BESA Center Perspectives Paper No. 2,353, November 9, 2025
EXECUTIVE SUMMARY: In today’s fast-paced technological environment, defense systems can no longer rely solely on internal R&D. Open innovation—systematically engaging with startups, academia, and civilian tech sectors—has become a strategic necessity. The distinct cases of the US and Israel suggest that diverse models can serve a shared imperative: to leverage civilian innovation in order to maintain national security and a technological edge.
For much of the twentieth century, national defense establishments were the principal engines of technological advancement. In the twenty-first century, that dynamic has changed. Civilian high-tech sectors driven by global tech giants, pioneering academic institutions, and a vast entrepreneurial ecosystem have become the primary incubators of cutting-edge technologies, from artificial intelligence and quantum computing to advanced autonomous systems.
This presents a profound challenge for national security systems. Technologies critical to future warfare are now being developed outside the gates of the defense establishment, often in environments that had no initial security orientation. The question today is no longer whether defense systems should adopt open innovation strategies, but how they should do so, and to what extent.
At its core, open innovation is the deliberate engagement by an organization with external sources of knowledge, technology, and ideas to complement and expand its internal capabilities. It is not a management trend or theoretical abstraction but a strategic paradigm that requires institutional, financial, and cultural mechanisms to systematically access, evaluate, and integrate external knowledge and technologies. Civilian sources like startups, universities, and tech firms must be viewed not as peripheral actors but as central players in national defense. This imperative is especially critical for nations engaged in protracted power struggles. Falling behind in tapping into civilian sources of innovation means compromising future security.
Countries like the United States and Israel already engage extensively with open innovation in ways tailored to their institutional landscapes. While their approaches differ, they share a strategic insight: to sustain a technological edge, the defense system must deliberately and intelligently open itself to the civilian innovation ecosystem. The reason is simple: in today’s fast-moving technological landscape, no single organization—not even a national defense organization—can keep pace with the scale, speed, and diversity of civilian innovation. Disruptive breakthroughs in AI, cyber, robotics, quantum technologies, and advanced materials are being driven by civilian actors that include academic labs, private companies, and early-stage startups backed by venture capital. Many breakthroughs emerge far outside the traditional defense ecosystem and they often have no initial connection to military needs.
This dislocation creates a strategic paradox. On the one hand, national defense strategies increasingly rely on capabilities emerging from the civilian sector. On the other hand, defense institutions are often ill-equipped—organizationally, culturally, or procedurally—to identify, access, or adapt those capabilities effectively. Bureaucratic procurement cycles, rigid classification regimes, and intellectual property concerns all contribute to a widening civil-military innovation gap. Overcoming this paradox requires building structured mechanisms, including accelerators, intermediaries, co-funding models, challenge platforms, and academic partnerships, that can enable defense actors to engage systematically with the most dynamic corners of the innovation landscape.
While the strategic logic of open innovation is universal, its implementation is anything but uniform. Different states have adopted varying models to access civilian innovation, reflecting their unique institutional architectures, governance cultures, and civil-military relationships. These differences are not shortcomings; they are adaptations. Each is tailored to local conditions, yet aligned with the same overarching objective: to preserve technological superiority through deeper engagement with the civilian ecosystem.
The United States has developed a highly structured and formalized open innovation system. It includes multiple dedicated agencies such as the Defense Innovation Unit (DIU), the National Security Innovation Network (NSIN), and the Office of Strategic Capital, all of which serve as intermediaries between the Department of Defense and the broader technology landscape. These entities run accelerators, issue challenge-based contracts, and invest in dual-use startups through flexible mechanisms like SBIR grants, OTAs, and venture partnerships. Academic engagement is also deeply institutionalized through Federally Funded Research and Development Centers (FFRDCs) and University Affiliated Research Centers (UARCs), which provide long-term defense research capacity embedded within top-tier universities.
Israel, by contrast, has followed a more decentralized and agile path. While it lacks the bureaucratic scale and institutional layering of the US system, it leverages tightly knit networks, personal relationships, and national service ties to create permeability between the defense establishment and the civilian innovation sector. The Ministry of Defense’s Directorate of Defense Research and Development (DDR&D) plays a central role in identifying promising technologies and guiding their adaptation for defense use. Much of this activity is driven through informal channels, such as elite military units that feed talent into the civilian tech ecosystem, and targeted accelerators or co-investment tracks that align private ventures with defense needs.
These two cases illustrate the broader truth that there is no single “correct” model for open innovation in defense. What matters is not the structure itself, but the strategic intent behind it and the willingness to institutionalize relationships with external innovators. Whether through formalized agencies and challenge platforms or through lean, adaptive networks built on shared experience and trust, states must find mechanisms that suit their internal logic while still opening the gates to outside innovation.
While the pathways to open innovation may vary, the conditions for success remain consistent. Regardless of institutional structure, geography, or political culture, defense organizations that seek to integrate civilian innovation must build specific enabling mechanisms. Without them, efforts will remain fragmented, symbolic, or unsustainable.
First and foremost, there must be strategic recognition. Leadership across the defense ecosystem, from ministries and procurement offices to R&D units and operational commands, must acknowledge that civilian innovation is not merely a supplemental asset but a core source of technological relevance. This recognition must be codified into national strategy documents, planning frameworks, and resource allocation priorities.
Second, access channels must be institutionalized. Governments must establish or empower intermediaries that serve as the connective tissue between defense and civilian sectors. These may include dedicated innovation units, joint accelerators, liaison offices within academic institutions, or public-private co-funding schemes. The key is to reduce the friction that often deters startups, researchers, and tech firms from engaging with national security challenges.
Third, funding models must be adapted. Traditional defense procurement is often ill-suited to the iterative, rapid cycles of civilian innovation. Flexible funding mechanisms like seed grants, milestone-based contracts, or matching investment funds can lower barriers to entry and make participation attractive for smaller players. Equally important is ensuring continuity of support from proof-of-concept to full integration.
Fourth, procurement and IP frameworks must evolve. Many promising companies avoid defense markets due to long contracting timelines, unclear intellectual property arrangements, and reputational risks. Addressing these issues through fast-track pathways, modular contracting, or IP-sharing models can dramatically expand the pool of potential partners.
Finally, efforts to bridge the civilian–defense divide must contend with issues of trust. In many cases, cultural tensions between civilian and military communities—differences in language, pace, incentives, and institutional logic—make trust difficult to establish, and in some contexts, perhaps unattainable. Therefore, policy frameworks should be designed to function despite friction: by creating clear rules of engagement, ensuring transparency, and building low-risk entry points that allow cooperation without full cultural convergence.
As civilian technologies rapidly reshape the global balance of power, open innovation has become not just a strategic option but the only viable path for keeping defense systems relevant, adaptive, and competitive. The United States and Israel offer two distinct approaches—one institutionalized and formal, the other agile and network-based—both demonstrating that open innovation can be adapted to different political cultures and institutional landscapes.
Sustaining this path, however, requires more than recognition. It demands long-term investment, institutional reform, and strategic resolve. Ultimately, the integration of civilian innovation into national defense is not just a technical upgrade. It is a redefinition of how states build power, adapt to disruption, and secure their future. In this context, open innovation is not a luxury. It is a strategic necessity.
Nir Reuven is a researcher at the BESA Center, an engineer, and a former officer in the Merkava development program (the main Israeli battle tank). He has held several management positions in the Israeli hi-tech industry and is an expert on technology. Currently he is co-manager of the Sapir College Innovation and Entrepreneurship Center. He is working on his Ph.D. and lectures at Bar-Ilan University.