Recently, the chair of the Defense Innovation Board, Michael Bloomberg, announced the task force on strategic investment capital. Staffed by successful investors like Reid Hoffman and even a generative artificial intelligence system — likely a first for the Pentagon — this task force will assess how defense works with early-stage companies. It’s a topic of both hype and hope in Washington.
The hope extends across 10 years of former Defense Secretary Ash Carter’s distinguished career in defense innovation. While much of Washington still focused on countering terrorism, Ash foresaw China’s rise as the pivotal security challenge. It was an early insight that shaped both the Pentagon and my life significantly.
During the heat of counterinsurgency operations in Iraq and Afghanistan, I met in Ash’s office. Though frequently discussing missile defense or lasers at the time, he ended that meeting quite seriously. “I want you to go do something about China,” he said. Just that.
But his go-figure-it-out commission pulled me into 10 years of unexpected government service, most of it working for him at the Strategic Capabilities Office — his first of many such organizations.
Reading Donald Rumsfeld’s “snowflake” memos is a fascinating insight into what drove that particular secretary of defense. Ash Carter’s snowflakes are his deputized innovation organizations: the Defense Innovation Board, the Defense Innovation Unit and the Strategic Capabilities Office, among others.
While recently attending SCO’s 10th anniversary, this snowflake’s “report card” was noticeably front and center: 37 classified game-changers being fielded, with nine operational today. An understandable habit: SCO was nearly crushed when top cover shifted in years past. Only compelling metrics helped it survive to later thrive.
More recently, while sitting in the DIB meetings, it was clear “investment snowflakes” will need similar metrics to avoid melting in the post-Carter era.
I discussed this with Ash while on the committee that founded AFWERX, and again while running this Air Force investment arm. Having investors inside a service procurement system, vice bypassing it, required metrics that scream return on investment to procurement executives and warfighters alike. One “screaming” metric for AFWERX was leverage: multiplying purchasing power — typically by four to five — via matching public and private funding on contracts.
Combined with some “hack-quisition” ninjutsu, the Air Force and Space Force bought in and awarded over 2,500 investment contracts, including the large $60 million STRATFIs to startups like Anduril and Shield AI.
Though only one metric, it defended Ash’s bridge between Silicon Valley and a sometimes mercurial Pentagon. Others, like DIU’s creation of U.S. industrial capacity for small drones, replacing ones lost to China, seem part of the bridge defense, too. And just like SCO, strong defense will almost certainly be needed.
Kessel Run is an illustrative example. An Air Force software factory of 1,000 coders and recipient of the Pentagon’s highest acquisition awards, this organization began as a DIB-encouraged, DIU coding project for tanker planning apps.
Highly successful, DIU proved agile software methodology could solve defense problems on commercial timelines. But the app project did not anticipate the needs of a global military operating system, ultimately requiring a major overhaul to support the air operations centers.
I led that post-Carter standup of Kessel Run, approving its acquisition plan and defending it against successive “return-to-waterfall-coding” assaults, including two budget torpedoings. Without our team’s prowess and DIU’s performance data, Kessel Run would never have formed, and along with it, 20 subsequent Air Force and Space Force software factories, including the first enterprise cloud and coding platform. Return-on-investment-screaming metrics matter, especially when top cover gets thin.
Top cover appears thinner on defense innovation these days. With Dr. Carter’s passing, I fear a divided Pentagon on commercial innovation, with increasing antibodies to “tech sis” and “tech bro” companies, including new ways to work with them. This DIB task force is a serendipitous opportunity to look at roles and missions across the defense investment ecosystem, including those of the defense primes, and metrics that scream value for warfighters and taxpayers.
As we wait for the DIB results, my Pentagon experience points to five defense investment principles worth sharing:
Source better opportunities. Warfighters forecast needs based on systems they know and use. Unknown opportunities can often be game-changers, but they’re hard to source in the ever-changing tech ecosystem. Tech scouting, due diligence and early customer development can flip mission prospects.
Leverage addressable market potential. Warfighter dominance is the goal. But in pursuing it, jeopardizing military reuse or commercial dual use kills purchasing power, deals and trust. Such jeopardy takes many forms: overreaching requirements, antiquated regulations, insular acquisitions and gapped funding. The Pentagon is simply more practiced in “.mil” procuring than “.com” partnering. Unlocking the value of the broader addressable market can multiply defense-dollar impacts.
Place bets for portfolio returns. Overspreading development dollars is one of many forces perpetuating the “valley of death.” Like the private sector, defense investors (including laboratories) should place bigger productization bets as the culmination of earlier investment pipeline stages. And this pipeline should have understandable gates between small customer development contracts, larger prototyping and final productization. Today, many companies do not know if they’re on a highway to recurring revenue or a demonstration dead end.
Improve purchasing power. Value will always have a cost component. Investments should have measurable returns, not hand waves to private capital. As defense investment contracts become more important, audits will undoubtedly follow. But quantifying leverage and increased purchasing power is where they can shine.
Manage for long-term trust, not near-term gain. Many companies have a market choice. Making defense appealing means defending the Pentagon’s reputation as a trusted innovation partner, as much as it is a battlefield one.
However the defense innovation report card ends up, defending the bridge Ash built with commercial innovators over 10 years would be a fitting tribute to his legacy, one that lives on in snowflakes and other inspired organizations, all commissioned to “go do something” about the urgent mission of national security.
Will Roper is a former assistant secretary of the U.S. Air Force for acquisition, technology and logistics.