Forum for Innovation

The United States military keeps the nation safe and protects American interests around the world. It also plays an important role in driving technological innovation, with enormously beneficial spillover effects for American consumers. 

Perhaps the best illustration of this dynamic is the Internet. What started as a research project funded by the Defense Advanced Research Projects Agency (DARPA), the ARPANET was the world’s first fully functioning packet switching network. Its advent laid the foundation for the World Wide Web and the commercial Internet that is revolutionizing commerce, media, business, and social life. 

Nevertheless, other examples are worth studying for the serendipitous and advantageous innovations they enable and create. 

Consider the growing market for satellite imagery. Images of the Earth taken from high in the sky are now widely available on the Internet.  

For example, when a tsunami strikes the Pacific Ocean coastline, media outlets can now publish “before” and “after” images of a devastated region to let people grasp the extent of the damage and to let aid agencies know where they should concentrate their relief efforts. 

Or consider how different it is for house hunters to look for a home today. They can check out neighborhoods via Bing or Google map platforms where they can access a treasure trove of high-resolution photos taken from the sky. 

The ubiquity and increasing utility of all this imagery is easy to take for granted, just another example of the wonders of the modern age. 

Yet many of these images come from two private sector companies, GeoEye of Virginia and DigitalGlobe of Colorado. These companies were made possible in part thanks to American military research and development needs. 

The companies are the two designated providers of commercial satellite imagery to the United States government. Yet it wasn’t always this way. Indeed, the history of U.S. government reliance on satellite imagery has evolved in interesting and surprising ways. 

In the late 1950s and early 1960s, the federal government elected to create an agency that would both develop and operate space reconnaissance systems. The systems under the National Reconnaissance Office (NRO) would include satellites to collect imagery and for other intelligence purposes.

In the 1990s, Congress permitted private companies to get in on the satellite imaging business. This included big players such as Boeing and smaller companies such as Orbital Sciences Corporation.

In the 2000s, the playing field shifted as President George W. Bush issued Presidential Directive 27, a measure that pushed intelligence agencies to rely on commercial enterprises as much as possible as opposed to heavy reliance on expensive government satellites. Additionally, in 2009, President Obama proposed a plan to procure satellite imagery from the private sector, with GeoEye and DigitalGlobe providing the bulk of commercial imagery for U.S. intelligence services.

In addition to providing images to satisfy America’s military and intelligence needs, the companies are able to create or satisfy new markets and emerging needs in the private sector. 

For example, big energy companies are increasingly using commercial satellite images and analysis to study current and potential installations in the Gulf of Mexico. The images help them to see the conditions surrounding installations and how those conditions evolve over time.

Major insurance companies are also using satellite imagery in productive ways. The pictures give them a wide lens to help them to evaluate risks associated with potential natural disasters such as earthquakes or hurricanes. Transnational shipping enterprises use the images in a similar way as they analyze global shipping routes for potential trouble.

It’s not just the for-profit sector that is increasingly finding value added in the use of commercial satellite pictures. Non-governmental organizations (NGOs) that promote human rights procure pictures as a way of understanding refugee activity in the world’s hot spots. The images help them determine what governments and militant groups are doing that influences the migration patterns of people over broad regions.

The commercial satellite industry is still in its relative infancy. New uses of images are being thought of every day. In this way, it tracks a pattern we’ve seen in other private sector industries that were birthed by American military demands. 

Scholars at the Breakthrough Institute recently published a report called Where Good Technologies Come From: Case Studies in American Innovation. They found that “the history of American innovation shows that an active partnership between the public and private sectors has been key to developing breakthrough technologies, which have driven generations of economic prosperity.”

Consider the über innovation of the 21^st century—the Apple iPhone. While Steve Jobs was rightly lionized for his role in revolutionizing mobile computing and telephony, the U.S. military deserves some credit.

The microchip revolution that makes the iPhone and other mobile marvels possible can trace its roots to the U.S. space program and other military endeavors in the 1950s and 1960s. The GPS embedded in the phone was made possible thanks to the military's NAVSTAR satellite program.

Even the touchscreen technology that is the hallmark of the iPhone experience was made possible by University of Delaware researchers who were provided support from the CIA and the National Science Foundation.

To be sure, it took remarkable entrepreneurial genius in the private sector to commercialize the Internet and GPS, develop the business model that would support the iPhone, and cultivate the marketing wizardry and supply chain marvels that can turn a product into a global phenomenon. Yet it’s clear that American military needs and spending priorities were key drivers of the early catalysts to innovation. 

American innovation is the result of a complex ecosystem, one that comprises many great American institutions. These include our enviable research universities, strong military, cultural celebration of risk and entrepreneurship, advanced financial markets, marketing savvy, embrace of globalization and trade, and productive and highly adaptive workforce. 

All of these institutions combine to make America’s free enterprise system the most remarkable and awe-inspiring force for material advance and wealth creation in the history of the world.

Nick Schulz is a National Chamber Foundation fellow and a frequent contributor to the Business Horizons Quarterly.  He is the co-author of From Poverty to Prosperity and the DeWitt Wallace Fellow at the American Enterprise Institute.