Steve Blank Why is the government not the biggest version of a start-up?


This article has already been published in War On The Rocks

There was a time when a large part of the American academic world was engaged in weapons systems research for the Department of Defense and the intelligence community. Some of the best and brightest workers wanted to work for defense contractors or corporate research and development labs. And the best startups out of Stanford were the construction of components for weapons systems.

Indeed, Silicon Valley was born as a weapons systems development center and its software and silicon made it possible to put an end to the cold war.

During the Second World War, the United States did something that their opponents did not do; It has recruited professors and graduate students as civilians in 105 colleges and universities to build state-of-the-art weapons systems – nuclear weapons, radar, etc. After the Second World War, the military-academic relationship so effective against Germany and Japan mobilized to face the Soviet threat. and almost all the research universities (Massachusetts Institute of Technology, Stanford, Caltech, Harvard, Columbia, Johns Hopkins, University of Michigan, University of Wisconsin, Cornell, University of Chicago and many others) continued their research on War weapon systems.

One of them was Stanford, whom Provost Fred Terman (the father of American electronic warfare and electronic intelligence during World War II) had built to be a center of Excellence in microwaves and electronics. Rather than centering the university on research, Terman made the radical decision to encourage Stanford professors and graduate students to set up companies applying engineering to urgent military problems. The companies they created in the 50s and 60s were based on contacts and defense contracts with Stanford – microwave components, electronic warfare and intelligence systems, and then on the first wave of semiconductor companies . As there was no venture capital, these early startups were funded by initial sales to both arms – sourcing donors and sub – contractors.

But this quarter-century relationship between the army and the universities ended in 1969. In the midst of the Vietnam War, student riots protesting against military research forced end of classified work on most university campuses. One of the unintended consequences has been that many academics have gone on to found a wave of startups selling their technology to the military. In Stanford, for example, after the April 1969 student riots that shut down Applied Electronics' laboratory, James de Broekert, who was building electronic intelligence satellites, left the university and co-founded three military intelligence companies. Silicon Valley: Argo Systems, Signal Science and Advent Systems.

In the space of a decade, the rise of venture capital in Silicon Valley has allowed startups to find business customers rather than military customers. And from then on, innovation in semiconductors, supercomputers and software would be driven by startups, not by the government.

After the attacks of September 11, 2001, and memories of the fall of the Twin Towers, this ecosystem of military, academic, corporate, and start-up players came together throughout the decade when American businesses felt the patriotic duty to help their country to defeat a common enemy.

But Snowden's revelations in 2013 once again damaged this tenuous relationship. In hindsight, the damage was not the result of what the United States was doing, but the inability and reluctance of the Pentagon to admit why it was doing it: after the failure of intelligence By September 11, security agencies were overcompensating for data mining as well as electronic and telephone surveillance, including on US nationals.

Without clearly explaining why this had been done, startups, already funded by increasingly large venture capital pools, have abandoned their cooperation with the Defense Department and focused on high returns on social media and social media. commercial applications. The commercial applications of Big Data, Machine Learning, Artificial Intelligence, Drones, Robotics, Cyber, Quantum Computing and Biotechnology are the fundamental building blocks on which the Pentagon needs to build weapons of the 21st century. Yet the development of these advanced technologies is now driven by commercial interests and not by the Department of Defense.

American opponents understand this. China is closely integrating its defense sector with startups, companies and universities in "military-civilian fusion". Russia, Iran and North Korea have also merged their activities.

Replenishing the closely linked military, academic and commercial ecosystem that was once the Department of Defense forces the Pentagon to relearn its skills, overcoming decades to avoid the political and social problems of what it takes to rally the country for common threat. Today, every government agency, service branch and combatant command adopts innovation activities (hackathons, design brainstorming, innovation workshops, etc.) to tap into the creativity of a new generation of soldiers – born in a digital world, comfortable with technology and eager to improve America's ability to fight and win.

The government can not act as a start-up
However, these activities are not enough. The government is not a bigger version of a startup and can not act as a startup. Innovation activities in government agencies most often result in the theater of innovation. If these activities shape and build culture, they do not win wars and rarely deliver products that can be shipped or deployed.

Startups have been dreaming for years, plan in months, evaluate in weeks and ship in days. Sometimes this means that startups are running at such a fast pace that they seem unclear to government agencies. It's not that these companies are smarter than Defense Department employees, but they operate with different philosophies, different product development methodologies, and different constraints.

The table below summarizes some of the main differences. Some of the most important are the least obvious. Startups can do just about anything. They may break the law and apologize later (as Uber, Airbnb and Tesla did), but a government official who takes the same kind of risk can go to jail.

Emergency and risk taking in a start-up are an integral part of the culture, felt by 100% of beginning employees. Few representatives of government agencies feel the urgency felt by service members on the battlefield and more often than not, there are negative incentives to take risks. In a cluster of startups (Silicon Valley, Beijing, Tel Aviv), a bankruptcy entrepreneur is described as experienced. In a government agency, he is likely to be unemployed.

Innovation at full speed is a data at startup, but the exception in a government agency. Advances in commercial technologies are advancing at no less than twice, and up to ten times more, the speed of comparable systems developed or acquired by the Pentagon. Part of the speed is simply due to development methodologies. Stunt development is still used by most defense contractors, resulting in system updates measured in years. With Agile development, used by all startups, updates can occur in weeks, days, or even hours. Some of the differences in speed are due to the fact that corporations and academics face Darwinian competitive pressures for revenue or recognition. These impose rapid technical advances in areas such as machine learning, artificial intelligence, robotics, large data and analysis.

The very definition of the entrepreneur implies a contract. And a government contract begins with fixed requirements that change only with contractual changes. This makes sense when the problem and the solution are known. But when they are unknown, traditional methods of contracting fail. Start-ups recognize that when new circumstances arise, they may pivot – make substantial changes to their products without any new contract.Existing contractors have learned to master the Arcane Defense Acquisition System and live with the slowness of decision-making and payment processes. In some organizations, large entrepreneurs seem to "own" sections, offices, organizations or programs. Often former government employees, at the GS-15 and lower level, will leave as staff members and will return the next day to work for great Beltway entrepreneurs, working or managing the same programs as before. This relationship between a government agency and a contractor further impedes and often rejects any innovation or disruption. Agents know that they will probably lose their future after retirement if they want a radical change.

This symbiotic relationship between government agencies and incumbent entrepreneurs is also an obstacle for newcomers, especially for startups with the technologies the Department of National Defense now needs. While the Pentagon has made efforts to reform the process (other transaction authorities, TechFAR, intermediary procurement, accelerators …), there remains a fundamental misunderstanding of the financial incentives that would encourage the brightest investors to guide their companies towards the Department of Defense. Major donors are not encouraged to invest in new businesses or acquire new businesses. And there is no plan to know how quickly insert and deploy startup technologies in weapon systems.

The question is: what is the next step? How do government leaders think and organize innovation to make a difference?

The answer is, yes, government agencies need to be more agile. And yes, they must solve the systemic internal problems that hinder the contribution of their own innovators. But, moreover, they lack a comprehensive plan to create a 21st century defense innovation ecosystem – reintegrating the military, academia and private enterprise. To exploit both their own internal innovators and this new external ecosystem, the Ministry of Defense needs what I call a doctrine of innovation organize their efforts to quickly access talent and technology and mobilize them. The Pentagon can create a state of mind, a culture and a process to solve this problem. This doctrine would allow the country to once again capture the untapped power and passion of the best and the brightest to pass opponents and win wars.

Filed under: Innovation, Doctrine of Innovation |