The founders of Empirical Systems Aerospace (ESAero) had barely graduated from college when they received a small contract in 2004 to make desktop static-display models for NASA.

From that humble beginning the small California company has grown into an advanced-concept developer with clients including Boeing, NASA, AeroVironment and Lockheed Martin's Skunk Works. ESAero's current workload is an eclectic mix ranging from supporting the development of a hybrid airship to designing an electric distributed-propulsion aircraft concept for NASA.

“We were fresh out of school, had no kids, no mortgages,” says President Andrew Gibson. “It was feast or famine to start with, we got contracts here and there, but then we got our big breaks—first with NASA and then with Boeing Phantom Works and Aerocopter.” Gibson, together with fellow California Polytechnic State University at San Luis Obispo graduates and co-founders Benjamin Schiltgen and Trevor Foster, established ESAero in 2003 “around the goal of forming a design capability when we came out of school.”

The design element “took off,” says Gibson, who adds that not everything worked out initially. “Being young and dumb, it took two to three years to work out what we should and shouldn't do.” To help them figure it out, they enrolled the help of former industry design leaders who became consultants for the larger engineering projects. They include Darold Cummings, former Boeing Advanced Design/Phantom Works exploratory concepts manager, and David Hall, an aerospace professor, former project manager and lead engineer. Others include flight analyst Glen Mills and business development specialist John Winter.

Building on its design work, ESAero has also seen strong growth in its technology demonstration capabilities, which Gibson considers a key strength for a company based on innovation. At first, demonstrations were seen almost as a necessary evil. “People were having trouble seeing our vision, but that's changed in the last couple of years,” he says.

The ESAero ethos is to “forget analysis paralysis and get in the hangar and build something. If it fails, go back and do it again,” says Gibson. The policy has stood it in good stead. “Now we're building technology demonstrators for a couple of companies, including some large primes, because we can cost-effectively build it, fly it—and crash it sometimes. It verifies the design and the data. We're doing it with Lockheed Martin, and right now with another company called Sofcoast for which we are testing a small, back-packable hybrid airship with intelligence, surveillance and reconnaissance capability.”

Gibson attributes the company's success to a couple of key characteristics. “We just don't limit ourselves in terms of creativity. Unlike advanced design groups in larger companies, we have no particular preferred concepts and we are not limited by bureaucracy—I think that's huge. It's harder for designers in large companies to think outside the box because they've been told something is a stupid idea, or they have to follow specific concepts. We can approach a mission or a problem without those constraints and start from scratch.”

To sustain innovation, ESAero is a big fan of brainstorming sessions, particularly with its senior consultants. It is also a fan of going back to basics with designs that start life on a whiteboard rather than a computer screen. “We are young but we have an old-school aircraft design process. A lot of people will sit down at a computer and use a program to start a design. There's nothing wrong with that—but from our point of view that's still a program which someone designed. We start by drawing on a board with no limits to the configuration.”

As an organization with just seven employees, the entire turnover is dedicated to 100% R&D. The measure of whether adequate progress is being maintained in innovation is simply “how the customer reacts and if they keep coming back.”

As for the bigger picture view of the climate in aerospace innovation, Gibson believes it is “not super-strong. People think we may not be being innovative enough, but because of limitations on R&D and on budgets in general, there is not enough being done. However, if [U.S. budget] sequestration hits, then we could be in crisis mode.”

People and close contacts are key when it comes to keeping the doors open to innovation, says Gibson. “It's about relationships, getting to the right people and getting them to trust you and try you out.” The environment is tough for small companies. By the same token, it is “almost getting easier on the hardware side because people are realizing there are cheaper ways of doing things. It all depends on how the large primes react. They're in a holding pattern—but at some point they will have to restart R&D.”