What the Pentagon could learn from unicorns

By: Jill Aitoro

WESTLAKE VILLAGE, Calif. — The promise of Silicon Valley is built on unicorns — startup companies valued at more than $1 billion. They're rare. Hence the name. But the payoff is big enough that venture capitalists are willing to funnel a lot of money by way of multiple rounds of funding toward unproven technologies, to accept significant risk, in hopes they'll be in on the ground floor of the next great discovery.

Compare that to Washington, where in the words of Defense Innovation Board Executive Director Josh Marcuse: “We put forward a defense program full of things that we know aren't going to work, but no one is willing to say so.”

For more than three years the Pentagon has attempted to draw upon the Silicon Valley culture of innovation, to buy instead of build, to take advantage of commercial technology. But success has been spotty at best — with SpaceX and Palantir rather exclusively held up as the two “unicorns” catering to the military.

But while many procurement reformists will point to burdensome regulations as the problem, innovation leaders from both the Department of Defense and Silicon Valley companies agreed during a November roundtable hosted by Defense News that no laws currently in place prevent smart buying by the government.

Instead, those same innovation leader say that what causes the greatest minds in the tech community to walk away from the largest buyer in the world is a slow, arduous process combined with a serious lack of understanding within the Pentagon for how software is designed.

“We basically created an innovation program where you have to have Howard Hughes-style entrepreneurship to do anything that matters,” said Trae Stephens, partner at San Francisco-based venture capital firm Founders Fund and co-founder of Silicon Vally tech firm Anduril.

To buy or to build

Since the 1990s, defense acquisition regulations have clearly stated that commercial preference should be given in every contracting decision. Reinforcing that point, the Office of the Secretary of Defense for Acquisition, Technology, and Logistics released a guidebook for acquiring commercial items in January 2018, stating: “The time and cost to develop and field new capabilities, the technological advances made by near peer competitors and the rapid pace of innovation by private industry have demonstrated the need to access the best technology — now.”

And yet, such earnest support of commercial tech does not regularly filter to the acquisition community. Agencies over-specify requirements, “so now if the company wants to do business with [the Pentagon], they have to modify their product,” Stephens said. “All you have to do is say, ‘Yes, we have validated that there is no commercial product that meets our requirements,' and that's it.”

The Pentagon does not, however, do the opposite — adapt requirements for a particular product.

“There are a lot of things that we just have to build. We're going to build aircraft carriers, we're going to build fighter planes,” Stephens added. “And then there's the thing that we're going to buy — the products. These should be entirely separate conversations.”

That over-specification runs counter to the “agile” development method typically favored by the tech community, which is built on a premise of short sprints that factor into evolving requirements. Agile can't exist without a degree of flexibility, ensuring, too, that if you fail, you fail fast. Contrast that with the traditional waterfall approach that predefines the various phases of development to ensure, in theory, a predictable outcome.

Full article: https://www.defensenews.com/smr/cultural-clash/2019/01/28/what-the-pentagon-could-learn-from-unicorns