Taking the "R" out of R&D

In the U.S. defense and national security sphere, capability development has slowed to a crawl

For almost 20 years my team has worked with federal and private sector defense and national security R&D organizations to evaluate their programs. During that time we have seen a progressive, pervasive and significant deterioration of the willingness to take risk. No one should be surprised by this. In an era of constrained budgets and pursuit of quick profits, it is natural that organizations would focus on those things with near-term impact. What no one has stopped to consider is the systemic damage this has done to our country’s ability to stay ahead of terrorists, competitors, and adversaries. Near-term pursuits are fine for incremental advances, but they are disastrous when it comes to changing the nature of the game.

Most people think technological change is rapid, and in some domains that is true. However, within the U.S. defense and national security sphere, this is not the case. Capability development has slowed to a crawl. It is hard to advance the state of the art when you are sitting at the forefront of knowledge. However, it is relatively easy for others to follow your lead. 

What this means in principle is that most of the world’s great powers have already achieved a degree of technological parity with the United States. It’s a type of equilibrium, where incremental advances in the U.S. are quickly imitated by those around us. The only way to break this cycle is to achieve a step-change through a technological disruption. Unfortunately, this is precisely the sort of thing our country’s defense and national security apparatus is less and less likely to achieve.

Part of the problem lies with turnover – our government labs have backed themselves into corners with large allocations of their resources caught up in investments that are no longer discretionary. Never-ending research programs and an unwillingness to kill underperforming efforts, and ill-advised capital projects with large sustainment tails, have conspired to dramatically reduce discretionary funds. As discretionary funds become scarcer, there is less interest in investing them in high-risk efforts. The resulting lack of vitality of R&D portfolios is one reason for stagnation. Another reason is simple mathematics. Every dollar invested in high-risk efforts is a dollar that will not show a clean path to a capability transition. This is shortsighted in the extreme. Research that is critical to our nation’s freedom should not be judged on monetary terms; other factors like capability-gap closure are more important.

Since none of us have a crystal ball and can say with any certainty how a particular investment will turn out, it is crucial that R&D organizations have sufficient balance and throughput in their portfolios to ensure some high-risk investments actually make it to the finish line. Yet this is where we fall short; to the extent high-risk investments exist, they tend to be small “seedling” efforts that are quickly abandoned at the first sign of trouble. We have become risk-averse as a nation and it is showing up in our national competitiveness, the pace of our military capability development, and the quality of our science and engineering workforce.

The lack of innovation, and, indeed, the lack of freedom to innovate is most apparent in public sector labs. Unfortunately, the problem does not stop there. Similar trends have been underway in the private sector. Companies are only interested in the next quarter’s results and keeping the analysts happy; R&D portfolios at the major defense primes are as incremental as those in the public sector. The irony is that at a time when our security as a nation is most at risk, we seem incapable of making the bold investments necessary to give us the material advantage we desperately seek. The nation is in danger of being overmatched in military domains as diverse as electronic warfare, artillery, active protection systems, and high-performance computing, not to mention homeland security gaps that are arguably more severe. All this presents a singular opportunity for an aggressive market player willing to think and act strategically. Targeted investments in exploratory research focused on domains of interest will eventually yield results. For a patient management team willing to play the long game, the payback will be market dominance. Alas, such players are few and far between.


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