During the Cold War, defense money funded much of Northern California’s nascent tech industry, and the military worked closely with universities and companies to develop electronics, microwave devices, semiconductors, and spy satellites. But the military did not stay connected to the venture capital–fueled tech industry that emerged in Silicon Valley in the 1980s. Until recently, the Pentagon didn’t see this as a liability: The United States enjoyed unmatched technological superiority on the battlefield. That advantage, though, is now dissipating. China and Russia have invested heavily in new systems. ISIS is using hobby-style drones for reconnaissance. Rebels in Syria are using iPads to aim mortars. Equipment like this was once prohibitively expensive. Now you can get a lot of what you need off the shelf. ... As much as Defense Department officials say they want better access to commercial technology, the way the Pentagon functions often makes this impossible. The military has spent decades configuring itself to work with defense contractors to build complicated systems that take years to produce, like fighter jets and aircraft carriers. With its cumbersome rules and processes, the Department of Defense is not set up to race alongside small, agile companies. ... The Pentagon is beginning to realize it must operate differently. Some of the most advanced work in computing, big data, cybersecurity, energy, robotics, and space — all areas the military draws on — is being done by tech companies, not traditional defense contractors. Last year, the Pentagon kicked off a large-scale effort called the Defense Innovation Initiative.
The DOD of course has a long history of jump-starting innovation. Historically, it has taken the megafunding and top-down control structures of the federal government to do the kind of investing required to create important technology for the military. Digital photography, GPS, the Internet itself—all were nourished by defense contracts before being opened up to the private sector, which then turned them into billion-dollar industries. ... Now the flow has reversed. Defense has been caught in the throes of the same upheaval that has disrupted legacy industries, unseated politicians, and upended global dynamics. In the digital age, innovation more often comes from smaller entrepreneurs than from the hierarchical structures that were the hallmark of 20th-century government and business. ... Defense contracting is notorious for bureaucratic lethargy and technological backwardness. And executives are leery of appearing to be too close to the US government while they seek to expand overseas. Put bluntly, they don’t want to alienate potential customers. ... The Valley is a place where brainpower is its own kind of currency, and Carter, who holds a PhD in theoretical physics from Oxford, made an impression on the locals. ... somehow Carter must instill the seeds of a cultural and logistical overhaul that will make the modern military-industrial complex nimble enough to provide the kind of innovation and support its 21st-century fighting force needs.