Can the Military Move at Startup Speed? How the Army and Navy Are Rebuilding

This episode offers a rare look inside the Department of Defense, revealing how the Army and Navy CTOs are actively dismantling decades of bureaucratic inertia to integrate cutting-edge commercial technology, providing crucial insights for innovators navigating large-scale institutional change.

Meet the Change Agents: Army and Navy CTOs

• Alex Miller (CTO, Chief of Staff of the Army): Alex describes his role as heavily focused on education—explaining technology's potential to mission commanders—while also engaging in hands-on engineering to advance the Army's tech capabilities. He emphasizes setting a "north star" for technology use, navigating complex stakeholder environments (including Congress and the American public), and overcoming decades of risk-averse policies. He notes that many policies were "implemented by minimalists," creating significant hurdles that require deep understanding and persistent effort to overcome. Before this role, Alex was the science and technology advisor for Army intelligence (G2).
• Justin Finelli (CTO, Department of the Navy - Navy & Marine Corps): Justin highlights the relatively recent creation of the CTO role in government, acknowledging commercial tech's disruptive potential. His focus is on accelerating innovation adoption, particularly from non-traditional partners, scaling successful solutions quickly, and crucially, tying innovation to the divestment of outdated systems. He works across numerous internal organizations to align efforts on high-impact outcomes, aiming for technological "overmatch."

Deconstructing the "Black Box": Evolving Pathways for Startups

• The speakers acknowledge the notorious difficulty startups face when trying to engage with the Department of Defense (DoD), often described as a "black box." Alex Miller explains this complexity stems from historical acquisition reforms like the Packard Commission (acquisition), Clinger-Cohen Act (IT), and Goldwater-Nichols Act (linking mission and buying), which established rules still governing the DoD, with subsequent efforts being mere "duct tape and bubble gum."
• Alex stresses a fundamental shift: "we are trying to fix it." This involves admitting the problem exists and working to cut through bureaucracy, rather than just finding workarounds. The Army is actively bringing industry in earlier, seeking input on requirements and leveraging tools like Other Transaction Authorities (OTAs) – flexible contracting mechanisms – to form industry consortiums, moving away from the pretense of knowing everything internally.
• Justin Finelli notes an unprecedented interest from companies wanting to work on national security, driven by a recognition of global threats. He sees this as the "best alignment that we'll have in our lifetimes" for divesting old systems and integrating new, disruptive technologies. However, he cautions that the translation process (fitting commercial tech to DoD needs) remains expensive and slow, sometimes turning away potential breakthroughs.

Navigating Procurement: Beyond the Program of Record

• Justin Finelli explains Program Executive Offices (PEOs) – large organizations responsible for buying systems at scale – and the traditional goal for startups: becoming a Program of Record (PoR), signifying long-term, stable funding. The DoD has 75 PEOs (18 within the Navy). However, navigating this is complex and difficult.
• The Navy is pioneering a shift towards "Military Moneyball," moving from rigid PoRs to capability-based portfolios (like PEO Digital). This involves making data-driven decisions focused on "capability per dollar," opening the aperture for new solutions, especially Horizon 1 capabilities (incremental improvements to existing, budgeted systems). An online index (via Steve Blank) helps identify PEOs, but finding budget often requires identifying something to "turn off."
• For Horizon 2 capabilities (breakthroughs using existing tech/budgets), mechanisms like SBIR (Small Business Innovation Research – often seen as just a starting point) and ATP-FIT (Accelerating Procurement for Innovative Technology) exist but are limited. Horizon 3 capabilities (game-changing, entirely new tech) still often require "guerrilla marketing," involving DIU (Defense Innovation Unit), Congress, and requirements writers.
• Alex Miller forcefully argues that PEOs and the PoR structure are workarounds for a broken system, not mandated by law. He advocates for blowing up this complexity, questioning why startups should navigate such an arcane system. His goal is to eliminate perverse incentives where achieving PoR status leads to complacency and inertia, rather than continuous improvement.

Reforming Requirements: From Gold-Plated Docs to Agile Needs

• Alex criticizes traditional DoD requirements documents – often thousands of pages long, overly specific ("gold-plated"), and disconnected from operational reality. He provides a stark example of a counter-unmanned system requirement that, statistically, only demanded 51% effectiveness, highlighting the absurdity.
• The alternative approach involves stopping this practice and using more agile methods. Justin mentions the successful use of Capability Need Statements (CNS) – concise documents outlining needs – combined with the Software Acquisition Pathway, reducing an 18-month process to 3 months in one instance.
• This shift represents a move towards scaling what works, acknowledging that the old methods often fail to deliver needed capabilities effectively. Justin emphasizes, "Let's not cut it down with a thousand paper cuts... let's make decisions based on the impact."

Horizontal Capabilities & Cross-Service Collaboration

• A major theme is the need to break down silos and leverage horizontal capabilities (like AI, cloud, data platforms) across services, rather than building redundant systems within each PEO or service. Justin provides examples:
• An edge compute solution developed for shore-based use was rapidly adapted and deployed on Navy ships in the Red Sea. Edge Compute refers to processing data locally, near the source, rather than sending it all back to a central cloud, crucial for disconnected or low-bandwidth environments.
• An electronic warfare solution developed by the Navy was quickly adapted ("painted brown and thrown on a Humvee") for the Army in three months, avoiding a lengthy, duplicative procurement process.
• Alex stresses shifting the focus from rigid cost/schedule/performance metrics (often tied to flawed requirements) to value and time-to-delivery. He argues the Army, with its flexible organizational structures and equipment (kit), is well-positioned for rapid field experimentation.

The Army's Open Door: Transforming in Contact

• Alex Miller extends an "open invite" to companies with working technologies. He highlights the Army's unique ability to rapidly integrate and test solutions directly with soldiers in operational units (e.g., brigades in Europe, Pacific, Middle East).
• He recalls Quick Reaction Capabilities (QRCs) during the Global War on Terror (GWOT) as proof that rapid fielding (e.g., kit in Afghanistan in 30 days) is possible when urgency exists. The current effort aims to make this speed the norm by fixing the underlying system, not just creating temporary workarounds ("side quests").
• Justin Finelli supports this, referencing the concept of "transforming in contact" – adapting doctrine and operations based on new technology, not just acquiring tech for its own sake. The focus is on outcome-driven metrics: does the new tech move the needle significantly?

Overmatch: Seeking Order-of-Magnitude Leaps

• Justin Finelli repeatedly uses the term Overmatch, defining it as seeking capabilities that offer orders-of-magnitude improvement, not just incremental (e.g., 15%) gains. Making significant change requires demonstrating substantial leaps in performance or efficiency.
• He cites Seronic (likely a typo for a company like Saronic, which works on autonomous vessels) using high-performance compute (HPC) and cloud simulations (Rescale) to prove capability improvements equivalent to years of physical testing in a fraction of the time. This data-driven approach makes the A/B decision (old vs. new) much easier.
• Alex provides a counter-example: the Army's historical struggle with 17 different Mission Command programs, each with redundant mapping servers and architectures. It took years to start consolidating these towards modern enterprise services and APIs (Application Programming Interfaces – standardized ways for software components to communicate), hindered by vested interests ("rice bowls") protecting legacy programs. This highlights the wastefulness DoD aims to eliminate.

DoD Modernization & Venture Parallels: Modularity is Key

• The conversation draws parallels between DoD modernization and venture capital: both seek high-impact "100x" solutions and need to validate outcomes.
• Alex Miller criticizes the DoD's past expectation that a single contractor deliver every part of a system, even components they aren't good at. He advocates strongly for a modular, "Lego piece" approach: integrating best-of-breed solutions from different specialized companies (e.g., one for data, one for UI).
• "It is shocking to me how much stuff we buy for soldiers that no one would accept if I handed to you in your everyday life," Alex states, underscoring the drive for higher quality and usability through specialization and integration, mirroring modern software development practices highly relevant to AI and decentralized systems.

Enterprise Services & Focusing on the Unique Niche

• Alex advocates adopting the intelligence community's concept of "services of common concern"—enterprise-level capabilities (like identity management, data platforms, potentially AI foundations) provided centrally by organizations like the CDAO (Chief Digital and Artificial Intelligence Office) and DIU.
• This allows individual services (Army, Navy, etc.) to focus their resources on truly unique, mission-specific requirements where they hold niche expertise, rather than reinventing common infrastructure wheels. He notes Palantir's journey from a small In-Q-Tel (the CIA's venture arm) investment to a major player shows how small, specialized companies can scale to address critical needs.
• Crucially, Alex frames the challenge: "This is not a technology problem. This is a culture and a process problem that we can apply technology to." Startups can't fix the DoD's internal issues but can help identify problems and provide solutions once the DoD clearly defines its needs, especially unique data sets and use cases for technologies like Large Language Models (LLMs).

Culture, Proximity, and Risk Appetite

• Justin Finelli stresses the importance of proximity: startup CEOs should deeply understand the warfighter's environment and needs before scaling sales efforts. Being close to the end-user is critical for developing relevant solutions.
• Both speakers address the cultural challenge of risk aversion. Alex explains the acquisition community is incentivized to minimize financial risk (waste, fraud, abuse), often ignoring the opportunity cost of time. He argues for accepting small financial losses on failed experiments to learn faster, rather than spending years on slow, outdated processes.
• Justin uses a powerful analogy: measuring a quarterback on not making mistakes versus throwing touchdowns. The DoD needs to shift focus from risk reduction to achieving mission outcomes and speed. He mentions internal "mavericks" who drive change despite disincentives and advocates for metrics like SAVE (Speed as an Independent Variable) over just cost.

Budget Realities and Demonstrating Value

• Alex provides historical context: the shift in 1968 (Minuteman III program) introduced program-specific budget lines, reducing the flexibility of earlier portfolio-based funding. Today, the Army has limited flexibility within its budget, making the standard 3-5 year planning cycle incompatible with rapid tech evolution.
• Justin emphasizes that to overcome inertia and budget constraints, new solutions must demonstrate undeniable value. Using a Zero Touch AI example, he explains the need to clearly articulate savings (Total Cost of Ownership - TCO) and mission impact to justify upfront investment (CapEx) for long-term operational gains (OpEx). The key is making the A-to-B comparison stark: "blow it away."

The Year Ahead: Excitement and Key Initiatives

• Justin Finelli: Excited about scaling proven successes using new authorities like the Software Acquisition Pathway, aiming to get breakthrough capabilities fielded much faster within the next 6-12 months.
• Alex Miller: Highlights several key Army initiatives:
• Moving the next-generation Command and Control (C2) consortium (integrating tech like Android devices in tanks) into its program phase.
• Project Flytrap: A major counter-unmanned systems effort in Europe, integrating non-conventional sensors, compute, and automation, learning directly from conflicts like Ukraine.
• Launching an Autonomy Consortium: To develop toolchains, libraries, and concepts for autonomous vehicle formations, aiming to "never trade blood for blood in first contact."
• A general commitment to "body block" policy obstacles hindering progress.

Lightning Round: Advice for Founders

• Red Flags:
• Justin: Don't waste time on bad/long requirements documents; find pathways with clear, concise needs (CNS, CSOs).
• Alex: Stop trying to make the DoD your only source of revenue; maintain a dual-use focus to stay innovative.
• Green Flags:
• Justin: Stick to your core product vision; work with DoD to adapt it, don't tailor excessively from the start.
• Alex: Keep imagining a safer world; bring top talent to solve hard national security problems.
• Book Recommendation (Justin): The Hundred-Year Marathon by Michael Pillsbury.
• Misconceptions to Dispel:
• Justin: The DoD is becoming more flexible and open-minded; data-driven arguments can overcome policy hurdles.
• Alex: The Army is actively transforming while engaged globally ("transforming in contact") and has been adapting since 1775.
• Favorite Military Movie:
• Justin: Top Gun: Maverick (partially filmed on a ship with tech discussed).
• Alex: Starship Troopers (for its depiction of ground infantry getting the job done).

This discussion reveals a DoD actively working to dismantle internal barriers and embrace commercial innovation at speed. For Crypto AI investors and researchers, the key takeaway is the growing opportunity to engage via new pathways, provided solutions demonstrate clear 'overmatch' value and align with emerging needs in areas like C2, autonomy, and data analytics.