Defense Connections' CEO, Tom Hernandez, has spent time during the past three months briefing and advising technology businesses from Australia and New Zealand. Firms from "down under" have tremendous technology, are quite entrepreneurial, and have much to offer to US national security. The following interview is excerpted from remarks by Tom at a briefing during the Security Summit in San Diego in March and meetings last week at the New Zealand embassy. The excerpts focus less on formula and process and more on common sense, wisdom, and cautions about pitfalls that are known mostly to industry veterans. These lessons apply equally to US small businesses.Q: First, tell us something about your background and how you got to where you are today.
Hernandez: I started in this business 25 years ago as a project engineer working for a Northrop division in Kansas City, doing avionics. Since then, the first half of my career has been on the technical and program management side of the defense industry, and second half in marketing, business development, corporate development, and general management. It's a pretty standard progression in the industry for someone without a military background -- engineer, program manager, business developer, Vice President, corporate officer, business entrepreneur.
Along the way I had several roles that led to a very broad and diverse exposure to customers and prime contractors. These contacts are strong and vital to this day and many of the younger staff I knew early on are now division Presidents, corporate executives, and CEOs; ditto for my government customers. That is how I am able to deliver for my company's clients and partners. In addition, 25 years in any business provides one with a wealth of experience and common sense, which I gladly share with my clients and anyone who is willing to listen.
Q: So, tell us about the Australian and New Zealand businesses that you briefed.
Hernandez: Both countries have trade commissions that actively promote their technology businesses. Scientists and engineers from down under are very innovative and entrepreneurial and you might be surprised how many of them are getting American capital to carry forth their products here in the USA. One of the lesser-known stories is about a Western Australian software firm that was financed by a very prominent Southern California investor and team owner (sorry, can't divulge more details) and became a roaring suceess in the storage market; it has been sold twice and is now part of IBM. Today's burgeoning businesses from down under have a wide array of technologies, concentraing on cybersecurity, renewable technology, energy, and cross-domain sharing.
Q: What was the advice you provided them?
Hernandez: I broke out the discussion as follows:
- Solve, don't sell Most small businesses make the mistake of thinking that they need to sell their products or technology to DOD. A message something like, "Here's what I have, how many do you want" is doomed to failure. They need to approach the problem from an orthogonal perspective, however. Don't sell what you have, solve the problems that the government is facing. Remember, most of the government's problems are mission focused; e.g., they might be buying software but what they want is intelligence analytics. Solve the government's problems while selling what you already have or the technologicial competency you possess.
- Master the process, understand the culture, and know the lingo Commercial firms and international firms all struggle with the acronyms for which the DOD is famous. But there is more than just mastering the alphabet soup. A successful firm must not only know what COTS, TRL, and CRADA mean, they must understand why they are important to the business development process and how they fit. Cluelessness will only exasperate a customer.
- Succinctness wins and demonstrations are essential Many firms come to the USA with great ideas, fantastic powerpoint slides, and smart technologists, but they don't know that DOD customers have short attention spans -- not because they all have ADD, but because they are immensely busy. A very productive meeting at a conference might last 10-15 minutes and include a laptop demonstration and a "rack and stack" of key performance indexes versus the current solution. Meaning, do your homework in advance and hone your message to be clear, succinct, and precise. Such is evidence of a prepared marketeer and it will ensure that an Army Colonel will remember you.
- There is no "low hanging fruit" in the DOD I have heard more times than I can count, from potential clients, that they want me to focus only on the low hanging fruit. Let me say categorically -- there is no low hanging fruit in the US Government, especially the DOD. There is no DOD program manager musing at the end of a long day, "I have a million dollars to spend and nothing to spend it on" or "whatever will I do with my discretionary funding?" Every dollar of every budget is being tracked by 3-5 defense industry marketeers at minimum and I can guarantee that they will make a claim on this money before an outsider even knows it exists. I usually turn down work from potential clients who can't get past this shortsightedness. "Low hanging fruit" only exists in tropical paradises that are short of natives and in business executives' dreams.
- Supplanting an incumbent is hard Even if your company's technology or solution is cheaper, faster, more powerful, more efficient, or sexier, it is extremely difficult to replace an incumbent contractor who is, in all likelihood, larger and better connected than you. Government customers do not usually want to assume the risk of a new solution. There are exceptions, of course, but as long as a program is adequately funded, your a priori assumption must be that a government program manager will not change horses without the passage of some time and some awfully good marketing on your part.
- Prime contractors will not sell for you -- use a pincer movement to ensure success It's amazing how many small businesses make this mistake. Their solution or product is at a component level, so they focus their marketing activity on prime contractors. They sign two or more teaming agreements and figure the orders will be forthcoming soon. But they wonder why the phone doesn't ring. Even if their offering makes the system cheaper, faster, more powerful, more efficient, or sexier (see previous question above), there are a host of reasons why the prime will not want to move forward with your good idea. A successful small business will sell to the customer or user community themselves while also selling to the prime contractor who will integrate their product into a higher-level system. I call it the pincer movement. Yes, it can be tough getting the right access but when your prime contractor starts getting calls from his own customer, about you, then your prime will start to take you more seriously.
Hernandez: Just one final point. Always assume you are one year from revenue; never assume it will happen any more quickly. The DOD is a great customer. The first order takes some time but the successful contractor is usually in for the long haul.
