PUBLIC-PRIVATE CO-DEVELOPMENT.

01 / Increasing Speed and Lowering

Increasing Speed and Lowering Innovation Cost

In an increasingly volatile security environment, accelerating defence innovation while ensuring cost efficiency has become a strategic imperative. Traditional procurement models – rigid, lengthy, and risk-averse – struggle to keep pace with the dynamic nature of threats and technological evolution. The shift toward more agile, digitally driven solutions demands a new innovation logic – one rooted in collaboration between the public and private sectors, and guided by operational needs rather than bureaucratic inertia.

Germany’s defence innovation landscape is undergoing a transformation in this regard. One important actor within this transformation is the Bundeswehr Cyber Innovation Hub (CIHBw), established by the Federal Ministry of Defence (BMVg) to accelerate the adoption of civilian and deftech technologies in the armed forces. As an official initiative with direct access to both military users and decision-makers, the CIHBw functions as a bridge – linking the operational reality of soldiers with the pace and creativity of the startup ecosystem.

But beyond any one actor, the key question remains: how can institutional structures enable faster innovation, reduce costs, and ensure mission-effectiveness in an era shaped by digital disruption?

02 / The innovation challenge in

The innovation challenge in public-sector defence

Unlike private markets, public-sector innovation must operate under unique constraints: budget cycles, legal frameworks, oversight requirements, and political legitimacy. In Germany, this includes a strong emphasis on accountability, neutrality in procurement, and transparent competition.

This does not mean innovation is impossible – only that it must follow its own logic. For startups, entering this space can be daunting. Yet, if the public sector can provide structured and transparent access points – clear validation processes, defined trial frameworks, and operational feedback – innovation can thrive. In fact, when civilian startups successfully navigate these hurdles, they often emerge with a “Gütesiegel” (seal of quality) of institutional resilience. Surviving public-sector requirements, particularly in the defence domain, often prepares them for success in broader markets – both public and private.

03 / From Time to Market

From Time to Market to Time to Mission

In the private sector, innovation is judged by market timing, competitive differentiation, and user adoption. In the defence context, innovation must be measured by its contribution to mission effectiveness – its ability to enhance readiness, protection, and operational superiority.

This distinction – Time to Mission instead of Time to Market – defines which technologies are suitable for co-development and where new models are most needed. Civilian-origin technologies, especially in fields like AI, communications, sensor fusion and robotics, often have shorter development cycles and lend themselves well to early-stage experimentation. They can be tested, iterated, and deployed in select use cases without large upfront investments or long certification processes.

In contrast, highly specific military capabilities (e.g., missile systems or classified ISR platforms) often require different timelines and different industrial players. These tend to require a different innovation path – one that still benefits from modularity and digital engineering but follows a more traditional development arc.

A well-designed public-private innovation interface can serve both tracks – channeling civilian ingenuity toward military problems where agility is needed most.

04 / Software defined defence: a

Software defined defence: a structural shift

The shift toward Software Defined Defence (SDD) is central to this evolution. SDD prioritizes modularity, updatability, and rapid deployment – values drawn from modern software development and applied to military capability-building. It allows defence systems to evolve continuously, rather than being delivered in fixed, hardware-bound generations.

SDD is not just a technical strategy. It is a conceptual shift away from procurement-as-delivery toward capability-as-a-service. Instead of waiting years for complete systems, forces can receive incremental improvements, updated features, and rapid patches – based on field feedback and threat evolution.

This model has implications beyond technology. It requires new procurement pathways, a stronger role for DevSecOps in defence contexts, and closer interaction between users and developers. Critically, it necessitates trust: between institutions, between agencies and suppliers, and across organizational silos.

Germany’s defence establishment is beginning to embrace this model, piloting SDD-compatible approaches that focus on iterative development and user-centered design – without compromising on security, compliance, or oversight.

05 / Dual contexts: peace-time development,

Dual contexts: peace-time development, war-time deployment

Innovation must be context-aware. A system optimized for peacetime administrative processes will not survive the harsh realities of the battlefield, where robustness, redundancy, and autonomy are paramount.

Defence innovation today must serve two logics simultaneously: peacetime development and wartime deployment. This means designing products that can scale administratively and survive operationally. It means communicating differently to different audiences: compliance officers, acquisition units, field commanders, and soldiers in combat all require tailored narratives and expectations.

This mindset must also permeate development itself. Civilian developers need to understand that a “minimum viable product” for a soldier is not a beta app – it is a tool they may depend on in life-and-death scenarios. Contextualizing innovation in this way – embedding the realities of operational use from the start – is essential for legitimacy and effectiveness.

06 / Public-private co-development: a European

Public-private co-development: a European imperative

Public-private co-development is more than a procurement tactic – it is a strategic necessity for maintaining technological sovereignty. Europe cannot rely solely on foreign-developed defence technologies in an era of increasing geopolitical fragmentation. Nor can it afford to exclude its own most innovative companies – startups, SMEs, and non-traditional actors – from contributing to defence capability development.

The challenge lies in building the institutional frameworks that allow this cooperation to flourish: clear access points for non-traditional suppliers, agile funding mechanisms, and innovation pipelines that can bridge prototyping and procurement.

Germany’s approach is evolving in this direction. Through initiatives like the CIHBw – mandated by the Ministry of Defence and integrated within the Bundeswehr structure – new forms of early-stage experimentation and validation have been established. These are not replacements for formal procurement, but upstream complements to it. Their role is to de-risk innovation early, to bring in fresh thinking, and to test what works – and what is needed. But to fully unfold their potential, initiatives like the CIHBw need a mandate to procure on a small to medium scale. A kind of fast-track-procurement for systems of urgent need, defined by short innovation cycles.

07 / Toward a new social

Toward a new social contract in defence innovation

Defence innovation requires a recalibration of expectations on all sides. Public institutions must become more comfortable with uncertainty and iteration. Private actors must respect the unique constraints and responsibilities of national defence. And both must recognize that co-development is not faster because it cuts corners – but because it builds the right things, sooner.

If Europe is serious about strategic autonomy, it must take defence innovation seriously – not just in budgetary terms, but in cultural and institutional terms. The shift toward software-defined, user-centered, and co-developed capabilities offers a path forward – one that balances accountability with agility, and security with innovation.