initiatives, Europe is preparing to commit hundreds of billions of euros to defense capabilities and industrial capacity. The choices made today will shape Europe’s defense portfolio for years, if not decades.

When industries are disrupted, the early signals rarely look dramatic. They often look like isolated anomalies, niche technologies, or debates between people who disagree about the future.

Only later do they reveal themselves as the beginning of something larger. That is why the most important question facing Europe’s defense leaders is not whether drones matter.

The battlefield has already answered that.

The more important question is whether they are paying attention to the same signals that, in hindsight, every disrupted industry wishes it had recognized sooner.

The difference is that this time more is at stake than the future of a company.