The incoming Trump Administration’s announced defense leadership nominees, with deep private market expertise, signal a potential shift in the Department of Defense’s (DOD’s) ability to harness innovation from venture-and private equity-backed companies developing dual-use technologies. Historically, leadership interest in leveraging commercial innovation in this context has primarily resided at the Office of the Secretary of Defense (OSD) level, often without the direct experience necessary to effectively bridge military needs and private sector capabilities.

But if these nominees—including not only John Phelan at Navy and Dan Driscoll at Army but also Stephen Feinberg as Deputy Secretary—as well as David Sacks’ appointment as White House AI/crypto czar are indicative of others to come at the military departments under the incoming Administration, the embedding of private market acumen within the services could transform the DOD’s innovation agenda.

This shift is particularly critical given the state of the existing defense industrial base, which is struggling to meet current demands for new weapons systems, particularly ships and submarines, and to maintain, repair, and overhaul existing platforms. The ability to surge production to meet the requirements of new conflicts is even further out of reach. Building new DOD shipyards and depots, while a necessary long-term investment, would take years to program, budget, and construct. This leaves an immediate capability gap that demands innovative, commercially viable solutions.

Here, the expertise of the new Pentagon team with relevant private market experience can be pivotal in bringing an understanding of how to navigate commercial financial structures, scale promising technologies, and deploy capital effectively. By leveraging capital markets and establishing public-private partnerships, these leaders could accelerate the delivery of new capabilities on commercial timelines. This approach complements existing funding mechanisms, such as the Rapid Defense Experimentation Reserve (RDER), by aligning them with private-sector investment cycles, expediting the transition of dual-use technologies in critical areas like AI/ML, hypersonics, space-related technologies, etc.

By embedding private market expertise directly within military departments, the DOD can better address not only its modernization challenges but also its operational capability gaps. These leaders are uniquely positioned to overcome cultural and procedural barriers to innovation, unlocking the potential of public-private partnerships to deliver transformative impact at the scale and speed required to maintain military superiority.