A sudden surge in orders. A client demanding a response within 48 hours. A dual opportunity arising amid geopolitical tensions. And you, right in the middle of it all, approving everything: quotes, schedules, technical decisions, and client emails. As the Middle East erupts in conflict and order books swell, a stark question arises: if demand were to double tomorrow, who would make decisions in your place? If the answer is “no one,” you don’t have a production problem. You have a governance problem.
Since July 13, 2026, the Gulf region has been rocked by a series of strikes. The risk of an all-out resumption of war between Iran and the United States has increased significantly following a new wave of strikes and retaliatory strikes that have affected several Gulf countries and Jordan. Iran’s response has taken the form of launching hundreds of drones and ballistic missiles not only toward Israel but also toward U.S. military bases in the Persian Gulf, located in Jordan, Kuwait, Bahrain, Qatar, Iraq, Saudi Arabia, and the United Arab Emirates.
This isn’t just a market jolt. It’s a real-world test. And it’s not just putting the big corporations to the test. It’s testing every link in the chain, all the way down to the second- or third-tier subcontractors—including yours.
Demand is skyrocketing. Everywhere. The DGA plans to place more than 40 billion euros in military orders in 2026, a record high; by way of comparison, orders totaled approximately 38 billion euros in 2025 and 20.3 billion in 2023. The growth curve is steep.
But France’s production sector is struggling to keep up. The President of the Republic put it bluntly. “We have doubled—and in some cases tripled—our production capacity and output rates. Let’s be honest with ourselves. Are we, strictly speaking, in a war economy? The answer is no.”
Analysts agree on this assessment. The challenge for defense manufacturers is to transition from a quasi-“artisanal” production of a few dozen units per year to industrial-scale production of several hundred units per year. That is the paradigm shift—and it is a drastic one.
Here is the thesis of this article: in a BITD SME under pressure, it’s not your production tools that break down first. It’s your decision-making process.
The regionalization of the conflict changes everything for you. It turns a distant event into an immediate market signal.
In the manufacturing sector, the urgency is clear as day. Major contractors are now demanding production rates that the industry has never been able to meet. And this pressure is automatically passed down the supply chain. Supplier quality control involves ensuring that Tier 2 and Tier 3 subcontractors maintain reliability standards despite the increase in volumes.
This area of tension is well known and documented. The capacity utilization rate among defense manufacturers will exceed 90% by mid-2025, which is 10 percentage points higher than the manufacturing sector average; furthermore, one in three defense manufacturers is facing supply chain challenges, which is twice the rate for the industry as a whole.
What does this mean for you, in practical terms? A client who calls you on a Monday and wants a firm commitment by Wednesday. A dual opportunity that opens up. A competitor who has already said yes. Scaling up is no longer a distant strategic option: it’s an immediate operational requirement—a topic we explore in detail in our analysis ofa defense SME’s transition to a wartime economy and its governance implications.
The first reaction when demand doubles is: “I can’t afford to scale up.” That’s not true. The money is there now.
As of December 31, 2025, financing provided by the six major French banking groups to French defense companies exceeded 46.6 billion euros, up 25% from the end of 2024 and 75% from 2021. The number of initiatives has increased. The Ministry of the Armed Forces is promoting the widespread adoption of a “cash-neutral” objective throughout the value chain, aimed at ensuring that the execution of defense contracts has a minimal impact on companies’ cash flow, particularly that of subcontracting SMEs and mid-market companies.
So, if it's not a cash flow issue, what's holding things up?
You.Or, more precisely: your position as the key decision-maker. When an SME with 40 to 100 employees needs to respond urgently to a surge in requests, it is the centralization of decision-making in the hands of the CEO that slows down the transition. Not capital.
The symptoms are always the same:
Each of these minor expectations is invisible. Taken together, they constitute a massive competitive disadvantage. We have quantified this hidden cost in our analysis ofthe financial burden of strategic uncertainty in small and medium-sized enterprises.
This centralization is no accident. It is the logical extension of your history.
You founded the company. You signed the first contracts, earned the first certifications, and kept the business afloat during the lean years. You’ve learned one thing: when you make a decision, it’s the right one. So you’ve delegated the execution—but never the decision itself.
It’s a founder’s instinct, not a character flaw. The problem is that it doesn’t scale. Your valuable business and technical intuition remains locked inside your head. We’ve devoted an entire analysis to this specific challenge:how to replicate the business intuition of an SME leaderso that it is no longer a single point of bottleneck.
The defense sector presents an additional pitfall: the confusion between confidentiality and centralization. Because your matters are sensitive—and sometimes classified—you conclude that everything must be reported to you. This is a fallacy. Confidentiality requires restricted access; it does not require that a manager approve every quote.
The true cost of this confusion? Lost business while you’re getting bogged down in trivialities. Yet, in a climate where order books are filling up, every missed contract comes at a direct financial cost—a phenomenon we document in our article onBITD SMEs that lose defense contracts due to a lack of responsiveness and visibility.
Some small and medium-sized businesses can handle the surge in demand. Others are overwhelmed. The difference lies neither in size nor in the order book. It’s in decision-making governance.
Here's what sets the two profiles apart:
| The Bottleneck Manager | The Leader Who Scales |
|---|---|
| Approve every quote, regardless of the amount | Has established clear delegation thresholds (technical, commercial, financial) |
| The Executive Committee issues an advisory opinion | The Executive Committee has actual decision-making authority |
| Strategic information stays in his head | The decision-making criteria are clearly defined and shared |
| Resolves operational emergencies | Maintain the vision and the strategic relationship |
| Absent = everything stops | Absent = the company continues to make the decision |
The pivot consists of three movements.
One: explicit thresholds.Below a certain amount, risk level, or customer type, someone else makes the decision—without consulting you. It’s written down, well-known, and strictly enforced.
Second: an executive committee with a clear mandate.Not a committee that simply makes recommendations. A body that makes decisions within its scope of authority and takes responsibility for them. Governance then becomes a valuable asset, exactly as we analyzed in ourbreakdown of Harmattan AI’s strategic governance.
Three: refocusing.You don’t let go of the steering wheel. You let go of the gearshift. You maintain the big-picture view, the relationships with major clients, and the decisions that truly shape the business. Everything else takes a back seat.
The window of opportunity that the crisis has just opened will not last. It is closing as your competitors make their decisions. In this market, the speed of decision-making will make the difference between the small business that wins contracts and the one that watches them slip away.
Ask yourself the original question again: If demand doubled on Monday, would your company be able to make a decision without you? If the answer makes you uncomfortable, it’s not your production facilities that need to be audited first. It’s your decision-making framework.
That is precisely the purpose of ourGovernance Framework: to map out your decision-making chain, identify the bottlenecks where everything ultimately comes back to you, and design the thresholds and mandates that accelerate the process without causing you to lose control. We don’t promise miracles. We offer you a clear-eyed assessment of your decision-making bottlenecks.
Demand doesn't wait. Neither do your competitors. Discover how theGovernance Frameworktransforms your decision-making process into a competitive advantage, and let's start the conversation with an initial assessment.
