Key Findings
• Open innovation in defense is possible with tailored secrecy management.
• Managers rely on dynamic, practice-based strategies rather than strict rules.
• Secrecy is not static: it shifts as trust and partnership maturity evolve.
• Relational and cognitive tactics allow firms to collaborate without leaks.
• Innovation under constraints is achievable with the right cultural mindset.
Why Rearmament Demands Openness
Rearming Europe requires a new approach to secrecy. In the face of wavering commitments from the Trump White House and Vladimir Putin’s inscrutable ambitions, the talk in European capitals is all about rearmament.
To that end, the European Commission has put forward an €800 billion defense spending scheme designed to “quickly and significantly increase expenditures in defense capabilities,” in the words of Commission President Ursula van der Leyden.
But funding is only the first of many challenges involved when pursuing innovation. Indeed, ramping up military capability “quickly and significantly” will prove difficult for a defense sector that must keep pace with rapid technological change.
Of course, defense firms don’t have to do it alone. They can select from a wide variety of potential collaborators, ranging from SMEs to agile and innovative start-ups. Successful innovative partnerships, however, require trust and a willingness to share vital information, qualities that appear incompatible with the need for military secrecy.
Our paper studies the strategies used by one leading defense firm (which we, for our own secrecy-related reasons, have renamed “Globaldef”) in balancing open innovation with information security. The 43 professionals we interviewed - including R&D managers, start-ups CEOs and innovation managers - were not consciously working from a common playbook. However, their nuanced and dynamic approaches could serve as a cohesive role model for Europe’s defense sector as it races to adapt to a radically changing world.
How Flexible Secrecy Enables Innovation
Our research took place in the 2018-2020 period. At the time, defense firms looked toward open innovation to compensate for the withdrawal of key support. Indeed, there was a marked decrease in government spending on military R&D across the OECD countries. However, even though the current situation involves more funding, the need to leverage external innovation remains prevalent to speed up the access to the knowledge required for innovation.
When collaborating to innovate, firms face what open innovation scholars have termed “the paradox of openness,” wherein the value to be gained by collaborating must be weighed against the possible costs of information sharing (i.e. leakage of precious knowledge). In the defense sector - unlike, say, consumer products - being too liberal with information could lead to not only business losses but also grave security risks for entire nations, and even prosecution for the executives involved.
Although secrecy was a constant concern, Globaldef’s managers often found themselves in what one of our interviewees called a “blurred zone” where some material could be interpreted as secret, but sharing it was not strictly off-limits. In these cases, the standard default mode in the defense industry - to err on the side of caution and remain tight-lipped - would make open innovation impossible.
Closely studying transcripts of more than 50 interviews alongside a rich pool of complementary data (emails, PowerPoint presentations, crowdsourcing activity, etc.), we discerned that Globaldef had developed fine-grained practices for maintaining and modulating secrecy, even while actively collaborating with civilian companies.
What Practices Make Collaboration Work
Our research divides these practices into cognitive and relational practices. Cognitive practices acted as strategic screens masking the most sensitive aspects of Globaldef’s knowledge from partners, without throttling information flow to the point of preventing collaboration.
Depending on the type of project, cognitive practices might consist of:
· Encryption (relabeling knowledge components to hide their nature and purpose from partners),
· Obfuscation (selectively blurring project specifics so as to preserve secrecy while recruiting partners),
· Simplification (coarsening project parameters to test the suitability of a partner without revealing true constraints),
· and/or transposition (transferring the context of a problem from military to civilian).
Relational practices involved reframing the partnership itself, by selectively controlling the width of the aperture through which external parties could view Globaldef’s aims and project characteristics.
These relational practices might include:
· Redirecting the focus of a collaboration away from core technologies, or
· Introducing confidentiality agreements to expand information-sharing within the partnership while prohibiting communication to third parties.
When to Shift Strategy in Defense Projects
Leveraging both dimensions — cognitive and relational — enabled Globaldef to skirt the pitfalls of its paradox. For example, in the early stages of open innovation, when Globaldef was scouting and testing out potential partners, managers could widen the aperture (relational) while imposing stringent limits on knowledge-sharing (cognitive). They could thereby freely engage with the crowd without being in danger of violating Globaldef’s internal rules regarding secrecy.
As partnerships ripened and trust grew, Globaldef could gradually lift cognitive protections, giving partners access to more detailed and specific data. This could be counterbalanced by tightening on the relational side, e.g. requiring paperwork and protocols designed to plug potential leaks.
As we retraced Globaldef’s careful steps through six real-life open innovation partnerships, we saw that the key to this approach was in knowing when to transition from one mode to the other. Each project had its own rhythm.
For one crowdsourcing project, the shift from low to high cognitive depth, and high to low relational width, was quite sudden, occurring as soon as the partnership was formalized. This was due to the nature of the problem in question: Globaldef’s partner needed accurate details and project parameters in order to solve it. Therefore, near-total openness and concomitant confidentiality had to be established at the outset.
In another case, Globaldef retained the cognitive blinders throughout the early phase of a partnership with a start-up. In order to test the start-up’s technological capacities, Globaldef presented its partner with a cognitively reframed problem. Only after the partner passed its initial trial was collaboration initiated on a fully transparent footing, driven by the need for the start-up to obtain defense clearance prior to co-developing technology with Globaldef.
How Firms Can Lead with Adaptive Secrecy
Since we completed and published the research results, a lot has changed geopolitically. But the high-stakes paradox of openness is still a pressing issue inside Europe’s defense firms. As we write this, managers and executives are no doubt gamely grappling with the evident necessity for open innovation, on the one hand, and secrecy as a legal imperative, on the other.
Our research suggests that, like Globaldef, Europe’s defense sector can deftly navigate this paradox. Doing so, however, will entail employing a more subtle, flexible and dynamic definition of secrecy rather than the absolutist, static one that normally prevails in the industry. As military technology itself has evolved in a far more contextually sensitive and granular direction, so too should the sector’s conception of secrecy progress, from a primarily legal to a largely strategic framework.
Methodology
The research is based on 53 interviews with project managers, engineers, lawyers, and external partners involved in six confidential collaborations between a global defense leader and external entities such as start-ups, labs, and contractors, allowing for grounded analysis of how secrecy is practiced.
Applications
Executives and policymakers managing dual imperatives of confidentiality and collaboration in the defense sector can use these findings to better design innovation ecosystems. This approach is already used by leading multinational contractors and can inform European military-industrial strategy.
