An ideal operational relationship between global militaries and defence industry manufacturers would support risk taking to drive private-sector technological advances, whilst simultaneously guarding against budgetary excesses. But no country with a major military has been able to put these pieces together satisfactorily.
In the US and much of the West, the disconnect between the public and private sector is chronic, in part because military spending is cyclical and does not grow materially over the long term. Consequently, identifying and funding projects that bring tangible returns in a relatively short period is usually a priority for defence departments. But to prove out new technology so that it can be utilised in next-generation military equipment requires a substantial commitment of up-front R&D and engineering resources, at least some of which falls on the private sector. In many cases these companies are loath to make these investments without an assurance that they will be adequately covered.
As a starting point, the government and the defence industry should address these immediate issues in order to create a more welcoming environment for innovation:
- To overcome the fear of risk taking, defence suppliers should focus R&D and capital expenditure investments in areas in which they have already demonstrated expertise and can take advantage of accumulated knowledge to produce new advances.
- Defence departments should widen their orbit to include procuring more cutting-edge technology from companies that are not traditional privatesector suppliers. This would accomplish twin goals. First, it would give the military access to the latest digital breakthroughs. Second, it would drive incumbent defence contractors into partnerships and acquisitions of newly competing startups, which in turn would improve the innovation engines and product development agility at these established companies. Many of the technologies that would be acquired under this approach initially began as products for non-defence applications. In November 2018, for instance, the US Army awarded Microsoft a US$480m contract to supply more than 100,000 HoloLens mixed-reality headsets for use on combat missions and in training. Microsoft won out over 25 companies that were interested in participating, including contractors such as Booz Allen Hamilton, Lockheed Martin and Raytheon.
- The Pentagon is reorganising itself to accelerate these acquisitions. It announced a competition, Army Expeditionary Technology Search (xTechSearch), to look for startups (‘non-traditional defence partners’) to help the Army develop new weapons tech. The DoD also launched the Defense Innovation Board and a dedicated research and engineering organisation focussed on maintaining a technological edge, whilst doubling down on innovative groups such as the Defense Innovation Unit (DIU), a rapid prototyping and experimentation office meant to promote more engagement with the private sector. The US Army has also established a Futures Command to address how innovative technology plays a role in maintaining its future fighting capabilities.
- Defence departments and the private sector must break through the cultural divide that hinders cooperation between commercial technology companies and the military. The US provides a good illustration of this. Less than half a percent of the US population serves on active duty. A senior executive from a major Silicon Valley firm recently told us that none of the company’s engineers had ever worked with anyone from the military. As a result, many in tech companies harbour deep ethical concerns about helping soldiers kill people and win wars, whilst many in the defence community are aghast at what they view as the erosion of patriotism and national service in the tech industry.
There is also a knowledge gap between leaders in Washington, who are mostly lawyers struggling to understand recent technological advances, and executives in Silicon Valley, who are mostly engineers struggling to understand the age-old dynamics of international power politics. In the past, it wasn’t difficult for policymakers to understand the essence of breakthrough technologies such as the telegraph, the automobile and nuclear fission. Technology moved faster than policy, but the lag was more manageable. Digital technologies are different, spreading quickly and widely, with societal effects that are hard to imagine.
These issues and others that separate military agencies from the private sector are hurting the prospects for growth for traditional defence suppliers and the increasing number of startups involved in the industry. In the end, in developing nations or the West, a concerted effort by governments and the defence industry to identify key issues and strategies for resolving them will be necessary to overcome their negative impact.
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