Innovating in a Secret World: The Future of National Security and Global Leadership. Tina Srivastava. Lincoln, NE: Potomac Books, 2019.

In Innovating in a Secret World, Dr. Tina Srivastava examines America’s legal and administrative framework for defense technology innovation and asks if it can take advantage of the open innovation model, and especially if it could be used by the U.S. government to manage delivery of innovative technologies in a system that prizes secrecy and delivery of low-cost hardware.[1] This narrow focus plays to the author’s experience working in academia, overseeing a technology development program for Raytheon, and founding a small, innovative startup.[2] Her experience shines in all seven chapters of this short book.

The need for U.S. defense innovation and acquisition reform has been extensively argued in literature, academia, congress, and beyond. Srivastava has focused her work on the open innovation model and its suitability for government innovation on projects that require high levels of secrecy. Her narrow focus is at once the strength and weakness of this book. It allows her to explore the many ways the U.S. defense innovation process is legally unsuited to the open innovation process. But, the narrow focus also stops the author from asking broader questions about innovation in government and defense generally or offering a compelling solution to address the many problems she identifies. It also keeps her from comparing how the government manages its innovation process and how modern businesses now manage their innovation processes.

It might help to pause here and describe the three horizons framework of product/business maturity. Horizon one consists of established products and technologies. Critically, horizon one capabilities require large support structures to eke out efficiencies and ensure legal compliance. The second horizon is for new products and technologies. The third horizon exists in labs and fabled garages where new products and technologies are being invented. Horizon two and three products and technologies have much lower efficiency and compliance burdens.[3] Business-to-government comparisons are dangerous, but the three horizons framework is useful in this case to help understand the U.S. defense establishment is a horizon one organization trying to develop a portfolio of horizon two and three capabilities to ensure its future relevance.

Businesses have moved away from large, corporate research and development (R&D) labs and instead rely on universities to conduct basic research and students and professors to form companies based on the research that they conduct. Venture capital keeps these new companies afloat until a large company sees an opportunity to acquire the company and their technology or the company disrupts old business models and the industry.[4] As this structural change to the innovation process was beginning in America, universities began to distance themselves from secretive defense related research and development in response to student protests during the Vietnam War that made universities hesitant to continue their relationships with defense research.[5] This means that few of the professors or students building innovative companies with potential defense applications have security clearances or experience with government acquisition processes. Meanwhile, the paucity of defense research, development, and acquisition funding mean the most successful defense companies also have large private portfolios.[6] These companies have to meet the demands of private businesses and consumers in a globally competitive environment if they want to survive, and they can’t waste time and resources on a government acquisition process with no guarantee of a contract or that their intellectual property will be respected.

Srivastava describes an administrative and legal system that assumes secrecy is a requirement of national security and assumes efficiency is more important than effectiveness.[7] In other words, horizon one thinking dominates without acknowledging the need to grow horizon two and three capabilities. This is perverse; American businesses now rely on a network of universities and small businesses to do their research and development and innovation for them.[8] But the inability of these small companies to meet secrecy and administrative requirements make it difficult for them to participate in the government acquisition process and to sustain innovation in the long term.[9]

Open innovation, “…a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology,” is an important part of private and public innovation and can be a catalyst to creating profitable companies.[10] Examples of open innovation in government, like the Apollo program, DARPA’s grand challenge, and the DARPA’s Fast Adaptable Next Generation ground vehicle challenge (FANG), reflect the literature on open innovation in government.[11] Despite the promise of open government innovation, few open innovation projects have been able to produce more than token innovations that solve simple resource maintenance and allocation problems.[12] Governments and their employees are bound by existing legal and administrative frameworks, built to reflect past realities or favor incumbents, that hinder their ability to rapidly adapt to new business and security possibilities.[13]

The U.S. government has provided itself with a host of authorities, especially Authorization and Consent, that allow it to transfer technology and innovation from companies who took on the innovation risk to companies the government believes are able to produce at a scale and cost advantageous to the government.[14] Under Authorization and Consent, developing companies are not able to receive full compensation for their innovation if the government transfers their intellectual property to another company.[15] This disincentivizes small companies from putting their intellectual property—perhaps the company’s only source of value—at risk by participating in the government innovation and acquisition process.

The Department of Defense and its subordinate military departments are making efforts to invest in small startups and innovative defense companies. In a recent event, the U.S. Air Force awarded 242 contracts for $75 million inside a two-week period. The U.S. Air Force worked the approval and payment process to allow contract payment by the end of the business day, instead of after several weeks.[16] But Srivastava critiques the U.S. government’s ability to successfully manage security innovation from research and development to fielding.[17] The Air Force did make some real changes to speed up its ability to write and pay contracts, but it remains to be seen if those changes are repeatable and sustainable through delivery and fielding and not another case of innovation theater.[18] Open innovation in government requires changes to existing policies and structures to fulfill its promise of solving complex social and administrative problems, without those changes, governments will not be able to take advantage of the open innovation model.[19]

In one of the book’s most insightful passages, Srivastava asks if a vulnerability should be classified to hide it from enemy exploitation, or should it remain unclassified because the open and dynamic innovation environment of the United States can resolve the vulnerability before a competitor can exploit it.[20] She identifies this conundrum and then moves on without fully addressing it. This moment strikes at the heart of the book. Srivastava provides an excellent work on the legal and policy challenges American companies face if they want to innovate in the national security environment, but she does not offer a compelling vision for improving the situation. Anyone who wishes to improve this situation will need a solution and the support of a movement that is good for Congress, good for business, good for the defense and national security customers, and good for innovators. And that is the conundrum of innovating for national security.

Kurt Degerlund is a U.S. Air Force officer and a member of the Military Writers Guild. The views expressed in this article are those of the author and do not reflect the official policy or position of the U.S. Air Force, the Department of Defense, or the U.S. Government.

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Header Image: The site of the DARPA Grand Challenge. (Wikimedia)

Notes:

[1] Srivastava, Tina. Innovating in a Secret World: The Future of National Security and Global Leadership. Lincoln: Potomac Books, 2019. 4

[2] Srivastava, Innovating in a Secret World, 2

[3] “Enduring Ideas: The Three Horizons of Growth.” McKinsey Quarterly. December 2009 https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/enduring-ideas-the-three-horizons-of-growth#

[4] Aroza, Ashish, Sharon Belenzon, Andrea Patacconi, Jungkyu Suh. “The Changing Structure of American Innovation: Some Cautionary Remarks for Economic Growth.” National Bureau of Economic Research Working Paper Series, May, 2019, 45. https://www.nber.org/papers/w25893.pdf

[5] Blank, Steve “Why the Government isn’t a Bigger Version of a Start Up.” War on the Rocks. November 11, 2019. https://warontherocks.com/2019/11/why-the-government-isnt-a-bigger-version-of-a-startup/

[6] Goure, Daniel. “Winning Future Wars: Modernization and a 21st Century Defense Industrial Base.” Heritage.org, October 4, 2018, https://www.heritage.org/military-strength-topical-essays/2019-essays/winning-future-wars-modernization-and-21st-century

[7] Srivastava, Innovating in a Secret World, 33

[8] Mowery, David. “The U.S> National Innovation System: Recent Developments in Structure and Knowledge Flows.” OECD “National Innovation Systems,” October 3, 1996. 9. http://www.oecd.org/science/inno/2380128.pdf

[9] Srivastava, Innovating in a Secret World, 119

[10] Srivastava, Innovating in a Secret World, 7

[11] Srivastava, Innovating in a Secret World, 42

[12] Pedersen, Keld. “The Purpose of Public Sector Open Innovation.” Presented to the European Conference on Digital Government, May, 2018. https://www.researchgate.net/publication/325335578_The_purpose_of_public_sector_open_innovation

[13] Blank, Steve “Why the Government isn’t a Bigger Version of a Start Up.” War on the Rocks. November 11, 2019, https://warontherocks.com/2019/11/why-the-government-isnt-a-bigger-version-of-a-startup/

[14] Srivastava, Innovating in a Secret World, 110

[15] Srivastava, Innovating in a Secret World, 114

[16] Maucione, Scott, “The Air Force Just Handed Out 242 Contracts in Two Weeks and it Might Change Everything.” Federal News Network, March 7, 2019. https://federalnewsnetwork.com/air-force/2019/03/the-air-force-just-handed-out-242-contracts-in-two-weeks-and-it-might-change-everything/

[17] Srivastava, Innovating in a Secret World, 4

[18] Blank, Steve ”Why Companies do ‘Innovation Theater’ Instead of Actual Innovation.” Harvard Business Review, October 7, 2019. https://hbr.org/2019/10/why-companies-do-innovation-theater-instead-of-actual-innovation

[19] Barroca, Jean Paulo Gil. Mulas, Victor. “How to Implement ‘Open Innovation’ in City Government.” World Bank Blogs, May 25, 2016, https://blogs.worldbank.org/sustainablecities/how-implement-open-innovation-city-government

[20] Srivastava, Innovating in a Secret World, 84.