From Data to Dominance: How Elite Leaders Make Game-Changing Calls

What separates great leaders from everyone else isn’t just experience—it’s how they think and act when the pressure is on. 

In this episode of Commander’s Intent, Derek Oaks sits down with Madeline Hart of Palantir to unpack how elite organizations use data, technology, and decisive leadership to move faster, think smarter, and stay ahead of the competition. From national security to business strategy, this conversation reveals why most systems fail, how true innovators break the rules, and what it really takes to win in high-stakes environments. If you’ve ever hesitated in a critical moment or wondered how top performers consistently make the right call—this episode will shift how you lead, decide, and execute forever. 

Transcript

SPEAKER_03 0:01

Have you ever frozen in the key moment of making a critical decision? Whether it's in business or in life, it can cost you everything. Commander's Intent will teach and inspire you how to lead with clarity, courage, and purpose. So here's your host, retired Air Force Colonel, fighter pilot, and your leadership mentor, Derek Oak.

SPEAKER_02 0:25

Hello, and welcome back to another episode of Commander's Intent. I'm here with my co-host, Rob Powell, and our special guest, Madeline Hart, from New York, New York. And she has been with the Palantir company for about six years. And I'm going to let her introduce herself a little bit and tell us a little bit about Palantir, why I thought it was important to have her on this show and why I think the message that she has put together is so important for the audience and just for any decision maker in general. So I'm going to turn it over to you, Madeline, to give us an introduction.

SPEAKER_00 0:55

Great. Well, thanks, Derek and Bob, for having me on. I've been at Palantir for about six years. Those that aren't familiar, Palantir is a publicly traded commercial software company, but we are probably most well known for our work with the US government, the Department of Defense, now the Department of War. We were founded shortly after 9-11 to help government agencies share data better. And we started with the intelligence agencies. We were an InQtel company. So if you're familiar, InQtel is a venture capital firm, started with the CIA. So kind of an interesting pairing there of finding companies that are commercial and applying their technology to missions and problem sets that they otherwise wouldn't have access to. So fast forward, you know, 20 plus years and our access to problems has expanded tremendously. And we work all across the government in civilian agencies, the defense, and then also the commercial sector as well. So literally everything from Wendy's to Airbus are different problems that we work on. And it's about helping companies operationalize their data, make decisions better. And since we're on a defense podcast, I'll use a defense analogy. Really get inside of the enemy's OODA loop or, you know, on the commercial market, the competitor's OODA loop. So make decisions better and faster and lean into that company's comparative advantage, whatever that might be, whether it's their product or their people or their expertise. And we're using software and AI to do that. And at Palantir, I've supported our business development on the government side and then recently co-authored a book with our CTO, Shom. And that book is mobilize, how to reboot the American industrial base and stop World War III. And before Palantir, I was at a different NQTEL company, actually. So I was at a startup called Synapse that built AI for X-ray security. So automatically detecting guns, weapons, narcotics, and X-ray images, and got to work on some really cool perimeter security problem sets that span, you know, Air Force bases, but also customs and how do you detect small packets of fentanyl that are coming into the US, which is very challenging. And just love getting to work on missions and problems in the national interest. And then before that, I was in an investment painting, which was not really a great fit. But as I always say, not that much downside. I got paid a nice salary and realized after a year that it wasn't what I wanted to do. So certainly there could have been a worse way to spend a year of my time.

SPEAKER_02 3:18

Well, thank you so much. Tell us what drew you to Palantir. You know, what you're tired of investment banking, so you start looking for other opportunities. What drew you to Palantir?

SPEAKER_00 3:28

Well, I mean, I really got interested in national security towards my senior year of college. I think most of college, I studied economics, I was very finance focused. I think at you know a lot of these elite schools, you just get aggressively tracked towards finance and consulting because that's the elite thing and it pays a lot of money and it just kind of where the momentum takes you. But I realized I didn't really want to do that, but I already had my job lined up because they really prey on the risk-averse undergraduate like myself. But you know, senior year, I hadn't met all of my requirements. And so I took a bunch of courses at the Harvard Kennedy School, that's our the graduate school, and cross-registered there and just met so many interesting people, a lot of veterans, a lot of you know, civilians that had worked in government and great professors, and really felt like there was a gap. So this was around 20, 2016, 2017, a tech gap about where the US needed to be headed that we weren't meeting. And I don't have an engineering background, but I felt like I could really be useful in the process of selling technology to the government, because unfortunately, the best product does not win in defense tech and defense sales. And so there's a real need for people that want to make an entire career out of, you know, hopefully believing strongly in a specific technology and then helping that company sell and then letting the engineers do what they do best, which is, you know, build and interact with end users. So it took me a little bit of time to get there, but Palantir was really one of the only new defense companies, unless you wanted to go work for a prime contractor. Now there's so many companies that have been founded in recent years with all of the venture capital funding that has come in. And I was actually rejected from Palantir for a couple of times, after a couple of times, but persevered, but first had to take a detour through the startup I was at, but Palantir acquired that startup. But I always loved the Palantir mission. I love that they were very public about what they were trying to do and the values that they defended. And that was inspirational for me.

SPEAKER_02 5:12

That sounds like a good receipt. I love your book. I just finished your book. I've got a copy of it right here. I'll hold up the picture, hold it up. I love it. I love a lot of the points you brought up. I love a lot of you brought up a lot of my heroes when it comes to defense, mavericks, and heretics. One of my classes in college, I was taking a history of Christianity class, which was kind of interesting. And the professor, who is this very, very staunch Texas Methodist, very, very Christian, and he said, you have to remember one thing when you're studying a religion, that orthodoxy is the heresy that survived. I thought that's always stuck with me. It's the winner who gets to tell the story. It's the winner who gets to have their ideas carry on. And that's translated for me also into how we manage the defense department and who ends up being the winners and who ends up being the losers. So I really love that you guys call them the heretics. And some of them have made a difference, but most of them have not. Most of them have not been able to really crack the surface on it. So tell me a little bit about the book. Tell me the genesis of why you wrote it and where you got the ideas and how you came to the thesis and the conclusions that you came to.

SPEAKER_00 6:22

Well, so as we're recording, we're in week three or week four of, you know, a hot war with Iran. I don't know if we're calling it a war, but you know, it certainly feels like that's what it is. You know, expending a lot of expensive munitions, we're diverting resources away from Asia. Every other headline is about munitions production. And so from one perspective, it's kind of a crazy coincidence that our book came out when it did. But from another perspective, the timing is precisely the reason why Shaum and I wrote this book. It was kind of looking around at all of the conflicts over the last 10 years, any one of which could have been, you know, I'll overuse the, you know, the sputnik analogy, but really should have been the moment of, you know, crap, we got to do something different here. And the West America is losing deterrence. Our defense capabilities have degraded over the last, you know, 30 or so years. We still have the best military in the world and the most patriotic men and women in uniform who are, you know, are willing to do anything for the country. But there is a clear deterrence issue that we're not addressing correctly. And I think we thought that after Russia invaded Ukraine, that really would have been the moment. And when we didn't really mobilize and change how we were buying weapons, producing weapons, incorporating our broader economy, that was around when Shaum and I really wanted to put pen to paper to trace the history of how we got to where we are, how we lost our manufacturing capacity, how the defense industry, which is really only it's kind of new in the last few decades, mostly we had this American industrial base, not a defense industrial base. So how did that become siloed and ultimately tell that story through individuals, through the heretics and heroes that you mentioned, in part because I think it's much more interesting to interface with something like defense acquisition through, you know, character like John Boyd. But from another perspective, because it really is individuals that are ultimately who America is betting on. We are a nation of founders and exceptional people and, you know, the founding fathers, that spirit that ethos lives on, where you can have the right policies and laws in place, but unless the culture is there, unless you have a figurehead, somebody that is taking full accountability for their decisions and, you know, in the case of defense, you know, a specific weapons program or a military operation, you're going to fall short and you might fall drastically short. And so that's why we highlight, you know, first and foremost, the primacy of people, and then secondarily, the, you know, the process that needs to be supporting them behind that.

SPEAKER_02 8:46

Thanks. And that's really what left off the page to me for so much of what you did when you went through the history. You didn't talk about these heretics and mavericks fixing the system. You talked about them working outside the system. You talked about their force of personality that really believed in what they were doing, really believed in their mission. And so, whatever it took, they were going to get the mission done. Whatever it took, they were going to get the equipment field that they need to. Whatever it took, they were going to push the government and the Department of Defense, Department of War in the direction of the tactics and operational procedures that they espoused. And so, how do you feed that mentality and get people to be willing to step out of their comfort zone really and do something like that? That's what I really loved about the book. You know, you did have conclusions afterwards and you did have recommendations, you know, towards the end of the book. But the really engaging part was how did they do that? They get us, how did they move really mountains the way that they did with nobody backing them, with nobody structure saying, hey, John, you're doing a good job, or Bernard, you're doing a good job. Or no, we love your ideas. You know, the Army General staff, no, we really love your ideas. We want to get rid of a couple divisions so that you can field some airplanes. It said nobody anywhere in the at the time it was the Department of War back then. And so I love that portion of it. And is there any particular character in the book that really stood out to you of I'd like to be like that person? I wish I could think like that person and act like that person.

SPEAKER_00 10:16

Yeah, no, I mean, there's a lot of great examples. I'll talk about Bernard Schwever, who you already kind of mentioned earlier, so known as the father of the intercontinental ballistic missile. And I think now with the hindsight, it's easy to think of the missile gap during JFK presidency as something that was kind of consensus. And post-World War II, missiles were really not the consensus. It was very much bigger bombers and people like Curtis Lemay were incredibly influential and kind of the dominant voice. And so Shrever, who was just a big believer that ICBMs were the future, much, much earlier than others, had to kind of brief people around the chain of command because he knew the Secretary of the Air Force was not going to be hoisting the missile flag, basically. And that was what was needed. And so he inculcated some operatives to brief. And I think it that might sound kind of minor to people outside of the defense apparatus, but it really could have gotten him fired. So that was some of his earliest examples of insubordination and you know, very laborious in his part, getting together the science and the vision for why these things are possible. He goes and visits John von Neumann and he sits at a blackboard with him for a couple hours and they kind of game out how this technology is possible, and if it's possible. And then he's in his seat for a long time at the Western Development Division, which then becomes, I forget what the Air Force Command and they changed the name, but he builds the ICBM program. And he also, so he was a heretic, but he also had a knack and an ability to nurture kind of the heretics within his own organization, which I think is another really important point. It's like, can you spot and protect the talent that is needed? Where do you draw lines? Where do you encourage people? And so another good example there is Edward Hall, who he's known as kind of the father of the Minuteman, which is one leg of our regular triad, the thousands of or hundreds, hundreds of hardened underground silos that launch, you know, at a moment's notice. And that program is currently undergoing modernization known as the Sentinel Program. But um, that was an incredibly impactful program. And Colonel Hall was himself, you know, kind of a crazy guy. He pulled his service pistol on some repair man during World War II because he didn't feel like they were repairing the plane to his standard and he wasn't going to put America in harm's way. And he basically threatened to shoot the guy unless he backed away from the plane and let you know Edward Hall do it correctly. And Hall's kind of one of the only people that doesn't have a rapid promotion during World War II. During the war, people you know rose the ranks rapidly because finally there was conflict, there was impetus, we needed to elevate leaders. And he's just such a kind of difficult guy to work with. And then during Thor, which is the intermediate range ballistic missile that precedes the successful ICBMs that we ultimately developed, he is not particularly good at leading that program. And Shrever's overseeing him and he ends up pulling Edward Hall off of it, but he keeps Hall around. He's like, I can tell that you're super smart. And earlier in his career, Hall had was actually working on one of the earliest ICBM rocket motors, and funding was threatened for that. Again, this is all before Sputnik, so nobody has really converged around missiles are the thing we got to build. And so he has his buddy in the Intel community fake a report of a Soviet super rocket. And his buddy doesn't want to do it. And he's like, you got to fake this report. And so his friend fakes a report, and all of a sudden, Colonel Hall's funding is restored for the engine that he wants to work on. And so these are really people that are willing to put their career on the line and they have such a belief and excitement for where the technology is going and what it can mean for their country that they're willing to do all these kind of crazy things. And then after the Thor stuff, Shrever be in States Hall on the Miniman program. And he comes up with this amazing idea. And even Curtis LeMay gets on board and he was there on the anti-missile. So those are two of my favorite figures.

SPEAKER_01 14:05

So, Madeline, I think it's really interesting that you mentioned, because you know, we read about Shrever and LeMay and Billy Mitchell and all these larger-than-life characters that kind of led the Air Force out of its infancy in, you know, the 19 teens all the way up. And I remember reading about all these and learning about them in my undergraduate degree. And yet, I served 25 years in the military, and I can't tell you anybody that I would think of that fits any of those molds. And it's not to say that we don't have new technology. I mean, in our lifetime, in my time in the service, you know, cyberspace was one of the things that we talked about immensely, about its importance for the battlefield of the future. UAVs, towards the you know, mid to the later part of my career, there was a lot of interest in them from a certain fringe part of the Air Force. But I haven't seen anybody really grab hold of any of these concepts and run and kind of make themselves the poster child and the daddy rabbit that's going to take care and shepherd these programs along. And I wonder, you know, is that, you know, my personal thoughts, it's probably a combination of factors, but part of it is the Air Force doesn't really put up with heretics much anymore. If you're the guy that steps out of line, we have not had an existential crisis that we've not had a place where, you know, the US is really on its back heels like it was in the beginning of World War II, to be able to let somebody walk in and say, hey, we're gonna do this. So I'd be interested to see. Would do you have anybody that you could think of maybe in the last 30 years that maybe in a hundred years we'll look back on like Shrever or, you know, these folks? I don't I can't think of any. I mean, there have been a few semi-popular generals that I've seen. I mean, the first guy that comes to mind is Petraeus, but I don't think he was, I mean, he was kind of the the standard bearer for counterinsurgency in Iraq, but that's more of an ideology. It's not a tech-driven, future-looking. So is there anybody out there that you've seen or you can think of, or the you know?

SPEAKER_00 15:59

So the contemporary figure, we only highlight really one contemporary figure in depth for the very reasons that you're describing, which is that the number has just dwindled. So we share Colonel Kukor's story with Maven. People might be familiar with Maven, it's been on their headlines more, is the AI operating system that the US has been using in many of the recent conflicts. And we can talk about his story a bit more. But I think one of the reasons that we don't see as many heretics, the culture has changed from the tech perspective, the timeline for these weapons programs has extended so much that in many cases it's literally beyond one individual's career. And so there's not that directly accountable person. And who, when you're working on the Sentinel program as the fifth person cycled in and you're there for two years, it's not that inspiring. I think it's just very challenging to be in that sort of situation. And the numbers of programs have decreased, the requirements have increased, the timelines have lengthened, and there's just much less room for that sort of individual that comes in. And as a result, I think a lot of people are finding today they are heretics and heroes in the private sector, with you know, the Palmer Luckys or some of these other new defense companies that are sprouting up, which is well and good and inspiring. But also we do need that, we need that counterpart on the government side because it doesn't work if it's just coming from the private sector. And so that was another part of the book. It's like state capacity comes from individuals and execution and competence needs to come on both private sector and public sector. And if it's very imbalanced, there's gonna be a real challenge in execution and delivery of something truly exceptional.

SPEAKER_01 17:35

Go ahead. I also think that maybe, because this is something I noticed in my career, the early technological achievements that we talk about with the Air Force particular, but in the DOD, you know, with the early part of last century and about through World War II, most of the tech and innovation was driven by what I could tell by the United States government. Like they put a lot of money to whether it was the space program or, you know, even the early internet, you know, ARPANET and all that other stuff, it came from the government. And it seems to me that today's innovation doesn't come from the government. Nothing comes from inside the government innovation. It all comes from the private sector. So I wonder if maybe that's why we're seeing less, you know, less of these folks that are the heretics inside the government. Because we're not driving change anymore. We're just kind of riding along and put picking it up and putting it together like a bunch of Legos to try to make something out of what the private sector's already done.

SPEAKER_02 18:24

Let me chime in on that, Rob, just real quickly. First of all, I'm gonna go back to something that Madeline said about program managers that are in the seat for two years. And I've seen that over and over. It's almost like they don't want anything to break on their watch. So they just try and move the ball along. They don't think innovatively, they don't think like, how can I save the world? That's really you want people, you want not everybody, but you want a large number of people asking themselves, how can I save the world? And actually thinking they're capable of doing it. Because those are the crazy ones that actually produce dramatic results is those kind of folks who do it. And in the government, what I have seen, and the Air Force in particular, is I've seen that there's no alternative pathway to promotion for the heretics. And it we have a one strike and you're out kind of a service right now. And it's not just the Air Force. We have a one strike and you're out. We can't send bad press, we can't send somebody who steps out of line. And so we, you know, you get one mark on your record and you're done for. You know, you may make the next rank up, but probably not. You're probably going to retire in the rank that you're wearing at that particular instance. You know, the Air Force for the longest time had below the zone promotions, and now I'm not exactly sure how it works. But what if somebody got on that track of I'm getting promoted below the zone? They didn't want to get knocked off that track. So they didn't want to ruffle feathers, they didn't want to mess up anybody's hair. So they just kind of they wanted things to stay status quo. So they became very, very risk averse. And that's an unfortunate part of it. And the two that I can think of right now that were somewhat mavericks, Douglas McGregor in the Army, you know, he wrote his book, Breaking the Phalanx, where he was effectively saying how we organize in the army is wrong. And we are not capitalizing on technology, we're not capitalizing on the proper force structure for the wars that we're fighting. And that was in the late 90s, and nobody listened to it. He retired as a colonel. His book got a lot of notoriety and like, thank you for your service, but we definitely don't want you as a general officer because your ideas may spread, and then we're gonna lose our legacy divisions and corps and things like that. And then H.R. McMasters, too or less, he wrote his book really criticizing general officers, but in some ways he was part of the establishment in his criticism. And so I won't call him a full heretic. He was brave in a lot of things he said, and his ideas were right, but he wasn't criticizing anyone sitting in the seat, so it wasn't that way. But something else you said, Rob, is and this is talked about a lot in your book, Madeline, about the innovation that doesn't exist in the government anymore. It part of it's because of I don't want to rock the boat, and the other part of it is because we don't have the same interaction that we used to have with the civilian sector. And because the defense OEMs are solely defense or to a large degree solely defense, they don't have the division in their company that's making washing machines or that's making cutting-edge technology in other sectors where that can bleed over into the fence. Being in the same room as somebody who is forward-thinking and innovative, you're gonna learn something and you're gonna start picking up ideas. If you're completely isolated from and all your focus on them is your stupid program or record, you're not gonna innovate. You're gonna focus on cost, schedule, and performance, and that's it.

SPEAKER_00 21:36

Yeah. Now, something that's very ironic about a lot of the government innovation, we know we associate that with kind of the 60s and 70s and Apollo program and the internet and GPS. Before the fall of the Berlin Wall, the vast majority of defense spending went to companies that supported both commercial, the regular commercial market, and then also defense. But today, the vast majority of spend goes just to Defense companies, which is ironic because most of the RD is happening in the commercial economy. Yeah. And so even though there was this time when the government was much better at kind of in-house innovation, they were still relying heavily on a base of companies that had commercial businesses, had the ability to do business with the government. And then over time, the Department of Defense's requirements got so much more specific, and really only a very small number of companies could actually service the government's bespoke needs. And we have all have kind of lost out on that. And it also means that the companies that are remaining are much more at the whim of the defense budget, which is not that healthy either. I think it's a lot easier for the American people to accept a higher defense budget if they know that money is going to stimulate the broader economy because it's going to companies that have robust commercial businesses. And another theme of the book is the defense budget as something that should be supporting freedom and prosperity. So, yes, we all need to be kept safe, but the other part of it is we don't want to live in a garrison state. We want to have a prosperous economy and ultimately exist to do non-defense things. And the way that we can do that is by hopefully having healthy commercial businesses that are involved in the national interest as well. And if you look at China's primes, they get like 20, less than 30% of their revenue comes from the Chinese government. So most of it is commercial because partly they've just dominated so much on the manufacturing side. But those are the sorts of dynamics we should get back to as a country. And part of that is the Department of War acquiring things with a more commercial mindset and then tapping into the innovation that is happening and what's essentially free money, because it's venture capital dollars that are helping to create these advances. And the taxpayer doesn't fund that and the government doesn't have to fund that. They just need to be a good customer, they are.

SPEAKER_02 24:45

Firm fixed price is I'm going to pay you X million dollars for that aircraft. And if it costs you X plus $2 million to create that aircraft, that's on you. If you make it for half of the price that I'm buying it for, then that's your profit. You do with that profit what you want. That's how firm fixed price competition works in the defense department. Then you have cost plus where the prime wins or the contractor wins and he gets paid every step of the way. So there's no incentive to finish on time. There's no incentive to do anything extra. They are just meeting the contract and billing hours, billing labor. They're only allowed by the rules, they're only allowed to bill so much of a fee, so much profit. Well, if you know your profit is only going to be 4%, and then you have other demands, you have shareholder demands and other growth demands, you're going to take that profit and roll it into those other requirements before you roll it into RD and really thinking of what's next. And you're going to look for the next government contract where the government is going to pay you to innovate. And so you really don't have to think because the government's going to tell you what to think about and tell you how to innovate. And so you'll do that. So I really like that concept. I wanted you to comment on that and why you guys thought it was so important to include that in the book.

SPEAKER_00 26:02

Yeah, I mean, I think there is a lot to criticize about the primes and that they are the easy target, but they are also responding to these incentives that the government has created. You know, the biggest contracts, the most important weapons, like those are all cost plus. So if you're in the business of building fighters or munitions, really any weapons, like those are the contracts you have to go after. That changes your classification as a company. It changes, you know, you have to keep a second set of books, reporting systems. All of a sudden, your engineers can't just go build till midnight and hack because that's what they want to do. They're logging hours in a timesheet and they're reporting their, you know, their rates, and everyone's falling into specific boxes. And it really erodes at the creativity. And you know, many of these primes really being founder-led, you know, with Northrup. It was Jack Northrup and Glenn Martin. And now through consolidation and MA and kind of more financial management, these companies have changed over the years. And a lot of that, I think, is in response to government incentives. And the government, in turn, is also not happy with the situation. You know, they're constantly berating the primes for why are you spending all of this in dividends and share buybacks? And when are you going to actually invest in RD? Maybe not really recognizing that they're creating these weird incentives by reimbursing the RD of the defense primes and dictating the things that they want to have built, but cutting off so much of the upside that comes from just letting companies do what they do, which is pursue crazy ideas and make let companies make their own, you know, risk rewards around what they want to build and try out. So we have lost a lot of the optionality and choice we used to have. If you look back in history, I mean, just over time, the number of platforms we have available has just decreased so dramatically. And things that looked maybe duplicative were really things that bought us options. And so going back to the ICBM example, there were several ICBMs. There was Atlas, there was Titan. Minuteman really emerged as the winner. And those other options were pursued. There were other IRBMs pursued. Those weren't the winners, but we arguably couldn't have gotten to Minuteman before. And so much of the tech tree is starting with uncertainty. And you don't get to the end state through requirements. You have to go through the messy process of experimentation. We really understood that better before. And now it's all like upfront. We need to know what we're going to build. And we only have one shot at it. And it trades off any optionality later on. And I don't even think we necessarily need like crazy amounts of budget to have some of the experimentation that we want, especially on like lower end munitions, that would be helpful for us. Like we should be thinking more ambitiously about what could we do with a more modest amount of money, but a much different mindset around who will allow the innovate, what sorts of things we're going to build, and really making a requirement rate of production. Like we need to be able to replace this thing we're expending. And if we can't replace it, that's the big problem. And that needs to be a serious requirement for ammunition. Yep.

SPEAKER_02 28:48

No, those are great points. In fact, as you were talking, I was thinking about milestone C. And for nobody, for somebody who doesn't understand anything about government acquisition, Milestone C is your production decision. You go through the RD phase, the, and then you're doing low rate production prototyping. And then you get to milestone C is saying, okay, we want to buy this. The problem with how we have it set up is every program becomes too big to fail. Every program or record, we can't let it fail. When it should be such like it was with the ICBMs and IRBMs, we're okay with a couple of them failing. And so you word small contracts to do prototyping to get to a certain decision, but ultimately those companies are working in their own paths and they're competing for the final contract. And sometimes it may be they're competing for one of three final contracts where we field multiple of the same thing. And I know the logisticians they cringe when something like that gets said, but I think what's more costly is going with that too big to fail model. And that is killed this over and over again. And so get my way through it. So go ahead. Okay. So and giving getting back to something you said earlier, Madeline, you said that uh, you know, it's but you were kind of defending the primes. You weren't really defending the primes, but I wasn't trying to sound critical of the primes. You know, I've got a brother who worked for Lockheed and Martin. I've got a lot of friends who work for Lockheed and Boeing and Northrope and Raytheon. And they're all red-blooded Americans who want what's best for the country. And just like there are a lot of great, great red-blooded Americans who work in the government sector, you know, on the government side of the acquisition process, they want what's best for the country. They're working in a system that is really tough to work with. And those incentives you talked about, why does Lockie Martin build the most expensive fighter ever? Well, because that's what's asked of them. That's what the government said we want. We want a single joint strike fighter with no competition beyond the initial one aircraft that was built with the X-32 and the X-35. And as a result, we create these two big-to-fail programs and we create contract structures that incentivize in the wrong way. So let me ask you a question. How do I take the heretics and the heroes and how do I make them more productive? How do I maintain that private sector innovation or develop that private sector innovation with the government acquisition process without turning them into part of the problem? Because sometimes somebody becomes the chosen one and all of a sudden they're part of the problem. They were for the innovator before they're the great idea person, and then all of a sudden they're no longer the solution, they're part of the problem. Go ahead, Rob?

SPEAKER_01 31:22

Can I rephrase the question a little bit? I want to use one of Madeline's words because I think it's the key. He talks about that the problem that the primes are really responding to the incentives that the government is providing. They operate in a system that provides incentives. So I guess the question that I would ask, I'd take Derek's turn in a little bit how do we incentivize company? You know, what kind of rules, regulations, what kind of changes need to be made to the system to incentivize the type of production or the type of innovation that the three of us are talking about? How do we set that up to incentivize?

SPEAKER_00 31:51

Yeah, I mean, I think the biggest thing is commercial first, which is a 1994 law that the government must buy commercial technology and even change their own requirements if they can be modified to a reasonable extent to buy commercial technology. So that's been on the books for over 30 years, has not really been followed. Palantir sued the government over that and we won. And then there was an executive order from President Trump about a year ago, kind of reiterating like the Department of Defense must be buying commercial. If you're not buying something commercial, then you need to ask for an exemption. So we'll need to see if that actually shakes out. But there's a large, probably bureaucratic inertia here where even though the law is on the books, this goes back to the culture and the heretics, like who is ultimately driving home that we are no longer going to tolerate people not complying with this law and just shrugging it off. And pretty much anything that's cost plus is pretty much by definition not commercial because we're paying for the development of something, paying for someone's cost to develop and build something, then adding on that. So any cost plus contract should just be viewed with great, great suspicion. And, you know, no, there's not really a commercial five, but as we're seeing in Iran, there are just so many opportunities for lower cost commercial type platforms that are made by companies that are selling their product as a, you know, in a commercial way, firm fixed price contract, where here's my price, this is what it costs. You can buy it or you cannot buy it, but I don't need a development contract to bill. And then we're not going to quibble over what should my profit margin be. My profit margin is going to be whatever it's going to be, and you don't even need to worry about it. You just have to look at the performance of the product and the price and see if you want it. And so I think that we need to get more to a place of what does the government need at what cost and see who can step in to make it. And I think the government will be very surprised at what they're able to get. So I would like to see us move more in that direction. We're almost a victim of our own largest where we have such crazy budgets that we can dream up the most complicated exquisite programs, find the companies willing to contort themselves to build it and never have to go into kind of the classic budget mindset that you have at private companies, where the chief revenue officer is like, okay, here's what we can afford, and this is what we're going to go shop for.

SPEAKER_02 33:58

I think you're exactly right about the incentives that you recommend. I think as you're talking here, I was thinking about something you said with regard to profit, how it should be none of the government's business how much profit I make. And I think that's really, do I care? If I really want a Tesla and it is my dream car or a Toyota, I drive Toyota, I really don't care if they're making 100% profit on that car, if it matches my budget, if it fits my needs, and if I'm able to be successful from a transportation perspective, I really don't care what it is. But when you get into the weeds and you have cost accounting systems and you have systems that really nickel and dime those companies, it gets very painful for everybody and they become less innovative. The truth of the matter is if Lockheed Barton was making 50 or 100% profit on the F-35, then they would be dreaming up their own ideas of what else can I do with this thing and how else can I build it? I mean, I know, for example, you know, the F-22, the assembly line was already set and they're already building it in a certain way, and they already had better ways to do some aspects of that aircraft. You know, by the time they started, you know, got past Milestone C and they're into production, they already had better ways to do it, but they had set it and they had set the price. And because it's a cost plus contract, we're not gonna change that. Whereas a great company with the right incentives would say, no, we're gonna field the better product because it's cheaper for us, it's more innovative for us, it's gonna help us further on down the line, and it helps the customer, it helps the end user. And yet we don't have an incentive system that allows that to happen.

SPEAKER_01 35:34

But I think, Derek, that's the a factor of the programs of record. Because once I get something on the program of record, I don't have to do anything to make it better because I know it's not going away until you know years and years later, where a Tesla deal, if you don't continue to innovate, somebody's gonna outsell you next week. And that's I think what Madeline is probably it sounds like you're getting to with the commercial people.

SPEAKER_00 35:54

Yeah, I mean, the programs of record are interesting. Palantir has several of them, and our CTO will kind of quip. Like the program of record is you know, he doesn't care about it. It's almost a bad outcome in that now it could breathe complacency. And we have this program of record sticker, but it's like we got to be more focused than ever on not letting that breathe complacency because we need to be innovating and the program of record should not be the end goal. It's maybe something that happens as a result of success. But yes, that's definitely a pitfall for program of record. And then on just one more comment on the profit point. Yeah, the cost plus contract just naturally engenders this adversarial relationship between customer and the seller, because of course, if the customer is covering all the costs, then they're gonna want to know how it's being spent and what the profit is. So you know, from that perspective, I understand it. It would be a much easier arrangement if we switch to more market dynamics where this is how much I'm gonna pay for this thing, and however you get there is fine. And then we don't need companies keeping another set of books. So I think the time for needing cost plus is maybe you can make exceptions for a very, very limited number of things. But again, that should really be the exception, and we should be looking at commercial pricing for many more systems.

SPEAKER_01 37:02

So oh agree. Yeah, I think that all of us are kind of in agreement over all this. The one caveat I put on this is that we're missing the elephant in the room, and the elephant in the room is politics, trumps everything. And the top of them with a lot of these programs is programs of records. I remember studying the B-1 bomber development when I was in college. Most of the reason the B-1 continued on track was because if I remember right, 48 of the 50 states were represented in the manufacture and development of the B-1. Congressman or senator is gonna vote against something that's gonna take jobs away from their state. And so as I'm reflecting on this, I was looking at the cover of your book and I wanted your subtitle, you know, How to Reboot the American Industrial Base and Stop World War III. I would throw it back on you and say it's probably gonna take World War III to fix the system because the pig is not gonna slaughter. It's Congress is not gonna try to fix the system because they don't care. And the defense contractors aren't gonna try to fix the system because it's how they make their money. And so I would argue that it's gonna take World War III and a real truth America and the American way of life for people to realize that what we're doing is just incredibly straight.

SPEAKER_00 38:08

Yeah, I mean, uh part, yeah, the book is about trying to avoid that point. And right now, people are complaining about oil prices, and it's truly unimaginably worse if we were in a hot war with China. This is not even retrospecting as a blip, as what's going on with Iran. So, how do we avoid that point? And you know, it's not clear that we are able to defeat China in a hot war. We don't want to get to that point. Um, so where's the wake-up call, how do we get people to care? That's part of what this book is, and also painting the picture of how defense procurement is not this niche issue. It is something that's related to how our broader economy functions. You look at something like manufacturing and AI, where people are talking about job loss with AI, but also the potential for AI to create jobs and how do we incorporate this incredible innovation into the rest of our economy? Something like a manufacturing renaissance would obviously be enormously beneficial to the defense industrial base and also as something that needs to have a commercial market because the defense budget just isn't big enough to sustain it can sustain a few contractors. That's about it. We know that from the last 30 years. And if we want to really have broader productivity and prosperity for Americans across the country, that needs to come from commercial innovation as well. And and the Department of Defense can be a very important customer there, but it's not going to be the biggest customer.

SPEAKER_02 39:23

Yeah, you know, to your question, Rob, really we need politicians with a win-win mindset because there's plenty of work to go around. There's plenty of defense need to go around. There's plenty that can be spread across the 50 states, but they don't think that way. They look at their own rice bowl, they look at what they have right now, and that's what they focus on. And to the point of World War III, yeah, and I don't want to minimize Iran, because it's a big deal. And I have friends over there that are fighting right now, and some of them are getting shot at. I guess they're all kind of getting shot at with the Iranian missiles, and number have already lost their lives. And yet to the regular American, it's a nuisance. This conflict is a nuisance, and it's like comparing do is my dinner cold or do I have dinner at all? You know, right now dinner's a little bit cold. It's not even cold, it's just not as warm as we like it. We go to World War III and we don't have dinner at all. And that's the real start difference. And that's what we're trying to avoid here with uh a lot of things that you guys have written in this book. Madeline, any parting shots? Any last thing that you want to say before we wrap up here?

SPEAKER_00 40:23

Well, thanks for having me on. I think I would just say that America can do it. We don't need to wait for things to get much worse. And we've already, I think, shown some very excellent resolve. And, you know, regardless if you agree with some of the military operations over the past few months with, you know, Maduro and Operation Midnight Hammer, those are demonstrations of American deterrence that we have not seen in a long time. So the will is there, the capital is there. I think many would argue the leadership is there. So now it's just act. We have to act and we have to commit.

SPEAKER_02 40:52

Thank you very much. Well, thanks, Rob, also, and uh thanks, Madon, for joining us. And thanks to the audience for everybody who's participated here. And if you have any questions, if you want to talk directly to Madon, then reach out to me at askhareatnow.com and I'll connect the two of you. If you have any questions about what we talked about, what it all means for national defense, what it all means for your own company and for how you structure incentives, even just with inside your company, then I'd love to have that conversation. And if you want to bring up a potential topic for a future show, then go ahead and reach out to me and we'll have that conversation. Again, thanks for joining us for Commander's Intent, where we can all become better decision makers for better results. Thanks.

SPEAKER_03 41:33

So that's it for today's episode of Commander's Intent Podcast. Head on over to Apple Podcasts iTunes or wherever you listen and subscribe to the show. One lucky listener every single week that posts a review on Apple Podcasts or iTunes will be entered in a grand prize drawing to win a $25,000 private exclusive leadership coaching package with Derek Oakes himself. So head on over to Commanders and Temp Podcast.com and pick up a free copy of Derek's Leadership Guide and join us on the next episode.