A Marketplace for Multidomain Innovation

This article is part of a new series on The Strategy Bridge analyzing some of the issues surrounding the problem of #TechnologyInnovation.

The U.S. National Defense Strategy maintains that “success no longer goes to the country that develops a new technology first, but rather to the one that better integrates it and adapts its way of fighting.” This has been true for some time as the Wehrmacht demonstrated in World War II with tank warfare, and is a challenge that American warfighters, even at the lowest levels, have a tradition of meeting. Today, special operators are jury-rigging Iraqi command nodes from Samsung phones and Marines are building custom quadcopters with 3D printers. They have shown the same innovative spirit as those desperate soldiers who welded beach obstacles to Sherman tanks to breach the hedgerows at Normandy. However, smart phones and drones are cheap to tinker with; the costs skyrocket once major weapon systems are involved. At the tactical and operational levels, it’s quite difficult to find tens of thousands, or even millions of dollars to try out something like guiding Army rockets with F-35 sensors. In order to meet senior leaders’ requests for innovative techniques to employ exponential capabilities that don’t yet exist, the force will need funds to tinker with creative solutions. However, there is no overarching budgetary program—no road map—for funding operational and tactical innovation; nor is there a place in any warfighter’s development or education process where they are even told about how to fund experimentation.

U.S. Marine Lance Cpl. Benjamin Cartwright launches the Instant Eye MK-2 Gen 3 unmanned aerial system during an exercise for Marine Corps Warfighting Laboratory’s Marine Air-Ground Task Force Integrated Experiment on Camp Pendleton. (USMC Photo)

The Department of Defense budget has the money for developing new tactics, techniques, and procedures scattered across various budgets—the Warfighting Labs Incentive Fund (WLIF), Joint Test and Evaluation (JT&E) funds, and the Wargaming Incentive Fund, to name a few. However, those funds take too long to source and aren’t getting where they are needed.[1] In the eighteen to thirty-six months that a WLIF or JT&E effort currently takes to approve and spend some of this money, Moore’s law doubles the capacity of the processor in an iPhone and quadruples the storage in the same device; while American units endure request processes for money, their competitors’ systems are diluting a heretofore uncontested technological advantage. Even three-star generals can’t get the money needed for service-component level experimentation. Though the U.S. Army expects robust experimentation by warfighters in order to operate across multiple domains, it is under-sourced to do so, according to the commander of the Combined Arms Center. Warfighters with pressing problems and great ideas, who are eager to innovate, should have better access to outlaid funding sources. To do that we need a platform to link the best ideas to the resource streams that reside in central headquarters.

A digital exchange—an innovation stock market across the Department of Defense—could move money from obscure corners of the bureaucracy to those who want to solve the great problems of today’s complex operating environment. The platform should be modelled on the early stock market. That battleground of brokers, buyers, and sellers began as an essentially unofficial, informal, almost unsupervised communal effort outside the building in Amsterdam which bears the historic title.[2] The Department of Defense should similarly establish an exchange platform that (1) moves information between funders and innovators, 2) provides a price of sorts for each idea, and (3) enables prompt brokerage. The proposed platform, a Dutch-style exchange—in digital form—would move ideas instead of shares of ownership in a company. This should be an inherently competitive space, in line with the Department of Defense’s mandate for “a competitive approach to force development.”

The first function of an exchange platform is moving information between funder and innovator; it starts out as a listing, a database of possible experimentation sponsors and what sort of budget they have. Young leaders with ideas can go there looking for organizations with mission statements that demand their particular concepts. They contact those organizations and ask for funding in exchange for the results of a test, if not active participation in it as well. A simple, centrally updated listing starts achieving the first function that we’re chasing—passing information. Moving the ideas has value in itself. In his book Where Good Ideas Come From, Steven Johnson asserts that laboratory conference room spaces matter more for solving hard problems than the actual instruments themselves. In the same way, the process of pitching an idea to multiple buyers in an online marketspace will help the creative party re-contextualize its idea, just as the vetting of those ideas will help the funders better understand their own problems. Johnson’s overall point was that “innovation prospers when ideas can serendipitously connect and recombine with other ideas, when hunches can stumble across other hunches that fill in their blanks” and that the acceleratory benefit of those connections mitigate any risk that such openness brought with them. Such an open system also allows for competing, combining, or reducing multiples, or ideas simultaneously discovered.

...supply and demand signals can be easily muffled by service stovepipes, so the exchange must be fully, uncomfortably, joint.

The second function of an exchange platform would be to provide prices, or information that communicates supply and demand. The demand side of the price equation is fairly straightforward: what problems does a prospective funder need solved? These customer requirements are already transmitted through existing venues like the Capabilities Based Assessment and the Integrated Priority Lists which feed the current resource planning cycle. No such direct signals exist in the current resource processes and ideas that fail to matriculate to the highest visibility fall by the wayside. Converging priorities, as well as the various emerging requirements documents from lower organizations, provides a healthy amount of market research for the folks selling ideas, as well as a secondary price signal of seller preference. The prevalence of a particular requirement communicates how many funders are available and how much they are willing to pay for it. When consumers do not want what the seller produces, investment should not pay off. A Department of Defense market is no different; it seeks results, not philanthropy for pet projects. These supply and demand signals can be easily muffled by service stovepipes, so the exchange must be fully, uncomfortably, joint. When the Dutch parliament unified the six stock exchanges in 1602, it allowed them to create an economy of scale for investing in order to compete with the Portuguese and Spanish, but also to mitigate provincial rivalry among its own states.[3] Similar to the Dutch success, a combined innovation exchange would mitigate inter-service rivalries and the bias to protect parochial interests in an effort to counter waning advantages. Combatant Commands and any other organization with dollars earmarked for experimentation should essentially be able to buy a stake in the testing process for any particular problem. The combined purchased stakes pool resources for bolder experimentation.

"The Courtyard of the Beurs in Amsterdam" pained by Emanuel de Witte in 1653 (Wikimedia)

The third function of an exchange is brokerage. The transactions involved in a tactics experiment will be peculiar; this is the hardest and therefore the culminating function of a Department of Defense experimentation exchange. The funds involved won’t really qualify as research money (RDT&E) because the tester might not get “equipment, material, or computer application software” at the end. The people who do the experimenting certainly need salaries, travel, and fuel provided by Operations and Maintenance (O&M) funds, which most units have and can spend. However, a testing command may need to hire a civilian expert or interim contractor or buy a missile to shoot at things outside of the regularly approved training; these are procurement expenses and that kind of money simply isn’t included in an ordinary unit’s budget. Even harder, they might have to buy a replacement system because trying something new broke or destroyed an existing piece of gear. There is a Department of Defense unit however, Defense Innovation Unit-Experimental (DIUx), that has developed the requisite vehicles for this sort of finance work without infringing on legislative restrictions, and their learning should be foundational to any attempted platform. The exchange must have the capability to leverage colorless money that can be flexibly spent with some as-yet-undesigned oversight mechanism in order to enable combat formations to get to that next tactical step.

...those who take ownership of their own corner of an institution to create something new and who will solve tomorrow’s multidomain quandaries, don’t necessarily need a new manual; their needs will always outpace the ability to update a manual. They don’t need a class; there’s no one yet qualified to teach it.

Changing funding characterization, integrating force development processes, and building databases are big endeavors. Also, that first exchange produced the world’s first bubble, over tulip futures. Any risks of an innovation stock market can be mitigated by starting small. The intrapreneurs, those who take ownership of their own corner of an institution to create something new and who will solve tomorrow’s multidomain quandaries, don’t necessarily need a new manual; their needs will always outpace the ability to update a manual. They don’t need a class; there’s no one yet qualified to teach it. They could start with a hyperlink, or just a spreadsheet that lists all the sources of experimentation dollars in the Department of Defense, and maybe a few slides per entry explaining who to talk to and how to ask. Eventually, this link can expand to an interactive marketplace.[4]

After the world had come to grips with those wonder weapons of world War II, operational researchers found that new tactics or operational policies had as much impact as new technology and could be brought to bear more quickly.[5] Innovation requires money. You can’t just throw money at a problem, but in the end, you do need capital to make progress. Unfortunately, experimentation resources are hard to find as they are widely and obscurely scattered throughout the Department of Defense. They are all but invisible, and discovery learning, while necessary, is not sufficient for the scale on which progress is needed. Implementing a digital Department of Defense exchange for experimentation funding creates a conduit that moves information, provides a price, and enables prompt brokerage of the requisite transaction in order to meet the innovation demands of a multidomain battlefield. Such a platform also begins to unlock the potential of the Department of Defense’s existing innovation network: its people.

Christopher Telley is a U.S. Army officer assigned to the Naval Postgraduate School. The views expressed here do not represent those of the Naval Postgraduate School, the U.S. Navy, the U.S. Army, the Department of Defense, or any part of the U.S. government.

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Header Image: Defense Innovation Board Recommends How to Boost Military Innovation (NextBigFuture)


[1] For example: The WLIF process—generally focused on fielding acquisition solution—starts at the service level, several months before the annual April application deadline, and the results are release in June or July. The money is then available in the upcoming fiscal year. (Source: https://defenseinnovationmarketplace.dtic.mil/business -opportunities/warfighting-lab-incentive-fund/) JT&E Joint Tests—wholly focused on tactics, technique, and procedure solutions—require a six-month application process, a six-month feasibility study, and then a two-year test process before results are released to the sponsor. (source: Joint Test and Evaluation Handbook, June 2007)

[2] The term “battleground” is borrowed from Lodewijk Petram. The World's First Stock Exchange (Columbia University Press, New York, 2014) 4 : The rest of the description is from Jonathan Israel. Conflicts of Empires: Spain, the Low Countries and the Struggle for World. (Cambridge University Press, London, 1997) 321

[3] Niall Ferguson. The Ascent of Money: A Financial History of the World. (New York: Penguin Press, 2008) 130

[4] The Defense Innovation Marketplace (https://defenseinnovationmarketplace.dtic.mil/) is a good baseline but is focused on industry solutions, like their Rapid Innovation Fund which “provides a collaborative vehicle for small businesses.” The proposed exchange is for “new tactics or operational policies”

[5] Brian McCue, U-Boats in the Bay of Biscay, an essay in Operations Analysis, (Alidade Press, New Port Rhode Island. 2008) 1