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5 Ways Government Can Shift From Spinning Out Tech to Spinning It In

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By Peter Kant October 26, 2017

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Peter Kant is vice president for federal partnerships and innovation at SRI International, a nonprofit research and development center based in California’s Silicon Valley.

In 1969, the first transmission on the “ARPANET” was sent from a computer at UCLA to another at SRI International.  The ARPANET was a U.S. government research and development project to allow researchers to share computers and to build a distributed command and control net more resilient to nuclear attack. The ARPANET was the origin of the internet and spawned the information age.  The invention of the internet was only one of many critical technology developments that started with U.S. government R&D investment and then “spun-out” into commercial successes.

From 1940 through 2000, many of the most important technical innovations started as government R&D programs. During that time, the federal government was by far the largest funder of R&D underwriting efforts at government facilities, national labs, universities, research institutes, and corporate labs.  Technologies were invented for and sold to the government first.  Technology developers then “spun out” companies and commercial applications based on these initial government investments.  It was the feds who helped innovations cross the technology “Valley of Death” between initial discovery through applied development to initial commercial product.  This “spinning out” model was wildly successful and helped make the U.S. the world’s technology leader. 

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Fast forward to this past July, when North Korea launched missiles capable of reaching the U.S. Seeking to counter this threat, military, intelligence and diplomatic officials (with much encouragement from Congress) looked outside typical defense satellite programs to small satellite technologies being developed and deployed by small start-up companies.  These inexpensive sats were developed for commercial applications and the U.S. government was looking to apply them to military missions. The government did not direct or fund the development of these technologies and instead identified these commercial technologies and adapted them for its requirements.  This “adopt and adapt” methodology is one part of a new government relationship to technology development, a relationship we call “spinning in.”  Spinning In: The government can attract innovation without breaking the bank

Success stories, like adapting small commercial satellites for military applications, are unfortunately rare.  There is an expanding gap between commercial and government technology adoption, with the government often limited to outdated and/or expensive systems while commercial and international players leverage the newest innovations.  Today’s top tech innovators and investors are competing on global scales.  Federal markets are too small and bureaucratic to attract these new players through only financial means.  This new “Valley of Death” preventing commercial innovation from reaching government adoption has very real implications for U.S. economic competitiveness and national security.  To close this gap, the government must both improve its ability to efficiently acquire technology and identify ways to identify and influence early-stage commercial and international R&D.

Recently, the government implemented programs to accelerate acquisition of new technology and to connect federal agencies to startup companies in innovation corridors.  But programs that simply focus on improving acquisition only enhance access to developed technology. We need companion strategies to learn about and influence early-stage R&D happening outside of the federal sphere and quickly “spin in” these innovations.

While the federal government no longer has the dominant checkbook, it does have unique tools to attract new companies to public sector markets and access to early-stage technology development.  Employing these tools as part of an overall “Spin In” strategy will help ensure that the government is able to employ the best technology to meet critical national needs. Expanding the role of the federal government’s R&D infrastructure, including Federally Funded Research and Development Corporations and non-profit R&D institutes, to not only invent new technologies but “Spin-In” emerging innovations, will help close this gap.  To expand its access to innovation without blowing a hole in the budget, the government should:

Use Unique Regulatory Flexibility to Test New Tech on Federal Turf

In late 2014, numerous media outlets reported that Amazon was aggressively pursuing drone development and was considering moving its R&D outside the U.S. due to slow-moving regulatory action by the Federal Aviation Administration. While comprehensive nationwide regulatory changes do (and should) take time, federal agencies have a lot of leeway in dealing with their own regulations.  For example, the Defense Department controls vast amounts of airspace and it could make that space available to developers, like Amazon.  In exchange, Defense would have visibility into and influence over drone technology development. 

Attract Innovators with Data, Data and More Data

Data is becoming one of the most valuable currencies in the new economy and is crucial to new technologies ranging from artificial intelligence to drug development.  Data is one of the reasons, Alphabet, Amazon and Facebook are such dominant and valuable companies.  But the U.S. government has more data than all of these corporate juggernauts and can use this data “currency” to attract top developers and new companies. Government data sources like satellite data at National Oceanic and Atmospheric Administration, drug research data at the Food and Drug Administration and others can all be used to attract the best and the brightest innovators to work with the federal government to develop and test their technologies. 

Be a Technology Validator and Beta Tester for Start-ups

Start-up companies often find themselves in a Catch-22 when raising investment capital: investors prefer investing in companies with customers and real market feedback.  However, small companies need this investment capital to build those prototypes to get to these early customers.  The government can serve as an early evaluator of technologies and provide start-ups and even mature companies with a key reference account for future investment or even prototyping funding.  The government does not need to nor should it endorse any technology or company, but by providing impartial and valuable test results, the government is providing a valuable service to start-ups and in turn can get access to emerging technologies before the commercial sector.

Look Outside the Wire to Identify Emerging Technologies

As the government connection to technology changes, it must actively seek to understand technology developments, trends and new innovations in the private sector and around the world. The federal government needs to enhance these links by pushing public mission R&D institutions to garner closer connections to and knowledge of non-government technology development activities.  This requires us to rethink some of our ITAR strategies and U.S. government and contractor interaction with international players. 

The Office of Naval Research’s ONR Global program is a good model for this kind of outreach.  ONR Global has offices around the globe devoted to working with international partners and companies on technology development.  It provides limited funding, scientific expertise and provides ONR with direct access to international emerging research and technologies outside its traditional R&D sources.  Expanding these types of programs and removing the regulatory barriers preventing government officials from visiting, communicating and working with international and commercial researchers would be helpful.

Adapt Emerging Commercial Technologies for Public Missions and Benefits

The federal government should reorganize and redirect its R&D infrastructure and programs to focus less on start-to-finish R&D and more on learning about and adapting emerging technologies.  The government should expand applied R&D programs and efforts that are specifically designed to adapt commercial technology and to develop government-use prototypes from externally developed early-stage technology.  There will always be a government need for early-stage scientific discovery and technology development.  But considering the speed of commercial technology development, the government would be better served by programs that move early-stage technologies to more developed readiness levels and adapt them to meet specialized government requirements.

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