Innovation in defence : how start-ups are making their mark

Fif­ty years ago, many of the tech­no­lo­gies used in the civi­lian sec­tor came from the defence sec­tor. Today we are wit­nes­sing the oppo­site move­ment, with the emer­gence of inno­va­tions in defence coming from the civil sec­tor. Why is this so ?

There are seve­ral rea­sons for this phe­no­me­non. First­ly, tech­no­lo­gi­cal cycles in the civi­lian sec­tor are much fas­ter than the long cycles of arma­ment pro­grammes, which can last from ten to for­ty years. Second­ly, R&D invest­ments in the civi­lian sec­tor some­times great­ly exceed the defence bud­gets of most Wes­tern nations. For example, Hua­wei’s R&D bud­get (€21 bil­lion) exceeds Israel’s mili­ta­ry bud­get by one bil­lion, even though Israel is a major player in terms of defence inno­va­tion. But we should also be sure what we mean by inno­va­tion here.

The Minis­try of the Armed Forces has been inves­ting for a long time in so-cal­led “plan­ned inno­va­tion”, in the sense of long-term R&D, which aims to anti­ci­pate tech­no­lo­gi­cal break­throughs and ensure mana­ge­ment of emer­ging tech­no­lo­gies of a stra­te­gic nature. But there are also inno­va­tions in their use, too. For example, the diver­sion of tech­no­lo­gies from the civi­lian sec­tor (e.g. drones), not fore­seen in the tech­no­lo­gi­cal road­maps, can respond to ope­ra­tio­nal chal­lenges and be deve­lo­ped more rapid­ly by com­pa­nies tar­ge­ting civi­lian mar­kets. The Defence Inno­va­tion Agen­cy (DIA), crea­ted in 2018, has the ambi­tion, among others, to detect, moni­tor and cap­ture oppor­tu­ni­ties from the civi­lian world.

The arri­val of these civi­lian players in the world of defence (for example Par­rot, to take the case of drones) raises new ques­tions. The issue of confi­den­tia­li­ty is not the most dif­fi­cult to manage. The real issues, which we encoun­ter in the context of open inno­va­tion with large defence groups, are how to orga­nise the co-inno­va­tion pro­cess, by cor­rect­ly regu­la­ting the intel­lec­tual pro­per­ty rights. Col­la­bo­ra­tion bet­ween start-ups and large groups can some­times lead to a phe­no­me­non of pre­da­tion, whe­ther volun­ta­ry or not. Yet, contrac­tual solu­tions do exist. 

Fur­ther­more, the DIA, through its open inno­va­tion approach, has the mis­sion of detec­ting and cap­tu­ring the “right pro­ject at the right time”: that is to say, a pro­ject that responds to the chal­lenges expres­sed by the armed forces, capable of rea­ching levels of matu­ri­ty not only tech­no­lo­gi­cal but also mar­ket and user. And often the busi­ness model of these start-ups can­not be based sole­ly on the defence mar­ket, which is both too small and mar­ked by exces­si­ve­ly long acqui­si­tion cycles.

The pro­blem of dua­li­ty must be obser­ved on seve­ral levels of ana­ly­sis : stra­te­gy, pro­jects, and busi­ness model. The poten­tial for dua­li­ty often decreases as tech­no­lo­gy deve­lops, but also as uses, pro­cesses and orga­ni­sa­tio­nal choices change. The deve­lop­ment costs for defen­sive spe­ci­fi­ca­tions are usual­ly so large for the scale of a start-up’s resources that it can rare­ly focus on seve­ral mar­kets at the same time, at least in the begin­ning. The linear model of tech­no­lo­gy deve­lop­ment that has been used as a refe­rence to define dua­li­ty is somew­hat out­da­ted, as we notice today that some (rare) defence start-ups have demons­tra­ted the abi­li­ty to absorb arti­fi­cial intel­li­gence deve­lop­ments in the civi­lian world and adapt them to the defence context.

This is the case of Pre­li­gens : a start-up which deve­lops soft­ware using AI to auto­ma­ti­cal­ly ana­lyse mass data from mul­tiple sources, nota­bly satel­lite opti­cal ima­ge­ry, and alerts intel­li­gence agents when an abnor­mal situa­tion is detec­ted on a site of stra­te­gic interest.

In prac­tice, the dua­li­ty is very dif­fi­cult to manage, espe­cial­ly from a stra­te­gic point of view and on the ques­tion of resource allo­ca­tion. There are dual tech­no­lo­gies, but real dual SMEs are rare (we can never­the­less cite the case of MC2 Tech­no­lo­gies, on anti-drone combat).

Tal­king about a defence eco­sys­tem contrasts somew­hat with a concept that is still very regu­lar­ly used by the players in the defence mar­ket : that of the defence indus­trial and tech­no­lo­gi­cal base (DITB), made up of about ten indus­trial prime contrac­tors (some of which were State ser­vices before being pri­va­ti­sed) and about 4,000 SMEs.

Open inno­va­tion repre­sents less than a quar­ter of the DIA’s bud­get. There is no revo­lu­tion. Never­the­less, open inno­va­tion is rede­fi­ning the roles of players in the defence world and their rela­tion­ships, espe­cial­ly in cross-cut­ting areas such as arti­fi­cial intel­li­gence, where there is no his­to­ri­cal player that imposes itself on this vertical.

The major defence groups are increa­sin­gly sys­tems inte­gra­tors : they inte­grate all the sys­tems and com­po­nents, a skill that only the very large players pos­sess. But they no lon­ger have full tech­no­lo­gi­cal control. SMEs are not just sub­con­trac­tors ; they pro­vide com­plete tech­no­lo­gi­cal buil­ding blocks. Open inno­va­tion also encou­rages the emer­gence of inter­me­dia­ries to ali­gn players in an inno­va­tion situa­tion, for example the DIA’s Inno­va­tion Defense Lab, the inno­va­tion labs of the Armed Forces such as the Bat­tle Lab Terre, or even capi­tal investors.

The shift towards stra­te­gies of hyper-com­pe­ti­tion and inten­sive inno­va­tion has been des­cri­bed for more than thir­ty years by resear­chers in mana­ge­ment sciences, and the defence sec­tor is no excep­tion. This context of strong com­pe­ti­tion has had a signi­fi­cant impact, pushing com­pa­nies to ratio­na­lise the orga­ni­sa­tion of deve­lop­ment pro­jects. In the ear­ly 2000s, major tech­no­lo­gi­cal dis­rup­tions made the sys­te­ma­tic desi­gn and stan­dar­di­sa­tion of deve­lop­ment pro­cesses obsolete. 

This is per­haps where the defence mar­ket can shed some inter­es­ting light. Indeed, faced with the increa­sing com­plexi­ty of sys­tems, the conduct of arma­ment ope­ra­tions through major pro­grammes is fin­ding it increa­sin­gly dif­fi­cult to coha­bit with explo­ra­to­ry approaches. These explo­ra­to­ry pro­jects, cha­rac­te­ri­sed by their uncer­tain­ty, must allow lear­ning loops to be car­ried out and seve­ral concur­rent deve­lop­ments to be car­ried out in order to avoid being “killed” by the qua­li­ty-cost-delay logic of ope­ra­tions. The chal­lenge of the defence inno­va­tion eco­sys­tem today is to allow real break­throughs to emerge from these explo­ra­to­ry projects.

The human fac­tor is of course cru­cial for the armed forces as well as for the actors of the defence world. If the ques­tion of man­po­wer is always impor­tant, espe­cial­ly in the cur­rent geos­tra­te­gic context, the ques­tion of a qua­li­ta­tive rise in pro­files is cen­tral. Accul­tu­ra­tion to new tech­no­lo­gies is essen­tial to face the evo­lu­tion of pro­fes­sions, equip­ment, and orga­ni­sa­tions. In the fields of arti­fi­cial intel­li­gence, cyber­se­cu­ri­ty, or nano­tech­no­lo­gies, many pro­fes­sions are in per­ma­nent ten­sion. Cyber defence is one of the prio­ri­ties of the armed forces in terms of recruit­ment. And it is here again that the power of an open eco­sys­tem can be illus­tra­ted, as is the case in Bruz near Rennes, where public actors (the Direc­to­rate Gene­ral of Arma­ments, the Com­Cy­ber) and pri­vate actors (indus­tria­lists and start-ups) work clo­se­ly toge­ther, inclu­ding to attract talent. 

Interview by Richard Robert