Author: steve blank

Finding and Growing the Islands of Innovation inside a large company – Action Plan for A New CTO


This post is by steve blank from Steve Blank


This post previously appeared in Fast Company.

How does a newly hired Chief Technology Officer (CTO) find and grow the islands of innovation inside a large company?

How not to waste your first six months as a new CTO thinking you’re making progress when the status quo is working to keep you at bay?


I just had coffee with Anthony, a friend who was just hired as the Chief Technology Officer (CTO) of a large company (30,000+ people.) He previously cofounded several enterprise software startups, and his previous job was building a new innovation organization from scratch inside another large company. But this is the first time he was the CTO of a company this size.

Good News and Bad
His good news was that his new company provides essential services and regardless of how much they stumbled they were going to be in business for a long time. But the bad news was that the company wasn’t keeping up with new technologies and new competitors who were moving faster. And the fact that they were an essential service made the internal cultural obstacles for change and innovation that much harder.

We both laughed when he shared that the senior execs told him that all the existing processes and policies were working just fine. It was clear that at least two of the four divisions didn’t really want him there. Some groups think he’s going to muck with their empires. Some of the groups are dysfunctional. Some are, as (Read more...)

Artificial Intelligence and Machine Learning– Explained


This post is by steve blank from Steve Blank


Artificial Intelligence is a once-in-a lifetime commercial and defense game changer

(download a PDF of this article here)

Hundreds of billions in public and private capital is being invested in Artificial Intelligence (AI) and Machine Learning companies. The number of patents filed in 2021 is more than 30 times higher than in 2015 as companies and countries across the world have realized that AI and Machine Learning will be a major disruptor and potentially change the balance of military power.

Until recently, the hype exceeded reality. Today, however, advances in AI in several important areas (here, here, here, here and here) equal and even surpass human capabilities.

If you haven’t paid attention, now’s the time.

Artificial Intelligence and the Department of Defense (DoD)
The Department of Defense has thought that Artificial Intelligence is such a foundational set of technologies that they started a dedicated organization- the JAIC – to enable and implement artificial intelligence across the Department. They provide the infrastructure, tools, and technical expertise for DoD users to successfully build and deploy their AI-accelerated projects.

Some specific defense related AI applications are listed later in this document.

We’re in the Middle of a Revolution
Imagine it’s 1950, and you’re a visitor who traveled back in time from today. Your job is to explain the impact computers will have on business, defense and society to people who are using manual calculators and slide rules. You succeed in convincing one company and a government to (Read more...)

Lessons for the DoD – From Ukraine and China


This post is by steve blank from Steve Blank


 Portions of this post previously appeared in War On the Rocks.


Looking at a satellite image of Ukraine online I realized it was from Capella Space – one of our Hacking for Defense student teams who now has 7 satellites in orbit.

National Security is Now Dependent on Commercial Technology
They’re not the only startup in this fight. An entire wave of new startups and scaleups are providing satellite imagery and analysis, satellite communications, and unmanned aerial vehicles supporting the struggle.

For decades, satellites that took detailed pictures of Earth were only available to governments and the high-resolution images were classified. Today, commercial companies have their own satellites providing unclassified imagery. The government buys and distributes commercial images from startups to supplement their own and shares them with Ukraine as part of a broader intelligence-sharing arrangement that the head of Defense Intelligence Agency described as “revolutionary.” By the end of the decade, there will be 1000 commercial satellites for every U.S. government satellite in orbit.

At the onset of the war in Ukraine, Russia launched a cyber-attack on Viasat’s KA-SAT satellite, which supplies Internet across Europe, including to Ukraine. In response, to a (tweeted) request from Ukraine’s vice prime minister, Elon Musk’s Starlink satellite company shipped thousands of their satellite dishes and got Ukraine back on the Internet. Other startups are providing portable cell towers – “backpackable” and fixed.  When these connect via satellite link, they can provide phone service and WIFI capability. Another startup is providing a resilient, (Read more...)

Cram Down – A Test of Character for VCs and Founders


This post is by steve blank from Steve Blank


This article previously appeared in TechCrunch.

Cram downs are back – and I’m keeping a list.

At the turn of the century after the dotcom crash, startup valuations plummeted, burn rates were unsustainable, and startups were quickly running out of cash. Most existing investors (those still in business) hoarded their money and stopped doing follow-on rounds until the rubble had cleared.

Except, that is, for the bottom feeders of the Venture Capital business – investors who “cram down” their companies. They offered desperate founders more cash but insisted on new terms, rewriting all the old stock agreements that previous investors and employees had. For existing investors, sometimes it was a “pay-to-play” i.e. if you don’t participate in the new financing you lose. Other times it was simply a take-it-or-leave-it, here are the new terms. Some even insisted that all prior preferred stock had to be converted to common stock. For the common shareholders (employees, advisors, and previous investors), a cram down is a big middle finger, as it comes with reverse split – meaning your common shares are now worth 1/10th, 1/100th or even 1/1000th of their previous value.

(A cram down is different than a down round. A down round is when a company raises money at valuation that is lower than the company’s valuation in its prior financing round. But it doesn’t come with a massive reverse split or change in terms.)

They’re Back
While cram downs never went away, the flood of capital in (Read more...)

Here’s What Happened When Deputy Secretary of Defense Dr. Kathleen Hicks visited Stanford’s Gordian Knot Center for National Security Innovation


This post is by steve blank from Steve Blank


It was an honor to host US Deputy Secretary of Defense Dr. Kathleen Hicks at Stanford’s Gordian Knot Center for National Security Innovation.  (Think of the Deputy Secretary of Defense as the Chief Operating Officer of a company – but in this case the company has 3 million employees (~1.4 million active duty, 750,000 civilians, ~800,000 in the National Guard and Reserves.)

She came to the Gordian Knot Center to discuss our unique approach to national security and innovation, and how our curriculum trains the next generation of innovators. The Deputy also heard from us how the Department can better partner with and leverage the U.S. innovation ecosystem to solve national security challenges.

Our goal for the Secretary’s visit was to give her a snapshot of how we’re supporting the Department of Defense priority of building an innovation workforce. We emphasized the critical distinction between a technical STEM-trained workforce (which we need) and an innovation workforce which we lack at scale.

Innovation incorporates lean methodologies (customer discovery, problem understanding, MVPs, Pivots), coupled with speed and urgency, and a culture where failure equals rapid learning. All of these are accomplished with minimal resources to deploy at scale products/services that are needed and wanted. We pointed out that Silicon Valley and Stanford have done this for 50 years. And China is outpacing us by adopting the very innovation methods we invented, integrating commercial technology with academic research, and delivering it to the Peoples Liberation Army.

Therein lies the focus of our Gordian (Read more...)

The Quantum Technology Ecosystem – Explained


This post is by steve blank from Steve Blank


If you think you understand quantum mechanics,
you don’t understand quantum mechanics

Richard Feynman

IBM Quantum Computer

Tens of billions of public and private capital are being invested in Quantum technologies. Countries across the world have realized that quantum technologies can be a major disruptor of existing businesses and change the balance of military power. So much so, that they have collectively invested ~$24 billion in in quantum research and applications.

At the same time, a week doesn’t go by without another story about a quantum technology milestone or another quantum company getting funded. Quantum has moved out of the lab and is now the focus of commercial companies and investors. In 2021 venture capital funds invested over $2 billion in 90+ Quantum technology companies. Over a $1 billion of it going to Quantum computing companies. In the last six months quantum computing companies IonQ, D-Wave and Rigetti went public at valuations close to a billion and half dollars. Pretty amazing for computers that won’t be any better than existing systems for at least another decade – or more.  So why the excitement about quantum?

The Quantum Market Opportunity

While most of the IPOs have been in Quantum Computing, Quantum technologies are used in three very different and distinct markets: Quantum Computing, Quantum Communications and Quantum Sensing and Metrology.

All of three of these markets have the potential for being disruptive. In time Quantum computing could obsolete existing cryptography systems, but viable commercial applications are still speculative. (Read more...)

The Semiconductor Ecosystem – Explained


This post is by steve blank from Steve Blank


The last year has seen a ton written about the semiconductor industry: chip shortages, the CHIPS Act, our dependence on Taiwan and TSMC, China, etc.

But despite all this talk about chips and semiconductors, few understand how the industry is structured. I’ve found the best way to understand something complicated is to diagram it out, step by step. So here’s a quick pictorial tutorial on how the industry works.


The Semiconductor Ecosystem

We’re seeing the digital transformation of everything. Semiconductors – chips that process digital information — are in almost everything: computers, cars, home appliances, medical equipment, etc. Semiconductor companies will sell $600 billion worth of chips this year.

Looking at the figure below, the industry seems pretty simple. Companies in the semiconductor ecosystem make chips (the triangle on the left) and sell them to companies and government agencies (on the right). Those companies and government agencies then design the chips into systems and devices (e.g. iPhones, PCs, airplanes, cloud computing, etc.), and sell them to consumers, businesses, and governments. The revenue of products that contain chips is worth tens of trillions of dollars.

Yet, given how large it is, the industry remains a mystery to most.  If you do think of the semiconductor industry at all, you may picture workers in bunny suits in a fab clean room (the chip factory) holding a 12” wafer. Yet it is a business that manipulates materials an atom at a time and its factories cost 10s of billions (Read more...)

Save the Date! the 5th Lean Innovation Educators Summit


This post is by steve blank from Steve Blank


SAVE THE DATE for the 5th Lean Innovation Educators Summit on The Role of Educators and the University in Building Sustainable and Innovative Ecosystems 
February 3rd, 2022 from 1 to 4pm EST, 10 to 1pm PST 

Join me, Jerry Engel, Pete Newell, and Steve Weinstein as well as educators from universities around the world for this upcoming event.  

The Summit brings together leading entrepreneurship educators who are putting Lean Innovation to work in their classrooms, accelerators, and students’ ventures. This is the fifth edition of this semi-annual gathering, a supportive peer community of educators, and we’ll meet to discuss how we adapt to meet the challenges of the current tumultuous environment. The upcoming session will focus on the role of the university, and other important organizations in our ecosystems, in supporting our critical mission of preparing the next generation of entrepreneurs and innovators. 

Why?
The role of entrepreneurs and the ecosystem that supports them is even more important as the pace of change accelerates. The challenges of the pandemic and global warming highlight the importance of capturing value from technology and the innovators who create novel and effective solutions.  How do we as entrepreneurship and innovation educators best prepare the next generation?  What is the role of the university in helping us do this?

What?
Our key note speaker is Dr. Richard Lyons of UC Berkeley – the University’s first ever Chief Innovation Officer. After ten years as Dean of the Berkeley Haas School of Business, Rich brings a fresh and broad perspective. Stimulated by Professor Lyon’s keynote, (Read more...)

What’s Plan B? – The Small, the Agile, and the Many


This post is by steve blank from Steve Blank


This post previously appeared in the Proceedings of the Naval Institute.


One of the most audacious and bold manifestos for the future of Naval innovation has just been posted by the Rear Admiral who heads up the Office of Naval Research. It may be the hedge we need to deter China in the South China Sea.


While You Were Out
In the two decades since 9/11, while the U.S. was fighting Al-Qaeda and ISIS, China built new weapons and developed new operational concepts to negate U.S. military strengths. They’ve built ICBMs with conventional warheads to hit our aircraft carriers. They converted reefs in international waters into airbases, creating unsinkable aircraft carriers that extend the range of their aircraft and are armed with surface to air missiles make it dangerous to approach China’s mainland and Taiwan.

To evade our own fleet air defense systems, they’ve armed their missiles with maneuvering warheads, and to reduce our reaction time they have missiles that travel at hypersonic speed.

The sum of these Chinese offset strategies means that in the South China Sea the U.S. can no longer deter a war because we can longer guarantee we can win one.

This does not bode well for our treaty allies, Japan, the Philippines, and South Korea. Control of the South China Sea would allow China to control fishing operations and oil and gas exploration; to politically coerce other countries bordering in the region; to enforce an air defense identification zone (ADIZ) over the South (Read more...)

Technology, Innovation, and Great Power Competition  – Wrap Up


This post is by steve blank from Steve Blank


This article first appeared in West Point’s Modern War Institute.

We just had our final session of our Technology, Innovation, and Great Power Competition class. Joe FelterRaj Shah and I designed the class to give our students insights on how commercial technology (AI, machine learning, autonomy, cyber, quantum, semiconductors, access to space, biotech, hypersonics, and others) will shape how we employ all the elements of national power (our influence and footprint on the world stage).

(Catch up with the class by reading our intro to the class, and summaries of Classes 1234, 5 6, 7 and 8.)


This class has four parts that were like most lecture classes in international policy:

  • Weekly Readings – 5-10 articles/week
  • 20+ guest speakers on technology and its impact on national power – prior secretaries of defense and state, current and prior National Security council members, four-star generals who lead service branches
  • Lectures/Class discussion
  • Midterm individual project – a 2,000-word policy memo that describes how a U.S. competitor is using a specific technology to counter U.S. interests and a proposal how the U.S. should respond

The fifth part of the class was unique.

  • A quarter-long, team-based final project. Students developed hypotheses of how commercial technologies can be used in new and creative ways to help the U.S. wield its instruments of national power. And then they got of the classroom and interviewed 20+ beneficiaries, policy makers, and other key stakeholders testing (Read more...)