The 10 Tenets of Solving Large Energy Problems

I recently read an HBR article about how DARPA (the Defense Advanced Research Projects Agency) attacks problems. DARPA is one of the best regarded and longest running organizations known for innovation. Do you agree? Since 1958, the Pentagon’s DARPA has produced many breakthroughs and inspirations including the internet, Unix, GPS, Google Maps, Windows, videoconferencing, and motion-sensing micromachines (the technology embedded into iPhones, Gaming, Airbags, etc…). DARPA’s mission is an awesome one: “to prevent and create strategic surprise.”

I believe DARPA’s principles and philosophies can be applied in the private sector. At SURGE, we have implemented these tenets with our own flavor and self-proclaimed panache. 

DARPA deploys a “special forces” model to solving problems which includes important tenants and beliefs designed to cut through red tape and deliver results.

1. Leadership: This is an understood rule amongst startups, but the point here is clear. There needs to be a final decision maker, in DARPA’s case it is the project leader, who cannot be bogged down by committees. Large organizations tend to require project managers to report on both results and methods. This is one reason why startups move so much faster. It is also critical that the leadership team is able to adapt and learn. And make no mistake, these project leaders are strong executives able to lead by influence, deal with ambiguity, and execute. Our investment focus, our curriculum, and my mission at SURGE is to find, enable, and build leaders. We understand that a percentage of our companies will fail. But we invest into leaders. And sometimes, despite a negative outcome to the current project, these leaders will continue to provide value to this ecosystem by creating a new venture, becoming a mentor, joining another startup, and/or investing.
2. Extraordinary Goals: Creating extraordinary goals forces teams to think revolutionary vs. evolutionary. In large organizations, teams usually find reasons to reduce risk, thus ideas move from game changing to evolutionary through the natural “manage by committee” processes found in many product development groups. Our team regularly discusses whether we are reaching high enough and taking enough risk.
3. Small Teams: Small teams are fast and able to pivot without red tape. The US Military uses its special forces to solve problems quickly and efficiently. As a military event grows and requires scale, the larger military units enter the picture. Scale requires infrastructure, systems, and process. Innovation requires agility. I used to work in a special forces group within Dell. We were tasked to work outside of the product development group to find new ideas that would add to the top and bottom line. We reported to the CMO and had amazing autonomy. We developed the business cases, found the partners, and convinced the executives. Our small team produced many new ideas that became long-term product lines and programs for the company.
4. Intense and Short Durations: During the ideation stage of development, projects bring together world experts for an intense but short duration. DARPA found that this combination allows them to recruit the world’s best while delivering amazing results. At SURGE, our 3 month program helps to focus the entrepreneurs towards the 20% that really matters and ignore the 80% that does not. As with DARPA, SURGE mentors consist of expert scientists, engineers, executives, financiers, operators, and others. The cost to hire these experts as staff or as consultants would be untenable for a startup. Three months is long enough to determine value, but short enough to keep our expert mentors engaged. The results speak for themselves. It works. As the article states, “a high-risk effort by a diverse set of world-class experts can be sustained for only a limited period.”
5. Asset Light Model: DARPA uses a laboratory and personnel light model. While DARPA funds projects, the innovators are outsiders. And the work is performed in non-DARPA labs. They do not have any. And SURGE takes this concept to a new level. First, we believe in co-locating our entrepreneurs for our 3 month program. It is much easier for mentors, customers, investors, and talent to come to one place. And, since we are focused on a specific vertical, mentors, customers, investors and talent are able to help multiple companies in a single visit. Second, we created a concept known as the Ninja Index. We specifically put together a diagram before each program locating “synergistic” companies near one another. This practice works. From the first two classes, we have witnessed better code, improved ideas, enhanced industry expertise, and more innovative product collaboration because of how we seat companies in our community pit known as the SURGE Hangar. The peer review process works well, especially when organic.
6. Focus on Pragmatism: I am especially fascinated by DARPA’s guiding model to select projects known as Pasteur’s Quadrant. “It entails pushing frontiers of basic science to solve a well-defined, use-inspired need.” I love the concept of pragmatism. And this aligns very closely with SURGE’s sweetspot. SURGE was the only accelerator in the world that chose to invest 3 years ago into companies solving the world’s energy problems including entrepreneurs focused on oil & natural gas. We wrote about this earlier: Oil Men Drive Electric Cars Too. It is up to the project leader to make a business case for taking in a project and how it meets the criteria for funding. In the venture community, this business case comes in the form of an investment memo.
7. Context: Robert Dolan defines context as: “What cultural, technological and legal factors limit what is possible?” DARPA chooses projects that tackle emerging user needs that existing technologies cannot solve or leverages a step change in technology to solve practical problems of significant importance. A good example of this at SURGE is Deep Imaging Technologies. With new innovations in telecommunications and defense, electromagnetic technology advancements are now capable of enabling oil and gas companies to reduce the number of dry holes and improve the efficacy of existing drilling operations.
8. Independence: DARPA has the freedom and autonomy to choose projects. At SURGE, despite our close partnerships with the largest energy and power companies, we remain independent. Interestingly, this industry favors autonomy. The Air Force did not want stealth technology. DARPA created it anyway. Does anyone favor more governance? Again, the results speak for themselves.
9. Pivoting and “Failing Fast”: This is one of the single most important reasons an accelerator can provide a minimum of a 5X return on equity to the entrepreneur. We put entrepreneurs in front of customers, dozens of them. Out of this process, startups learn to pivot on their target market, product and methods. And in many cases, startups learn that the original problem that they were solving is wrong. We surround entrepreneurs with experts, customers, investors, and others for an intense 3 months. Good ideas are refined. Bad ideas are thrown out. We have investors that specifically ask how many times a team has pivoted during the program. DARPA understands that not all ideas work in their original form. And they have built a culture that can adapt to change.
10. Perishability of Ideas: Even DARPA recognizes that ideas have a short fuse. If a team cannot execute within a tight timeline, others will. I used to place a lot of value into ideas. Today, I value execution. As a mentor told me long ago: 100 people have the same idea, 10 people are trying to put the same idea into practice, but only 1 team wins.