The defense industry faces a new kind of product development challenge.

For decades, product development in the defense sector has been shaped by long design cycles, complex procurement models, stringent reliability requirements, and tightly managed supplier ecosystems. There are valid reasons for these practices, as defense systems must operate safely, durably, interoperably, and reliably under demanding conditions. Failure often comes at a high cost and can jeopardize the success of the entire mission.

At the same time, technological development has accelerated. Many of the technologies shaping future defense capabilities are now being developed outside traditional defense programs: artificial intelligence, autonomous systems, cybersecurity capabilities, space technologies, robotics, software, and advanced sensor technology.

The accelerating pace of development creates both pressure and opportunities.

The defense industry can learn from the best technology companies. They stay close to users, focus on real-world problems, experiment rapidly, remain open to external ideas, and learn in a disciplined manner before scaling anything.

Defense companies have the opportunity to combine the speed of technology companies with mission-level execution capabilities.

Faster deployment of defense capabilities is a strategic advantage

The defense industry has entered an era where the ability to rapidly field new technology has become a strategic advantage for both defense companies and their customers.

This is no longer merely a matter of internal dialogue among individual companies, R&D units, or product development teams; it is a priority for the entire defense ecosystem. In June 2025, NATO announced that Allies had approved the Rapid Adoption Action Plan, which aims—according to NATO—to significantly accelerate the adoption and integration of new technological products into defense operations across all military domains. (nato.int)

Speed ​​was previously a characteristic primarily associated with commercial technology markets. Now, it is becoming an integral part of defense capability itself.

Large defense companies possess strengths such as deep customer and mission understanding, system integration capabilities, security expertise, certification experience, long-term maintenance models, and the ability to deliver scalable solutions. These strengths remain essential. However, in a rapidly changing threat and technology landscape, they must be combined with shorter learning cycles, faster experimentation, and an enhanced ability to leverage external innovation opportunities.

NATO’s broader innovation ecosystem points in the same direction. For instance, DIANA (Defence Innovation Accelerator for the North Atlantic) works with leading researchers and entrepreneurs from across the Alliance to develop technologies that support collective defense and security. Its accelerators and test centers are located at universities and research facilities throughout Europe and North America. (nato.int)

This new trend creates a significant opportunity for traditional defense companies.

They can act as a bridge between two worlds. On one side lies the pace, creativity, and technological depth of commercial development; on the other, the trust, discipline, integration capabilities, and understanding of operational needs found in the defense sector.

In the future, success will belong to companies that can combine speed and reliability rather than choosing between them. They will learn quickly enough to respond to emerging threats and scale only those solutions that are secure, sustainable, and operationally significant.

Three misconceptions on the path of change

If the opportunity is clear, why is change still difficult for companies in the sector and for defense organizations?

The obstacles are rarely purely technical; more often, they are structural, cultural, and rooted in established ways of working.

Many defense companies already have promising technologies at their disposal. The challenge lies in moving them from idea to trial, from trial to implementation, and finally to operational use by the customer.

When the topics of accelerating product development and openness are raised, a few objections often come up.

1: “Faster product development means greater risks”

This objection is understandable. The defense sector is not a consumer technology market. Companies in the industry cannot simply “move fast and break things” when national security, operational resilience, and human lives are at stake.

However, learning does not mean abandoning discipline. Through experimentation, risks can be mitigated at an earlier stage.

A better principle is to experiment quickly in order to learn, and to scale only what proves to be valuable, safe, and operationally effective.

Small-scale experiments expose flawed assumptions before they evolve into costly programs. Early user testing reveals whether a solution addresses a genuine operational need. Short learning cycles prevent the organization from committing to expensive technology prematurely.

In the defense sector, speed does not equate to haste. Testing solutions early provides faster evidence of their viability, enabling more confident decision-making.

2: “New ideas must come from within the traditional supply chain”

Traditional industry suppliers and defense organizations remain essential to defense. They understand security requirements, the complexities of integration, long-term maintenance, interoperability, and regulated delivery environments.

If development is restricted solely to established internal industry channels, defense organizations risk losing visibility into technologies that are advancing more rapidly elsewhere. There are already alarming examples of this in areas such as drone warfare and other unmanned systems.

Openness requires clear processes for identifying, evaluating, and testing external expertise prior to implementation. This ensures that development remains under control, even when ideas are sourced from outside the organization.

The defense ecosystem currently taking shape is a hybrid one: traditional prime contractors, specialized suppliers, dual-use technology companies, research institutes, digital product development firms, public innovation units, and allied networks are collaborating more deeply than ever around mission-driven needs.

3: “A successful pilot automatically translates into performance”

A prototype may function technically, appeal to end-users, and appear successful as a pilot, yet still fail to translate into actual operational capability. The reason often lies in the absence of a budget holder, a procurement pathway, an integration plan, or a maintenance model—or the lack of a clearly defined operational lead.

This is often described as the “valley of death” in defense innovation. RUSI characterizes it as the gap between the capital available for funding small-scale pilots and the funding required to develop production-ready capabilities. (rusi.org)

Therefore, defense innovation cannot stop at ideation, pilots, or accelerator programs. The path to deployment must be planned from the very beginning.

Every experiment should answer two questions:

• Does this solve a genuine mission-related problem?
• If it works, how does it become an operational capability?

Without addressing the latter question, experiments easily become mere window dressing with no real impact.

At HiQ, we have spent 30 years operating at the intersection of technology, business transformation, and mission-critical digital systems. This gives us a close-up view of the challenges facing the defense industry.

We have seen how difficult it is for an established organization to rapidly scale product development when the operating environment changes faster than its own internal processes. Yet, speed alone is not enough. In critical sectors, product development must remain safe, reliable, and scalable—while also aligning with genuine operational needs.

Defense organizations possess expertise and ambition, and there is no shortage of problems worth solving. The challenge is usually that promising ideas generated with customers and partners get sidelined by ongoing programs.

That is why it pays to learn from successful technology companies and open innovation. The goal is not to make the defense sector less disciplined; rather, it needs more effective ways to learn, validate, and scale solutions.

Five steps to accelerate product development in the defense sector

The issue, therefore, is not a lack of product development. Many already have an abundance of pilots, accelerators, technology roadmaps, and promising ideas. The greater challenge lies in taking them all the way to actual customer use as fully realized defense solutions.

This requires a practical operating model that starts with operational needs, brings the right stakeholders together at an early stage, enables rapid experimentation, and establishes a credible path from prototype to program.

The following five-step framework is designed precisely for this purpose.

1: Start with task-based problems, not technology programs.

The first step is to clearly define the operational problem.

Many product development projects begin with technology: artificial intelligence, autonomy, data platforms, drones, cyber tools, or digital twins. Technologies can be impressive, but they are valuable only when they solve a real operational problem.

It would be better to ask:

• What aspect of the outcome needs improvement?
• Who experiences the problem firsthand?
• What is the current temporary fix?
• What makes the problem urgent?
• What would a significant improvement look like in 90 days?
• What would be a “good enough” solution to test with real users?

These questions help shift product development from a technology-driven approach toward addressing actual operational needs.

The best technology companies succeed by staying close to their customers’ pain points. The defense industry can achieve the same by staying close to operational pain points.

2: Build small, cross-disciplinary teams

The second step is to create teams with the freedom to operate.

Product development slows down when every decision has to pass through multiple departments. A small, autonomous team reduces friction.

A strong defense-sector product development team could include:

• Operational sponsor
• End users or frontline representatives
• Product and technology experts
• Security and compliance experts
• Commercial expertise
• Legal support
• Relevant external partners

It is not a matter of eliminating oversight. The right expertise is brought in early enough to influence what is being built.

This enables the company to make better decisions faster and avoid surprises at a later stage.

3: Use rapid experiments before large-scale procurements

The third step is to test assumptions quickly.

Instead of proceeding directly from a requirement to a large-scale program, organizations can build products and services around short learning cycles.

A practical approach could look like this:

• 30 days: Validate the problem and identify solution hypotheses
• 60–90 days: Build a prototype or minimum viable capability
• 3–6 months: Test in a realistic operational environment
• Decision point: Scale, modify, pause, or terminate

Particularly in digital product development, we are seeing cycles shorten even further than previously described, as artificial intelligence accelerates the development of application prototypes in particular. Many companies do not yet even realize how much faster software prototypes can be built today.

This creates a disciplined learning loop. At the same time, it reduces the risk of over-investing in the wrong type of solution.

The aim is not to produce pilots endlessly. The key is to identify viable solutions before committing to full-scale implementation.

4: Unlock opportunities for open innovation

The fourth step is to look beyond conventional organizational boundaries.

Many technologies shaping defense are advancing rapidly in commercial and dual-use markets. Defense organizations need ways to identify, evaluate, and engage these external technology companies in collaboration.

This could mean, for example:

• Technology scouting
• Innovation competitions
• Accelerator partnerships
• University collaboration
• Leveraging the venture ecosystem
• Leveraging alliance networks
• Open-source communities
• Partnerships with digital design and development companies
• Collaboration between prime contractors and “new defense” suppliers

Finland already boasts excellent examples of ecosystem initiatives, such as Patria’s eAlliance and the Digital Defence Ecosystem.

The role of traditional defense companies remains essential. They possess expertise in integration, regulation, reliability, certification, security, and long-term maintenance. Their impact is further amplified when they aggregate and coordinate the capabilities of various players, rather than operating in isolation.

5: Create a clear path from prototype to program.

The fifth step is to plan the implementation path from the very beginning. Each experiment should answer not only the question “Does this work?” but also the question “How will this become part of actual performance?”

This entails clarifying the following points:

• Who owns the problem?
• Who owns the budget?
• What procurement or commercial route could be used?
• What security requirements apply to the solution?
• What integration dependencies exist?
• What training or doctrinal changes are needed?
• What kind of maintenance model is required?
• What evidence is needed to justify scaling?

A prototype without a transition path is unlikely to create a lasting impact.

Ownership of an operational problem

If one thing were to be singled out for defense companies to focus on initially, it is clear ownership of the problem.

Without problem ownership, the rest of the framework begins to falter. From an innovation management perspective, the slow pace or lack of clarity in projects often stems precisely from the failure to designate a clear, empowered owner for the problem.

An organization can establish innovation teams, run pilots, scout technologies, and build prototypes. However, if no one truly owns the operational problem, no one will make the necessary trade-offs, secure resources, validate the impact, or drive the solution toward implementation.

Problem ownership goes beyond mere interest. It refers to a designated individual or team responsible for the outcome and committed to driving development forward from initial insight to implementation.

A strong problem owner is able to answer:

• Why does this problem matter right now?
• Who does it affect?
• What happens if it is not resolved?
• What constraints must the solution respect?
• What kind of improvement would justify scaling up?
• Who needs to be involved to make implementation possible?

When problem ownership is clear, it is much easier to assemble the right team, attract the right partners, design meaningful experiments, and build a transition path.

The speed and task-level execution capability of technology companies

The defense industry has a significant opportunity to accelerate innovation by learning from technology companies and open innovation ecosystems.

However, the culture of commercial technology should not be adopted into the defense sector wholesale. Instead, useful elements should be applied: a user-centric approach, rapid learning, small empowered teams, external collaboration, and iterative experimentation.

A practical model for this is:

1. Start with task-based problems, not technology programs.
2. Build small, cross-functional teams.
3. Use rapid experiments before large-scale procurements.
4. Unlock opportunities for open innovation.
5. Create a clear path from prototype to program.

The most important first step is to establish clear ownership of the problem. When someone owns an operational problem, innovation becomes anchored to a real need rather than remaining an abstract possibility.

This enables the defense industry to move faster while safeguarding what matters most: trust, security, reliability, and mission success.

Eeppi Nieminen

Senior Advisor, Defence u0026 Security