Steve Blank's Blog, page 13
September 24, 2020
Technology, Innovation, and Modern War – Class 1 – Ash Carter
We just had our first week of our new national security class Technology, Innovation and Modern War. Given the tech-centricity of Stanford and Silicon Valley, Joe Felter, Raj Shah and I thought it was natural to design a class to examine the new military systems, operational concepts and doctrines that will emerge from 21st century technologies – Space, Cyber, AI & Machine Learning and Autonomy.
Read about all the class sessions here.
Our students, a mix between international policy and engineering, will be the ones in this fight. If the past is a prologue, they’ll go off to senior roles in defense, policy and to the companies building new disruptive technologies. Our goals are to help them understand the complexity and urgency of the issues, offer them a model to understand the obstacles and path forward, and to inspire them to help lead the transformation of the Department of Defense to meet 21st century challenges.
Our guest speaker this class was Ash Carter the 25th Secretary of Defense. [image error]
The pre-class reading included: Christian Brose, The Kill Chain, Michele Flournoy and Gabriele Chefitz: Sharpening the US Military’s Edge and the 2018 summary of the National Defense Strategy.
Lecture 1:
This post describes our lecture slides below.
If you can’t see the slides click here. The text below refers to the slides.
The Big Picture
Context is important. We started the class illustrating the sweep of the rise and fall of empires and nations over the last 500 years. (Slide 17) The takeaways were that:
National power is ephemeral
China is the only nation that declined in national power and eventually recovered it – though it took half a millennium
The rise of the United States as a national power was incredibly steep, however its trend over the last two decades is not heading in the right direction and is about to intersect with the rise of China
While the class is focused on how new technologies will shape new weapons and doctrine, the national power of a country (its influence and footprint on the world stage) is more than just its military strength. It’s the combination of a country’s diplomacy (soft power and alliances,) information/ intelligence and its military and economic strength. (This concept is known by its acronym, DIME.) (Slide 18)
It’s worth considering the reasons why nations decline — they lose allies, a decline in economic power (the UK in the 20th Century); they lose interest in global affairs (China in the 15th Century); internal/civil conflicts (Russia in the 20th Century.) We zeroed-in on one of the other reasons, and the purpose of this class – a nations military can miss disruptive technology transitions and new operational concepts (Slides 21-22).
And that has happened to us. For 25 years as the sole Superpower, the U.S. neglected strategic threats from China and a rearmed Russia. The country, our elected officials, and our military emotionally committed to a decades long battle to revenge 9/11. Meanwhile, our country’s legacy weapons systems had too many entrenched and interlocking interests (Congress, lobbyists, DOD/contractor revolving door, service promotion of executors versus innovators) that inhibited radical change. The 2018 National Defense Strategy changed that, becoming a wakeup call for our nation (Slide 25.)
All this was a prelude to introducing the class’s three parts (Slide 27):
The first part provides a broad overview of how new technology turns into weapons and doctrine.
Part two does a deep dive on AI, machine learning, autonomy, cyber and space (and will touch on biotech, microelectronics, quantum and hypersonics) and how each can be applied in the service of national security.
The third part of the class gives students hypothetical problems and asks them use 21st century technology to create operational concepts and doctrines that can solve them.
Technology to Weapons to Doctrine
As we described how the U.S. specifies and buys weapons systems to students accustomed to Amazon and the “make it happen now” culture of Silicon Valley, we could hear the “you got to be kidding me,” even over zoom. We described the theory versus current practice of defense requirements, acquisition and budgeting in Slides 28-32. And we repeated the obvious (that the system is broken) and the not so obvious – the U.S. is still using a McNamara-era requirements and acquisition system designed by financial managers from Ford and imposed on the DOD in the early 1960s. One observation that often goes unnoticed is that the government audit agencies – GAO, DoDIG – are also part of the problem, as they work hard in assuring compliance with bad strategy. (Best comment from a student, “It strikes me that our acquisition system isn’t broken – it’s obsolete. Built for a world that no longer exists.” An even more sobering comment was, “Was this system designed by the Chinese to ensure we can’t innovate?”)
Having a new technology and weapon doesn’t describe how it’s used to fight or win a war. Each new generation of technology (spears, bows and arrows, guns, planes, etc.) inevitably created new types of military systems. Shooting a gun instead of a longbow didn’t win a conflict; it required the development of a new operational concept and doctrine to learn; who mans it, what other activities are needed to work with it, how to sustain it, and how to use it to win. (Operational Concepts are the Minimum Viable Products of the practical application of a doctrine against a specific enemy in a specific environment.) Slide 33
New adversaries like ISIS in Iraq created the need for a new doctrine i.e. the 2006 Counterinsurgency Field Manual 3-24.
New types of disruptive technologies/weapons (China/Russia A2/AD, China’s DF-21D and DF-26B) can create the need for new doctrine.
(Ironically, China building military bases on top of reefs in the South China Sea had nothing to do with new technology. It was simply a disruptive operational concept that used 20th-century dredging ships and a gamble that the U.S. wouldn’t interfere. That move alone negated 75 years of U.S. weapons and doctrine in the Pacific, and we’ll spend 10s of billions of dollars to solve the problem. The Marine Corps Force Design 2030 has revamped its operational concept to meet the new reality.)
Today, the Department of Defense can’t create doctrine, new operational concepts and new organizational structures against new technology and new types of warfare fast enough. Therefore, the purpose of this class – how to think about it systematically.
Incremental technology improvements in commercial companies and the Department of Defense tend to follow an S-curve – an initial systems capability is low as it undergoes shakedown and debugging, but climbs rapidly, then plateaus until it is replaced with another incremental improvement. However, unlike commercial systems, weapon systems are matched with a doctrine of how they are used. And incremental improvements in weapons typically result in incremental improvements in doctrine. And because of the complexity of the DOD requirements and acquisition system, the incumbent contractors are typically the same. New startups/companies rarely break into the system. (There’s something wrong when the cost of entry of Palantir, SpaceX and Anduril as new DOD contractors required billionaire founders.) Slides 35-37
Unlike incremental technology improvements. disruptive technology is on a completely different S-curve than existing technology and forces the creation of new doctrine and operational concepts. In theory, incumbent contractors of old technology/weapons should be at a disadvantage over the suppliers for new technology systems as disruption offers opportunities for a new generation of contractors and suppliers. However, as we’ll describe in later classes, the role of Congress, incumbent contractors, lobbyists, still favor the existing prime contractors. Slides 38-41
[image error]It’s sobering to consider what our existing legacy systems are versus where they need to be in the next two decades. It’s worth looking at the chart below for a while. Whether we want to or not this is where the new technologies are going to take us. Even if the chart is just directionally correct, each one of those transitions requires billions of dollars, new weapons and new doctrine. Slide 41
In both commerce and Defense, they are visionaries who can look at technology (that to others appears like a toy,) and they can imagine it fully formed a decade into the future with the new operating concepts against new threats/opportunities. Examples include the Blitzkrieg (Von Manstein), or the Nuclear Navy (Admiral Rickover,) or AirLand Battle (Creighton Abrams,) or Andrew Marshall at ONA, or Elon Musk at SpaceX. Executors (those focus on running existing organizations) often dismiss visionaries because, truth be told, most are hallucinating. But the few that are right, change the world or win wars. The biography of John Boyd (the author of the OODA loop) and his observations on “Be versus Do” in a military career is still a great read. Slide 42
The Impact of New Technology and How the DOD Will Acquire It
As an introduction to this class session, one of the assignments was to watch the Slaughterbot video, a dystopian (but technically possible) future of autonomy and AI.
As a nation the U.S. invests large % of its GDP in research and development; however, the source of those dollars has shifted from government to private industry. (The large rise in federal R&D in the 1960s was the investment in NASA and the space program.) While federal R&D is focused on the national interest, a lack of a national industrial policy or incentives for commercial R&D has those R&D dollars optimizing the greatest financial return. Slide 45
“No bucks, no Buck Rogers” describes the role that Congress plays in providing funding for all military expenditures. In the last two decades a federal budget was passed on time just four times. This plays havoc with having a predictable way to pay for new things. Slides 49-51
A glimmer of hope is occurring across the DOD. An insurgency has arisen in the services and combatant commands that has essentially said, “We can’t wait until our acquisition system is fixed, so we’re going to bypass it.” All the services have incubators, Accelerator’s, and SBIR programs. And they’re even making an end-around to a broken acquisition system. First driven by the Army, and now rapidly being used by the other services, a new way to write contracts, called Other Transaction Authorities (OTAs,) has emerged to bypass the years of paperwork. (Time will tell whether the existing acquisition bureaucracy beats this down or if it truly can sustain a breakout from traditional contracting and gets embraced by visionary leadership.) Slides 47 and 52
Guest Speaker – Ash Carter – SecDef
If you can’t see the Ash Carter video, click here
In the beginning of every class we ask our students for their feedback and thoughts about our guest speakers. Our student take-aways from Secretary Carter’s talk is below:[image error]
Lessons Learned
Technology by itself doesn’t win wars. It has to be built into a weapons system.
Today, many of the advanced technologies that will be used in 21st weapons are being built by private companies not the department of defense
Weapons by themselves don’t win wars. To be effective they have to be integrated into an operational concept/doctrine
Operational concepts/Doctrine describes how a weapon is used, who uses it, what else/who else needs to be used with it, how it’s maintained, etc. And the expected results when used
The way we describe what weapons we need (the requirements) and the way we buy them (the acquisition process) is built on a mid-20th process designed by accountants
Today, there are 88 Major Defense Acquisition Programs (billion $’s.) Almost all are legacy systems – designed to fight 20th century wars
For example, the F-35/B-21/KC-46 aircraft, Ford-Class Carriers, Columbia-class SSBN, Virginia-class SSN, M-1 tank upgrades, etc.
In its attempt to minimize financial risk it has metastasized into a process that cannot field a major weapon system in less than a decade
The process does not differentiate between programs that are incremental improvements, versus those that are disruptive
The pushback to do something different i.e. the Marine Corps Force Design 2030 illustrates the institutional inertia to change -even when clearly needed
Existing technologies – can be described with an S-Curve
These systems start out with teething problems, mature, and then are replaced by better systems solving the same problem
Unlike commercial products, military technology/weapon systems have an associated doctrine – how it is used
Doctrine gets incremental improvements
Most often incremental weapons systems are built by existing contractors
Disruptive technology also goes through their own S-Curves, but they solve different problems/create new capabilities
Disruptive technology create new doctrine and in a perfect world, new suppliers
Technology, Innovation, and Modern War – Class 1
We just had our first week of our new national security class Technology, Innovation and Modern War. Given the tech-centricity of Stanford and Silicon Valley, Joe Felter, Raj Shah and I thought it was natural to design a class to examine the new military systems, operational concepts and doctrines that will emerge from 21st century technologies – Space, Cyber, AI & Machine Learning and Autonomy.
Our students, a mix between international policy and engineering, will be the ones in this fight. If the past is a prologue, they’ll go off to senior roles in defense, policy and to the companies building new disruptive technologies. Our goals are to help them understand the complexity and urgency of the issues, offer them a model to understand the obstacles and path forward, and to inspire them to help lead the transformation of the Department of Defense to meet 21st century challenges.
Our guest speaker this class was Ash Carter the 25th Secretary of Defense. [image error]
The pre-class reading included: Christian Brose, The Kill Chain, Michele Flournoy and Gabriele Chefitz: Sharpening the US Military’s Edge and the 2018 summary of the National Defense Strategy.
Lecture 1:
This post describes our lecture slides below.
If you can’t see the slides click here. The text below refers to the slides.
The Big Picture
Context is important. We started the class illustrating the sweep of the rise and fall of empires and nations over the last 500 years. (Slide 17) The takeaways were that:
National power is ephemeral
China is the only nation that declined in national power and eventually recovered it – though it took half a millennium
The rise of the United States as a national power was incredibly steep, however its trend over the last two decades is not heading in the right direction and is about to intersect with the rise of China
While the class is focused on how new technologies will shape new weapons and doctrine, the national power of a country (its influence and footprint on the world stage) is more than just its military strength. It’s the combination of a country’s diplomacy (soft power and alliances,) information/ intelligence and its military and economic strength. (This concept is known by its acronym, DIME.) (Slide 18)
It’s worth considering the reasons why nations decline — they lose allies, a decline in economic power (the UK in the 20th Century); they lose interest in global affairs (China in the 15th Century); internal/civil conflicts (Russia in the 20th Century.) We zeroed-in on one of the other reasons, and the purpose of this class – a nations military can miss disruptive technology transitions and new operational concepts (Slides 21-22).
And that has happened to us. For 25 years as the sole Superpower, the U.S. neglected strategic threats from China and a rearmed Russia. The country, our elected officials, and our military emotionally committed to a decades long battle to revenge 9/11. Meanwhile, our country’s legacy weapons systems had too many entrenched and interlocking interests (Congress, lobbyists, DOD/contractor revolving door, service promotion of executors versus innovators) that inhibited radical change. The 2018 National Defense Strategy changed that, becoming a wakeup call for our nation (Slide 25.)
All this was a prelude to introducing the class’s three parts (Slide 27):
The first part provides a broad overview of how new technology turns into weapons and doctrine.
Part two does a deep dive on AI, machine learning, autonomy, cyber and space (and will touch on biotech, microelectronics, quantum and hypersonics) and how each can be applied in the service of national security.
The third part of the class gives students hypothetical problems and asks them use 21st century technology to create operational concepts and doctrines that can solve them.
Technology to Weapons to Doctrine
As we described how the U.S. specifies and buys weapons systems to students accustomed to Amazon and the “make it happen now” culture of Silicon Valley, we could hear the “you got to be kidding me,” even over zoom. We described the theory versus current practice of defense requirements, acquisition and budgeting in Slides 28-32. And we repeated the obvious (that the system is broken) and the not so obvious – the U.S. is still using a McNamara-era requirements and acquisition system designed by financial managers from Ford and imposed on the DOD in the early 1960s. One observation that often goes unnoticed is that the government audit agencies – GAO, DoDIG – are also part of the problem, as they work hard in assuring compliance with bad strategy. (Best comment from a student, “It strikes me that our acquisition system isn’t broken – it’s obsolete. Built for a world that no longer exists.” An even more sobering comment was, “Was this system designed by the Chinese to ensure we can’t innovate?”)
Having a new technology and weapon doesn’t describe how it’s used to fight or win a war. Each new generation of technology (spears, bows and arrows, guns, planes, etc.) inevitably created new types of military systems. Shooting a gun instead of a longbow didn’t win a conflict; it required the development of a new operational concept and doctrine to learn; who mans it, what other activities are needed to work with it, how to sustain it, and how to use it to win. (Operational Concepts are the Minimum Viable Products of the practical application of a doctrine against a specific enemy in a specific environment.) Slide 33
New adversaries like ISIS in Iraq created the need for a new doctrine i.e. the 2006 Counterinsurgency Field Manual 3-24.
New types of disruptive technologies/weapons (China/Russia A2/AD, China’s DF-21D and DF-26B) can create the need for new doctrine.
(Ironically, China building military bases on top of reefs in the South China Sea had nothing to do with new technology. It was simply a disruptive operational concept that used 20th-century dredging ships and a gamble that the U.S. wouldn’t interfere. That move alone negated 75 years of U.S. weapons and doctrine in the Pacific, and we’ll spend 10s of billions of dollars to solve the problem. The Marine Corps Force Design 2030 has revamped its operational concept to meet the new reality.)
Today, the Department of Defense can’t create doctrine, new operational concepts and new organizational structures against new technology and new types of warfare fast enough. Therefore, the purpose of this class – how to think about it systematically.
Incremental technology improvements in commercial companies and the Department of Defense tend to follow an S-curve – an initial systems capability is low as it undergoes shakedown and debugging, but climbs rapidly, then plateaus until it is replaced with another incremental improvement. However, unlike commercial systems, weapon systems are matched with a doctrine of how they are used. And incremental improvements in weapons typically result in incremental improvements in doctrine. And because of the complexity of the DOD requirements and acquisition system, the incumbent contractors are typically the same. New startups/companies rarely break into the system. (There’s something wrong when the cost of entry of Palantir, SpaceX and Anduril as new DOD contractors required billionaire founders.) Slides 35-37
Unlike incremental technology improvements. disruptive technology is on a completely different S-curve than existing technology and forces the creation of new doctrine and operational concepts. In theory, incumbent contractors of old technology/weapons should be at a disadvantage over the suppliers for new technology systems as disruption offers opportunities for a new generation of contractors and suppliers. However, as we’ll describe in later classes, the role of Congress, incumbent contractors, lobbyists, still favor the existing prime contractors. Slides 38-41
[image error]It’s sobering to consider what our existing legacy systems are versus where they need to be in the next two decades. It’s worth looking at the chart below for a while. Whether we want to or not this is where the new technologies are going to take us. Even if the chart is just directionally correct, each one of those transitions requires billions of dollars, new weapons and new doctrine. Slide 41
In both commerce and Defense, they are visionaries who can look at technology (that to others appears like a toy,) and they can imagine it fully formed a decade into the future with the new operating concepts against new threats/opportunities. Examples include the Blitzkrieg (Von Manstein), or the Nuclear Navy (Admiral Rickover,) or AirLand Battle (Creighton Abrams,) or Andrew Marshall at ONA, or Elon Musk at SpaceX. Executors (those focus on running existing organizations) often dismiss visionaries because, truth be told, most are hallucinating. But the few that are right, change the world or win wars. The biography of John Boyd (the author of the OODA loop) and his observations on “Be versus Do” in a military career is still a great read. Slide 42
The Impact of New Technology and How the DOD Will Acquire It
As an introduction to this class session, one of the assignments was to watch the Slaughterbot video, a dystopian (but technically possible) future of autonomy and AI.
As a nation the U.S. invests large % of its GDP in research and development; however, the source of those dollars has shifted from government to private industry. (The large rise in federal R&D in the 1960s was the investment in NASA and the space program.) While federal R&D is focused on the national interest, a lack of a national industrial policy or incentives for commercial R&D has those R&D dollars optimizing the greatest financial return. Slide 45
“No bucks, no Buck Rogers” describes the role that Congress plays in providing funding for all military expenditures. In the last two decades a federal budget was passed on time just four times. This plays havoc with having a predictable way to pay for new things. Slides 49-51
A glimmer of hope is occurring across the DOD. An insurgency has arisen in the services and combatant commands that has essentially said, “We can’t wait until our acquisition system is fixed, so we’re going to bypass it.” All the services have incubators, Accelerator’s, and SBIR programs. And they’re even making an end-around to a broken acquisition system. First driven by the Army, and now rapidly being used by the other services, a new way to write contracts, called Other Transaction Authorities (OTAs,) has emerged to bypass the years of paperwork. (Time will tell whether the existing acquisition bureaucracy beats this down or if it truly can sustain a breakout from traditional contracting and gets embraced by visionary leadership.) Slides 47 and 52
Guest Speaker – Ash Carter – SecDef
If you can’t see the Ash Carter video, click here
In the beginning of every class we ask our students for their feedback and thoughts about our guest speakers. Our student take-aways from Secretary Carter’s talk is below:[image error]
Lessons Learned
Technology by itself doesn’t win wars. It has to be built into a weapons system.
Today, many of the advanced technologies that will be used in 21st weapons are being built by private companies not the department of defense
Weapons by themselves don’t win wars. To be effective they have to be integrated into an operational concept/doctrine
Operational concepts/Doctrine describes how a weapon is used, who uses it, what else/who else needs to be used with it, how it’s maintained, etc. And the expected results when used
The way we describe what weapons we need (the requirements) and the way we buy them (the acquisition process) is built on a mid-20th process designed by accountants
Today, there are 88 Major Defense Acquisition Programs (billion $’s.) Almost all are legacy systems – designed to fight 20th century wars
For example, the F-35/B-21/KC-46 aircraft, Ford-Class Carriers, Columbia-class SSBN, Virginia-class SSN, M-1 tank upgrades, etc.
In its attempt to minimize financial risk it has metastasized into a process that cannot field a major weapon system in less than a decade
The process does not differentiate between programs that are incremental improvements, versus those that are disruptive
The pushback to do something different i.e. the Marine Corps Force Design 2030 illustrates the institutional inertia to change -even when clearly needed
Existing technologies – can be described with an S-Curve
These systems start out with teething problems, mature, and then are replaced by better systems solving the same problem
Unlike commercial products, military technology/weapon systems have an associated doctrine – how it is used
Doctrine gets incremental improvements
Most often incremental weapons systems are built by existing contractors
Disruptive technology also goes through their own S-Curves, but they solve different problems/create new capabilities
Disruptive technology create new doctrine and in a perfect world, new suppliers
September 10, 2020
Technology, Innovation, and Modern War
I’m teaching my first non-lean start up class in a decade at Stanford next week; Technology, Innovation and Modern War: Keeping America’s Edge in an Era of Great Power Competition. The class is joint listed in Stanford’s International Policy department as well as in the Engineering School, in the department of Management Science and Engineering.
Why This Course?
Five years ago, Joe Felter, Pete Newell and I realized that few of our students considered careers in the Department of Defense or Intelligence Community. In response we developed the Hacking for Defense class where students could learn about the nation’s emerging threats and security challenges while working with innovators inside the Department of Defense (DoD) and Intelligence Community to solve real national security problems. Today there is a national network of 40 colleges and universities teaching Hacking for Defense. We’ve created a network of entrepreneurial students who understand the security threats facing the country and engaged them in partnership with islands of innovation in the DOD/IC. The output of these classes is providing hundreds of solutions to critical national security problems every year. This was our first step in fostering a more agile, responsive and resilient, approach to national security in the 21st century.
Fast forward to today. For the first time since the start of the Cold War, Americans face the prospect of being unable to win in a future conflict. In 2017, the Chairman of the Joint Chiefs of Staff gave a prescient warning that “In just a few years, if we do not change the trajectory, we will lose our qualitative and quantitative competitive advantage.” Those few years are now, and this warning is coming to fruition.
New emerging technologies will radically change how countries will be able to fight and deter threats across air, land, sea, space, and cyber. But winning future conflicts requires more than just adopting new technology; it requires a revolution in thinking about how this technology can be integrated into weapons systems to drive new operational and organizational concepts that change the way we fight.
Early in 2020, Joe Felter (previously Assistant Secretary of Defense for South Asia, Southeast Asia, and Oceania and Hacking for Defense co-creator) and I began to talk about the need for a new class that gave students an overview of the new technologies and explored how new technologies turn into weapons, and how new concepts to use them will emerge. We recruited Raj Shah (previously the managing director of the Defense Innovation Unit that was responsible for contracting with commercial companies to solve national security problems) and we started designing the class. One couldn’t hope for a better set of co-instructors.
The Class
War, in one form or another, appeared with the first man. Ever since someone picked up a rock and realized you could throw it, humans have embraced new technology for war. Each new generation of technology (spears, bows and arrows, guns, planes, etc.) inevitably created new types of military systems. But just picking up the rock didn’t win a conflict, it required the development of a new operational concept learning how to use it to win, i.e. what was the best way to throw a rock, how many people needed to throw rocks, the timing of when you threw it, etc. As each new technology created new military systems, new operational concepts were developed (bows and arrows were used differently than rocks, etc.). Our course will examine the new operational concepts and strategies that will emerge from 21st century technologies – Space, Cyber, AI & Machine Learning and Autonomy. We’ll describe how new military systems are acquired, funded, and fielded, and also consider the roles of Congress, incumbent contractors, lobbyists, and start-ups.
This course begins with an overview of the history of military innovation then describes the U.S. strategies developed since World War II to gain and maintain our technological competitive edge during the bipolar standoff of the Cold War. Next, we’ll discuss the challenge of our National Defense Strategy – we no longer face a single Cold War adversary but potentially five – in what are called the “2+3 threats” (China and Russia plus Iran, North Korea, and non-nation state actors.)
The course offers students the insight that for hundreds of years, innovation in military systems has followed a repeatable pattern: technology innovation > new weapons > experimentation with new weapons/operational concepts > pushback from incumbents > first use of new operational concepts.
In the second part of course, we’ll use this framework to examine the military applications of emerging technologies in Space, Cyber, AI & Machine Learning, and Autonomy. Students will develop their own proposals for new operational concepts, defense organizations, and strategies to address these emergent technologies while heeding the funding and political hurdles to get them implemented.
The course draws on the experience and expertise of guest lecturers from industry and from across the Department of Defense and other government agencies to provide context and perspective. Bookending the class will be two past secretaries of Defense – Ash Carter and Jim Mattis.
Much like we’ve done with our past classes; – the Lean LaunchPad which became the National Science Foundation I-Corps (taught in 98 universities) and Hacking For Defense (taught in 40 schools,) – our goal is to open source this class to other universities.
As Christian Brose assesses in his prescient book “The Kill Chain”, our challenge is not the lack of money, technology, or capable and committed people in the US government, military and private industry – but of a lack of imagination. This course, like its cousin Hacking for Defense, aims to harness America’s comparative advantage in innovative thinking and the quality of its institutions of higher education, to bring imaginative and creative approaches to developing the new operational concepts we need to compete and prevail in this era of great power rivalry.
The syllabus for the class is below:
Technology, Innovation and Modern War
Part I: History, Strategy and Challenges
Sep 15: Course Introduction
Guest Speaker: Ash Carter
Sep 17: History of Defense Innovation: From Long Bows to Nuclear Weapons and Off-Set Strategies.
Guest Speaker: Max Boot
Sep 22: DoD 101: An Introduction to the US Department of Defense: How Military Technology is Sourced, Acquired and Deployed.
Sep 24: US Defense Strategies and Military Plans in an Era of Great Power Competition
Sep 29: Technology, Ethics and War
Guest Panel
Oct 1: Congress and the power of the purse
Part II: Military Applications, Operational Concepts, Organization and Strategy
Artificial Intelligence and Machine Learning
Oct 6: Introduction
Oct 8: Military Applications
Guest Speaker: LTG (ret) Jack Shanahan, fmr Director Joint Artificial Intelligence Center (JAIC)
Autonomy
Oct 13: Introduction
Oct 15: Military Applications
Cyber
Oct 20: Introduction
Military Applications
Space
Oct 27: Introduction
Military Applications
Part III: Building an integrated plan for the future (Student group project)
How to build a plan for future war
Nov 3: Conops planning
Guest Speaker(s): COCOM and Joint Staff Planners
Nov 5: Budget and Innovation
Guest Speaker: OMB Defense lead
Nov 10: Team working sessions with DoD Mentors
Group Presentations and Critiques
Nov 12: Groups 1-2
Guest Critique: US Indo-Pacom TBA
Nov 17: Groups 2-4
Course Reflections
Nov 19: Defending a Shared Vision for the Future
Guest Speaker James Mattis
August 17, 2020
Hacking 4 Recovery – Time to Take A Shot
“Let’s do something to help with the pandemic.” In April, with the economy crashing, and the East Coast in lockdown, I heard this from Stanford instructors Tom Bedecarre and Todd Basche, both on the same day. And my response to them was the same, “I can’t sew masks and I don’t know how to make ventilators.” But after thinking about it, it dawned on to me that we could contribute – by creating a class to help existing businesses recover and new ones to start.
And so, Hacking for Recovery began, starting first at Stanford and next offered by University of Hawaii for the State of Hawaii.
After teaching 70 teams – 50 at Stanford and 20 in Hawaii – 275+ entrepreneurs – we’ve proven three things: 1) people can take control of what happens to their lives/careers during and after the pandemic, 2) in five days teams can make extraordinary progress in validating a business model and, 3) this process can be replicated in other areas of the country that need to recover and rebuild businesses.
Here’s how it happened.
I realized we had the ability to rapidly launch a large number of companies on the path of validating their business models. We could offer a 5-day version of the Lean LaunchPad / Hacking For Defense / National Science Foundation I-Corps class that’s trained tens of thousands of entrepreneurs. The class already existed. I had been teaching it at Columbia University for the last seven years. Brainstorming with my Stanford co-instructor Steve Weinstein, we streamlined the material for a virtual class, and told Tom and Todd we could do it.
In two months, they recruited 200 students (50 teams) on 6 continents and in more than a dozen countries. What united the students was their belief that while the pandemic had disrupted their lives, here was an opportunity to shape their own future.
To support them we found 31 mentors, and 4 great Teaching Assistants. The entire course – from team recruitment to the actual class sessions – was hosted online through Zoom.
We ran the Stanford class three times, each in 5-day sessions. (The syllabus is here.)
The teams were able to do customer discovery via video conferencing (getting out of the building without physically getting out of the building) averaging 44 interviews in 5 days. In aggregate they interviewed 2,259 customers. But it just wasn’t the aggregate numbers that were impressive it was how much they learned in five days.
The results?
200 students will never be the same. Rather than bemoaning their circumstances, they decided to rise up and take their best shot. Immersed in a rapid-fire hands-on experience, and surrounded by mentors and subject matter experts, every team not only changed the trajectory of their company but left having learned a methodology for high-speed business model validation to help jump-start a business idea in these chaotic times and beyond.
The topics the teams worked on mirrored the opportunities created caused by the pandemic and sequestering. Over 40% were working on telemedicine, 28% in remote education or remote work. Other teams tackled problems in travel, small business, sustainability, etc. The 50 team concepts at Stanford fell into these categories:
21 Health/Telemedicine
9 Education
5 Remote Work
3 Travel
3 Sustainability
3 Small Business
6 others
More than 15 of the teams have already committed to continue to pursue their startup ideas and are applying to accelerators and seeking funding.
When the sessions at Stanford were completed, we helped the University of Hawaii and Maui Economic Development Board STEMworks launch the Hawaii version of Hacking 4 Recovery – to rebuild the State’s economy, which has been uniquely devastated by the coronavirus lockdown. 20 teams just finished their program. With more to come. Other regions can do the same.
Take a look at a selection of the presentations below from Stanford’s cohorts. Considering some of the teams consisted of incoming freshmen, their progress is kind of mind blowing.
While we enabled 70 teams to start companies, what we really generated was hope – and a path to new opportunities.
AntiCovidAI – a novel mobile app to detect COVID-19 symptoms. Team included Stanford undergrad, Stanford alum, DCI Fellow, Stanford staff member and a graduate student taking courses at Stanford. We had 21/50 teams focused on health/telemedicine concepts
Nightingale – a telemedicine platform connecting nurses to caregivers to close the home healthcare gap.
Diffusion – led by a Stanford Ph.D, this team is developing a sensor to prevent head and neck injuries from falls, especially for seniors in nursing homes.
Edusquared– this team of 4 women who just graduated high school and are entering Stanford in September created an educational subscription box for young Special Ed students. 9 of the teams worked on Education concepts.
Work From Anywhere – the team designed a service to help people move to new locations as remote working allows employees to work from anywhere. 5 teams developed concepts related to Remote Work.
Eye-Dentify – was led by a Knight Hennessy Scholar who wants to help bring eyecare to remote underserved areas. Many of the teams focused on social impact.
Escape Homework – team developed an “Escape Room” platform to make remote learning for k-12 students fun and engaging. (Post class, the team wrote a blog post describing their experience in the class. Worth a read here. And they shared their page on virtual educational resources here.)
Voyage – was a global travel advisory platform for pandemic information.
Parrot – fun language app – crossing Duolingo with TikTok. Four rising Stanford sophomore women.
All 50 Stanford presentations are here: Session 1, Session 2 and Session 3.
Total Stanford participants: 200 (Men 51%, Women 49%)
Representing a broad cross-section of the Stanford Community:
undergrads 25%
graduate 14%
Summer Session Students 10%
Alumni 30%
Faculty/Staff 2%
DCI Fellows 3%
Other/misc. 16%
Thanks to the instructors who taught the class: Tom Bedecarre, Steve Weinstein and Pete Newell and to the guest lecturers: Mar Hershenson, Tina Seelig, and Heidi Roizen.
In addition to the instructors, each team had mentors who volunteered their time: Jim Anderson, Adi Bittan, Teresa Briggs, Rachel Costello, Phil Dillard, Freddy Dopfel, Mimi Dunne, Dave Epstein, Eleanor Haglund, Joy Fairbanks, Susan Golden, Rafi Holtzman, Pradeep Jotwani, Phillipe Jorge, Vera Kenehan, Robert Locke, Kris McCleary, Radhika Malpani, Stephanie Marrus, Allan May, Rekha Pai,Don Peppers, Alejandro Petschankar, Kevin Ray, Heather Richman, Eric Schrader, Craig Seidel, Kevin Thompson, Wendy Tsu, Lisa Wallace. Plus another 27 subject matter experts as support.
And when a class with a million moving parts appears seamless to the students it’s directly proportional to the amount of work behind the scenes. Without our teaching assistants who volunteered their time none of it would have happened: Head TA’s: Valeria Rincon / Jin Woo Yu and TA’s Nicole Orsak and Diva Sharma.
Lessons learned
While we enabled 70 teams to start companies, what we really generated was hope and a path to new opportunities
With the open source curriculum available here, it’s possible for any school or region to get a version of this class ready in 8-10 weeks
The 5-day format of the class works well
It can stand alone or complement the 10-week or 14-week courses
Having teaching assistants are critical to managing the admin side of marketing, recruiting, team formation, communications and overall support for the teaching team
Team formation requires heavy lifting of emails/team mixers/team – as well as match-making by TA’s and instructors
Having a large pool of mentors and subject matter experts is important in 5-day crash course, to support teams looking for interview subjects and contacts for customer discovery
August 11, 2020
Teaching Lean Innovation in the Pandemic
Remote education in the pandemic has been hard for everyone. Hard for students having to deal with a variety of remote instructional methods. Hard for parents with K through 12 students at home trying to keep up with remote learning, and hard for instructors trying to master new barely functional tools and technology while trying to keep students engaged gazing at them through Hollywood Squares-style boxes.
A subsegment of those instructors – those trying to teach Lean LaunchPad, whether in I-Corps, or Hacking for Defense – have an additional burden of figuring out how to teach a class that depends on students getting out of the building and talking to 10 to 15 customers a week.
400 Lean Educators instructors gathered online for a three-hour session to share what we’ve learned about teaching classes remotely. We got insights from each other about tools, tips, techniques and best practices.
[image error]Here’s what we learned.
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When I designed the Lean LaunchPad/I-Corps/Hacking for Defense class, my goal was to replace the traditional method of teaching case studies and instead immerse the students in a hands-on experiential process that modeled what entrepreneurs really did. It would be guided week-to-week by using the Business Model Canvas and testing hypotheses by getting out of the building and building Minimum Viable Products (MVPs). After trial and error, we found that having eight teams presenting in a three-hour block was the maximum without exhausting the instructors and the students. That format, unwieldy as it is, remained the standard for a decade. Over time we started experimenting with breaking up the three-hour block with breakout rooms and other activities so not all students needed to sit through all the presentations.
When the pandemic forced us to shift to online teaching, that experimentation turned into a necessity. Three hours staring at a Zoom screen while listening to team after team present is just untenable and unwatchable. Customer discovery is doable remotely but different. Teams are scattered across the world. And the instructor overhead of managing all this is probably 3X what it is in person.
While we were making changes to our classes at Stanford, Jerry Engel was smart enough to point out that hundreds of instructors in every university were having the same problems in adapting the class to the pandemic. He suggested that as follow-up to our Lean Innovation Educators Summit here in Silicon Valley last December, we should create a mid-year on-line Summit so we could all get together and share what we learned and how we’re adapting. And so it began.
In July, 400 Educators from over 200 universities in 22 countries gathered online for a Lean Innovation Educators Summit to share best practices.
We began the summit with five of us sharing our experience of how we dealt with the online challenges of:
teaching an existing Lean program i.e. Hacking For Defense
creating and teaching new Lean classes i.e. Hacking For Oceans and Hacking For Recovery
creating programs for Diversity, Equity, & Inclusion e. GEM I4 / Black Learners Matter
effectively teaching Business Model Design during COVID-19
If you can’t see the presentation slides click here
But the core of the summit was gathering the collective wisdom and experience of the 400 attendees as we split into 22 breakout rooms. The one-hour discussion in each of the rooms covered:
What are your biggest challenges under COVID-19?
How is this challenge different now than during “in-person” learning?
What solutions have you tried?
What was most effective?
The output of the breakout sessions provided a firehose of data, a ton of useful suggestions, teaching tips and tools.I’ve summarized the collective notes from the breakout session.
Customer Discovery and Minimal Viable Products
The consensus was, yes you can “get out of the building” when you physically can’t. And it’s almost good enough.
Discovery can be done via Zoom or similar remote platforms and in some ways is more effective – see here
During Covid most people no longer have gatekeepers around them
Sending lots of cold emails works (at least in COVID times)
You could find the best mentors and the best sponsor for a given project
Building and demonstrating hardware MVPs is a challenge
One solution is to send a design file to a fab lab to be printed
If you would normally have your potential customer hold, feel or use the product, make sure you video a demo someone doing that
For software MVPs create video demo snippets of less
It’s critical to offer a “How to do customer discovery remotely” and “how to build remote MVPs” workshop
Class Structure
3-hour long classes are challenging in person and require a redesign to be taught online.
Keep students engaged by having no more than four teams in a presentation room at one time
Have other teams in breakout rooms and/or with other instructors
Breakout rooms must be well thought out and organized
They should have a task and a deliverable
Break up lectures so that they are no longer then 15 minutes
Intersperse them with interactive exercises (Alex Osterwalder is a genius here, providing great suggestions for keeping students engaged)
Work on an exercise in class and then talk more to it in office hours
Avoid canned video lectures
Be more prescriptive on “what is required” in the team presentations
What’s the goal for the class?
Do you want them to test the entire Canvas or …
Do you want them to work on product market fit?
Teams will naturally gravitate to work on product/market fit
Vary the voices at the “front” of the room
Guest speakers – previously extraneous but needed now to break up the monotony
But if you use guests have the student’s whiteboard summaries of what they learned
And have the guests be relevant to the business model topic of the week
Understand that while students attend your class they actually pay attention to their mentors
Recruit mentors whose first passion are helping students, not recruiting or investing in them
Ensure that you train and onboard mentors to the syllabus
Have the mentors sit in on the office hours and classroom
Invite lurkers, advisors, and others “invited” to show up and chime in
Be prepared for the intensity of the preparation required as compared to pre-COVID times
Recruiting students and forming teams is especially hard remotely
Double or triple down on the email and other outreach
Hold on-line info sessions and mixers
Teaching Assistant
Having a Teaching Assistant is critical
If your school won’t pay for one, get some unofficial “co-instructors”
They don’t have to be a teacher–use an admin or a student intern
They are critical to managing the admin side of marketing, recruiting, team formation, communications and overall support for the teaching team.
Team formation requires TA heavy lifting of emails/team mixers/team
as well as match-making by TA’s and instructors
During class TA’S need to be focused on chat, breakout room and presentation logistics
Don’t assume (or let your TA assume) that prior practices will work in a virtual environment.
Be prepared to try different approaches to keep class moving and engaged
Pre-class write up a “How to TA in a Remote Class” handbook
Go through it with your TA’s before class
Use security in advance; avoid open entry (Zoom Bombing)
Student Engagement
Zoom fatigue came up in almost every breakout session. Some of the solutions included:
Play music as students arrive and leave
Recognize that some may be in different time zones – take a poll in the first class session
Start each class session with an activity
Summarize key insights/lessons learned from their office hours and customer discovery
For those using Zoom – use the Whiteboard feature for these summaries
Other platforms for remote collaboration include Miro, Mural, Zoom, Discord, LaunchPad Central and Innovation Within etc.
A list of remote teaching tools suggested in the breakout sessions are here
Have students turn on their camera on to ensure the class they’re engaged
And have their microphone off, their full name visible, and a virtual background with their team ID
Create deeper connection with the students
ask them to anonymously submit a statement or two about what they wish you knew about them
ask the students to bring something to class that tells us something about them
have them bring it to the breakout rooms to share with their teammates and others
Randomly cold call
Don’t be afraid to call out students by name, as Zoom format makes raising hand or asking a question more awkward
Ask their advice on what someone else just presented or what they learned from the other team
After doing this a couple of times, everyone will become active (so not to get called on)
Require additional student feedback on chat – critical to keeping engagement high
Focus on quality of feedback over just quantity.
Have the students and mentors use chat during team presentations to share contacts, insights
Dial back the radical candor– take the edge off as the students are already stressed
Offer longer office hours for teams
(All the breakout session slides are here.)
Summary
When the National Science Foundation stopped holding their annual conference of I-Corps instructors, it offered us the opportunity to embrace a larger community beyond the NSF – now to include the Hacking for Defense, NSIN, and Lean LaunchPad educators.
When we decided to hold the online summit, we had three hypotheses:
Educators would not only want to attend, but to volunteer and help and learn from each other – validated
Instructors would care most about effective communication with students (not tools, or frameworks but quality of the engagement with students) – validated
Our educator community valued ongoing, recurring opportunities to collaborate and open source ideas and tools – validated
The Common Mission Project is coordinating the group’s efforts to create an open forum where these instructors can share best practices and to curate the best content and solutions.
A big thanks to Jerry Engel of U.C. Berkeley, the dean of this program. And thanks to the Common Mission Project which provided all the seamless logistical support, and every one of the breakout room leaders: Tom Bedecarré – Stanford University, John Blaho – City College of New York, Philip Bouchard – TrustedPeer, Dave Chapman – University College London, James Chung – George Washington University, Bob Dorf – Columbia University, Jeff Epstein – Stanford University, Paul Fox – LaSalle University Barcelona, Ali Hawks – Common Mission Project UK, Jim Hornthal – U.C. Berkeley, Victoria Larke – University of Toronto, Radhika Malpani – Google, Michael Marasco – Northwestern University, Stephanie Marrus – University of California, San Francisco, Pete Newell – BMNT/ Common Mission Project US, Thomas O’Neal – University of Central Florida, Alexander Osterwalder – Strategyzer, Kim Polese – U.C. Berkeley, Jeff Reid – Georgetown University, Sid Saleh – Colorado School of Mines, Chris Taylor – Georgetown University, Grant Warner – Howard University, Todd Warren – Northwestern University, Phil Weilerstein – VentureWell, Steve Weinstein – Stanford University, Naeem Zafar – U.C. Berkeley, and the 400 of you who attended.
Looking forward to our next Educator Summit, December 16th online.
The video of the entire summit can be seen here
July 14, 2020
What Can A Startup Do in 5 days? Watch this
With a terrific crew of instructors, TA’s, and mentors, we successfully concluded Session 1 of our Hacking 4 Recovery summer series – with 20 teams sharing their final presentations last night. Slides for these presentations are in this folder, and we will be editing and sharing videos of each presentation shortly.
Alivia – Telemedicine service bringing healthcare to middle income people in Peru
AllAboard – Remote onboarding services to help organizations establish a sense of belonging
AntiCovidAI – Mobile app for testing COVID-19
BBOM Preschool – Teaching social and emotional learning (SEL) to preschoolers
Collegiate Cost Busters – Delivering innovation to make college education more affordable to all
COVered – Crowdsourcing app to monitor risk for visiting public spaces
CoworkingSpace – Redefining coworking spaces in the post-pandemic world
Cratiso – Sourcing diverse patients for clinical trials
Florence Health – Telemedicine app to prevent hospitalization of congestive heart failure patients
HomeDoc – Central hub for connecting telemedicine platforms for nursing homes
Mango Lango – Mobile app that allows small businesses to reopen safely
MatchBook – Hiring platform structured similarly to dating apps
MemLove – Helping people grieve for lost loved ones
MUSTA – Telemedicine platform for patients in the Philippines
Remote Daily – Simplified employee feedback for small businesses
Resilience Gym – Online education and virtual reality to enhance mental health
Safe.ly – Mobile app for making reservations to visit your local stores safely
Sani-Team – Consulting service to help local restaurants reopen safely
Screen360.tv – Cross-cultural education platform using international films
Voyage – Global travel advisory platform for pandemic information
What Can A Startup Do in 5 days? Watch this
With a terrific crew of instructors, TA’s, and mentors, we successfully concluded Session 1 of our Hacking 4 Recovery summer series – with 20 teams sharing their final presentations last night. Slides for these presentations are in this folder, and we will be editing and sharing videos of each presentation shortly.
Alivia – Telemedicine service bringing healthcare to middle income people in Peru
AllAboard – Remote onboarding services to help organizations establish a sense of belonging
AntiCovidAI – Mobile app for testing COVID-19
BBOM Preschool – Teaching social and emotional learning (SEL) to preschoolers
Collegiate Cost Busters – Delivering innovation to make college education more affordable to all
COVered – Crowdsourcing app to monitor risk for visiting public spaces
CoworkingSpace – Redefining coworking spaces in the post-pandemic world
Cratiso – Sourcing diverse patients for clinical trials
Florence Health – Telemedicine app to prevent hospitalization of congestive heart failure patients
HomeDoc – Central hub for connecting telemedicine platforms for nursing homes
Mango Lango – Mobile app that allows small businesses to reopen safely
MatchBook – Hiring platform structured similarly to dating apps
MemLove – Helping people grieve for lost loved ones
MUSTA – Telemedicine platform for patients in the Philippines
Remote Daily – Simplified employee feedback for small businesses
Resilience Gym – Online education and virtual reality to enhance mental health
Safe.ly – Mobile app for making reservations to visit your local stores safely
Sani-Team – Consulting service to help local restaurants reopen safely
Screen360.tv – Cross-cultural education platform using international films
Voyage – Global travel advisory platform for pandemic information
July 9, 2020
Educators Summit: Lessons from Teaching in the Pandemic
SAVE THE DATE for the Lean Innovation Educators Summit:
Lessons from Teaching in the Pandemic
July 24, 10-noon Pacific, 1-3pm Eastern, 6-8pm London
[image error]As educators the COVID-19 pandemic has challenged us all.
We’ve faced the challenges of teaching remotely, while virtually managing students scattered across the world, keeping students enthusiastic and engaged via video, helping them conduct customer discovery when they can’t get out of the building, and rolling with uncertain teaching schedules now and in the future. We’ve all been making it up as we go and have begun to see a glimmer of patterns of what’s worked and what hasn’t.
Since the Pandemic we’ve taught three classes remotely – Hacking for Defense, Hacking for Oceans and our first of three Hacking for Recovery classes. I know I’ve learned a ton – some surprisingly good and some just surprisingly.
But more importantly there are hundreds of educators who have also learned valuable lessons. If you’ve learned something you’d like to share, or would like to hear how others are modifying their pedagogical approaches for the pandemic, you’re invited to join us virtually and collectively in this two-hour on-line session (with an additional one hour of breakout sessions for follow-up discussions on topics of interest.)
Some of the topics we’ll cover include:
Converting and scaling existing programs and classes
Standing up new programs from scratch
Improving diversity and inclusion in tech innovation education
Addressing K-12 opportunities
We invite you to submit your own instructional innovations for a virtual poster session. We will also be having subgroup discussions to engage in active give and take.
So save the date for the Lean Innovation Educators Summit on July 24th, 2020.
This session is free to all, but limited to Innovation educators. You can register for the event here and/or learn more on our website. We look forward to gathering as a community of educators to shape the future of Lean Innovation Education in the COVID-19 era.
June 23, 2020
Rising out of the Crisis: Where to Find New Markets and Customers
The pandemic has upended the business models of most startups and existing companies. As the economy reopens companies are finding that customers may have disappeared or that their spending behavior has changed. Suppliers are going out of business or requiring cash-up-front terms. Accounts receivables are stretching way out. Revenue models and forecasts are no longer valid.
In sum, whatever business model you had at the beginning of the year may be obsolete.
While there’s agreement that companies need to adapt to changing markets, rapidly find new markets, new customers and new revenue models, the question is how? What tools and methods can a C-suite team use to do so?
While the Lean Startup was built with Business Model Canvas, Customer Development and Agile Engineering, there’s an additional tool — the Market Opportunity Navigator — that can help entrepreneurs discover new opportunities.
Here’s how.
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Companies have rapidly responded to Pandemic Needs
When COVID-19 first emerged established companies rapidly pivoted. Some focused on remote work, others offered new ways to learn online. Swiss smart flooring startup Technis now helps supermarkets regulate the flow of shoppers. Large companies like GM, Ford and Rolls-Royce began to produce ventilators. Companies in cosmetics and perfume production pivoted their production lines as well. With ethanol and glycerin on hand and equipment required to fill bottles, French luxury giant LVMH has started to produce sanitizer – just like gin and whiskey distilleries across the US and UK have done.
Although the large firms made the headlines, startups also pivoted. For instance, Italian additive manufacturing startup Isinnova used its 3D-printing equipment to produce a crucial valve for oxygen masks. New York-based startup Katena Oncology discovered that a cancer detection tool under development could be adapted to test for coronavirus..
Capture opportunities by building on or repurposing your start-up’s abilities
In these examples CEOs instinctually figured out, 1) their core , and 2) market needs where their competencies/abilities could be used.
Rather than running on instinct, the Market Opportunity Navigator can help CEOs figure out their next moves in this confusing recovery. It can provide a big-picture perspective to find different potential markets for your company’s competencies/abilities. This is the first step before you zoom in and design the business model, engage in focused customer development or test your minimal viable products.
Take the example of Abionic, a nanotech startup.
Abionic: pivoting a sepsis test to fight COVID-19
Abionic’s tests can detect allergies, cardiovascular diseases, sepsis and other diseases in 5 minutes. As the pandemic hit, the company’s leaders wondered how their tests could be used in the fight against COVID-19. Using the Market Opportunity Navigator, Abionic realized that their test could diagnose sepsis up to 72 hours before a septic shock would occur in COVID-19 patients.
One of the worksheets below from the Market Opportunity Navigator provides a systematic view of Abionic’s market discovery process: The upper part of the worksheet shows Abionic’s technological assets and the lower part shows how these abilities can be used different market opportunities.
You can download the Market Opportunity Navigator and its free worksheets here.
By looking at their technological abilities, especially in the early detection of sepsis, and clinical data showing that septic shock is one of the key complications of a coronavirus infection, Abionic identified a new market opportunity to help patients suffering from COVID-19. Their CEO Nicolas Durand explains: “If doctors are able to diagnose sepsis up to 72 hours before a septic shock would occur in COVID-19 patients they can prescribe an antibiotic therapy much earlier, thereby potentially saving the lives of millions. In order to test this application of our technology, we deployed our machines at the Hospital at the University of Geneva and see promising results!”
Beyond medical needs: Discovering new opportunities with the Market Opportunity Navigator
Abionic and other companies were able to act fast, as they already possessed technological abilities that, with limited adjustments, could be pivoted or repurposed to the newly identified COVID-19 opportunities.
Yet, because the crisis and recovery will create a “new normal,” additional opportunities will emerge that wait to be discovered by startups and existing companies. Think about looking beyond the immediate opportunities of existing customers and markets, and take a mid- to long-term view on how you can proactively identify new and emerging market opportunities. The three worksheets of the Market Opportunity Navigator help you to:
Identify new market opportunities stemming from your technology or abilities
Reveal the most attractive domain(s) by evaluating the potential and challenges of each option
Prioritize market opportunities smartly to set the boundaries for your lean experimentations
Lessons Learned
The COVID-19 crisis and recovery creates fundamental shifts in our economies and societies, and a “new normal” is emerging
Winners in this new normal will be able to quickly understand
what are their company’s core competencies/abilities, and
the new market needs where their competencies/abilities could be used
The Market Opportunity Navigator is a framework for this identification process
Worksheets and supporting material can be downloaded at wheretoplay.co
June 18, 2020
The Coming Chip Wars
[image error]A version of this article appeared in War on the Rocks.
Controlling advanced chip manufacturing in the 21st century may well prove to be like controlling the oil supply in the 20th. The country that controls this manufacturing can throttle the military and economic power of others.
The United States just did this to China by limiting Huawei’s ability to outsource its in-house chip designs for manufacture by Taiwan Semiconductor Manufacturing Company (TSMC), a Taiwanese chip foundry. If negotiations fail, China may respond and escalate, via one of many agile strategic responses short of war, perhaps succeeding in coercing the foundry to stop making chips for American companies – turning the tables on the United States.[image error]
Short of war, there would be no obvious way to get those foundries back. Without them, the U.S. defense and consumer electronics industries will be set back at least five years — and because China has its own advanced chip foundries, it could become the world leader in technology for the next decade or more.
Here’s why. And how they may do it.
And why the world just got a lot more dangerous.
There are two types of companies in the chip industry.
Companies like Intel, Samsung, SK Hynix and Micron design and make their own products (microprocessors and memory chips) in factories that they own
There are also foundries, which fabricate chips designed by consumer and military customers; TSMC in Taiwan is the largest of these in the world
The chips that TSMC makes are found in almost everything: smartphones (i.e. Apple iPhones), high-performance computing platforms, PC’s, tablets, servers, base stations and game consoles, Internet-connected devices like smart wearables, digital consumer electronics, cars, and almost every weapon system built in the 21st century. Around 60% of the chips TSMC makes are for American companies.
Background
In 2012, a bipartisan committee of the U.S. House of Representatives investigated whether the Chinese company Huawei had put backdoors into its equipment that enabled it to spy on data therein. The committee found that Huawei could not or would not explain its relationship with the Chinese government and did not comply with U.S. laws, The report recommended that no government or contractor systems include Huawei systems. In 2019, the U.S. Department of Commerce’s Bureau of Industry and Security added Huawei to its Entity List, effectively limiting the sale or transfer of American technology to the company, (though a series of licenses have been granted to waive the restrictions in some cases.)
This month, the Commerce Department required overseas semiconductor firms that use American technology and equipment to apply for a license before selling to Huawei. The order was targeted at TSMC, which is Huawei’s main supplier of advanced chips; without these, Huawei will be at a competitive disadvantage against Apple or Samsung in the smartphone industry, and against Cisco and others in the market for network equipment. (Some analysts have pointed out the order has potential loopholes.) Next up, it’s likely Washington will prohibit sales to China of the equipment used to make chips, which comes from companies like Applied Materials, KLA and Lam.
TSMC was forced to choose sides and picked the U.S. – For Now
In May 2020 TSMC announced it was going to build a $12 billion foundry in Arizona to make some of its most advanced chips. Foundries take at least three years to build and the most expensive factories on earth. Construction on TSMC’s facility is planned to start in 2021, but actual chip production will not start until 2024.
But while the TSMC announcement is welcome, if and when the Arizona foundry is built, it will only be able to make about a quarter of the chip production of TMSC’s largest semiconductor fabrication plants and would amount to just 3 percent of the manufacturing capability that TSMC currently operates in Taiwan. There they have four major manufacturing sites, called GigaFabs, each of which have 6 or 7 fabs producing thirteen million wafers a year. Compare that to the quarter million wafers they intend to produce in the U.S. in 2024. So if the United State lost TSMC in China, one new American plant would not make up the difference in capacity.
China’s Semiconductor Industry
A decade ago, China recognized that its initial success as the world’s low-cost factory was going to run its course. As the cost of Chinese labor increased, other countries like Vietnam could fill that role. As a result, China needed to build more advanced and sophisticated products on par with the United States. However, most of these products required custom chips — and China lacked the domestic manufacturing capability to make them. China uses 61 percent of the world’s chips in products for both its domestic and export markets, importing around $310 billion worth in 2018. China recognized that its inability to manufacture the most advanced chips was a strategic Achilles Heel.
[image error]China devised two plans to solve these problems. The first, the Made in China 2025 plan, is the country’s roadmap and financing vehicle to update China’s manufacturing base from making low-tech products to rapidly developing ten high-tech industries including electric cars, next-generation computing, telecommunications, robotics, artificial intelligence, and advanced chips. The goal is to reduce China’s dependence on foreign technology and promote Chinese high-tech companies globally. In addition, to encourage Chinese high-tech companies to go public in China rather than the United States, the Chinese government set up its own version of the Nasdaq called the STAR market (Shanghai Stock Exchange Science and Technology Innovation Board).
China’s second plan is the National Integrated Circuit Plan, China’s roadmap for building an indigenous semiconductor industry and accelerating chip manufacturing. The goal is to meet its local chip demand by 2030.
Make no mistake, these are not government pronouncements that don’t end up going anywhere. This is a massive national effort. China is spending over a hundred billion dollars to become a world leader in developing their semiconductor industry. The China Integrated Circuit Industry Investment Fund or Big Fundhas raised $51 billion – $22 billion in 2014 and another $29 billion in 2019. China has used the capital to start 70+ projects in the semiconductor industry (such as building fabs and foundries, acquiring foreign companies, and starting joint ventures) and have gone from zero to making 16% of the world’s chips, though today their quality is low. Going forward, China plans to start investing in chip design software, advanced materials, and semiconductor manufacturing equipment.
How Do the Chinese View Our Actions?
China believes that this is their century and sees American actions as designed to hold China back from its proper place in the world. Given the importance of controlling the supply of advanced chip manufacturing, China would be forced to respond if the United States cut off their access to this supply.
The question is whether China will view the action against Huawei as sanctions against a single company or a portent of further action against China’s access to advanced chips.
What Has China Learned From Our Prior Actions?
In the 21st century the U.S. has blinked even when its own interests were at stake. From the perspective of some China policymakers, America is exhausted from endless wars in Iraq and Afghanistan and will not fight again. They see that the United States is divided politically, distracted by the COVID-19 pandemic and unlikely to risk American lives for something as abstract as a chip factory.
Paper protests
When China has acted aggressively over the past couple of decades, it has seen that the American response has largely been paper protests. In 2012 China occupied the Scarborough Shoal and took control of it from the Philippines. As China was not ready to militarily confront the U.S. at the time, in hindsight the U.S. could have parked a carrier strike group over those shoals and likely prevented their plans for military construction. Instead, Washington blinked and did nothing but send a nasty note.
[image error]Today, the Spratly Islands have new Chinese bases bristling with surface-to-air missiles, cruise missiles and fighter jets, which has changed the calculus for a war in the western Pacific. Any attempt by the United States to control the air space in the area will face serious opposition and heavy losses. What was previously an uncontested American “lake” is now contested by China.
Up until this week Hong Kong, while part of China, was a democracy with guarantees of freedom of speech, assembly and the press. China recently tore up that agreement and is preparing to impose the same draconian limits on speech, assembly and press that muzzle the rest of China. There’s not much the U.S. can do other than express concerns and perhaps remove Hong Kong’s special trade status. But China doesn’t care. They’ve already factored the American response into their move and decided it was worth it, with the cynical calculation that any U.S. response will make Hong Kong poorer, and that any business Hong Kong loses will mostly end up in other parts of China. And a poorer Hong Kong will be punishment to its citizens for standing up for the rights they had been promised.
The day after China’s move on Hong Kong, Chinese Premier Li Keqiang left out the word “peaceful” in referring to Beijing’s desire to “reunify” with Chinese-claimed Taiwan, an apparent policy change.
The lack of an effective American response to these events has shown Chinese leadership the unwillingness of America to forcefully engage in Asian affairs. This will embolden China’s next move.
China’s Goals and Options
To respond to the United States cutting off Huawei’s access to Taiwan’s most advanced chip foundries, the Chinese government is likely thinking through their next moves. Their planning starts with they want to accomplish. It may look something like this in the preferred order.
Return to the Status Quo – Restore Huawei’s Access to TSMC fabs to secure a steady supply of chips
Don’t let the restrictions escalate
Turn the Tables – Convince TSMC/Taiwan to allow China to have sole access to TSMC
Kick Over the Table – Ensure that the TSMC fabs can’t be used by anyone
China’s Options
So how would China achieve these goals?
China may wish to avoid any escalation perhaps by accepting the American restrictions as they currently are with a promise that they will go no further. This return to the status quo, with a restoration of Huawei’s access to TSMC’s foundry, may simply require negotiating some form of trade deal or agreeing to restrictions on the sale of Huawei networking gear (34% of their revenue). This kind of deal would let the Huawei consumer and enterprise businesses (66% of their revenue) survive and thrive. However, it requires the Chinese to back down. And they may have decided that the Rubicon has been crossed.
If China doesn’t negotiate but retaliates, the danger is that the United States ups the ante further by prohibiting TSMC from working with more Chinese firms, and/or bans the sale of the equipment used to build chips to any company in China. Such escalation may lead China to perceive that the U.S. actions are not a dispute about Huawei, but a salvo in a wider economic war.
If it gets to that point, China’s plans no longer are how to negotiate with the U.S. but how to force TSMC to do its bidding. And as TSMC is in Taiwan, in what China claims is a province of China, things can get interesting.
The most obvious option is to simply carry out the threat the Chinese government has made since 1949: that there is only one China, and Taiwan is a rebellious province, and that they will reunify China, by force if necessary. An invasion or blockade of Taiwan would give Chinese hardliners a reason to try out all their new military equipment, while distracting the masses from the pandemic economic downturn. This option has the highest risk of provoking an American military response, and while possible it’s extremely unlikely. While these more aggressive scenarios might seem implausible, China’s behavior has become more aggressive and more risk-tolerant as the COVID-19 pandemic, which began in Wuhan, roils the world.
China can achieve their immediate goals of 3 and 4 above and weaken Taiwan without an outright invasion.
One option is a major disinformation campaign against TSMC and the United States that would make current influence campaigns emanating from China pale in comparison. This would emphasize that the U.S. is the aggressor, illegally waging economic war against China. It would announce that since Taiwan is a province of China, China has the right to restrict TSMC sales to the U.S. and that China ill enforce an embargo of any TSMC sales to American-affiliated companies.
This could be coupled with an equally massive disinformation campaign to the Taiwanese people, pointing out to them that the United States won’t go to war over a semiconductor company, and that China’s requestsare fair and reasonable. (How effective a disinformation campaign would be is up for debate, given that Chinese campaigns in Taiwan’s January elections did not result in the election of China’s preferred candidate.) China could offer a no-invasion pledge in exchange, while reminding the Taiwanese government what they already know: regardless of promises the United States can’t defend them. Even if the United States attempted to intervene, there is a serious debate unfolding about how useful legacy American platforms – especially carriers – would be in a shooting war with China.
There’s a high probability Taiwan will still refuse despite all of this, so China would then ratchet up the pressure.
China might then start some type of trade war with Taiwan to ensure access, following the playbook Beijing used to coerce Korea over Terminal High Altitude Area Defense (THAAD) or Australia over its recent decision to lead a call for investigating the origins of the novel coronavirus. On the more extreme end, these Taiwanese chip foundries might be subject to an aggressive campaign of sabotage.
Finally, they could nationalize TSMC’s two less advanced fabs in mainland China. Next, if there’s no agreement, China could launch a precision guided missile strike against one of the older, less advanced TMSC fabs in Taiwan to send a message they’re serious. They could announce they’ll destroy one foundry each week until TMSC agrees to sell only to China. Even if they destroy all the TSMC foundries in Taiwan it will still be a net win for China. It’s highly unlikely Taiwan would go to war with China over this. The end result would be that U.S. military and consumer technology would have no advanced foundries, but China would.
What Would the United States Do?
Would the United States go to war with China over chips? The loss of TSMC would mean we’d be rapidly scrambling to find alternate sources. We could turn to Intel to restart their foundry business or turn to Samsung or even Global Foundries. But the transition and recovery would take at least three to five years if not more and tens of billions of dollars. In the meantime, we’d have second-tier status in technology.
The outcome could depend on the timing of Chinese actions.
When Might China Take Action?
An October Surprise – Before the 2020 election
The current U.S administration may not want to start a war over a chip factory before the 2020 presidential election, but it is unpredictable enough that a campaign season focused on China policy could change the calculus.
After the 2020 election
If the presidency changes hands, the incoming administration might de-escalate and reverse original restrictions, but a lot can happen between now and January 2021.
A Trump administration in its second term and no longer worrying about reelection might reverse the ruling in exchange for a better trade deal.
Downside: Lots of economic uncertainty for the next seven months exacerbating China’s pandemic recovery. More immediate action might be required.
Lessons Learned
The dispute over Huawei’s access to TSMC has highlighted how vulnerable American industry is to the loss of its sole supply of advanced chips.
If the matter cannot be solved by negotiation, China may perceive the restrictions as economic warfare and rapidly escalate, potentially threatening Taiwan
It is not at all clear that Washington has thought through the consequences of its actions here, or that the current administration has considered chip supply as part of a wider supply chain security and national industrial policy.
It was encouraging to see Republicans and Democrats in the House and Senate propose $25 billion to help America’s semiconductor industry.The bill hasn’t yet passed, and hopefully this is only the start
Given that China has more positive options than the United States, it is surely time for those in charge to consider where this might lead
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