The Challenge of Commercializing Defense Technology Outside Core

• Technology commercialization is difficult to do well
      “The track record of defense commercialization is unblemished by success”
                                              NormAugustine, CEO Lockheed Martin (1993)

• …but not impossible -- five“home-runs” in 1990s from defense companies:

  • DirecTV (Hughes) $28 billion

  • Conexant (Rockwell) $30 billion

  • RF Micro Devices (TRW) $15 billion

  • Intersil (Harris) $4 billion

  • Network Solutions (SAIC) $18 billion

• However, even the few successful internal commercialization groups have lived short lives

Company	Successes	Outcome
TRW Technology Bank	Spawned RFMD and half-dozen other startups	New management changed priorities, approach, and then closed in 2002
Lucent New Venture Group	Spawned 35 companies in five years	Parent sold portfolio and closed in 2004 due to financial constraints
Raytheon Commercial Ventures Inc. (RCVI)	Spawned 5 companies in first 21 months, yielding 2 liquidity events so far	Unanticipated losses from non-RCVI commercial businesses totaling $2.6 billion led to closure in late 2002