Process Innovation Pilots: Lowering Early-Stage Barriers to Entry and Survival

Abstract

"The Department of Defense (DoD) defines innovation as “the process in which new capabilities are provided to the nation’s warfighters to create or sustain an enduring advantage.” This “enduring advantage” exists when DoD acquisition processes are faster or exceed adversary rates, resulting in stable evolutionary capabilities, and large, efficient, and profitable firms with dominant market shares. When faced with an urgent need for innovation, the defense market is left with few options other than incremental evolution or novel adaptation of existing systems and capabilities. Small early-stage firms often create new capabilities. While they comprise over 70% of U.S. firms, their work can be disruptive and unable to gain defense market entry or sales. Without sustained revenue (sales), these firms fail to thrive, and responses include acquisition, asset divestiture, or refusing to enter the defense market. However, small firms can establish business models and strategies adapted to changing demands or conditions. This provides opportunities to address emergent “short-term” needs faster than existing market providers or acquisition process capabilities. This paper highlights challenges to defense market entry and pilot initiatives by the Defense Advanced Research Projects Agency (DARPA) to improve small firm survival and growth."