Tue, Feb 16, 2021

Keeping pace with the competition: How the Pentagon can incentivize innovation at the speed of relevance

Event Recap by Julia Siegel

China Defense Industry Defense Policy Defense Technologies National Security Technology & Innovation United States and Canada

Photo by Markus Spiske on Unsplash

On Wednesday, February 10, the Scowcroft Center’s Forward Defense (FD) practice hosted a panel of distinguished speakers to reimagine how the Department of Defense (DoD) can adapt acquisition practices to improve its access to the US innovation base and keep pace with twenty-first century military developments. As the latest installment of FD’s Captains of Industry Series, this event provided a platform for business leaders to discuss issues at the interface of defense ministries and industries, cultivating practical solutions to pressing market challenges.

FD Senior Fellow Mr. Steven Grundman kicked off the event, underscoring the importance of public-private coordination in fostering rapid innovation. He then turned to MajGen Arnold Punaro, USMC (Ret.), who, in his role as chairman of the National Defense Industrial Association, appreciates the value of strategic national security dialogue across government and industry. Placing the Pentagon’s priorities in the context of “the geopolitical, economic, military, and technological rise of China, along with the modernization of its military,” MajGen Punaro expressed the need for the United States to “increasingly rely on dual-use technologies under development in the commercial sector,” such as artificial intelligence, machine learning, and advanced sensors, to maintain its competitive advantages. He acknowledged that the unmatched power of the US Armed Forces was due, in part, to US industry providing the most cutting-edge technologies, making certain that US forces always hold the advantage.

Featured on the ensuing panel were Mr. Brian Schimpf and Mr. Daniel Jablonsky, two captains of industry steering leading-edge companies in the aerospace and defense sector. Mr. Schimpf is co-founder and CEO of Anduril Industries, a defense company seeking to exploit breakthroughs in consumer and commercial technology and radically evolve US and allied defense capabilities, while Mr. Jablonsky is president and CEO of Maxar Technologies, a space company which seeks to produce integrated space infrastructure and Earth intelligence capabilities that make global change visible, information actionable, and space accessible. This panel was moderated by Atlantic Council Nonresident Senior Fellow and former DoD Deputy Assistant Secretary of Defense for Research Dr. Melissa Flagg. Dr. Flagg framed the discussion with an opportunistic lens: Rather than bemoaning the extent to which the acquisition process is broken, the panel would center around what can be done to build upon and improve the current system.

Throughout the discussion, Mr. Schimpf emphasized the need for speed in defense innovation. Identifying pace as the single-biggest consideration for industry optimization, he discussed how the Pentagon’s incentive structure often hinders this philosophy of moving quickly and thus cultivates the wrong outcomes for the warfighter. According to Mr. Schimpf, US government overemphasizes the means (i.e., buying and building) rather than the ends (i.e., potential and pace) in its approaches to acquisition. While he did not advocate for a single approach, he highlighted end-to-end competition as a constructive model for rapidly finding, testing, and scaling existing commercial solutions for a defense problem set. One factor Mr. Schimpf stressed in considering pace is the risk tradeoff: High barriers make sense “where the cost of loss and the risk to life is really high,” but not in areas “where there is a lot more tolerance for risk, where you can actually just go try things instead of analyzing for a year.” In these areas, companies can massively accelerate. Mr. Schimpf pointed to SpaceX as exemplary of this concept, constantly crashing rockets while consequently hastening the learning curve.  

Mr. Jablonsky looked broadly at the acquisition process as a system, specifically investigating incentivization and integration. Applying an economic lens, he stated that DoD will get what it incentivizes, pressing for the department to ask for solutions rather than tell companies how to solve for a given problem set. By doing so, “companies that thrive on innovation will come up and line up and show up.” Additionally, Mr. Jablonsky noted that the most effective partnerships are found not when different entities own disparate system components, but rather when the company and the customer approach the solution as a system unified under a single mission. He pointed to Maxar’s WorldView Legion constellation as exemplifying a successful partnership, with the customer intimately involved in the industry design process. In closing, Mr. Jablonsky addressed the need for the acquisition system to be reimagined under the national security mission. While commercial innovation is necessary and welcomed, national objectives must be considered because when technologies and infrastructure are tested, “national interests are on the line and [US] troops’ lives are on the line.”

Despite varying perspectives on what the future business model of defense should look like, all panelists agreed that the defense innovation base is filled with potential and opportunity. Mr. Schimpf rounded out the panel by reflecting on the ever-changing landscape of defense acquisitions and commending the Department of Defense for continually reinventing itself to match the problem sets of evolving generations. While commercial software companies were out of the picture fifteen years ago, the department has since undergone a huge mindset shift. Fifteen years from now, commercial companies like Amazon or Google could be leading the production of next-generation warfighting capabilities.  

You can watch this event on “Innovating the Business Model of Defense” here or below. For more information about the Atlantic Council’s Forward Defense practice or to read our latest reports, op-eds, and analyses, please visit the website here. You can also sign up for updates from Forward Defense on the latest trends, technologies, and military challenges shaping tomorrow. 

Julia Siegel is an intern for Forward Defense at the Atlantic Council’s Scowcroft Center for Strategy and Security.

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About the Captains of Industry Series

The Captains of Industry Series is a platform for senior defense executives to address the public interests their companies serve and the public policies that shape their markets. By engaging the perspective of business leaders about issues at the interface of defense ministries and industries, the series aims to cultivate a constituency for practical solutions to these challenges.

Forward Defense shapes the debate around the greatest military challenges facing the United States and its allies, and creates forward-looking assessments of the trends, technologies, and concepts that will define the future of warfare.