The head of Elbit Systems of America called on the United States to have more proactive industrial policy, like Israel, if it wants to spur innovation in defense technologies.
“I think that definitely helps in Israel when the government and Ministry of Defense are playing a more active role in basically seeding investments in interesting areas,” company President and CEO Raanan Horowitz said Oct. 20 at the Atlantic Council think tank in Washington. Elbit Systems of America is the U.S. unit of Israel’s Elbit Systems.
The United States, theoretically, doesn’t perform centralized industrial policy like many other nations where the government funds certain technologies, like semiconductors, to achieve specific long-term goals. It does, unofficially, perform a non-centralized form of industrial policy when the Defense Department decides to pursue, and fund, science and technology (S&T) pursuits for certain technologies.
Israel has its own Silicon Valley called Silicon Wadi, an area with a high concentration of high tech companies. Horowitz said Israel has been able to develop innovation in Silicon Wadi through a very high concentration of households connected to the internet and leading its allies in the percentage of gross domestic product (GDP) it invests in research and development (R&D). Horowitz also said innovation in Israel is spurred by valuing “outside-the-box” thinking and unstructured communications.
Horowitz said Elbit Systems created its Incubit Technology Ventures as part of the company’s innovation strategy. Incubit calls itself a corporate venture incubator that allows access to Elbit’s infrastructure like labs, knowledge and technical experts. Incubit said its success is also measured by the technology it helps develop and not just financial numbers.
Incubit is similar to the U.S. intelligence community’s (IC) In-Q-Tel, an independent, not-for-profit organization created to bridge the gap between the technology needs of the IC and emerging commercial innovation In-Q-Tel invests in venture-backed startups developing technologies that provide, within 36 months, innovation vital to the IC mission. In-Q-Tel said more than 70 percent of its portfolio companies have never done business with the federal government.
DoD this year opened its Silicon Valley unit called Defense Innovation Unit-Experimental (DIUx), a major initiative to facilitate more engagement with innovative businesses and startups located in the northern California tech hub. DoD spokeswoman Maureen Schumann said Oct. 20 DoD would seek to make a small investment in In-Q-Tel and, through this arrangement, the Pentagon would make investments in early-stage technology such as nanoelectrics, software and automation.
If the United States was to pursue more formal industrial policy, Horowitz suggested it focus on the smaller and mid-sized companies, where he believes the innovation happens. Elbit Systems of America is considered a “tier II supplier,” one level below prime contractor on the supply chain.