The co-authors of a recent article in Foreign Affairs, America Could Lose the Tech Contest With China, Eric Schmidt and Yll Bajraktari, are Chair and CEO of the Special Competitive Studies Project (SCSP), respectively. The SCSP “builds on the work of the National Security Commission on Artificial Intelligence (NSCAI), which ended its congressionally-mandated work in October 2021.  NSCAI made recommendations to the President and Congress to “advance the development of artificial intelligence, machine learning and associated technologies to comprehensively address the national security and defense needs of the United States.”

The SCSP is a bipartisan, non-profit initiative with a clear mission: to make recommendations to strengthen America’s long-term competitiveness for a future where artificial intelligence (AI) and other emerging technologies reshape our national security, economy, and society…to ensure that America is positioned and organized to win the techno-economic competition between now and 2030, the critical window for shaping the future.” (1)

Schmidt and Bajraktari begin their article by itemizing what they call the “reactive approach…on the technological battlefield” to the Chinese challenge to date:

• Passage of the CHIPS and Science Act “only after a supply-chain crisis had roiled the U.S. economy for two years as a result of the COVID-19 pandemic, and after the Pentagon had warned that it had become dependent on East Asian suppliers for 98 percent of the commercial chips it uses.
• In 2019…a diplomatic campaign to thwart China’s bid to dominate the world’s 5G infrastructure. But that was only after the massively state-subsidized Chinese companies Huawei and ZTE undercut major Western competitors, seemingly cemented positions in the communications networks of U.S. allies, and flooded the zone in standard-setting bodies; and
• Last year, the National Security Commission on Artificial Intelligence (on which both of us served) delivered its final report, but that report came out four years after China had already launched its national strategy on artificial intelligence, which generated billions in new funding, identified national-champion companies, and integrated AI into Beijing’s military-civil fusion strategy.” (1)

The author’s diagnosis of the root cause of the problem is aligned with the drivers behind the recent launch of America’s Frontier Fund and the Quad Investor Network (with which Eric Schmidt is also affiliated) and maps to many of the recent “Deep Tech” and “Valley of Death” discussions here at OODA Loop:

• For most of the post–Cold War era, the high-tech ecosystem in the United States evolved according to the logic of globalization rather than in response to strategic considerations. High-margin and high-value-chain investments and the search for cheap suppliers abroad made good business sense for U.S. companies and investors but devastated the U.S. technology manufacturing landscape. The absence of national technology priorities set by the federal government and a relative decline in government-funded R & D allowed commercial interests to drive the tech agenda, indifferent to the international strategic implications or U.S. competitiveness.
• Additionally, the rise of venture capital added a powerful new category to the so-called innovation triangle that had long brought together government, industry, and academia. Venture capitalists jolted the innovation landscape but largely stayed away from “deep tech” (technology requiring major scientific research, engineering innovation, and significant capital) and from attempts to commercialize basic R & D —both of which would have required enormous patience and less promise of sizable returns. The government’s relative power to shape and drive innovation weakened and Washington lost its focus on national technology priorities.  (1)

Strategically, the authors call for:

• A national competitiveness strategy “that centers on technology and leverages the new geometry of the contemporary innovation ecosystem, [that] would create a national action plan for investing in, incentivizing, and accelerating innovation in biotechnology, quantum (and other new methods) of computing, new forms of energy generation and storage, new manufacturing paradigms, and wildcards such as food and water security and countering autonomous disinformation systems.
• A need for the U.S. to address its diminishing ability to produce critical technology and its reliance on supply chains that run through, or dangerously close to, its main rival [China].   The federal government will need to make sure that investments in digital infrastructure, starting with 5G and fiber optic networks, are deployed swiftly and efficiently and support more basic research and piloting of next-generation applications.
• Development of a tech-savvy workforce (including more talent from abroad) in critical industries, starting with AI, biotech, and semiconductors. 
• Expansion of the U.S. manufacturing capacity for advanced batteries, permanent magnets, and microelectronics by partnering with the private sector and using tools such as grants, government-backed loans, and purchase commitments to minimize the risk posed by investing in cutting-edge technology.
• [U.S. insulation] from China’s acts of economic malpractice, such as intellectual property theft and coercive tech transfers, that undermine U.S. firms. ‘Industrial policy’ is a fraught label, but targeted government intervention can fill critical gaps and provide public goods when the market falls short in creating paths for the diffusion of technologies across the economy, unleashing private-sector innovation and boosting economic output. The CHIPS and Science Act is cause for optimism. But if it is not implemented successfully, it risks becoming the first and last step in a new taxpayer-supported techno-industrial strategy.”  (1)

In the realm of policy and regulation, the authors call for a “balanced approach” to achieve competitive advantage through:

• “A model of technology governance that upholds democratic values and norms while also supporting disruptive innovation, economic growth, and national security. The United States already has a rich system of technology governance that includes technologists, trade associations, advocacy groups, and media outlets that make use of a range of tools including voluntary norms and standards, investigative journalism, and the legal system. They should continue to lead the American approach.
• Relying on existing regulators to develop rules for emerging technologies on a sector-by-sector basis. Regulation should focus on high-consequence uses of such technology and should take into account factors such as the number of people impacted and the significance of the potential harm.
• A U.S. recommitment to its alliances.  Washington and its allies and partners have a shared stake in the future of the rules-based order; their collective resources can overcome Beijing’s advantages in scale. The United States should integrate its allies in Asia and Europe into a single approach to shaping and promoting democratic digital norms, joint R&D investments, talent exchanges, new regimes for export controls and investment screening, and tech governance issues such as data privacy and content moderation.
• [Developing] incentives that can appeal to “swing states” that are currently calculating whether China or the United States offers a more attractive approach to technology. The United States and its allies should focus on areas where each has relative advantages that can work to the benefit of the larger democratic world.
• [Reinvigorating] public-private alignment to channel private-sector energy toward strategic technology initiatives such as multinational consortia to coordinate scientific investments and research agendas. The CHIPS and Science Act takes a step in the right direction by authorizing $500 million to establish an International Technology Security and Innovation Fund. That fund should be used to connect microelectronics ecosystems so that the United States and its partners can design, build, and package the chips they all need.

The following section of the article is, at the very least unique, and I would argue somewhat unprecedented, in the specificity of the strategic technological recommendations made by a non-profit think tank to the U.S. military and the U.S. intelligence community:

• “A new competitiveness strategy will fail if it does not contend with the United States’ flagging hard power. To circumvent China’s recent military advances, Washington must more fully embrace the distribution of network-based operations that can outmaneuver the Chinese People’s Liberation Army’s rigid, hierarchical forces. By 2030, the U.S. military must fully integrate human-machine teaming into every aspect of its operations and develop low-cost, easy-to-manufacture AI-enabled platforms.
• The Pentagon should also pursue and maintain software supremacy because in the future, the quality of software will determine a military’s advantage in collecting, aggregating, and analyzing information; thwarting attacks; and identifying opportunities to most effectively attack opponents. Every future system, capability, and operational concept of the Department of Defense should be developed with software in mind, so that the U.S. military can dominate in future combat. And the U.S. military services need to create new specialties for tactical software development and train leaders on how to use software for military advantage.
• Finally, the U.S. intelligence community must adapt to the challenges of the contemporary digital environment and focus greater attention on understanding foreign technology trends. As private companies and U.S. adversaries gain new capabilities, Washington’s intelligence agencies risk falling behind. Once unique capabilities such as geospatial and signals intelligence have been commercialized. Private companies are often better positioned than the U.S. government to exploit AI-driven data analytics. The U.S. intelligence leadership needs to accelerate the digital transformation of its agencies by embracing a unified strategy, common data standards, and an interoperable digital infrastructure. They must also update security and human resource processes to ensure that the best talent and technology can be safely integrated into and scaled across the intelligence community.

The SCSP’s “Mid-Decade Challenges to National Security”

The tone of the recommendations in this article by Schmidt and Bajraktari should not be surprising, as the recent work of the NSCAI and the launch of America’s Frontier Fund and The Quad Investor Network are all of a whole – and represent the private sector staying engaged and formalizing their commitment to these strategies after their initial engagement with the delivery of the report from the NSCAI.  In many sources we have reviewed, Eric Schmidt is credited with the realization that the private sector has to stay engaged in a real ‘sleeves rolled up”, actionable manner, which resulted in the creation of the SCSP.

This recent article in Foreign Affairs is also a part of a public relations campaign related to the recent release of the SCSP 189 page report, Mid-Decade Challenges for National Competitiveness.  At such a length, there is much to review in this report.  The strategy, policy, regulation, military, and IC recommendations included in the article by Schmidt and Bajraktari have their origins in this report and essentially act as an Executive Summary of the report.

Following are further high-level highlights from the report:

China’s Growing Tech Spheres of Influence. China’s tech advantages are translating into strategic impact through the classic idea of spheres of influence applied through new methods and in new domains. China’s spheres of tech influence range from control of critical inputs like rare earth minerals to network infrastructure through its Digital Silk Road projects, strategic approach to international standards bodies, and export of surveillance technologies. This tech influence is translating to geostrategic leverage around the globe as countries dependent on China vote differently in international bodies, change their position on Taiwan, and toe the PRC’s foreign policy lines on issues ranging from human rights to cyberspace norms.

The United States can be on a winning path by the middle of the decade if it can solve six challenges. The cumulative answer to how we address these challenges constitutes an agenda for restoring America’s competitiveness:

Challenge 1 – Harnessing the New Geometry of Innovation: How can we unlock and connect the expertise, will, and resources that exist throughout American society to build national advantages in critical technologies? The United States’ strengths across its commercial, academic, and government sectors are not oriented toward international competition. Our proposed answer is a new public-private model – one that provides a focused strategy process for the United States to deploy in making informed judgments on national technology priorities and for creating action plans to accelerate the tech applications.

Challenge 2 – Restoring the Sources of Techno-Economic Advantage:  How do we ensure that the United States remains the world’s most dynamic, competitive, and resilient economy in the 2020s? America’s advantages across its innovation ecosystem, workforce, and financial sector mean the economic competition should be America’s to lose. Today, however, the erosion of American manufacturing combined with the PRC’s techno-economic advance has triggered anxiety that the American system lacks resilience and cannot convert its advantages into national power. As Chapter 2 elaborates, to stay ahead, the United States needs a techno-industrial strategy that increases economic output and fills economic and national security gaps.

Challenge 3 – An American Approach to AI Governance:  How can we develop a technology governance regime that protects the rights of individuals and still unlocks the power of innovation to improve society? All societies are searching for models of technology governance that enhance global competitiveness by propelling innovation while also accounting for risks and vulnerabilities. The EU is building a regulatory framework. China is pioneering a techno-authoritarian model. The search for an American model, outlined in Chapter 3, takes place in this global context.

Challenge 4 – Remaking U.S. Global Leadership in the Age of Tech Competition:  How can we preserve an open international order, underpinned by respect for sovereignty and trusted digital infrastructure, that meets the aspirations of the widest number of people and is still guided by democratic values? Chapter 4 traces technology’s place at the heart of the long-term contest between democracy and authoritarianism. The PRC is pursuing a methodical approach to build technology spheres of influence from which it can coerce political preferences. Its strategy rests on controlling the global digital backbone, providing useful platforms and services, and setting international tech standards. The United States and its allies must marshal the resources and diplomatic efforts to compete across the world so nations have real choices about their futures.

Challenge 5 – The Future of Conflict and the New Requirements of Defense:  In the face of military rivals employing new technologies and operational concepts to gain advantage, how can the United States ensure a favorable global balance of military power, and uphold its defense commitments in the event of aggression? A strong military deterrent to keep the peace is a necessary precondition for pursuing a positive agenda. Chapter 5 sketches the interplay of new technologies and traditional geopolitical rivalry that are producing a dangerous set of international conditions.

Challenge 6 – Intelligence in an Age of Data-Driven Competition:  How can the United States win the race for actionable insight in an information-rich and geopolitically-competitive world? Out-knowing authoritarian rivals is a critical advantage in strategic competition. Chapter 6 describes how the U.S. Intelligence Community (IC) will have to master emerging technologies to deliver relevant and timely insight to decision-makers and augment its efforts by focusing on foreign technology developments shaping military, economic, and political trends. (2)

What Next?

Many of the technological challenges and strategic Great Power competition implications addressed by Schmidt, Bajraktari, and the SCSP report will be discussed (when we gather as the OODA Community in October at OODAcon 2022 – The Future of Exponential Innovation & Disruption) in the context of the following panels:

Tomorrowland: A Global Threat Brief

Bob Gourley, CTO of OODA LLC | Former CTO at Defense Intelligence Agency

Johnny Sawyer, Founder of the Sawyer Group | Former Chief of Staff at Defense Intelligence Agency

The Pandemic, Russian invasion of Ukraine, demographic inversions, and technological labor force disruption have combined to forever shift the global geo-strategic environment. This session will examine the new world economy, seeking actionable insights for practitioners who need a deeper understanding of new realities.  Impacts on individuals, investors, businesses, the military, and governments will be examined.

Swimming with Black Swans – Innovation in an Age of Rapid Disruption

Dawn Meyerriecks, Former Director of CIA Science and Technology Directorate

If Yogi Berra were to evaluate today’s pace of global change, he might simply define it as “the more things change, the more they change”. Are we living in an exponential loop of global change or have we achieved escape velocity into a “to be defined” global future? Experts share their thoughts on leading through unprecedented change and how we position ourselves to maintain organizational resiliency while simultaneously reaping the benefits of new technologies and global realities.

The Future Hasn’t Arrived – Identifying the Next Generation of Technology Requirements

Neal Pollard, Former Global CISO at UBS | Partner, E&Y

Bobbie Stempfley, Former CIO at DISA | Former Director at US CERT | Vice President at Dell

Bill Spalding, Associate Deputy Director of CIA for Digital Innovation

In an age when the cyber and analytics markets are driving hundreds of billions of dollars in investments and solutions is there still room for innovation? This panel brings together executives and investors to identify what gaps exist in their solution stacks and to define what technologies hold the most promise for the future.

Postponing the Apocalypse:  Funding the Next Generation of Innovation

Matt Ocko (invited), DCVC

What problem sets and global risks represent strategic investment opportunities that help reduce those risks, but also ensure future global competitiveness in key areas of national defense?  This session will provide insights from investors making key investments in these technologies and fostering future high-value innovation.

Open the Pod Bay Door – Resetting the Clock on Artificial Intelligence

Mike Capps, CEO at Diveplane | Former President at Epic Games
Sean Gourley, CEO and Founder at Primer.AI

Artificial intelligence is like a great basketball headfake. We look towards AI, but pass the ball to machine learning. But, that reality is quickly changing. This panel taps AI and machine learning experts to level-set our current capabilities in the field and define the roadmap over the next five years.

OODAcon 2022

To register for OODAcon, go to: OODAcon 2022 – The Future of Exponential Innovation & Disruption

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