One of the most pressing issues facing Ukraine's defense industry was the focus of the forum "Transforming Management in the Defense Industry," held at Igor Sikorsky Kyiv Polytechnic Institute in late May. The urgency of the discussion was dictated by the realities of war itself: modern warfare has become highly technology-driven, and according to some estimates, technologies on the battlefield are now evolving almost every three months.
As a result, approaches to managing defense industry enterprises must also change. In particular, their effectiveness will increasingly depend on structural changes in management systems. It was therefore no coincidence that the forum was organized by the Faculty of Management and Marketing of Igor Sikorsky Kyiv Polytechnic Institute. Participants included executives from a number of defense industry enterprises, representatives of the National Security and Defense Council of Ukraine and the All-Ukrainian Association of Employers' Organizations of the Aviation, Space, Rocket, Shipbuilding and Other Scientific Industries of the Defense-Industrial Complex (FEU Defence), as well as students, faculty members, and staff of the university.
"Ukraine's defense industry is currently facing unprecedented challenges. We understand that, in addition to securing the resources necessary for our victory, we must also ensure high-quality management. In my view, the defense industry is undergoing a period of profound transformation—not only in its organizational structure but also in its management philosophy and even its overall paradigm. Some media outlets have even reported that the United States now regards Ukraine as the second Silicon Valley in the defense sector," emphasized Serhii Stirenko, Vice-Rector for Research at Igor Sikorsky Kyiv Polytechnic Institute, in his welcoming address to the forum participants.
Marina Kravchenko, Dean of the Faculty of Management and Marketing, emphasized the importance of the forum's theme for the faculty, noting that it had begun training managers for Ukraine's defense industry quite some time ago, with its first graduates completing the program as early as 2017. She explained that the program was later suspended for a period but resumed last year. "During that time, everything has changed. Ukraine's defense industry has changed. It has demonstrated the fastest and most dynamic development seen over the past 30 years. In the past, even in our teaching, we relied on Western models of defense industry management as benchmarks. Today, however, we are building our own innovative model, and we are building it under real wartime conditions," she said. "We now operate within a networked system in which new knowledge and technological developments emerge through the direct interaction of science, education, business, and industry, virtually in real time. These challenges require an entirely new generation of managers capable of responding to strategic challenges and prepared to lead through constant change." Kravchenko also stressed that, whereas Ukrainian specialists previously looked to foreign management models for defense enterprises, the country is now developing its own innovative model of the defense industry—one that is being created, quite literally, under field conditions.
Has this transformation produced tangible results? Without a doubt. Participants could see them summarized on a dedicated poster displayed in the Smart Space shelter, where the forum was held, and they were also highlighted throughout the discussions. According to official data from the Ministry of Finance of Ukraine, the Ministry of Social Policy of Ukraine, the International Monetary Fund, the Kyiv School of Economics (KSE), the National Bank of Ukraine, the World Bank, and other institutions, the production capacity of Ukraine's defense industry increased from USD 20 billion in 2024 to USD 35 billion in 2025. Over the same period, the actual value of defense production grew from USD 1 billion in 2022 to USD 12 billion in 2025. Domestic procurement accounted for 76% of all defense purchases in 2025.
According to Alla Dunska, Acting Head of the Department of International Business and Logistics at the Faculty of Management and Marketing, the current development of Ukraine's defense industry is driven by three key trends: the advancement of unmanned aerial systems; the development and scaling of ground robotic platforms; and the production of electronic warfare technologies and related systems. These are the fastest-growing segments of the defense industry and are shaping its future trajectory. At the same time, technological change is accelerating, with the sector transitioning toward intelligent and highly flexible technologies that require fundamentally new management approaches. Whereas management previously focused primarily on operational decision-making within hierarchical organizational structures, today's environment demands strategic, network-based management models capable of preparing organizations for—and adapting them to—the complex challenges they face. Logistics is also undergoing a profound transformation, shifting from stable supply chains developed over many years to flexible logistics systems capable of operating under conditions of uncertainty, constant security threats, and active combat. In addition, enterprises are moving beyond traditional accounting toward comprehensive financial management and contract management, while also transitioning from locally focused operations to extensive international cooperation. In other words, modern management is no longer simply about administration—it has become a matter of strategic vision and ensuring sustainable development under conditions of continuous uncertainty.
Are there challenges along this path? Certainly. Addressing those challenges—and identifying possible solutions—was one of the central themes of the forum. Participants discussed issues ranging from military-technical cooperation, which cannot be considered separately from the activities of the defense industry, to cooperation between the public and private sectors, the regulatory framework governing the industry, and the training of specialists at every level—from assembly workers and machine operators capable of working with advanced manufacturing equipment to engineers and managers. The discussion also touched on the disparity in wages between state-owned and private defense enterprises. Speakers further highlighted the security risks faced by defense industry employees, whose workplaces are often targeted by enemy attacks. Consequently, they stressed the need to grant these workers a special legal status. According to Ihor Fomenko, Director General of the All-Ukrainian Association of Employers' Organizations of the Aviation, Space, Rocket, Shipbuilding and Other Scientific Industries of the Defense-Industrial Complex (FEU Defence), the relevant draft law has long been submitted to the Verkhovna Rada of Ukraine, but no further progress has been made. Another major topic was access to financing for defense enterprises at a time when the state lacks sufficient resources to provide advance payments covering even 70–80% of the cost of components. This is particularly problematic given that the defense industry is one of the few sectors subject to statutory limits on profitability. During the two-hour session—which passed remarkably quickly—the participants managed to examine a wide range of pressing issues. Most of them are being addressed, albeit with considerable difficulty, because wartime conditions leave no alternative: delays and mistakes can cost human lives. In this context, the remarks of Andrii Tyvonchuk, Head of the Department for the Defense Industry, Military-Technical Cooperation, and Export Control of the Office of the National Security and Defense Council of Ukraine, were especially noteworthy: "The defense industry we had before the war was one story. Today, during the war, an entirely different defense industry has effectively emerged, with new competencies, a different management structure, advanced technologies, and much more. However, I am convinced that once the war ends—whether through a ceasefire or another form of pause—we will begin building a third model of Ukraine's defense industry. Moreover, it is the defense industry that has the potential to become the driving force of the national economy because it will possess the necessary resources, core competencies, and strategic directions for future development."
The key conclusion that emerged from the forum was clear: as in any other country, the mission of Ukraine's defense industry—today, tomorrow, and in the future—will remain centered on two fundamental priorities. The first, and most important, is to meet the needs of the Armed Forces of Ukraine and the country's other security and defense institutions. The second is to establish a strong presence in international markets. Whatever other challenges arise, they must be addressed with these two strategic objectives firmly in mind, as they will continue to define the future development of Ukraine's defense industry.