The Obama administration brought with it a huge focus on bringing technology innovation into the government from non-traditional sources, but the current administration has not slowed the pace set previously. To learn more about how the government is working with companies to innovate on new and exciting technology, we spoke with Sharon Hays, senior fellow at LMI.
ABERMAN: Well, you’ve been around technology innovation in many different ways. Tell me, what is it about technology innovation that interests you personally?
HAYS: I think it started long ago when I was in graduate school. So, I’m a scientist by training, and I became really interested in how the innovation ecosystem within the United States functions, and the role that graduate students and education in general play in that. That’s what led me to a career in science and technology policy. So I worked on Capitol Hill, and then at the White House Office of Science and Technology Policy. Where the issue is looking at the innovation of the government at large and all of the different parts that make it up, from the private sector to federal investment in research and so on. Understanding how all of that works, and how we can channel that to solve our nation’s most difficult problems, that I find truly fascinating.
ABERMAN: As do I. And I think that it, frankly, is one of this region’s distinguishing characteristics when people wonder: how can you be a technology community without having a venture capital industry?
HAYS: Yeah. I think that that’s really true. I mean, there’s so many different ways to invest in innovation. The private sector plays a huge role, both within companies, from venture capital and other kinds of investments from outside an individual company. And then, of course, the federal government plays a huge role in investing in research and development, not just in universities, not just in federal labs, but indirectly in the private sector as well.
ABERMAN: And I think that’s really the part of the puzzle that’s least understood here in our region. And I look at Uncle Sam very much as our angel investor, or venture investor for technology. And a lot of that technology spend around R&D actually occurs at companies like LMI, right?
HAYS: That’s correct. Right. So, LMI is is a government contractor. We serve the federal government. Our mission is to help the government solve their most difficult challenges, has been for almost 60 years. We were founded in 1961. And so, yes, that’s something that we are spending more and more time organizing ourselves around. It’s how we can make investments, leveraging the resources that we get as a government contractor. That’s how we generate revenue, is through government contracts. But everything that we do, whether it’s directly serving our customer or whether it’s building our innovation program, it’s aimed at solving those most difficult challenges that the federal government faces.
ABERMAN: And I think that one of the reasons why people outside our region don’t understand how innovative this community is, is because they conflate the customer with the activity. Did you know much about the government contracting community when you were a policymaker on the Hill, or before that when you were a health care expert? What did it look like from the outside in, and how different is it now you’re on the inside looking out?
HAYS: Yeah, it’s been it’s been fascinating because I went from being a bench scientist, and as we used to say, moving liquids from one test tube to another, to the policy mechanisms at the highest level of the government, at OSTP, where you’re really looking at that high level funding. And then moving into the private sector, and not just the private sector, but into the acquisition side of the private sector, where government contracts are let and performed. And that was a huge transformation for me, to go from that sort of 40,000 foot altitude level of innovation and science policy, to where the actual work gets done. So much of what gets done in the federal government, whether it’s innovation or just performing the duties of government, is done by government contractors. So, it is a huge learning experience for me to go from that high level, down to the sort of ground level of where everything happens.
ABERMAN: Now, certainly when I think back to five years ago, there was a lot of PR and a real push for the federal government to engage with, you know, garage inventors, and non-traditional performers. My impression is that that interest hasn’t gone away, but maybe there’s not as much publicity around it. From your standpoint, when you look at LMI’s activities or other government contractors in town, is there still the same pressure to find nontraditional innovation?
HAYS: I think so. That’s something that we’re increasingly interested in. So keep in mind that. LMI is a mid-sized government contractor. We’re not a small company, but when we compete, we’re competing against the big the big guys, but we’re not a giant user of what we call metal bending, kind of company, where we’re actually creating things, whether they’re airplanes or processors or things like that. We don’t produce hardware. We don’t produce products. So our place in the innovation ecosystem is very different than that of some of those those other giants that actually make products. So, we’re we’re looking at those smaller investments as absolutely a key way to really prime the pump of the innovation that we’re doing as a company. And that, like I said before, is really aimed at serving our government customer.
ABERMAN: How does it play out? Does it play out that these days that the government would look for a specific solution, or do they say, hey, go and be innovative? How does that actually play out in the real world?
HAYS: Yeah. There’s so many different ways that the government invests in R&D. And of course, there’s the whole university government lab direct investment in more basic research. But when you’re talking about government contractors, and the sort of more development side of the R&D spectrum, then I think there is a tendency in, across our industry, to wait for the government to tell us what they need. And that’s important. Obviously, we have to, anyone playing in this industry, needs to be highly responsive to what the government needs.
And very often, they know exactly what they need. And it’s just a matter of implementing that. But we need to always leave room for innovation that’s at the frontiers. That’s sort of the iPhone model of: the customer base didn’t tell Apple that the iPhone was what they wanted. They invented it. And then lo and behold, everybody wanted it. So we don’t pretend to be working at that sort of scale. But that innovation at the edges, that innovation, that helping the government understand not just what they need today, but what they’re going to need and want tomorrow. That’s a really important niche that I think is underserved today.
ABERMAN: A lot of our listeners are people building their careers, building startups. If I wanted to be an innovator in the government space, am I better off starting a company and attracting attention, or am I better off joining a company like yours, and working within to change things? How would you describe the two paths?
HAYS: I think they’re both important. And actually at LMI, we’re working on both fronts ourselves. So we have an internal R&D program, where we invest in those ideas that we think that the government hasn’t necessarily identified yet as specific needs, but we’re trying to get ahead of that curve. But we also have a program, our ventures program, where we’re investing in early stage companies. And the idea is that we’re not going to think of everything. We don’t want to try to be everything to everyone. But there are inventors, and there are entrepreneurs out there, who are thinking about all of these different things that, taken together, can really start solving some of these big problems. So we’re going down both tracks. I think they’re both really, really important.
ABERMAN: What technology areas are you particularly interested in?
HAYS: So, we have a lot of interest right now in advanced analytics, and really, in any way that we can apply the consulting that we are so well-known for, and so good at, to the digital transformation of the government, the increased use of advanced analytics, machine learning, artificial intelligence, all of those things that have the potential to really transform everything about the way the government operates.
ABERMAN: Well, you’ve been around different types of technologies in your career. You mentioned you were a beaker slave earlier in your career. So, you’ve been around life sciences. You’re now around software and computing, high technology of related nature. How would you differentiate the entrepreneurs you’ve met or work with in each area? Are they the same, or are they different?
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HAYS: I think entrepreneurs have a lot of similar qualities, regardless of the scientific discipline or area that they come from, in terms of being visionary, being willing to live with risk, having a higher risk threshold than than than maybe non-entrepreneurs. Certainly when I was in graduate school was the real beginning of the sort of molecular and genetic approach to everything across biotech. Obviously, molecular techniques had been around for a while. But the real automation of it. And so, doing gene on a chip screening and all of that really took off while I was in graduate school. So, it was fascinating to watch other students around me, some of whom, like me, left academia and went into other fields; in my case, government.
But there were a few that you could see were really gearing up to become entrepreneurs and start their own companies with what they’d done in the laboratory. And I admired them, that ability to take on that risk level that many of us don’t want to live with. It was really exciting and admirable. But I really saw that happening. At the same time, where I was going to graduate school out in the Silicon Valley, is really the beginning of the IT boom as well. And so, I wasn’t nearly as close to that at the time, but it was very clear that exact same thing was happening across all of these different sectors at the same time. Where people were students, even, undergrads, even, and starting their own companies right out of their dorm room or apartment, whatever.
So, it was a very exciting time to be there. And then to come to DC, to come to Washington, and then all of a sudden be looking at science policy from this completely different vantage point. I think that entire background of being in academia, watching these entrepreneurial industries really rise up out of almost nothing. And then, looking at the overall innovation enterprise from that federal perspective, it was fun. But I think it was also a sort of unique viewpoint to bring to D.C.
ABERMAN: I think it’s an amazing story. And I very much appreciate you sharing with us today. Sharon Hays at LMI, my thanks for being with us.