Why Defense Could Now Be a Market for Startups

The U.S. Department of Defense is coming to grips with the idea that the technologies it needs to keep the country safe and secure are no longer exclusively owned by the military or its prime contractors. AI, machine learning, autonomy, cyber, quantum, access to space, semiconductors, biotech are all being driven by commercial companies.  At the front-end of these innovations are startups – organizations the Department of Defense hasn’t previously dealt with at scale.

They’re now learning how.

Mrinal Menon is one of my Hacking for Defense students at Stanford where he’s currently in the MBA program. He’s a former U.S. Navy Surface Warfare Officer. Jeff Decker is a co-instructor of the Hacking for Defense class and the Stanford program director. Jeff is an Army Second Ranger Battalion veteran.

Mrinal and Jeff’s article below explains how startups can adapt and thrive while working with the Defense Department. And how the Department of Defense is learning to work with startups.



This article previously appeared in Fast Company.

At a time when young companies struggle to find technology sectors not dominated by Silicon Valley’s giants, most startups remain oblivious to one of the largest markets in the world, the U.S. Defense Department. The military awarded $445 billion in contracts in 2020. By comparison, last year’s global market for software-as-a-service, one of the hottest sectors for startup creation and investment, was estimated at $104 billion.

There’s a willing market here, too. The Pentagon is eager for help from the nation’s innovators. The military is clamoring for cutting-edge technologies in areas like artificial intelligence, machine learning, and autonomy. To attract interest the Defense Department is handing out unprecedented numbers of small contracts and in 2020 seeded 1,635 firms with more than $1.5 billion in early funding. Dozens of outreach programs across the military now offer quick revenue to early-stage companies. A startup could land a contract worth up to $3 million within months of entering the defense market.

This emerging opportunity reflects the urgency of keeping pace with rivals like China and Russia, who are furiously integratingcommercial technologies like AI, quantum computing, and unmanned systems into their armed forces. If former Google CEO Eric Schmidt’s prediction about China overtaking the United States in AI comes to pass, the People’s Liberation Army could be better prepared than the U.S. military for future conflicts in which cyberattacks and drone swarms play a larger role than warships and fighter jets. Without adopting cutting-edge commercial technologies, the U.S. military may be rendered obsolete.

Yet, for every newly minted success like Palantir or Anduril, thousands of companies struggle to find follow-on opportunities after receiving early innovation contracts. Historically, more than 80% of new entrants exit the defense market before they have a chance to see recurring revenue. Anduril founder Palmer Luckey has sardonically noted that the only defense companies to reach unicorn status in the past 30 years have all been founded by billionaires able to endure long gaps in funding. To truly compete with technologically advanced rivals, the Defense Department will ultimately need to enable a broad pool of innovative founders to succeed. Until this ecosystem materializes, however, building a successful defense business is likely to take years of grueling effort. Before committing to work with the military, startups must look past the allure of early money and carefully assess whether the defense market is right for them.

The Key Questions For Startup
Despite the Pentagon’s newfound enthusiasm for innovation, startups in the defense market continue to encounter longstanding obstacles. Most companies face uncertainty when trying to bridge prototyping awards with more permanent follow-on contracts. Startups that successfully fulfill innovation contracts don’t automatically scale. Instead, their solutions must still compete for funding in a formal budgeting and acquisition process before being eligible for widespread adoption . This ordeal takes two years or more, during which startups should anticipate little or no revenue as they try to push their product through the bureaucracy.

While earning the first $1 million in the defense market can be relatively easy, landing the next $10 million is extremely difficult. Before committing to work with the military, startups should carefully consider whether the defense market is right for them by asking three questions.

Is there strong interest for the product?
Those that offer solutions to high-priority problems have the best chance of sourcing funding and follow-on awards. Startups should assess how well their technologies align with the needs outlined in the defense budget, various modernization strategies, and problems posed by defense innovation hubs. For example, “flying taxi” startup Joby Aviation aligned its electric vertical takeoff and landing aircraft with the Air Force’s stated interest in advancing the market for air mobility vehicles. The 3D mapping company Hivemapper found traction with the Army by targeting its need to autonomously resupply field artillery units.

Is the company prepared to endure revenue gaps?
As noted, companies may go years without defense revenue while trying to bridge early contracts with larger opportunities. During this period, startups will need to sustain business development activities and may incur additional regulatory and compliance costs to ensure their product is usable by the military. Investors are also likely to express impatience with the long timelines of defense sales. The best prepared companies can either raise sufficient funds to keep operating or count on revenue from other sources. Palmer Luckey’s Anduril has aggressively pursued financingto sustain growth. Recently public enterprise-AI firm C3.ai entered the defense market having already built a successful commercial business in the energy vertical. Similarly, 3D-printing homebuilder Icon’s technologies have applications that extend well beyond national security use cases to commercial housing markets.

Can I balance the needs of my defense and commercial customers?
The best-positioned startups solve fundamentally similar problems for both military and commercial users. Satellite imagery firm Orbital Insight’s Go platform, for example, automates imagery analysis for defense analysts, investors, and agribusiness alike. Some amount of customization is inevitable given that military users often have specific mission requirements or technical constraints. However, companies that can serve military customers without fundamentally altering their existing product roadmap are likely to be most successful.

Incidents like Google’s withdrawal from Project Maven have highlighted the potential for conflict when commercial companies decide to work with the military. This tension tends to be lower at startups where an early team willingly signs on to pursue defense business. Regardless, companies should be mindful of the reputational impacts working with the DoD could have on their existing business.

The Case for Optimism
Companies eyeing the defense market have reason to be optimistic. There are a growing number of efforts to remove obstacles to partnerships between high-tech startups and the military. For example, the Air Force last year created the Strategic Financing (STRATFI) program. STRATFI provides the Air Force’s most promising commercial innovators, a list which includes Icon and Orbital Insight, quick access to large contracts worth up to $15M. Another positive sign is President Biden’s nomination of former Symantec CEO Mike Brown to oversee the Pentagon’s purchases of new technologies. As director of the Defense Innovation Unit (DIU), Brown has spearheaded investments in commercial technologies and helped C3.ai, Joby Aviation, and other Silicon Valley standouts navigate funding gaps. If confirmed, Brown could accelerate much needed reforms to military acquisition processes.

A startup that makes it through the hurdles may find a massive market with a stable set of customers eager for better technology solutions. The U.S. government pays its bills on time, defense budgets are shielded from short-term volatility, and contracts may be guaranteed for multiple years. Once onboarded, military users can quickly become long-term customers given the challenges involved with switching to another product.

A Path to the Minimum Viable Product

I first met Shawn Carolan and his wife Jennifer at the turn of the century at 11,000 feet. I was hiking with my kids between the Yosemite High Sierra camps. Having just retired from a career as an entrepreneur I had started thinking about why startups were different from large companies. The ideas were bouncing around my head so hard that I shared them with these strangers around a campfire, drawing out the four steps with a stick in the dirt. Shawn immediately said the name I had given the four steps was confusing – I had called it market development – he suggested that I call it Customer Development – and the name stuck. What I didn’t realize was that both were graduate students at Stanford and later both would become great VCs – Shawn at Menlo Ventures and Jennifer at Reach Capital. (And Jennifer is now my co-instructor in the Stanford Lean LaunchPad class.)

The MVP Tree
Over the last two decades Shawn has seen hundreds of startups use the Lean Methodology. Many of them get hung up on understanding how to select the right minimal viable product. He came up with the concept to simply the search for product/market fit by using an MVP Tree.

Shawns guest blog post describing describing the MVP Tree is below.

(Note that if you’re familiar with the business model canvas, Steps 1-4 below are equivalent to a visual map of the choices a founder makes as they develop a business model canvas. Step 5 and 6 leads you to selecting the right MVPs.)


It’s commonly believed that the top two reasons startups fail is because “there’s no market need” and “they ran out of cash.”  These reasons are mental gymnastics to avoid a plain truth: startups fail when they don’t build a simple solution to a problem many people have.

startup_fails.pngMany startups fall into the trap of building toward a “mission” rather than a minimum viable product (MVP).

Your mission is your baby. It’s the North Star that got your people on board and inspires them daily. However, solely focusing on your mission is the same as being unfocused.

Bridging the gap between a big, ambitious dream and the reality of what you can accomplish with limited resources isn’t fun because it requires saying no (for now) to a lot of things that have you excited. Paradoxically, resource limitations are the secret to success; they teach lessons that experienced entrepreneurs have harnessed. Constraints force you to pause—or even permanently shelve—certain aspects of your mission in favor of proving that you can deliver one specific thing that really matters to customers.

During the crucial mission-to-MVP planning phase, the objective of a startup is to solve one job for one customer group such that customers consistently use your minimally viable product for an important part of their work or personal lives. In other words, you prove retention. It’s really all that matters at the earliest stage.

The tool for doing this efficiently and effectively? We call it an MVP tree.

Solution: Build an MVP Tree
Company missions tend to fall to the extremes: either the mission isn’t ambitious enough or it’s too ambitious to build with your current resources.

It bears repeating: an early-stage startup must focus on making one customer group excited by a mission-aligned product. Doing so is usually a long way away from realizing your full mission statement, and that’s okay.

An MVP tree is a way of methodically breaking your mission into smaller components and formulating MVP candidates that may get your company sustainable and scalable. Using the tree structure outlined below increases the chance that your first step forward (the MVP) will be successful with a small team, while taking you in the right direction to achieve your company’s big mission. An MVP tree has three main components—customer archetypes, jobs to be done, and execution—and we’ll walk you through them step by step with a case study of Roku, a former portfolio company we’ve been fortunate to see execute from a $20 million first VC round to what is now a $50 billion public company.

(To get started, we draw our tree out using Whimsical, a product that I’m a big fan of.)

Step 1: Define Your Big Mission in a Simple Statement

In the day-to-day fray of prioritizing features, considering customer input, and handling people issues, it’s easy for a team to lose their bearings. The world is full of great products and it’s essential to be crystal clear on your reason for being; to avoid wandering in circles, you need a mission statement. A few examples:

  • Roku: “To be the TV streaming platform that connects the entire TV ecosystem around the world”

  • Uber: “To bring transportation—for everyone, everywhere”

  • Chime: “We believe everyone deserves financial peace of mind”

Your mission statement needs to stand for something specific and impactful. It may change as you build and learn from your customers, but aim for it to conjure up an image of a better future with your product at the center.

Your mission statement is the center of your MVP Tree.

Screen Shot 2021-03-17 at 11.21.46 AM.png

A motivating mission statement inspires action. It may be tempting to jump right into coding, but slow down—remember, the goal of this exercise is to determine how little you can do to acquire and retain customers. With both growth and retention, you earn the right to build more.

Step 2: Customer Archetypes

A customer archetype is a category of similar people with similar needs (e.g., segmented by age, gender, profession, personality type, etc.). While it may be tempting to want to build a product for everyone, everywhere (7 billion TAM, right?!), doing so will distract you from building exactly what one group needs. Each new segment you attempt to serve can increase scope, adding to your workload and demanding more of your limited resources.

The intent of this branch of the tree is to identify one group of potential customers who would be highly motivated to fix their pain as part of your MVP. Draw out a few customer archetypes that might be a fit for your startup, (we’ll discuss later how to prioritize the one group to tackle first.)

Screen Shot 2021-03-17 at 11.22.16 AM.png

Step 3: Jobs to Be Done

Clayton Christensen’s Jobs to Be Done framework proposes that focusing solely on customer data leads founders on a wild goose chase. Founders should understand what the customer hopes to accomplish, or what their job to be done is.

Break down your mission statement into different “jobs”; this itemization will likely narrow your product scope considerably, while still allowing you to create something of significant value.

When consumers have a job to be done, they’ll look around at their choices and select the best tool for the job. Your goal is to build the best tool for meaningful, reoccurring jobs that people face. Map out the jobs that you believe exist for the customer archetypes identified in step 2.

The more common jobs may apply to several of the archetypes, while the more esoteric jobs may apply to just one. There will be plenty of overlap, which is why jobs have their own branch of the MVP tree rather than attaching directly to the archetype branches.

The more common jobs may apply to several of the archetypes, while the more esoteric jobs may apply to just one. There will be plenty of overlap, which is why jobs have their own branch of the MVP tree rather than attaching directly to the archetype branches.

Step 4: Execution Branches 

Execution branches will vary based on the company, but think of them as the components of what gets built and where it gets sold. These branches of the MVP tree comprise the components of market expansion that urge founders to explore the tactical side of getting a solid product in front of the right people. This first product launch can either be a costly mistake or an ingenious first step that shows traction with early customers and gives your team and investors confidence. Map these out now as part of the tree and reduce the odds of a headache down the road.

In the Roku case study we’ve chosen three execution branches: (1) delivery platforms, (2) sales channels, and (3) chip platforms.

Delivery platforms
Delivery platforms are the vehicles through which customers come to interact with your product. For software products, they would be the operating systems with big market shares: iOS, Android, web, Mac, and PC. While supporting each additional platform expands your addressable market or breadth of customer touchpoints, it can dramatically increase scope. Developing for multiple platforms at once spreads already-thin resources, which ultimately harms the creation of the best product possible for a specific customer segment.

The fewer platforms you choose to support, the smaller the scope. Pick one delivery platform to save resources and prove your value. Investors will recognize that a successful app on iOS will also work on Android with more capital. Focus your precious time on making one platform sing.

Clubhouse, a recent startup darling, has quietly grown to over 2M users exclusively on Apple. Some early users might be frustrated because they can’t invite their Android peers, but the strategy to focus on iOS helped Team Clubhouse minimize their initial scope and meticulously learn from early users without the distraction that may come from opening the floodgates.

For hardware companies, delivery platforms are essentially the potential SKUs you might consider shipping. Steve Jobs once said that if you are really serious about software, you should build your own hardware. You can think of these hardware form factors as software delivery vehicles. Most people only know Roku for their TV devices, but Roku initially shipped an audio device for Internet radio stations and a PhotoBridge product to get digital photo libraries to the TV. Even when moving to video, consumers had the choice between a stand-alone box or a smaller plug-in stick. Today, Roku has become an operating system embedded in other brands’ TVs.

Sales channels
Sales channels are the paths through which your product lands in customers’ hands. For software products, the channels are typically through the mobile app stores or directly over the Internet. For hardware products, it’s D2C e-commerce, online retailers, or physical retail.

Some sales channels may behave similarly; more often than not, they each pose unique challenges. Every additional sales channel costs resources and increases scope. Pick one channel, prove traction, then experiment with the next.

Roku_MVP4.png

Chip platforms
Unique to hardware companies is the choice of which chip to use, and it’s a big one. The choice of semiconductor has profound implications on system requirements like how much memory is needed, how much power is required—and ultimately, the end system cost. Owners of the new Mac M1 laptops are taking advantage of a decade of Apple’s mobile chip development, which is finally robust enough to run the MacOS. The Roku OS has come to run on several different chipsets over time, but in the beginning they had to choose one.

Roku_MVP5.png

Other branches
There are several other execution branches that may be relevant to your business. If you are an office productivity tool, the data ecosystem you pick is a big one: Google or Microsoft? It’s lazy thinking (and expensive engineering) to try to build for both at the same time. Pick one, show success, then raise more money to address the other half of the market. Again, the fewer of these branches (ecosystems, etc.) you choose to support, the smaller the scope. If your startup doesn’t need to access customer data, the choice of consumer-grade vs. enterprise-grade is a big one that adds scope. The theme remains the same: be selective and pick the branch you have the best shot at success with before adding more.

Roku_MVP6.png

Step 5: Scope Out Your Candidate MVPs

If your map looks like Roku’s, you’re probably now staring at something that has grown to become quite complex, with many “leaves” at the ends of your branches. A single leaf chosen on each branch is what makes up an MVP. The reasonable permutations are your candidate MVPs.

Remember, an MVP is the minimally scoped product that gets some job done for your chosen customer archetype.

Step 6: Evaluate Your Candidate MVPs

How do you know which MVP to build first? Choose wisely: This will be the next several months of your life.
A successful MVP satisfies three criteria:

  1. It addresses a meaningful job to be done. A customer spending their own time or money to do a job chooses your solution as the best option for them. Pick a meaningful job—the more frequently occurring the better—and offer a significant advantage (better, faster, or cheaper).

  2. It has a growth engine. Build or price growth into your product. There are two viable growth engines for tech companies:

    1. Viral, or “inherently viral” growth: Customers either intentionally or unintentionally recruit new customers by using your product. Social platforms use intentional virality; this occurs when users get a more fulfilling experience as more of  their friends join the same platform. Unintentional virality happens when customers inadvertently introduce others to the product experience, similar to how shared bike or scooter riders serve as mobile billboards for the experience.

    2. Economic paid acquisition: Contribution margins from customers are recycled into advertising, marketing, and other PR activities that successfully drive additional customers. Note well, though: this engine is “economic” because it must fuel itself. It’s easy to simply buy customers, but only real value makes them stay. Your product must collect far more value over the lifetime of the customer relationship than the cost of acquiring that customer in the first place.

  3. It has a rapid time-to-value: How long must customers wait for the “aha” moment? With my first Uber ride in late 2011, it took about two minutes for that moment to arrive: I installed the app, entered my credit card, ordered a car, and it was waiting for me by the time I walked down one flight of stairs. Aha! I knew I’d never wait for another taxi in San Francisco again. The faster and more simply your product can prove its worth, the higher rate of conversion from tire-kickers to retained customers. For software startups, ask yourselves this question: What’s the one screen that will make your customers get it? 

Step 7: Pick, Beta, Ship

Now’s the time to let the rubber meet the road and get a minimal product into a customer’s hands. Can it do the job better than their prior solution? Keep iterating until you’re getting that one specific job done. 

Roku’s first two MVPs weren’t a success (sound bridge + photo bridge). It was however, through the process of mapping out MVPs candidates, testing, and learning that brought intense clarity to and laid out the infrastructure for what would ultimately work — a delivery platform for Netflix. Even if the first MVP isn’t a hit, you’ll be building the muscle needed for the company such as making key hires.

Don’t pivot to a different job unless you’ve learned something new that causes you to reconsider your initial hypothesis. This may take a lot of time, but that’s perfectly fine. Stay focused on solving that job until you prove your hypothesis right or wrong. The world is littered with failed companies that never got a product right. Where there’s a job to be done, you can build a solution with enough time, talent, and focus.

Roku’s Winning MVP:

Roku_MVP7.png

Step 8: Double-Down

When you finally find your product getting a recurring job done better than any other tool, stick with it. Don’t take your eye off the prize and move onto new things too quickly.

Earn the right to increase scope and move on to other jobs, platforms, and customer archetypes after solidifying your position among this first set of customers―and creating a sustainable growth engine.

Final Thoughts

Founders become infatuated with a bold and ambitious mission—as they should. However, what separates a startup that actually brings its mission to life from one that doesn’t is the ability to shed the rose-colored glasses and solve for a small job to be done.

A proper MVP framework, such as our MVP Tree presented here, is a critical first step in fulfilling your mission, even though it might seem like you are selling it short. Be patient. It won’t be easy realizing your mission, and it shouldn’t be. If your mission were easy, it would already be done by someone else!

Want to see an MVP Tree for another startup? Tweet @Shawnvc to nominate a company!


E Pluribus Unum – A Rallying Cry for National Service

This post previously appeared in Real Clear Defense.

 

The Latin phrase E Pluribus Unum – Out of Many, One – is our de facto national motto. It was a rallying cry of our founders as they built a single unified nation from a collection of states. It’s a good reminder of where we need to go.

Today as our country struggles to find the common threads that bind us, we need unifying, cohesive, collective, and shared national experiences to bring the country together again.

Here’s what we’ve done to get started.

And why I did it.

————-

Pete Newell, Joe Felter and I met over coffee in 2016 to discuss our common goal – how to get students in research universities who would never consider working on national security problems engaged in keeping the country safe and secure.

Today, our contribution to national service, Hacking for Defense, turned five years old. In this class, students learn about the nation’s emerging threats and security challenges while working with innovators inside the Department of Defense.

The result? The class teaches students entrepreneurship while they engage in what amounts to national public service. From our single class at Stanford, Hacking for Defense is now taught at 47 U.S. universities having graduated 500 teams and 2,000+ students.

Why Serve?
My interest in starting Hacking for Defense was rooted in my long belief in service – not just paying taxes or voting, but actual service. I had a great career as an entrepreneur, but always believed that at some point in your life you need to serve others – whether it’s God, country, community, or family. And I did so in my stints in the military and public service and as an educator.

Disconnection
Looking back it’s clear that our country was far more cohesive when millions of us had to physically share space and live and work with others who didn’t think like us or talk like us. The Air Force turned out to be the first melting pot I would encounter (Silicon Valley the next) where individuals from different classes and culture had the opportunity to share a common goal and move beyond the environment they grew up in. At each base I was stationed in, I hung out with a group that tutored each other, read books together, went on adventures together and learned together. And while most of us came from totally different backgrounds (before the Air Force, I never knew you put salt on watermelon, that Spam was food or muffuletta was a sandwich), as far as the military was concerned, we were all the same.

But a half-century ago, the country started to disconnect from each other and our government when we eliminated national service. In 1973, near the end of the Vietnam War, the U.S. ended compulsory military service and has since depended on an all-volunteer military.

One result of this experiment: the risk for the sons and daughters being sent into harm’s way is no longer evenly distributed across all segments of society. Many American families no longer have a personal vested interest in our nation’s decisions about foreign policy.

The unintended consequence of this decoupling is seemingly perpetual wars (we’ve been in Afghanistan for two decades). And with our country focused for two decades on fighting non-nation states – Al-Qaida and Isis – Russia re-armed and China has built weapons that have negated our strengths, matched our military, and threaten democracy around the world.

Even more corrosive to the nation is that without any type of mandatory national or public service – not just military service – we eliminated any unifying, cohesive, collective, shared national experience, or shared values.

Values
Instead our values are shaped by what we read on social media, where we find an echo-chamber of others who think like we do. Technology that was supposed to bring us together has instead sold out the country for partisanship and division, for profit over national interest. Others found it politically and/or financially profitable to create distrust in the government institutions that protect and bind us. The result is that we’re easy targets for disinformation by adversaries intent on undermining our government and its institutions.

The world isn’t a benign place. Our freedoms and values need to be defended. Throughout history the capacity of human beings to think up new ways to kill one another has proved endless. My parents, along with millions of others, lost parents, siblings, and extended family in Nazi-occupied Europe. Volunteering for national service for me was a partial payback for the country that welcomed them, sheltered them, adopted them, and allowed them to become Americans. And as much as we wish it and try, we will not eradicate violent conflict in our lifetimes or even in our children’s lifetimes. Today, the struggle for freedom and human rights continues across the globe. Ask the Uighurs, or the people in Hong Kong or Tibet what happens when their freedom is extinguished.

A Contribution to National Service
Five years ago, listening to Pete and Joe talk about the problems the Department of Defense (DoD) faced reminded me of what I noticed inside the parts of the government where I was now spending time. While there were smart, dedicated people serving their country, few of students from the schools I was teaching at were there. Few of my students knew what the DoD or other branches of government did. It just wasn’t part of their lives.

It dawned on us that building on the last national curriculum I created – the National Science Foundation I-Corps, we could hit the ground running and create our own version of a national service. We envisioned a national Hacking for Defense program across 50 universities.

It’s taken five years, but I’m proud we’ve accomplished just that. The class is now adding 1,000+ students a year, many of them choosing to change career paths to work in national service or the public sector after graduation.

Still, there’s much more we can and must do.

While my entrepreneurial career allowed me to work with people who built great products and companies, my national and public service careers connected me to those who’ve dedicated their lives to serving others. And I’ve concluded that a life lived in full measure will do both.

We need to scale the existing national and public service initiatives –AmeriCorps, YouthBuild, PeaceCorps,U.S. Digital Service, Defense Digital Service, and conservation corps– that today only reach 100,000 people. We need to offer every high school and college graduate – all 4 million of them – a shared national experience.

In the face of forces working to tear us apart, we must remember that we are stronger together, more resilient together, more successful together, than we are apart. Our challenge is to bring unity back to a nation that is built on different backgrounds and beliefs. E Pluribus Unum – Out of Many, One.

Hacking for Defense is our contribution to what hopefully will be a much larger effort to help unify the country.

Lessons Learned

  • E Pluribus Unum– Out of Many, One
  • We need to find the common threads that bind us
  • We need unifying, cohesive, collective, and shared national experiences and values will help bring the country together again
  • Hacking for Defense is our contribution

Software Once Led Us to the Precipice of Nuclear War. What Will AI Do?

A version of this story previously appeared in Defense One.

The story of RYAN and Able Archer is an oft-told lesson of a U.S. intelligence failure, miscalculation, and two superpowers unaware they were on the brink of an accidental nuclear war — all because the Soviet Union relied on a software program to make predictions that were based on false assumptions.

As more of our weapons systems and analytical and predictive systems become enabled by AI and Machine Learning, the lessons of RYAN and Able Archer is a cautionary tale for the DoD.


In 1983, the world’s superpowers drew near to accidental nuclear war, largely because the Soviet Union relied on software to make predictions that were based on false assumptions. Today, as the Pentagon moves to infuse artificial-intelligence tools into just about every aspect of its workings, it’s worth remembering the lessons of RYAN and Able Archer.

Two years earlier, the Soviet Union had deployed a software program dubbed RYAN, for Raketno Yadernoye Napadenie, or sudden nuclear missile attack. Massive for its time, RYAN sought to compute the relative power of the two superpowers by modeling 40,000 military, political, and economic factors, including 292 “indicators” reported from agents (spies) abroad. It was run by the KGB, which employed more than 200 people just to input the data.

The Soviets built RYAN to warn them when their country’s relative strength had declined to a point that the U.S. might launch a preemptive first strike on the Soviet Union. Leaders decided that if Soviet power was at least 70 percent of that of the United States the balance of power was stable. As the months went by, this number plummeted. By 1983, RYAN reported that Soviet power had declined to just 45 percent of that of the United States.

This amplified Soviet leaders’ paranoia. After 25 years of back-and-forth in the nuclear arms race, the Peacekeeper ICBM and the Trident SLBM were tipping the balance in favor of the United States. Responding to the Soviet introduction of SS-20 intermediate-range ballistic missiles to Eastern Europe in 1983, the U.S. deployed Pershing II and Ground Launched Cruise Missiles missiles to Western Europe, which reduced warning time of attack on Moscow to less than eight minutes. And in March 1983, President Reagan announced the Strategic Defense Initiative – “Star Wars” – to intercept Soviet ICBMs, then piled on just weeks later by publicly labeling the Soviet Union “the Evil Empire.” And to cap off a very bad year in the Cold War, in September 1983 the Soviets accidentally shot down a civilian 747 airliner—KAL 007—killing all 269 aboard.

By 1983, Soviet political and military leaders truly believed a nuclear war was coming. The RYAN program took on even greater importance. To feed RYAN, the KGB made its top priority to collect indicators of anything that might precede a potential surprise nuclear missile attack. They were looking for direct indicators—had the U.S. Continuity of Government program (doomsday planes) been activated? Had the U.S. given advance warning to launch our strategic nuclear forces? They also collected secondary indicators. Their agents inside the U.S. and allied countries watched for heightened activities in and around Washington offices (White House, Pentagon, State Dept, CIA, etc.), including the White House parking lot, places of evacuation and shelter, the level of blood held in blood banks, observation of where nuclear weapons were stored, etc. Some of the indicators were based on a mirror-image of how the Warsaw Pact would prepare for war. Soviet case officers were instructed to look for deviations in the behavior of people in possession of classified information suddenly moving into specially equipped secure accommodations.

While most of the KGB station chiefs and case officers thought Moscow was being paranoid, they dutifully reported what they thought their leaders wanted to hear.

By November 1983, Soviet military and political leaders had convinced themselves that a nuclear first strike from the United States was probable. The RYAN program told them that the odds favored the U.S., and the war indicators in Moscow were flashing red.

That month, NATO ran a highly realistic set of wargames in Europe called Able Archer 83. These included an airlift of 19,000 U.S. soldiers in 170 aircraft under radio silence to Europe, the shifting of commands from Permanent War Headquarters to the Alternate War Headquarters, and practicing nuclear weapons release procedures.

In reaction, the Chief of the Soviet Air Forces ordered all units of the Soviet 4th Air Army on alert which included preparations for immediate use of nuclear weapons. It appears that at least some Soviet forces were preparing to preempt or counterattack a NATO strike launched under cover of Able Archer.

Luckily, no one overreacted. The Able Archer 83 exercise passed.

For years, the U.S had no idea that the Soviet Union had believed the exercise was a cover to launch a nuclear first strike. The Berlin Wall had fallen by the time information from a defector and an end-of-tour letter from the U.S. general responsible for Air Force Intelligence in Europe prompted presidential intelligence board to revisit what the Soviets had thought. In hindsight, RYAN and Able Archer took the Cold War to the brink of Armageddon.

Even when RYAN was reporting that the U.S. had a decisive military advantage, what made the Soviets believe that we would launch a first-nuclear strike? No one knows. However, given Nazi Germany’s surprise attack on the Soviet Union in WWII, resulting in 25 million dead and the extreme devastation inflicted on their country, the Soviet Union had reason to be paranoid. Some have suggested that the Soviets had interpreted President Carter’s 1980 Presidential Directive 59 Nuclear Weapon Employment Policy as preparation for a nuclear first strike. Perhaps the Soviet Union ascribed their own plans for a first strike on the U.S. to their Cold War enemy. Or perhaps the U.S. actually did have a first-strike option in one of our operational plans that the Soviets discovered via espionage.

Why were the Soviets convinced that a war would start with a war game? Several months after Able Archer, the Soviet Minister of Defense publicly acknowledged his country’s inability to tell a big NATO exercise from an actual attack: “It was difficult to catch the difference between working out training questions and actual preparation of large-scale aggression.” It’s quite likely that the Soviets’ own plans for launching a war in Europe would have been as part of a war game.

Certainly the Soviets, believing the signals of the RYAN alert system, were primed to assume a U.S. attack. In attempting to automate military policy and potential actions, the Soviets had amplified their existing paranoia. (A movie called War Games came out that year with some of the same themes.)

A Cautionary Tale for Automating Policy and Prediction
Forty years ago RYAN attempted to automate military policy and potential actions. But in the end, RYAN failed in actually predicting U.S. intent. Instead, RYAN reinforced existing fears, and accidently created its own paranoia.

While the intelligence lessons of RYAN and Able Archer have been rehashed for decades, as our own AI initiatives scale no one is asking what lessons RYAN/Able Archer should have taught us about building predictive models and what happens when our adversaries rely on them.

Which leads to the question: What could happen when we start using Artificial Intelligence and Machine Learning to shape policy?

  • What could happen when we start using artificial intelligence and machine learning to shape policy?
  • Will AI/ML actually predict human intent?
  • What happens when the machines start seeing patterns that aren’t there?
  • How do we ensure that unintentional bias doesn’t creep into the model?
  • How much will we depend on an AI that can’t explain how it reached its decision?
  • How do we deconflict and deescalate machine-driven conclusions? Where and when should the humans be in the loop?
  • How do we ensure foreign actors can’t pollute the datasets and sensors used to drive the model and/or steal the model and look for its vulnerabilities?
  • How do we ensure that those with a specific agenda (i.e. Andropov, chairman of the KGB) don’t bias the data?
  • How do we ensure we aren’t using a software program that misleads our own leaders?

The somewhat-comforting news is that others have been thinking about these problems for a while. In 2020, the Defense Department formally adopted five AI ethical principles recommended by the Defense Innovation Board for the development of artificial intelligence capabilities: AI projects need to be Responsible, Equitable, Traceable, Reliable and Governable. The Joint Artificial Intelligence Center appointed a head of ethics policy to translate these principles into practice. Under JAIC’s 2.0 mission, they are no longer the sole developer of AI projects, but instead providing services and common software platforms. Now it’s up to the JAIC ethics front office to ensure that the hundreds of mission areas and contractors across the DoD adhere to these standards.

Here’s hoping they all remember the lessons of RYAN.

Lessons Learned

  • RYAN amplified the paranoia the Soviet leadership already had
  • The assumptions and beliefs of people who create the software shape the outcomes
  • Using data to model an adversary’s potential actions is limited by your ability to model its leaderships intent
  • Your planning and world view are almost guaranteed not to be the same as those of your adversary
  • Having an overwhelming military advantage may force an adversary into a corner. They may act in ways that seem irrational
  • Responsible, Equitable, Traceable, Reliable and Governable are great aspirational goals

Hacking for Allies

During the Cold War U.S. diplomatic and military alliances existed to defend freedom around the world. Today, these alliances are being reshaped to respond to Russian threats to the Baltics and Eastern Europe and to China’s economic, military, and technological influence worldwide.

Hacking for Allies
The U.S. Department of Defense works with our allies to expand their industrial base. We benefit because it helps the North Atlantic Treaty Organization (NATO) standardize on equipment and our allies’ industrial capacity, capability and workforce can complement those of the United States. Allied countries benefit under the Global Capabilities Program which offers allies opportunities to partner on research and development, with the goal to build prototypes and eventually co-produce systems.

The goal of Hacking for Allies, (which will launch a second cohort next week,) is to connect dual-use startups (those that sell to companies and government agencies) in allied nations to the U.S. defense ecosystem.

Startup ecosystems in many of the smaller NATO countries don’t enjoy the long-established expertise or funding opportunities we have in Silicon Valley or other innovation clusters. For example, today it takes 7 to 10 years for a company in Norway to sell into the U.S. defense market. To shorten that time, we wanted to teach them the best practices of Hacking for Defense/Lean Startup/I-Corps (customer discovery, MVPs, pivots, business model canvas, etc.) And give them a roadmap for how to play in the U.S. defense market.

Hacking for Allies – Norway Edition
Norway is a founding member of the NATO and they are NATO’s bulwark against Russian incursion in the strategically critical “High North” region. Norway has experienced Russian simulated air attacks on Norwegian targets and jamming of GPS signals that threaten civilian aviation. Last fall, Russia conducted a cyberattack on the Norwegian parliament.

The Norwegian Defence Research Establishment, Innovation Norway, and H4XLabs (BMNT’s early stage tech accelerator) just ran the first Hacking for Allies cohort of Norwegian companies. The teams were guided using the “player-coach” approach. The program conducted weekly deep dives with each company working through their challenges. It combined this with sourcing outside experts for all cohort topics of interest. These topics included: Raising funds as a European company, what it takes to work with the DoD, customer discovery for adjacent markets, and more.

85 startups applied for this first cohort. They were down-selected to a few promising teams. Some of the teams included:

  • Alva Industries – making 3D printed electric motor stators 20% more efficient. That means more battery life and/or power for unmanned aerial vehicles.

  • Excitus: a medical device to clear blocked airways in the battlefield. Their device replaces existing suction pumps with the equivalent of a handheld vacuum cleaner with a sterile disposable cup.

  • Fieldmade: An additive manufacturing microfactory with a library of certified printable 3D parts, which radically reduces parts inventory.

  • Ubiq Aerospace: started as de-icing for drones but potentially pivoting to sensor data fusion.

The teams launched out of the program talked to tons of people in the U.S. they never would have connected with (“it would have taken us years to make these connections”), made pivots, built new product suites and capabilities around their core services – all of which made them attractive to wider markets — and raised additional funding.

Now a new cohort of the program is getting under way. Innovation offices from NATO countries and other allies who want to teach their dual-use startups how to work with the U.S. government should attend the Hacking for Allies webinar February 23rd at 8 am Pacific, 11 am Eastern.

Register here.

When National Security Falls Between the Cracks

A version of this article – co-authored with Raj Shah and Joe Felter – previously appeared in War On The Rocks.

After hearing from 20+ guest speakers, including two Secretaries of Defense, Generals, Admirals and Policy makers in our Technology, Innovation and Modern War class – the direction of technology and the future of national security came into sharper focus. This series of articles will offer suggestions to transform the DoD to face the challenges ahead.


As it is currently organized, the U.S. government is ill-equipped to deal with the growing number of national security challenges that exist at the intersection of commercial and defense technology. Innovation opportunities are slipping between Washington’s organizational gaps, and America’s enemies are too.

President Joe Biden has already taken several steps that suggest he recognizes the gravity of this problem. He has elevated the science adviser to a Cabinet-level position, appointed a number of talented individuals to high-level cyber security posts, and created a national security adviser for cyber and emerging technology. But more changes are needed. Most importantly, Biden should create a deputy national security adviser with sufficient staff and authority to coordinate innovation and technology policies across the entire government.

Blurred Lines
From artificial intelligence to biotechnology, U.S. national security is inexorably and increasingly intertwined with commercial technology. Unlike in the Cold War, advancements in areas with important national security implications come from private sector research labs and are driven by consumer demand rather than government directives. Yet it remains unclear who in the government now sets policy for — or has final say over — issues that cross the boundaries between academia, defense, commerce, and diplomacy. In addition to the National Security Council, bureaucratic contenders currently include the Commerce Department, Federal Communications Commission, Federal Aviation Administration, Council of Economic Advisers, Treasury Department, the Office of Science and Technology Policy, and the Office of Management and Budget.

In theory it is the National Security Council that should coordinate a “whole of government” response that brings together tools from different agencies to address emerging threats. Indeed, this was the purpose for which the council was created in 1947. However, Cabinet members who are responsible for vertical portfolios still manage the government’s large functional agencies, and there continues to be significant overlap between those who handle commercial, defense, and diplomatic policy. It is this organizational design that creates blurred bureaucratic lines and weakens U.S. national security. 

There are a number of specific areas where these blurred lines led to subpar policies that undermined America’s technological competitiveness and left the country weaker against adversaries like Russia and China. Consider four recent examples: semiconductors, drones, the SolarWinds hack, and SpaceX’s Starship.

In the absence of a coordinated technology and industrial policy, the United States has become dangerously reliant on computer chips produced in a handful of countries for all its defense and commercial needs. Originally, all of America’s computer chips were produced in Silicon Valley. Today, none are made there. The United States is dependent on two companies, Taiwan Semiconductor Manufacturing Co. in Taiwan and Samsung in Korea, for the chips used to build a substantive part of its defense electronics. Around 60 percent of the chips Taiwan Semiconductor Manufacturing Co. makes are for American companies. Even Intel, the supplier of most of the central processing units used in desktop computers and data centers, will be outsourcing manufacturing of its next generation of chips to Taiwan. Taiwan Semiconductor Manufacturing Co. has announced that it will build a chip factory in the United States, but even when complete it will produce less than 3 percent of the company’s capacity in Taiwan.

In the case of drones, the U.S. government also missed an opportunity to maintain the country’s competitive edge. Where there was once a nascent U.S. commercial drone industry, the Chinese company DJI now controls 69 percent of the global market. Not only is DJI at the cutting edge of such crucial drone technologies as motors, speed controllers, radio modules, cameras, and artificial intelligence, but it has also allegedly used its hobby drones to map U.S. military installations. As a result, the former assistant secretary of the Air Force for acquisition, technology, and logistics lamented that the lack of Defense Department support for American drone startups was a critical missed opportunity.

In some cases, the danger is more immediate. The SolarWinds cyber attacks revealed how the failure to secure commercial software can compromise even well-secured government networks. In this case, the Russian government exploited commonly used civilian network management software in order to infiltrate the Treasury, State, and Defense departments. By adding malicious code to the SolarWinds update tool, hackers gained access to the data of 18,000 customers — including many in the U.S. government.

Efforts to harden government agencies and protect sensitive information against infiltration will fail so long as adversaries can circumvent them through commercial companies. Private companies have lobbied Congress against requirements that would mandate expensive investments to secure their systems. Furthermore, financial penalties for large-scale breaches of commercial companies are trivial. SolarWinds received national attention because it was an attack on the government, but cyber attacks on private companies continue unabated.

Finally, the fate of the SpaceX Starship offers an example of how government oversight agencies can stifle innovation when they are unable to keep pace with the speed of contemporary technological development. In temporarily halting test launches of the SpaceX Starship, the Federal Aviation Administration sought a lengthy investigatory period that put unnecessary roadblocks in the way of a company that is transforming access to space. In innovation, failure is part of the process. Test rockets blow up, test airplanes may crash. If you do not push the envelope and discover the limits of your design you are not innovating fast or far enough. It goes without saying that you strive to minimize loss of life and property, but the rules governing innovation programs should recognize a heightened need for speed. The U.S government appreciated this when developing rockets and experimental aircraft in the 1950s and 1960s — better organization could help it apply this understanding again today.

Reorganize to Win
To solve these problems, the White House needs to ensure there is a single organization that has stewardship of all the issues that cross existing lines between national security, commerce, and technology. 

An effective way to do this would be to create a new deputy national security adviser. Armed with sufficient resources and influence, this position would be given real responsibility to help shape the budget, trade policy, and alliance strategy. This adviser would ideally sit on both the National Security Council and National Economic Council, where they could coordinate policies covering a range of technological and scientific issues. These would include the fields of artificial intelligence, machine learning, biotech, hypersonics, and microelectronics, to name just a few. This position would also be responsible for building a civil-military alliance for protecting civilian assets and incentivizing private companies to do work with a national security payoff. The reach of the new deputy national security adviser could also be enhanced by putting appointees in key agencies such as the Department of Defense, the Office of Management and Budget, and the Office of Science and Technology Policy who would be responsible for leading and coordinating innovation policy across the government.

The Biden administration may opt for a different form of reorganization. Several plausible alternatives have been proposed. Regardless of the approach, the important thing is for Washington to recognize and close the organizational gaps its adversaries have exploited.

Regaining America’s Technological Edge: Build a Civil-Military Alliance

A version of this article – co-authored with Raj Shah and Joe Felter – previously appeared in The National Interest.

After hearing from 20+ guest speakers, including two Secretaries of Defense, Generals, Admirals and Policy makers in our Technology, Innovation and Modern War class – the direction of technology and the future of national security came into sharper focus. This series of articles will offer suggestions to transform the DoD to face the challenges ahead.

“We need to couple the $150 billion a year U.S. Venture capitalists (VCs) spend to fund new ventures with the speed and urgency that the DOD now requires.”


We stand at a crossroads of history. The decisions this new administration makes about how to engage, incite, and rally the full force of American capitalism will determine whether we stand in the backwash of China’s exhaust or we continue to lead.

In the twenty-first century our country’s military and economic power will rely on the rapid development and deployment of new technologies—5G, microelectronics, cyber, AI, autonomy, robotics, access to space, drones, biotech, quantum computing, energy storage, and others yet to be invented.

The technologies we employed to prevail in the Cold War and the War on Terror were largely developed by big defense primes and U.S. government labs, but today most of the advances come from commercial vendors—many of them Chinese. For the first time in the history of modern civilization most of the technologies needed for the military are driven by consumer demand and the potential for profit—not government directives.

China is executing a plan to win with new technologies through its strategy of Military-Civil Fusion—they’ve torn down the barriers between Chinese companies and academia and its military. Its purpose is to improve China’s military technology by integrating Chinese industry and academia so it can develop the Peoples Liberation Army into a world-class military equal or superior to the U.S. Meanwhile, its Orwellian National Intelligence Law mandates that citizens and companies must cooperate with state defense and intelligence work. (Yes you, Apple and DJI.) Simultaneously, the Chinese Communist Party is integrating party leadership in both state-owned companies and private businesses (which account for 60 percent of the country’s output).

The takedown of Jack Ma, founder of Alibaba and Ant Group, is a warning shot to every Chinese CEO that regardless of a company’s size, the party and government are back in control.

China’s Military-Civil Fusion and National Intelligence Law stacks the deck against every U.S. and Western company. You’re not competing against an individual Chinese company; you’re competing against the Chinese government.

What it means for the U.S. military is that our national security is now inexorably intertwined with our success in leading in commercial technology. Developing, maintaining and safeguarding our technological edge will be key to prevailing in great power competition.

Today, the DOD requirements and acquisition systems are driven by a sixty-year-old model predicated on 1) predicting the future (both threats and technology), 2) delivering solutions decades out optimized for lifecycle costs and 3) assuming that government labs and incumbent prime contractors drive technological innovation. Every one of those assumptions are no longer true.

Maintaining our technology leadership will require the DOD to understand that delivering new/disruptive innovation versus execution of existing technologies happen at different speeds, with different people, organizations, culture and incentives. Buying the next incremental version of a gun, tank, plane, ship, means you can (hope to) predict its lifecycle cost, delivery schedule, etc. And you can assume that with enough dollars it will appear.  That’s not how innovation actually happens. And we are living in that new world where innovation is happening continually. We don’t need to abandon our methods of buying incremental improvements, but we must have a parallel set of activities—at scale—to keep up with our adversaries who already understand this.

How can we effectively compete? One of the reasons the United States prevailed in the Cold War with the Soviet Union was that total government control of innovation is an inherent weakness. When the Soviets launched ideological purges of their best and brightest and jailed their dissidents, they throttled innovation at scale. There were no Soviet Steve Jobs or Bill Gates. Meanwhile in the U.S., venture capital was funding startups led by iconoclasts, troublemakers and dissidents. The result has been a half-century of continuous and extremely profitable disruptive innovation.

The U.S. military must now invest in new capabilities and concepts to reimagine how it fights. It needs to use rapid/agile innovation, disposable systems that take advantage of innovations in the commercial technology base. We need to couple the $150 billion a year U.S. Venture capitalists (VCs) spend to fund new ventures with the speed and urgency that the DOD now requires. We need to leverage the inherent advantages of a capitalist democracy and align public and private sector incentives to drive technology advances.

We need a Civil-Military Alliance. One that’s driven by incentives, not coercion. By public-private partnerships, not government control. Private industry, from primes to startups incentivized at scale, will ensure our leadership in science, in industry, and in new technologies.

A few suggestions:

For a Civil-Military Alliance the DOD needs new sources of disruptive innovation and ideas. Not as replacements for the valuable prime contractors we have but as complementary partners who are agile, can attract the best and brightest, and are willing to bet their company on new ideas.

In the 20th century most military contractor-built hardware, and software was an add-on. When an upgrade was required, a new contract was needed, which took years. The new generation of military systems will be built around software with hardware as the add-on. Upgrades can happen over the air in weeks not years.

Today, the world’s innovation ecosystem for new technologies are VCs and startups. To make Civil-Military Alliance work the DOD needs to understand that no investor wants a new startup to spend three years going through the existing DOD requirements and acquisition process when there’s a viable alternative in a commercial market.  (Today, even if a startup gets an early DOD award of a million dollars it’s not enough to incent the technologies they need.)

Few inside the department of defense understand how the commercial venture capital/startup innovation ecosystem works. Going forward, inside every service acquisition arm there needs to be a deputy who can go to a whiteboard and draw how private investors make money. And more importantly work with them to get the best and brightest of their portfolio companies engaged.

One solution is that the DOD needs to pick new entrants as winners at scale. Today, no DOD acquisition chief wants to be in front of Congress explaining to a committee chair why the incumbent vendor in their district lost. That will happen unless both the DOD and Congress clearly articulate that the process for picking winners for existing incremental changes is different from disruptive ones. And that the default ought to be new vendors. Each service should pick 1-2 startup/scale-up winners and buy heavily.

As part of the Civil-Military Alliance, the U.S. needs to massively reinvest in critical technologies. China has invested over $100 billion in moving its manufacturing base from making low-tech products to rapidly developing ten high-tech industries including electric cars, next-generation computing, telecommunications, robotics, artificial intelligence, and advanced chips. They’ve raised over $50 billion just for building an indigenous semiconductor industry.  We need to pick critical industries and do the same at scale. Not only the incumbents but with new entrants.

Another part of a U.S. Civil-Military Alliance would be transforming our existing government R&D Labs. The U.S. spends $15 billion a year on forty-two Federally Funded Research and Development Centers (FFRDCs)—twenty-six R&D labs, ten study and analysis centers, and six system engineering and integration centers. Set up in WWII and scaled during the Cold War, the truth is that most of them are no longer the country’s cutting edge. We need to radically reorient their relationship with the new centers of innovation.

Finally, the existing prime contractors have sat out the innovation game. While many have a token VC arm, today they are not leading in disruptive technology, particularly if the profit incentives are to continue to lobby and build the status quo and get a new contract every time a system needs an upgrade. We need serious incentives to have primes get into the disruptive innovation game. They need to actively invest in and buy startups—at startup multiples—with billions, not millions. Their CFOs need to tell us what incentives (tax write-offs, acquisition preferences, etc.) can be tied to rapid delivery and deployment—not demos—of new technologies and systems.

This is a critical time for our nation. Our adversaries aren’t waiting. The Biden administration can choose business as usual and let U.S. leadership in technology disappear and the country founder in the backwash of the coming China age. Or it can choose to build a Civil-Military Alliance ensuring our leadership in science and in industry, while maintain our core values. Our hopes for peace, security, and self-determination around the world, require us to make this effort.

Pentagon Advisory Boards Need to Offer 10X Ideas, Not 10% Ones – P.S. You’re Fired

A version of this article – co-authored with Raj Shah and Joe Felter – previously appeared in Defense One.

(UpdateAfter this article was written the Secretary of Defense fired every member of all 40+ defense advisory boards and will start anew. Hopefully the suggestions in this post will help inform how they reconstitute the boards.)


Last week the Biden administration delayed seating several Trump appointees to defense advisory boards. It’s a welcome signal that incoming leaders recognize these groups are essential, not just patronage jobs. But the review needs to go much further than that.

One of the many changes the Department of Defense needs to make is to reimagine the role and makeup of its advisory boards and ask them for 10x advice, not 10% advice.

—-

The Defense Department is at a crossroads. Incremental improvements are no longer good enough to keep up with China; the Pentagon needs substantive and sustained changes to its size, structure, policies, processes, practices, technologies, and culture. The last administration asked most of the Pentagon’s 40-plus boards for advice on small improvements — with a few notable exceptions, such as the Innovation Board’s Software Study and the work of the National Security Commission for AI — the latter an independent effort chartered by Congress.

This is no longer sufficient. The DoD needs to ask for big ideas, boards who can deliver transformative advice, and it needs to reshape its boards to provide them.

What’s an Advisory Board?
DOD’s Advisory Boards are comprised of individuals outside of the organization who can provide independent perspectives and advice. An advisory board has no official role in managing – they can’t hire, fire, or order people to do things.  All they can do is offer advice.  But with the right membership and senior support, they can have tremendous impact. In the past decades, advisory boards have challenged conventional thinking and nudged leaders towards major policy changes.

Most of the DOD advisory boards are in the services or agencies. For example the Army and the Air Force each have their own Science Board, the military academies each have an advisory board they call the “Board of Visitors.” The office of the Secretary of Defense has 7 advisory boards: Policy, Innovation, Science, Business, Military Personnel TestingWomen in the Services, and Sexual Assault. (Steve had the pleasure of serving on one – albeit for a short time.)

Different Advisory Boards for Different Times
In times where the status quo is sufficient – when your company or country is the leader –  advisory boards are asked for advice about improvement – how to improve your existing systems. You appoint advisors who have detailed knowledge of existing systems and have long term institutional knowledge and connections. And you generally discourage Ideas that might disrupt the status quo.

However, these are not normal times. Incremental improvements no longer assure that our country can compete. For example, rapid innovation in new technologies – cyber, AI, autonomy, access to space, drones, biotech, etc. – is no longer being led by military/government labs, but instead comes from commercial vendors – many of them Chinese. The result is that unlike the last 75 years, the DOD can no longer predict or control future technologies and threats.

So it’s time for DoD leaders and staff to hand off requests for advice about incremental improvements to consulting firms and refocus their advisory boards on critical competitive issues.

The first order of business is overhauling the boards’ membership to support this turn toward rapid innovation. In the past, the DOD has had some extraordinarily effective advisory boards. During the Cold War examples included the Jasons, the Gaither Committee, the Land Panel, and numerous others. More recently the Defense Innovation Board had admirably carried that torch. Unfortunately several advisory boards have become moribund resting grounds for political apparatchiks.Today’s challenges demand the DOD’s advisory boards appoint the best and brightest regardless of party.

We believe the new administration can quickly refocus their boards in three steps: 1) reset the membership of the current DOD Advisory Boards to support rapid innovation 2) Think strategically about the future, and 3) Set high expectations for engagement and implementation.

Reset board membership and structure to support rapid innovation and transformation

  • 1/3 DOD insiders who know the processes and politics and help ensure non-standard solutions actually get implemented. They can steer the board away from dead-ends or incremental solutions.
  • 1/6 crazy DOD insiders – the rebels at work. They are the Uniformed and civilian leaders with great ideas that have been trying to be heard. Poll senior and mid-level managers and have them nominate their most innovative/creative rebels
  • 1/3 crazy outsiders. Innovators and technologists with new, unique insights in the last two years, who are in sync with the crazy insiders to build 10x solutions
  • 1/6 outsiders who represent “brand-name wisdom”. They provide top cover and historical context. Connectivity to large institutions required for implementation at scale

Once the new members are in place, DoD should ask for big and bold ideas in several key areas, including:

Think strategically about the future

  • Technology and innovation: Given finite budgets, how best to evaluate, choose, and scale a plethora of new technologies and new operational concepts?
  • Business practices: Examine and explore entirely new ways of building commercial partnerships and influencing the private sector.
  • Policy: Ensure we understand our adversaries and how they are fusing together military, economic, and private markets to challenge us. What issues require educating Congress and DOD leadership?
  • Human capital: How should we reshape the DoD’s personnel architecture to attract more technologists and fit into today’s more sclerotic career paths?

Finally, DoD leaders should ask for more than ideas; they should engage and lead the boards. They should set high expectations for engagement and implementation, and work up and down the chain to ensure recommendations are achievable. Do we need new authorities, laws, organizations? Do we need to reprogram existing budgets? Acquire new ones?The boards should report to the principals of their sponsor organizations, who should regularly review whether the boards have delivered real value to the mission.

Americans are ready to answer the call to service to help the DoD and the nation reform and strengthen.  The Biden Administration and DoD leadership have the rare opportunity to completely rethink and reset its Advisory Boards.  Successfully taking on this challenge will not only repair strained ties between the public and private sectors but is essential to the future defense of our nation.

Lessons Learned

  • Flush all the political appointees from the advisory boards. (Update: Done- fired everyone not just the new appointees..)
  • Replace them with people with the experience and expertise needed to help the U.S. keep its competitive edge
  • DOD leadership needs to ask and act for transformational, contrarian and disruptive advice
    • And ensure they have the will and organizations to act on it
  • Move requests for advice for incremental improvements to the consulting firms that currently serve the DOD

Reminder

Lessons for the New Administration – Technology, Innovation, and Modern War

Our recent national security class at Stanford, Technology, Innovation, and Modern War was designed to give students insights on how the onslaught of new technologies like AI, machine learning, autonomy, cyber, access to space, biotech, hypersonics, and others have the potential to radically change how countries fight and deter threats.

With 20+ guest speakers, including two Secretaries of Defense, Generals, Admirals and Policy makers, the class emphasized that winning future conflicts requires more than just adopting new technology and developing new weapon systems. It calls for a revolution in thinking about how these technologies can be adopted and integrated into weapons and other defense platforms, and more importantly, how they can create new operational and organizational concepts that will change the way we fight.

By the end of the class there were five surprises.

  1. One was a continuous refrain from senior DoD leadership that new tech, weapons, and operational concepts are insufficient to guarantee the U.S. will prevail in a great power conflict. In fact, these new technologies/weapons change the odds against us.
  2. Secondly, our senior military leadership recognizes that now more than ever we can’t go it alone. We need allies – existing and new ones. And that depends on a reinvigorated State Department and renewed emphasis on diplomacy in general.

Unstated by any of our speakers but painfully clear by class end were three other surprises:

  1. Our national security is now inexorably intertwined with commercial technology and is hindered by our lack of an integrated strategy at the highest level.
  2. Our adversaries have exploited the boundaries and borders between our defense, commercial and economic interests.
  3. Our current approaches – both in the past and current administration – to innovation across the government are piecemeal, incremental, increasingly less relevant and insufficient.

Lessons Learned
A few takeaways from our speakers. If you’re in the DoD and conversant with the National Defense and Military strategies and have read Chris Brose’s book The Kill Chain, none of this will come as a surprise. But for the rest of you, here they are:

  • The 2018 National Defense Strategy focused the DoD on Great Power competition. It called out China as a peer competitor to America, pursuing its goal of global dominance. At the same time, Russia has reemerged as a regional power.
  • For the last two decades, while we were focused on combating terrorism, China has explicitly developed weapons and operational concepts to target every one of our advantages- in weapon systems and operational concepts, but also in alliances, economic and diplomatic power.
  • Unfortunately, China has succeeded – many of our most exquisite systems on sea, in space or in other places are at risk. A majority of these weapons have now become legacy systems eating up future budget and resources.
  • Rapid innovation in new technologies – cyber, AI, autonomy, access to space, drones, 5G, biotech, quantum, microelectronics, etc. – are no longer being led by military/government labs, but instead come from commercial vendors – many of them Chinese. The result is that unlike the last 75 years, the DOD can no longer predict or control future technologies and threats.
  • A surprise for many of us was the tacit acknowledgment from our military and defense leaders that we cannot win a war alone, without allies. These senior leaders emphasized the importance of a more collaborative embrace of existing allies and creation of new ones. They put a premium on diplomacy, and the need for a better funded and robust State Department.
  • The result is that for the first time in almost a century, the U.S. is no longer guaranteed to win the next war.

The good news is every one of our military and civilian speakers conceptually understands all of this. And even better, all want to change the status quo. However …

Most are coming to the conclusion that the DoD is at a crossroads: Substantive and sustained changes in the DoD size, structure, policies, processes, practices, technologies, and culture are needed.

  • For example, our requirements and acquisition systems are driven by a 70-year-old model predicated on predicting the future (both threats and technology) and delivering solutions decades out; and optimized for lifecycle costs, not rapid innovation or disposable systems.
  • In the last four years we modernized the acquisition process, but it remains hindered by the requirements processes from the services, which still result in 88 Major Defense Acquisition Programs – where we spend our acquisition dollars – to buy legacy systems mostly built for past threats.
  • Some hints of the future force came from multiple speakers. Admiral Lorin Selby, the Chief of Naval Research, for example, had a compelling vision of the future fleet and an expanded industrial base.
  • The DoD has over 75 incubators and accelerators. We lead the world in demos of new technology but not in deployed systems. Few of these innovation activities have resulted in a major program of record. The DoD is making the right baby steps but needs to quickly focus on scaling innovation. This, of course, will require the difficult conversation of what legacy systems will be retired.
  • DoD’s relationship with startups and commercial companies driving these new technologies is hindered by a lack of understanding of their own and their investors’ interests. Venture capital and startups have institutionalized disruptive innovation. In the U.S. they spend $150 billion a year to fund new ventures that can move with the speed and urgency that the DoD now requires. While we’ve made progress, a radical reinvention of our civil/military innovation relationship is necessary if we want to keep abreast of our adversaries. This should include:
    • A Civil-Military Alliance driven by incentives not coercion. By public-private partnerships not government control. Private industry – from Primes to startups – incentivized at scale will ensure our leadership in science, in industry and in new technologies.
    • Reduce the dependence on bespoke and exquisite systems. Rapidly bring commercial technology into the DoD while adding proprietary defense components
    • Create new technology ecosystems around DoD technology needs by encouraging commercial interoperability around DoD standards. Awards and contracts to each new ecosystem.
    • Encourage and incentivize dual-use startups, scale-ups, and companies
    • Overhaul Federal Labs and Federally Funded Research and Development Centers (FFRDCs) to promote collaboration at scale with startups and venture investors
    • Each service should pick 1-2 startup/scale-up winners and buy heavily
  • Pentagon leadership will need to be selected on the ability to innovate – empower the innovation insurgents and elevate risk takers that understand technology.
  • We’ve failed to engage the rest of the populace in our mission. Americans – including extraordinarily talented students from our top universities — are ready and willing to serve in some capacity. We’ve shown little interest in providing the incentives and expanding the opportunities required to make that happen.

However, these observations about changes needed in the DoD surfaced a much bigger problem, one that civilian leadership has not yet acknowledged: National security is now inexorably intertwined with commercial technology and is hindered by our lack of a national industrial and economic policy. There is an urgent need for an integrated strategy and policies.

These are not problems of technology. They’re problems of organizational design, incentives, out of the box thinking and national will.

The American people will need to demand more of their government and elected officials. The status quo will need to be broken. Substantive change will require new ideas, not better versions of the ones we have. For example:

  • The new Biden senior White House organizational structure still treats technology as a standalone issue. That’s a status quo position and a losing hand. We need to recognize that the boundaries between our defense, commercial and economic interests are interrelated.
  • We need to build the innovation capacity across the interagency- coordinated and synchronized by senior executive branch leadership. One way of implementing this would be creating a political appointee in key government agencies that acts as the interagency single point of innovation leadership cutting across organizations including but not limited to the DoD, National Security Council, Council of Economic Advisors, OMB, FCC, and OSTP.
  • Create a new Deputy National Security Advisor to coordinate and synchronize innovation and industrial policies across these multiple agencies
    • With real influence and responsibility on budget, trade policy, and alliance strategy
    • Specifically coordinate national policies of 5G, AI, machine learning, autonomy, cyber, access to space, biotech, hypersonics, microelectronics, etc.
    • Owns Civil/Military alliance for engaging and incentivizing new entrants and incumbents and protecting civil assets
    • Sits on the National Security Council and National Economic Council

These changes will require Congress, defense contractors and the executive branch to pull in the same direction to change that equation.

The good news is that we have all the tools needed to succeed, we just need the willpower.  And we must not forget what’s at stake. Democracies, while messy, are a force for good.  Self-determination with codified freedoms is the most moral system of organization mankind has developed.  Getting the reforms we examined in this class is essential to the preservation of democracy and maximization of peace.  It is most certainly a noble endeavor.

In future articles we’re going to offer specific solutions to transform the DoD to face the challenges ahead, not behind.

Steve, Joe, and Raj

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