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Innovation

Why the U.S. government is struggling with open innovation

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Whether it’s hunting down a terrorist mastermind, fortifying voter databases against foul play, or preparing for a future unknown threat, national security is at the top of the priority list for the U.S. government.

But as national security threats increase in frequency and sophistication, there is growing concern that America’s technology and innovation strategy are not keeping up — allowing other world powers to take the lead in research and development, and leaving the country vulnerable to attack.

In her new book, “Innovating in a Secret World: The Future of National Security and Global Leadership,” Tina Srivastava, PhD ’15, examines why it’s hard for the government to approach innovation like the private sector. Srivastava was a former chief engineer of electronic warfare programs at Raytheon, and is a co-founder and chief architect of a security startup.

“There is a gap between the remarkable successes enjoyed in the high-tech commercial world because of how that world gets innovation done, and how the government does it,” Srivastava writes.

One way the commercial world is successful is through open innovation. Open innovation, a term coined by professor Henry Chesbrough of the Haas School of Business at the University of California, Berkeley, is about “broadening participation in innovation beyond an individual organization or division traditionally assigned to perform specific R&D activities,” Srivastava writes.

As Srivastava highlights in her book, there are two broad barriers to open innovation: Government regulations, and unintentional discouragement of new innovators for established companies.

Bureaucracy and secrecy

Contracting with the U.S. government is neither simple nor straightforward.

There are multiple registration requirements for government contractors, and that’s not counting the additional requirements for those working with the Department of Defense. Once a contract is signed, there can be hundreds of clauses to agree on to ensure a company follows government security standards.

One example Srivastava offered was her five-year case study on a contract between the U.S. Air Force and a startup providing technology that met “urgent and critical national security needs” for the military branch.

Despite the seemingly desperate need for the technology, it took three years to kick off the contract, in part due to a restructuring of the contracting agency and incompatibility between agency websites. At one point the lead government contracting officer stopped working with the startup until the business hired a lawyer to help with contract negotiations.

The government’s apparent default to secrecy is also limiting open innovation, Srivastava writes.

While secrecy is important — like keeping portions of a supply chain hidden to avoid an attack of a specific manufacturing site — sometimes the government’s security efforts can be misguided, she writes.

In 2012 U.S. Marines and the Defense Advanced Research Projects Agency created the Fast Adaptable Next-Generation Ground Vehicle program. The program’s goal was to provide the Marines with a new amphibious infantry vehicle, something that could get Marines quickly and safely across land and water.

The technical requirements were classified, so the program was split into three tiers with increasing levels of secrecy. The first tier, Fang-1, was aimed at developing a drivetrain for the new vehicle.

Even though the second and third tiers of the program had higher security requirements, there were still secrecy issues regarding design of the drivetrain. This meant there were restrictions on participation and distribution of information to certain companies and people. The program also limited participation just to the U.S. due to export restrictions.

While a winner was eventually chosen, Srivastava writes, “many of the design requirements remained unsolved,” and the second and third tiers of the program were cancelled.

Discouraging diversification

The U.S. government’s contracting practices favor larger, more established businesses — or in some cases even require that a large company is a prime [main] contractor in the agreement.

This can be a burden on a smaller business or a company entering the federal contracting environment, effectively closing off innovation that they might offer.

In one case Srivastava looked at, she noted a prime contractor and small business argued every detail of a contract, while in another case, a prime contractor’s requirements blocked a startup from work due to a lack of “record of performance” — even though technically the startup had spun out of the small business that was originally a part of the agreement.

The Federal Acquisition Regulation rule called Authorization and Consent also discourages open innovation by limiting diversification.

This rule, explains Srivastava, gives immunity to government contractors when they infringe on a competitor’s patent — done at the implied or express direction of the U.S. government.

For example, a company called Tenebraex made an anti-reflective coating for machine-gun sights. It partnered with Elcan Optical Technologies — a subsidiary of Raytheon — in an effort to get a contract with the U.S. Army. The army awarded a contract only to Elcan.

Tenebraex ended up spending hundreds of thousands of dollars on legal fees, arguing its patent rights and getting the government to pay up for using its technology, Srivastava writes.

Ideally, Srivastava writes, the government would encourage participation from innovators and the companies best suited to deliver innovation. If the U.S. loses its edge because it can’t create a specific technology fast enough, the country will have to rely on someone else for the innovation.

“The simple reality is that losing our edge translates into a loss of hard power, which in turn translates into a loss of soft power, which in turn translates into an inability to influence matters that affect U.S national security and interests,” Srivastava writes.

“If American values are to be deployed to influence peace around the world, nuclear non-proliferation, climate change, humanitarian crises, and democratic rights — all tremendously difficult problems now — imagine how much more difficult they will be if the edge is lost.”  

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