Office of Naval Research goes lean

[caption id=”attachment_23412” align=”aligncenter” width=”2048”] Photo: Office of Naval Research[/caption]

The Office of Naval Research has been one of the largest supporters of innovation in the U.S. Now they are starting to use the Lean Innovation process (see here and here) to turn ideas into solutions. The result will be defense innovation with speed and urgency.

Here’s how the Office of Naval Research was started. In World War II the U.S. set up the Office of Scientific Research and Development to use thousands of civilian scientists in universities to build advanced technology weapons (radar, rockets, sonar, electronic warfare, nuclear weapons.) After the war, the U.S. Navy adopted the OSRD model and set up the Office of Naval Research – ONR. Since 1946 ONR has funded basic and applied science, as well as advanced technology development, in universities across the U.S. (Stanford’s first grants for their microwave and electronic lab came from ONR in 1946.)

Rich Carlin heads up ONR’s Sea Warfare and Weapons Department. He’s responsible for science and programs for surface ships, submarines, and undersea weapons with an annual budget of over $300 million per year.

Rich realized that while the Department of Defense spends a lot of money and has lots of requirements and acquisition processes, they don’t work well with a rapid innovation ecosystem. He wanted to build an innovation pipeline that would allow the Navy to:

• Create “dual-use” products (build solutions that could be used for the military but also sold commercially, and attract venture capital investments.) “Dual-use” products reduce the cost for defense adoption of products.
• Test if the Lean Innovation process actually accelerates technology adoption and an innovation ecosystem.
• Use best practices in contracting that accelerate awards and provide flexibility and speed in technology maturation and adoption.

Today ONR has taken the Lean Innovation process, adapted it for their agency, and is running pilots for defense innovation teams.

Lean Innovation is a Process

The Lean Innovation process is a self-regulating, evidence-based innovation pipeline. It is a process that operates with speed and urgency. Innovators and stakeholders curate and prioritize their own problems/Challenges/ideas/technology.

The process recognizes that innovation isn’t a single activity (an incubator, a class, etc.). It is a process from start to deployment.

The ONR pipeline has all the steps of the canonical innovation pipeline:

Innovation sourcing: a list of problems/challenges, ideas, and technologies that might be worth investing in.

Problem/Challenge Curation: Innovators get out of their own offices and talk to colleagues and customers with the goal of finding other places in the DoD where a problem or challenge might exist in a slightly different form, identifying related internal projects already in existence, and finding commercially available solutions to problems. They also seek to identify legal issues, security issues, and support issues.

This process also helps identify who the customers for possible solutions would be, who the internal stakeholders would be, and even what initial minimum viable products might look like.

This phase also includes building initial MVPs. Some ideas drop out when the team recognizes that they may be technically, financially, or legally unfeasible or they may discover that other groups have already built a similar product.

Prioritization: Once a list of innovation ideas has been refined by curation, it needs to be prioritized using the McKinsey Three Horizons Model. Horizon 1 ideas provide continuous innovation to a company’s existing business model and core capabilities. Horizon 2 ideas extend a company’s existing business model and core capabilities to new customers, markets or targets. Horizon 3 is the creation of new capabilities to take advantage of or respond to disruptive opportunities or disruption. We added a new category, Horizon 0, which refers to graveyard ideas that are not viable or feasible.

Once projects have been classified, the team prioritizes them, starting by asking: is this project worth pursing for another few months full time? This prioritization is not done by a committee of executives but by the innovation teams themselves.

Solution exploration and hypotheses testing: The ideas that pass through the prioritization filter enter an incubation process like Hacking for Defense/I-Corps, the system adopted by all U.S. government federal research agencies to turn ideas into products.

This six- to ten-week process delivers evidence for defensible, data-based decisions. For each idea, the innovation team fills out a mission model canvas. Everything on that canvas is a hypothesis. This not only includes the obvious -is there solution/mission fit? — but the other “gotchas” that innovators always seem to forget. The framework has the team talking not just to potential customers but also with regulators, and people responsible for legal, contracting, policy, and finance support.  It also requires that they think through compatibility, scalability and deployment long before this gets presented to engineering. There is now another major milestone for the team: to show compelling evidence that this project deserves to be a new mainstream capability. Alternatively, the team might decide that it should be spun into its own organization or that it should be killed.

Incubation: Once hypothesis testing is complete, many projects will still need a period of incubation as the teams championing the projects gather additional data about the application, further build the MVP, and get used to working together. Incubation requires dedicated leadership oversight from the horizon 1 organization to insure the fledgling project does not die of malnutrition (a lack of access to resources) or become an orphan (no parent to guide them).

Lean Innovation Inside the Office of Naval Research (ONR)

To come up with their version of the innovation pipeline ONR mapped four unique elements.

First, ONR is using Hacking for Defense classes to curate “Problem Statements” (ONR calls them Challenge/Opportunity Statements) to find solution/mission fit and commercial success.

Second, they’re using existing defense funding to prove out these solutions depending on the level of technical maturity. (There are three existing sources for funding defense innovation: COTS/GOTS validation (testing whether off-the-shelf  products can be used); Concept Validation and Technology Advancement; and SBIR/STTR funds – there’s over >$1B per year in the DoD SBIR program alone.)

Third, they are going to use Pete Newell’s company, BMNT and other business accelerators to apply Lean Launchpad Methodologies to build the business case for resulting prototypes and products and to attract private investments.

Fourth, they are going to use grants, purchase orders and Other Transaction Agreements (OTAs) to attract startups and nontraditional defense contractors, speed the award process, and provide startups the flexibility to pivot their business model and prototype/product solution when necessary.

BMNT and Hacking for Defense serve as the essential crosslink for tying together the assets already available in DoD to implement the Lean Innovation process for defense innovation.

Lessons Learned

• The Office of Naval Research has been funding innovation in universities for 70+ years
• They are piloting the Lean Innovation Process to move defense innovation forward with speed and urgency