"There appears to be a large gap between Defence and the defence industry, and the rest of the private sector," said Dr Petreski, director of innovation strategy - KPMG Innovate, at the recent HunterNet Defence Conference held in Newcastle.
"A lot of these companies in the private sector are a real threat to the defence industry," he noted.
"They have been capitalising on disruptive technology and innovation for years now, and it appears that this industry simply hasn't.
"They don't wait for problems to solve, they create answers for problems you didn't even know existed yet! That's the world we live in now.
"The DIPS (Defence Innovation Policy Statement) signposts a complete redesign of the relationship between Defence and businesses that operate in the defence industry or those looking to enter."
"These private sector companies are already ahead of the game," said Dr Petreski, insisting that SMEs within the defence industry start learning from the private sector and acting now to ensure they get the work that is flowing out of the White Paper.
Dr Petreski pointed out that there are always places for any business to innovate, especially in four key areas: organisational or management processes, customer experience, operational processes and product/service innovation.
"For this to happen you need to learn how to leverage ecosystems. Forget about just collaborating, that's not enough anymore," said Dr Petreski.
"Ecosystems are the new paradigm."