Power Sheet - August 31, 2015

I continue to be impressed by the leadership of Defense Secretary Ash Carter, who on Friday announced a new alliance with technology firms in Silicon Valley. This effort is almost invisibly small by Defense Department standards; DoD will contribute $75 million over the next five years, while funding by the alliance partners and local governments will bring the total to $171 million. You must trek far right of the decimal point to express that as proportion of the defense budget. But the symbolism counts big.

This is Carter’s second high-profile visit to the Valley in four months. In April he announced the formation of Defense Innovation Unit-Experimental, basically a Valley office to give Defense a permanent presence. The office was up and running less than five months after being announced, a feat of blinding speed for the Pentagon. It’s based at Moffett Federal Airfield, now run by Google on a 60-year lease.

Carter’s larger objective is to rehab Defense’s dowdy reputation in the Valley, where the department is widely regarded – with good reason – as hopelessly slow and bureaucratic, speaking a language that entrepreneurs and venture capitalists barely understand. It’s emphatically the right move as technology becomes increasingly decisive in battle. It’s also a gigantic project.

Can Carter succeed? A criticism when he was nominated for the job was that he was a lifelong academic with no real-world experience. It’s true that he spent much of his career in academia, but in fact he may be uniquely well prepared to improve the Pentagon’s relationship with business. As Deputy Secretary of Defense from 2011 to 2013, he oversaw more than $600 billion of annual spending. I believe that means he directly managed more spending than any other manager on earth. It also means he worked with many of America’s largest companies. Having served three years in the Pentagon in the Nineties and two years as an undersecretary before becoming deputy secretary, he knows how the place works, especially how it works with companies.

I have no idea whether Carter can significantly increase the value the Pentagon gets from business. That bureaucracy may be mightier than any human. But, far from being a stereotype bureaucrat, Carter is as demanding a manager as I’ve ever met. His efforts bear close watching as a case study in leadership.

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