The U.S. Navy is radically changing the way they engage with technology startups. Instead of leading with the answers, they’re putting first the responsibility to figure out any problems. What’s happening is that this strategy consistently creates and curates the conditions for innovation and collaboration. It aims to draw in more and different kinds of firms willing and able to further the Navy’s mission.
Captain Michael Fanelli, the Navy’s innovation head honcho, underscored the importance of this transition in a September interview. He expressed his desire to specifically engage more startups, stating, “We’re more open for business and partnerships than we’ve ever been before.” This dramatic shift rewards creative solutions, allowing companies to directly showcase their innovations to the challenges that have been specifically laid out and defined.
To measure the success of its pilot programs, the Navy employs five key metrics: time saved, operational resilience, cost per user, adaptability, and user experience. Fanelli’s team has already begun to dig up countless success stories that illustrate the potency of this new approach. When a venture-backed startup went supernova last year with the hook of using robotic process automation, just as an example, within a few weeks they completely cleared a two-year backlog of invoices.
The Navy has allocated a significant portion of its budget—single-digit percentages—to emerging and commercial technologies, contrasting sharply with traditional defense contractors. Fanelli expects that as artificial intelligence gets more sophisticated, this mix of distribution will change dramatically. He acknowledged that the Navy accomplished a remarkable turnaround. They recently transitioned from a Request for Proposal (RFP) process to piloting deployment in under six months, collaborating with Via, an Israeli cybersecurity startup.
To make these public-private partnerships more approachable, the Navy has created a Defense Innovation Adoption Kit. This suite of frameworks and tools is intended to address the “Valley of Death.” Most importantly, it enables great ideas to make the successful leap from smart concept into real-world application. The kit provides a structured pathway for startups to navigate through three phases: evaluation, structured piloting, and scaling to enterprise services.
f shared the link on social media, the response from the tech community has been enthusiastic. Fanelli pointed out one specific competition run by the Defense Innovation Unit (DIU). It received almost a hundred responses from a range of companies, most of whom had never worked with the DoD. This flood reflects a heightening desire on the part of new entrants to innovate alongside the Navy in emerging and disruptive technologies.
Fanelli especially emphasized the Navy’s renewed emphasis on domestic manufacturing, a perfect fit with the Navy’s own domestic manufacturing resilience goals. These goals encompass some pretty lofty and innovative undertakings such as creation of digital twins, additive manufacturing, on-site production capabilities. Third, they aim to reduce supply chain vulnerabilities. For instance, a recent network improvement project on an aircraft carrier saved 5,000 sailor hours within the first month of implementation.
Fanelli thinks the Navy’s approach is indicative of a sea change in government-private sector relations. “Sometimes it’s a zero-sum game. Sometimes it’s not,” he said, emphasizing the need for the Navy to adapt its strategies to better leverage private sector innovations. He acknowledged the legacy challenges within the organization, stating, “We do have a lot of technical debt that we need to cut anchor on.”
As Fanelli explains, the Trump administration’s “America first” policies have ever since been a perfect match for the Navy’s goals. Putting the OPMA in alignment with broader strategic goals. This alignment strengthens the Navy’s commitment to nurturing domestic capabilities while improving its own operational effectiveness.
The Navy is in the middle of a massive culture shift. Instead, they’re moving from a chevron-style procurement towards a more open-ended request for inquiries dedicated to solving the problem. Instead of dictating specific solutions, Fanelli explained that they now ask potential partners, “We have a problem. Who wants to solve this, and how will you solve it?” This is a more bottom-up approach, which leads to more creativity and flexibility in developing innovative solutions.
Fanelli concluded by inviting those interested in contributing to the Navy’s mission: “I would invite anyone who wants to serve the greater mission from a solution perspective to lean in and join us in this journey.” His call signals a spirit of cooperation that will hopefully re-imagine the relationship between our military and technology ecosystems going forward.
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