I hate to be critical of a well-intended effort at innovation in the #defenseindustry but I believe Defense Innovation Unit (DIU)'s $1 billion budget would be better spent on low-interest loans to existing defense industrial base small businesses to expand production, make capital investments, and hire & train workers. Doug Beck is clearly very driven & talented, with a compelling mix of military (US Navy) and private sector (Apple) experience. He also seems to understand the fundamental problems of 1) awarding prototype contracts fast and 2) transitioning those early wins to long term programs of record. It's just much less clear what DIU can do about it simply with more funding. An early sign of weakness in Beck's plan: "The additional money will allow DIU to nearly double its staff... The DIU is also requesting 50 more military and civilian staffers..." No comment. "DIU says it strives to award prototype contracts within 60 to 90 days... but in 2023 it took 197 days on average." In 2023 the DIU awarded 90 contracts for pilot projects worth an average $3.3M..." but of these "just 10 went on to win a deal with the military." "Since its inception, the DIU has helped 20 projects obtain a program of record." That is only 20 companies since 2015, nearly 10 years (!). So far, this doesn't seem like an organization we should give $1B to expand its mission. However, Beck has outlined some strong strategic priorities: 1. "He wants the DIU to grant technology pilots only when there is already confirmed demand for a contract from the Pentagon." Forget about how difficult this will be to accomplish -- this alone would be a huge step forward. 2. DIU will use its "increased budget to grant production contracts to startups waiting for other parts of the military to get their own funding to come through..." which Beck says could shave 1-3 years (!) off the time it takes to go from prototype to a production contract. Hoping for the best for this effort. Definitely some challenges, and I still say the effort would be better directed at supporting the existing defense industrial base rather than trying to force technology startups into the DIB. #defenseindustry #defensetech #defenseinnovation https://lnkd.in/eEhDktrG
What's the goal, what's the priority, why those metrics, what problem are they trying to solve? If we take the Eric Weinstein POV. The main objective throughout the DoD and defense industry is to increase the size of the trough ($$$) from which you and your organization feed. DIU was rewarded for exploring the flexibility inherent in OTs. They at least had a little courage and some leadership support to show others that DoD can do things differently. They are not pushing the envelope, but they are doing something different. I think this was meant to be a signal of tepid support for business process innovation. To your point, they may take this windfall and simply fill out an org. chart, becoming just another formerly "innovative" program junking up the place. They could also knock it out of the park by inventing entirely new and more effective ways to get things done. That's the opportunity, that's mission if they choose to accept. Now that interest rates have risen, lending is tightening, providing low cost loans to innovative companies is a solution worth exploring.
Paul Weizer MBA
2mo
Playing musical chairs with the defense budget does not accelerate innovation nor does it guarantee successful transition of products into programs of record. Everybody thinks they can do acquisition better than the acquisition professionals and there is yet to be evidence that supports this assumption.
Josh Cramer
2mo
Really interesting topic and great take. That budget plus ROI is eye opening
Founder and CEO at TheIncLab - Human Centered AI+X. Forbes Next1000.
2mo“The New York Times has identified at least 50 former Pentagon and national security officials, most of whom left the federal government in the last five years, who are now working in defense-related venture capital or private equity as executives or advisers. In many cases, The Times confirmed that they continued to interact regularly with Pentagon officials or members of Congress to push for policy changes or increases in military spending that could benefit firms they have invested in.”