Remarks as prepared for the NDIA Executive National Security Forum on Friday Jan. 13, 2017.

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I want to thank NDIA for hosting me today in my final week as Secretary of the Army. NDIA hosted me early on in my tenure as Under Secretary of the Air Force, so in some sense you're book-ending my service in this Administration.

There is so much that has changed over the last eight years when it comes to the topics I'll want touch on today: technology, modernization and the relationship between the defense sector and industry. When I joined the administration our military was engaged in two wars. We were still focusing the lion's share of our time, energy, and resources on counter-insurgency.

Today I'm walking out the door into a completely different world. That's true not just for the challenges we face but for many of the ways the defense sector works with industry in response to them.

I appreciate how much skin industry has in the game. Look at the Joint Multi-Role Tech Demonstrator, a $1.2 billion joint effort to develop future vertical lift which includes over $800 million of industry money. Through digital experimentation that allows us to save time, money, and effort in proto-typing, we're building a better platform. And we're learning lessons along the way.
It's an example of how the more we communicate and share thoughts and ideas, the likelier we are to get to the right place together.

We've spent much time describing how we imagine the future battle space, but how does that equate to what we need?

Already we see more clearly how the battle space is bleeding into the information space. You can't read the paper or turn on the TV without seeing a story on hacking or threats to cyber security. The public is now aware of the risks in a networked world in ways it was not a year ago, or even a few months ago.

Russia and others are clearly expanding the boundaries of conflict and warfare to destabilize the strategic status quo. Misinformation, propaganda, and outright theft are all parts of this new arsenal. Advances in information technology are becoming increasingly easier to weaponize and there are lower barriers to entry for bad actors.

And the growing importance of cyberspace to security is one of many transformations changing the characteristics of warfare. Actually, confronting the challenges we face in cyberspace is an area where the military is further along than it is in several other critical tech sectors.

Many of the advances we're making in cyberspace are due to partnerships we've forged with companies large and small who are on the cutting edge of technology. When the Defense Department simply cannot iterate as fast as these firms can, we have to find better ways to tap into their innovative capacity.

We are taking steps to reimagine our relationships with technologists, such as our recent bug bounty programs, "Hack the Pentagon" and "Hack the Army." Through these campaigns we invited white-hat-hackers to test our systems and networks and rewarded them for finding vulnerabilities. The value here was not only in making certain digital assets more secure but also in engaging with the talent we need to keep up with the pace of change in technology.

Our commitment to fight and win in cyberspace is also beginning to make its mark with our investments in infrastructure. These include a new headquarters for Army Cyber at Fort Gordon, Georgia. As I said late last year at the groundbreaking, "Cyberspace has become key terrain … It's a critical fifth domain alongside land, sea, air, and space. Controlling it ensures a clear advantage."
But we are only beginning to appreciate the importance of cyberspace. And in fact, the emerging threats we face here are but one piece of much larger and multi-faceted security competition now underway.

Some of the dangers in this new world include new and more diverse means of action for terrorist groups, the erosion of the international system, and the greater probability of interstate conflict, risks which are all chronicled in the Global Trends Report ODNI released this week. Each of these risks relate to our military's modernization, and the topics and technologies I'll address today.

Future Challenges, Emerging Threats, and Near-Peer Competition

We are entering a time of uncertainty but this much is clear: a new race is on between the United States and potential near peer competitors.

This race extends to competition in areas like autonomous systems and material sciences. It's a race that will require our military to use big data more effectively. It will require us to harness the power of narrow Artificial Intelligence, or AI, and to apply advancements in machine learning that enable military leaders to make complex decisions more quickly.

Maintaining our advantage as the world's most dominant military will mean we have to re-imagine how the defense sector and industry work together. Our focus must be on providing solutions and solving problems, not simply on satisfying listed requirements. I know that many voices in the business community have advocated this for a long time, and DoD must redouble its efforts to move in this direction.

Whether we can make the right investments in the right areas is important. Much more important is whether we get our relationship right so that we can be agile enough to respond to challenges we cannot anticipate. This means we have to put a premium on agility, responsiveness, and openness.
When it comes to confronting security challenges across multiple sectors and domains, this is not a multiple-choice test. We have to address and invest in all of the above.

Preparing warfighting capabilities for new types of conflict also requires us to wrestle with complex ethical questions.

We need to develop principled policy frameworks that keep pace with changes in technology. We need to ensure there are institutional safeguards in place to constrain technological extremes. And we need to go about this knowing our adversaries will not limit themselves in the same ways. As Americans, we have always understood that our security depends on both the example of our power and the power of our example. No matter how the battlefield, technologies, or our adversaries change, we have to ground our policies on ethical principles and values.

Emerging Threats Require New Technologies, New Model of Partnership for Defense & Industry
When we look at the state of our current capabilities and the threats on the horizon, there are certain imperatives. Our overmatch is slipping away in several important areas.

We've seen how Russia has advanced their capabilities, stealing a march on us over the 15 years we've been at war. They have pursued an aggressive program of modernization, working to close the technology gap and thwart our traditional advantages of power projection and freedom of movement.

In Syria, Ukraine, and elsewhere, we're seeing how these technological advancements are making the battlefield increasingly lethal -- a trend that is likely to continue far into the future.

As Deputy Secretary Work recalled, the old adage was that if you can be seen, you can be hit and if you can hit, you can be killed. The new adage is: if you emit, you die. Our Soldiers will have to operate more often in environments where their communications will be interrupted or constrained. They will have to see, understand, and act rapidly and with precision, all while constantly on the move -- because if you stop moving, you get hit in this highly lethal environment.

Time and again we've seen Soldiers respond to changes in the character of war. We've seen their battlefield flexibility in developing rough-and-ready solutions quickly against nimble adversaries.
But we need to demonstrate the same flexibility in how we equip, train, and resource our military to fight and win in a time of rapid technological, political, and demographic change.

Some of the most important victories will be won in our Nation's boardrooms and laboratories. And in some sense, that's always been true and especially at pivotal moments of strategic transition.
But at other inflection points in our history, DoD was leading the way in developing and fielding new capabilities and technologies. This moment is different. Today, the pace of technological change means the private sector is taking a leading role.

And when it comes to nascent technology, DoD will not always have the agility or capacity to determine what's possible or how it can be applied. That will be up to our innovative private sector. And that will mean that a greater number of solutions must be driven by business incentive and competitive opportunity.

Of course, the Defense sector will still need to fulfill requirements that have no immediate consumer application. In these areas, the Pentagon must find ways to provide more catalytic investments that make markets viable and spur competition.

As we enter this period of competition, we should be mindful that our Nation's comparative advantage comes from delivering products and solutions that are high on the value chain. It's our vibrant marketplace of ideas and many incubators of innovation that provide us the greatest edge. It is vital that we marry these sources of national strength more effectively to our defense base.

Changing How We Work Together to Meet Challenges Head-On

Accomplishing this will require the Defense Department to make its organizational culture more open and flexible. It's no secret that some of today's most innovative companies prefer not to work with DoD. Apple said: "If we give you a product with iterative software, you're not even capable to upgrade it -- you'll end up with a brick."

It's true that DoD's shingle currently reads "creative solutions welcome." But the door under the sign is locked.

Too often the formal requirements that drive our acquisition process become inflexible guidelines. Rather than promoting the innovative capacity of our industrial partners, we constrain them.
DoD must have the ability to adopt and re-purpose solutions developed in the private sector toward specific warfighting applications. But before we do that, the private sector must have the avenues to bring solutions forward.

By finding new ways to incentivize business to make its own investments in adaptable solutions, DoD will ultimately gain access to even more advanced capabilities, more rapidly, at a reduced cost.
There are many areas that are ripe for the private sector to take the lead and provide creative solutions.

These include cyberspace operations and space operations, advancements in machine learning and "narrow" artificial intelligence, in material sciences, as well as in Big Data applications and autonomous systems.

Operations in Cyberspace

I mentioned the challenges in cyberspace earlier. As you know, many of the most exciting tools and activities remain classified. But it's no secret about what cyber threats cost, both to bottom lines and in terms of our longer-term vitality as a society. And an environment where ideas can be stolen easily is one that stifles innovation.

The costs of industrial cyber espionage range as high as $500b and 1.2 million jobs a year. What is arguably more important -- and more costly -- is how states like Russia are incorporating cyber tools to sow disinformation and make it more difficult for democratic systems to make decisions. We're being tested now and the worst may be yet to come.

Activities in cyberspace also remind us of the importance of space. Capabilities in space provide much of the hardware and infrastructure for cyber operations. But even though we pioneered these capabilities in space, we've also underinvested in sustaining and improving them. Our adversaries have not.

Along with other state actors, the private sector is taking a growing role in advancing space capabilities. When what we do in space is tied to every other domain, it's vital that we accelerate partnerships with the private sector to support the resilience of our assets and innovation of new capabilities.

There are several initiatives underway that reveal the obvious potential:
OneWeb is launching more than 600 small satellites to provide broadband Internet service to individual users and to support potential first responders over the next three years. There should be ways DoD can piggyback on these kinds of investments to push the access of our networks to the tactical edge.

Similar investments in space can help us gather intelligence more quickly. Planet -- formerly Planet Labs -- is mass-producing small satellites to provide a full range of imagery services. These assets will allow them to image 100% of the earth once a day. It's easy to see how incorporating these kinds of technologies into what we do at DoD can help reduce demands on unmanned aerial systems.
Airbus is also experimenting with high altitude pseudo-satellites that can carry a wide range of payloads, Communications, PNT and ISR. These platforms show the potential to improve and expand the capabilities provided by unmanned aerial systems, and to the growing importance of autonomous systems writ large.

Autonomous Systems

In the realm of autonomy the boundaries of the possible are being tested every day. The defense sector is driving many cutting-edge efforts forward but some of the most creative advances come from civilian applications.

The recent emergence - and growing acceptance -- of self-driving vehicles on our roadways is one example of how autonomous systems are reshaping our world. Uber is a driving force behind this dynamic, in addition to being the method by which many of you probably traveled here today.
Perhaps one of your children or relatives received a remote control drone over the holidays. The fact that kids can now find a drone under the Christmas tree is a window into our progress in making these platforms smaller and enhancing their capabilities. It is also an indication of how ubiquitous they are for our adversaries.

You might have seen the capabilities provided by swarming autonomous micro-UAVs on a recent 60 Minutes segment. The Perdix micro-UAVs they featured, assembled entirely from commercial parts fitted into a 3D-printed fuselage, are able to communicate and operate together.

These kind of advances offer opportunities in both commercial and military applications, from intelligence, surveillance, and reconnaissance to an array of protection functions, to advancements in resupply and logistics, and in countering enemy anti-access and area denial capabilities.
Right now, most of DoD's autonomous systems do what humans tell them. But many civilian autonomous systems can also interact with humans. There are opportunities here to develop machines that can learn and make decisions based on analyzing Big Data.

Advanced Machine Learning and "Narrow" AI

Advanced machine learning and "Narrow" Artificial Intelligence are the foundations for most Big Data applications, machine autonomy, and other pioneering technologies.

Narrow AI, in this case, refers to the combination of image processing, text processing, and speech processing that enables a high-functioning system to replicate or surpass- human intelligence for a dedicated task.

By machine learning, I'm referring to algorithms used to detect patterns without the prior definition of features and characteristics, and done with little or no human supervision.

The leading edge of machine learning is now supported by the use of increasingly complex Neural Net algorithms. These enable a computer to learn from prior tasks rather than perform the same task in the same way.

Basically, it's pattern analysis. Think of Netflix, and the way it will queue up options it thinks you like. We are working on doing something similar with options and capabilities we provide to our forces on the battlefield.

The private sector is already well ahead here and moving faster than they could under any acquisition requirement. This is one more place where the military needs a better way to tap into existing innovation rather than seeking to duplicate it.

It's at the nexus of Narrow AI and machine learning where the Army and the military writ large could gain the greatest benefit, through the application of Big Data at the operational level.

Big Data Applications

We all know the military has enormous amounts of data. This should be a natural sweet spot for us, an area where we can draw insights and solutions from industry and improve rapidly.
What we need -- and don't have - is a comprehensive approach for using Big Data to derive a competitive advantage over capable, near peer adversaries.

Big Data is particularly useful in the growing "Internet of Things" (IoT) which allows physical objects and operating systems to network. However, the IoT does not have formal requirements, and so much of the equipment being developed for DoD is not IoT enabled, limiting the potential benefits of Big Data applications before the equipment even reaches the warfighter.

While there is far more work to be done, there are several examples where Big Data is being used effectively by the military.

The Army Analytics Group is doing great work for the ASA(M&RA) on the Human Capital Big Data Strategy. This will require data producing organizations across the Army human capital enterprise to provide a copy of their data on a reoccurring basis to the Army's Person-event Data Environment, finally allowing organizations to access, store, protect, and use personnel-related data across the force.

The Study To Assess Risk and Resilience in Servicemembers -- STARRS -- suicide prevention effort brought together billions of pieces of data to begin understanding the stressors that drive people to despair and suicide.

The Behavioral Health Data Portal provides a standardized approach to track the wellbeing of patients and the effectiveness of treatment, all in real time.

However, operational military applications for Big Data lag far behind. Possible applications include:
Enhancing targeting on the battlefield: Commanders could have analysis at a speed which enables them to anticipate an adversary's behavior and counter it quickly.

Information and influence operations could begin to match advancements seen in consumer advertising campaigns. The military needs to apply some of the lessons learned in the private sector about group and individual behavior.

Our logistics chains, both in theater and globally, could improve using machines to anticipate -- and meet - both cyclical and emerging sustainment demands.

Big data could allow us to stage supplies at imminent points of need and provide preventative medical care.

Material Science

Advances in material science present their own game-changing possibilities. Here, we can make the equipment our people need smaller, lighter, and easier to move. And in the long term, it's an area where the military can save enormous amounts of money.

Lighter, stronger materials and longer lasting sources of power that have the potential to transform global manufacturing and shipping -- These capabilities can make our military expeditionary in ways we never thought possible.

In addition to lighter, stronger metals, we are also seeing rapid advances in batteries and power conduction.

Scientists at places like MIT, Stanford, Arizona State, UCAL Irvine, and Dallas University are just a few of the researchers working on a battery revolution. They are working to provide batteries that recharge in minutes or less, don't die, difficult to damage, and orders of magnitude more powerful. This will revolutionize how we store and use power in both civilian applications like cars, phones, and infrastructure, but also for military vehicles, communications systems, and facilities.

Values and Ethics

I think I've made it clear how many opportunities there are for the private sector to take the lead and drive forward the solutions we need. But I want to underscore again how across these areas of opportunity there is great potential for abuse.

Even in this brave new world of new technology and competition -- perhaps especially in a world where technology plays such a pivotal role -- our principles and respect for human dignity must remain our North Star.

Whether in how we use autonomous systems or how we operate in the commons of space and cyberspace, we have to be thoughtful about the precedents we set. We have to take care to establish ethical policy frameworks that keep up with advances in technology. We need to be having these conversations now.

Shared Obligation, Shared Security, Shared Opportunity

When you consider the number of new and emerging technologies there are, and the number of sectors where we must advance, the scale of our challenge is clear.

But it should also be clear that we come to this competition with two unique assets: our robust culture of innovation and our strong, professional military. In both areas, our Nation is the envy of the world.

Advancing our strength and security will depend on what we do to make these assets more complimentary -- to ensure we are more strategic and coordinated in how industry works with the defense sector.

Our Nation's most innovative companies can't innovate without the security and stability the defense sector provides. And the defense sector cannot keep up with the challenges of a rapidly changing world without closer connections to our most creative people, firms and industries. At the end of the day, a vibrant private sector and strong national defense depend on one another.

Our quest to become more nimble and adaptive must be continuous. But today it must start with emulating what our nation's innovative industrial base does so well.

That will help us to meet our shared obligation to provide security today and into the future -- to ensure our service members have the advantage they need against any foe, in any fight. From administration to administration and strategic era to strategic era, that's the responsibility we share, and a commitment we meet together.