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How the US Federal Government is Solving Their 'Innovator's Dilemma'

In the book ‘The Innovator’s Dilemma’, Harvard Business School (HBS) professor Clayton Christensen explains why the failure to adopt new, ‘disruptive’ technologies has caused successful, established businesses to lose significant market footing or go out of business all-together. At the root of this phenomenon are certain business ‘laws of nature’ that act as a double-edged sword. On the one hand, these laws are what enable a business to thrive in the near-term. If not appropriately managed, however, these same laws can cause catastrophic financial loss or damage in the long-run. Christensen provides workable solutions for circumventing the unintended consequences of these laws and today - twenty years after the book’s release - his work remains highly-regarded in business and innovation circles.

Although the public sector abides by differing principles when compared with those of the private sector, it appears to have an equivalent 'innovator's dilemma' that is caused by its innate laws. While not explicitly stated as such, perhaps these laws are best summed up within a report titled ‘DoD is Taking Steps to Address Challenges Faced by Certain Companies’, published in July of 2017 by the Government Accountability Office (GAO). Page 9 of this report outlines a half-dozen common roadblocks faced by non-traditional* companies attempting to do business with the DoD; namely:

  • Complexity of DoD’s acquisition process

  • Unstable budget environment

  • Lengthy contracting timeline

  • Government-specific contract terms and conditions

  • Inexperienced DoD contracting workforce, and

  • Intellectual property rights concerns

Within the last few years, the DoD and other parts of government have attempted to solve their acquisition challenges through creating internal, innovation-focused organizations such as the Defense Innovation Unit (DIU) and the Department of Homeland Security’s (DHS’s) Silicon Valley Innovation Program (SVIP). In DIU’s few years of existence, it seems they have succeeded in proving their value and effectiveness to the department at-large - the ‘x’ for ‘experimental’ that was previously at the end of their acronym has recently been dropped, deeming them an official and permanent DoD entity. Whether intentional or not, the formation and charter of the government’s various innovation organizations align with Christensen’s core recommendation for businesses to spin out separate, autonomous units around a given disruptive technology. While there is validity to the counter-arguments against doing this, namely from concerned tax payers who understandably desire prudent government spending, it seems the government has no other option but to create these separate innovation organizations. The alternative of convincing the organization at-large to adopt something new simply does not work for reasons Christensen thoroughly explains in his book; reasons that we think can be sensibly carried over to the public sector. Further, simply not adopting disruptive technologies just isn’t reasonable; certainly, failure to innovate isn’t going to put the government out of business like it can for the private sector, but it still comes with its own associated set of risks.

It will be interesting to see how the government’s innovation organizations progress in the coming years. While there’s no telling what disruptive technologies lie ahead, DIU and others are now equipped to handle whatever comes their way, thanks to understanding and working around their own version of the innovator’s dilemma.

* The GAO defines non-traditional companies as those that do not regularly work with the DoD

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