The DIUx Is Dead. Long Live The DIUx

Defense Secretary Ash Carter launched his high-profile Silicon Valley outpost a year ago to great fanfare and high expectations. Less than a year later, he has completely overhauled its leadership, structure, reporting lines, and resources.

That a new government initiative built around experimentation would struggle in its first year is no surprise. That its founder would candidly address early challenges and publicly identify shortcomings and fixes as a matter of course is a big one. By taking early corrective action, Carter is upending the typical Washington playbook of prolonging failure — or, worse, postponing reform until demanded by scandal — and teaching his Department a critical lesson on how to learn by taking risk.

With its small size and steep learning curve, the DIUx 1.0 could not overcome the weight of expectations from a high-profile launch. As with many startups, the organization suffered from an overly broad purpose and unrealistic demands; unlike other startups, it missed the opportunity to operate in “stealth mode” to address these issues early. By re-focusing the DIUx now, Carter is setting the organization up for longer-term success. And by empowering the DIUx to be a testbed for new kinds of collaboration, he’s demonstrating that DoD can serve as an agile partner to the startup community.

But Carter’s most critical action was giving the DoD a new way to think about failure. The defense bureaucracy, for rational reasons, incentivizes “late” failure: typically spectacular, expensive, and with no real effort to learn from what went wrong. For decades, the logical route for any off-track defense initiative was to keep trying, throw more money at the problem, extend timelines, and add more experts and layers of scrutiny.

Related: All of Defense One's DIUx coverage

Confronted with the results of this culture, during his tenure Secretary Gates terminated the F-22 line, the VH-71 presidential helicopter program, and the Expeditionary Fighting Vehicle, and restructured the Army Future Combat System. His decisiveness was met with great applause for taking on failing programs, and far too little attention to what drove such calls to his desk in the first place. Coming after years of troubled acquisition history, these top-down, multi-billion dollar “failures” made big news but did little to change the Pentagon’s culture.

Despite noble attempts at reform through initiatives like the Better Buying Power series, there is still little career upside to calling out potential flaws in DOD investments, and the key risks driving behavior are those associated with disavowing acquisition process orthodoxy. This culture often leads DOD to take the path of least risk up front, avoiding tough choices and embarrassment in the short term but allowing technical and management debt to accrue quickly and quietly. Notable alternative models exist within the defense bureaucracy, but these incentives still persist across acquisition, policy, personnel, management, and operations.

By rebooting the DIUx, Secretary Carter has offered a different path: “early” failure as something to accept, learn from, and even celebrate. This may shape his innovation legacy more than anything else he’s done. The most acute challenge to DOD innovation is not lack of talent, technology, authorities, or resources: it’s perverse incentives that drive bad behavior and decisions.

Carter could have taken the easy path and allowed the DIUx to continue apace, leaving the next administration to dispense with it. Instead, the Secretary led by example and created a practical example of “OK to fail:” a highly desired, frequently discussed but rarely seen scenario in defense circles.  

Despite the Secretary’s leadership and corrective action, the DIUx’s future remains unclear. In launching DIUx 2.0, Carter has addressed core issues of leadership — Raj Shah is an inspired choice as managing partner — and reporting lines, while providing additional resources. However, DIUx 2.0 must still fight for relevance in a defense bureaucracy that is either skeptical or unhelpfully enthusiastic. Whether it can implement collaboration methods “at the speed of business” remains to be seen — and those are just the internal challenges.

Ultimately, DIUx’s success or failure must be measured in practical innovations applied to real DOD problems in collaboration with new partners. With a splashy relaunch and a direct line to the Secretary of Defense, DIUx 2.0 has been given the best possible chance to succeed.  But the organization's products are still alpha releases. DIUx 2.0 will need to execute and start delivering final product rapidly before they burn through the political capital the Secretary has just given them.