In the first two articles of this series, Irregular Warfare; Village Stability Operations and the Venture Capital Green Beret and Irregular Warfare and the Two Minds of the Venture Capital Green Beret, published with Small Wars Journal, I discussed the need for venture capital and entrepreneur training as a part of the Army Special Forces curriculum and body of practice. Though there were questions and pushback in the comments to these articles which should be addressed, I will limit my efforts in this article to how such capacity would be added to the Regiment and practiced in application.
Economic Development Program
As stated in the previous articles, the program would not create another mission for the Regiment but instead be designed only to enhance the five existing components of modern Irregular Warfare. Specifically, the EDP would consist of three interdependent components, which collectively employ Venture Capitalist thinking, resources, tools and success metrics in empowering local entrepreneurs. The three interwoven components would be:
Academics – Structured and operated as a formal center of learning and maintained by the Warrant Officer Institute, the academic component emphasizes a body of knowledge related to universal, regional and local best practices and models. Academics would be responsible for: development of scholarly works; field and case studies; 180A, 18A and other 18X EDP training programs; and, creation, maintenance and dissemination of a base of knowledge derived from real-world operations.
Command – Structured and managed like an Investment Bank, operated within the USASOC G3 and its subordinate commands and offices, the Command component would emphasize coordination of business and financial development efforts across each Group’s Area of Responsibility. Command would be responsible for: direction; long-range planning; high-level resource and relationship access; long-term project-program approving authority; and, other operational supports.
Operations – Operationally the EDP would be seamlessly intertwined with the many other activities a SF Company, ODA or individual SF Operator engages in when executing any of the five components of IW. Specifically the Company and ODA would be responsible for building and maintaining business and investor relationships; economic information attainment and investment due diligence; business, financial and market analysis; and investment placement, monitoring and reporting.
The best way to provide for an awareness of how this would operate in practice is to describe in brief how the program would be applied during a specific mission. The following is a depiction of what an ODA, tasked with conducting Village Stability Operations in Afghanistan, would do prior, during and post deployment.
Predeployment: As part of normal Intelligence Preparation of the Battlefield efforts, the EDP trained 180A, and other ODA members would draw upon traditional and EDP specific information sources to develop a detailed picture of the economic network(s) within the communities, districts and the province to which they are assigned.
The EDP aspects of the mission preparation process would emphasize identification of: businesses and products created or sold in the communities in these districts; logistical chains (where products sold or raw materials are acquired and from whom); business owners and leaders native to but not necessarily living in these communities; skilled labor; existing and planned CERP, USAID, Ministry of the Interior and other projects; banking, investors and other finance providers; and other business related information.
Once these items have been identified, to include holes in information, the EDP database and personal experience will be drawn upon to identify business and financial resources which can be accessed and employed to enhance the local economy of these communities. Emphasis will be on developing a Course of Action which fills in information gaps and best utilizes all the available Host Nation, US and NGO funds, and supplier, customer, businesses partner and investor access and relationships available through the EDP. Initial efforts will emphasize a Course of Action which provides for improvement and expansion of existing business, development of local business leaders and investors, with subsequent and ongoing efforts focusing on establishment of new businesses to fulfill unmet need and demand.
Relief in Place: During the RIP-in the ODA would refine its EDP COA based on more current and improved information derived directly from the ODA in place and with updated information sources. Additionally, the ODA would ensure coordination and interface with the various layers of partners, agencies and organizations which will be participating in realizing the ODA’s EDP COA.
For those AOs where the ODA is conducting a RIP of another ODA, final coordination would be made between the existing ODA’s EDP efforts and the incoming ODA’s EDP COA. And where the ODA is conducting VSO for the first time, emphasis would be placed on filling as many gaps in situational awareness and planning and establishing higher level relationships and partnerships as is possible before embedding and going operational in the AO.
Operational: Coinciding with Governance and Security efforts, the following is what would be emphasized during the operational phase of the mission by those responsible for conducting EDP efforts: training on job skills, business and finance and investing; establishing and improving situational awareness information related to economic base and participants; economic network development, expansion and improvement, to include the placement of investments and other funding in specific businesses; and, establishing, enhancing and deconflicting business relationships both intra and inter-district and between the community and the greater district, provincial, national, regional and global level economies.
At the ODA level, EDP efforts emphasize the small businesses in the local community and district, and larger businesses which reside within the greater AO. At this level the ODA’s focus will be on creating or enhancing local production while also enabling businesses which provide for local consumer needs. Fully integrated with the efforts of the ODA conducted at the village and district level, will be EDP efforts conducted by the SF Company. The Advance Operating Base, nested within the larger community centers or at the provincial level, will emphasize larger businesses which provide the products or services to the small businesses in the outlying communities or which provide external markets for the productivity of these villages.
EDP efforts at the Special Operations Task Force level would emphasize development of the overall economic base of the SOTF’s AOR. This would include integration and deconfliction of the efforts of the many ODAs and multiple AOBs within the command, and coordination of efforts and assets and resources across the entire AOR. Efforts would also be dedicated to providing coordination between the ODA and the local Provincial Response Team, USAID and many other national, provincial and international aid and development agencies focused on the AOR. Particular attention would be placed on creating linkages with the economic networks of the other SOTFs.
At the Combined Joint Special Operations Task Force level the EDP would emphasize national economic development and integration of the national economy with the regional and international economy. At this level many other assets and resources would also be coordinated such as those of the Worldbank, OECD, UN, the State Department’s Crisis Response Center and many other aid and development agencies and private enterprise and finance and funding providers. Particular attention will be placed on interface with national regulatory bodies, agencies and individuals which impact the economic development efforts being conducted in the Theatre.
For a best case and best practices model we can look to the Keiretsu model employed to great success in post WWII Japan. Though Japan of course was already an industrial and commercial power before the war, there remain models and practices which can be applied in far less advanced nations like Afghanistan. In essence the Keiretsu model establishes an atomic style economic engine, whereby a funding source and a small number of large companies reside within the nucleus, around which are several rings of small businesses which feed productivity into the large companies in the core.
At the center may be a company delivering products to the market as sophisticated as a car, while on the periphery would be layers of component and subcomponent manufacturers varying in the complexity of the products built and all of which are part of the same business ecosystem and end product. Even today you can walk through the housing areas of Tokyo and other Japanese cities and in the garage attached to a family home will be five people working, machining a component for a Camry or other end item product manufactured in Japan.
Conceptually the ODA would be working to establish the outer rings of the Keiretsu model in the villages and community centers of their AO. While concurrently the AOB would be focused on absorbing the capacity of these outer rings and moving it inwards toward larger enterprises, which in turn either deliver directly to market or feed inwards to the SOTF and CJSOTF level for inclusion in finished products or for delivery to market by large enterprises with access to much larger markets.
We are not talking about manufacturing cars or consumer electronics in Afghanistan just yet, but rather, simple products designed to meet domestic and regional consumer goods demand. As the economy improves however, these same low-skilled, local manufacturing facilities and the productivity they represent will be directed to increasingly more complex and sophisticated products and larger domestic and international markets. Just as happened at a much more advanced manner in Japan and more recently South Korea.
RIP Out: During the RIP out process it will be essential to conduct a thorough handover of the EDP initiatives underway and to fill in any gaps in information the incoming ODA, SOTF or CJSOTF may have. Of even greater importance will be personal introductions and in person handover of the business and financial and agency relationships established by the previous ODA and its predecessors. As well, the outgoing ODA, SOTF, CJSOTF will need to ensure the EDP database and information repositories are current and well detailed. This would include introduction of any academic or other works completed during the deployment which provide for greater EDP situational and operational awareness as impacts the local economy, best practices, etc.
Post-deployment: One of the greatest values of the EDP is that it provides an ODA with the ability to continue to improve the economics of a given community long after they have left the country. This is not realized through the ODA remaining focused on the AO they once were responsible for but rather simply by conducting their EDP efforts during the missions they go on to conduct. It is the linkages created between the local economies in which they have and will work and which other ODAs have and are currently working in which is the real strength of the EDP.
As a natural portion of the planning and COA development for the next deployment, the ODA will look to see if there are production resources, components or markets made available by companies reflected in the EDP database which would enhance or accelerate the EDP efforts in the new AO the ODA is going to be responsible for. Post-deployment efforts would emphasize maintaining an overall awareness of the business and financial resources made available and accessible, locally, domestically and internationally, through the EDP and on how such could be utilized to improve the ODA’s current and upcoming missions.
The previous provides a view into how the EDP would be operated during VSO in Afghanistan. However, tailored correctly, these capabilities would enhance any of the five component missions of IW. The primary focus, regardless of mission type or location, would be on training local business leaders and investors on how to benefit from the relationships and resources provided by the ODA to improve the standard of living for their own children.
Special Forces Warrant Officer Corp
Though designed and operated to provide for short and medium returns, the EDP is first and foremost about continuity and long-range gains. And those Green Berets tasked with continuity, relationships and long-range planning are the Warrant Officers. Of course the difficulty becomes one of how responsibility for and operation of the EDP would be added to the already over tasked and understaffed Corp. There are however models for such.
Many large Investment Banks operate their own Venture Funds (Vertical System combined with Horizontal Disruptor) and this well developed model from the financial world would be adapted to fit the unique nature and needs of the EDP. The following structure and framework was developed from the IB with VC Fund model and is excerpted from the proposal presented to the Command Warrant for Special Forces and the Commandant of the Warrant Officer Institute in 2011.
As a program and not a for-profit business or financial firm, and unlike an actual IB or VC Fund, the EDP will not own or directly manage any business or financial assets. However, the operational structure and approval authorities, the asset allocation decision analytics and the Risk & Uncertainty and Return on Investment modeling will closely follow that of a large Investment Bank with owned Venture Fund.
Though guidance and higher level relationships and access are provided from the IB hierarchy above, the greatest strength of the VC world is its ability to make decisions and apply resources rapidly and independently at the edges. What this means is ODA & Company level 180As will oversee a number of specific local initiatives with SOTF & Battalion level 180As overseeing a portfolio of ventures across their AOR and the Group level 180A responsible for a portfolio of portfolios across the AOR of the Group. And of course, these efforts would all be coordinated and overseen, though not managed, across and between the Groups by the parent organization, USASOC.
Just as in the IB and VC worlds, this will require experienced and highly educated, skilled and connected Warrant Officers at every level. In order to ensure this high degree of individual capacities, a three tiered certification process is recommended, with each level demonstrating thorough understanding, not just knowledge attainment. Though focused on the Warrant Officer Institute and its education and training guidelines, ongoing education should very much include opportunities to pursue civilian education at higher institutes of learning, both undergraduate and graduate.
Level I – Area Analyst – Equivalent to Investment Analyst
Role: A Level I is trained to analyze assets and businesses and to make recommendations as to the application of financial and other resources to the formation of new or expansion of existing businesses. The primary focus of a Level I is the business and financial success of specific individuals and ventures in the communities of the AO. The purpose of these efforts is to apply job creation and economic development as a means to enhance stability efforts and assist in attaining the Commander’s desired endstate.
Responsibility: Prior to deployment and as part of planning, a Level I would look at the EDP database to see what assets, individuals, skilled labor, productive resources and businesses exist within the AO and what if any EDP focused efforts and capabilities have been applied. Level I’s are responsible for EDP specific COA development which is an integrated and supportive portion of the overall COA for the mission. While operational, the Level I is responsible for oversight, placing investments analyzing assets and investments and for ensuring the EDP database is current and correct.
Level II – Area Developer – Equivalent to a Managing Director
Role: A Level II is trained to analyze a portfolio of ventures and to make recommendations as to individual ventures in the portfolio and the portfolio as a whole, to provide operational and funding guidance to Level I’s conducting EDP efforts at the ODA level. The primary focus of the Level II is the business and financial success of a portfolio of individuals and ventures with purpose to establish or enhance a network of ventures across the AOR.
Responsibilities: While the Level I is primarily focused at the tactical level of business, the Level II is focused on operations with the purpose to assist the Level I in their efforts to grow specific businesses within the portfolio. The Level II provides guidance as to: business operations; marketing; partnerships & alliances; contracting; vendor management; regulatory compliance; and more, with particular emphasis on access to higher level relationships and application of Seed & Angel funding and VC style investment analytics and oversight.
Level III – Area Partner – Equivalent to a Partner in a VC Fund or Investment Bank
Role: A Level III is trained to analyze and manage a portfolio of portfolios and to make determination as to the businesses approved for funding and support, to be sustained and which are to lose support or to be transitioned to other organizations or agencies. The Level III provides very high level access and resources and is responsible for management of the EDP at the Group or Battalion level. The focus of the Level III is on expansion of the overall economy, with particular emphasis on international investment and economic integration and expansion.
Responsibility: Whereas the Level I and II is focused on tactical and operational application of the EDP in their specific AO or AOR, the Level III works to strategically apply the program across the greater AOR. Where the Level I works with very small businesses and the Level II focuses on enhancing the efforts of the Level I while working with larger businesses, the Level III works with large businesses which absorb or feed the productivity of the lower levels and which operate nationally and internationally. The Level III is also dedicated to improvement of the EDP itself, which efforts emphasize relationship development with corporations, investors, markets, academia, government and regulators and regulatory bodies as well as resource and guidance development.
Level I: Every 180A serving on an ODA should be certified Level I.
Level II: At least one Level II should be resident in each SF Company.
Level III: Every 180A working in the EDP at the battalion level and above should be a Level III.
As with all endeavors undertaken by an ODA, success of the EDP will be dependent upon more than a single MOS or individual and instead will be dependent upon the capacities and efforts of the Team and the many other participants in the SOF community. In addition to those within the ODA and native to SF, there are many other participants to the EDP which already work closely with SF and which are part of the greater SOF or US Government Aid communities. The EDP would provide a framework for how these assets are employed and tailored to different mission types and environments to maximum effect.
EDP specific training would be enmeshed in the curriculum of the Special Forces Warfare Center and School at Fort Bragg, to be added in various parts of the Special Forces Qualification Course and to other specific 18X courses. These studies and courses of instruction would emphasize the program, its purpose, application and impact and how the various participants contribute. However, EDP training and education for 180As would be more collegiate and administered separately by the Warrant Officer Institute.
To ensure 18 Series EDP certified practitioners are and remain competitive with their civilian counterparts, it is essential the education and training program be rigorous and thorough. This means all coursework must directly correspond to that offered in comparable collegiate courses and programs. To meet this demand and to deal with obvious time constraints, academics would be broken into three components administered separately over time, with the work of all three, combined with on the job experience, which in total would equate to an MBA worth of study.
Level I – (1 month. self paced and driven – online) Assigned reading and coursework providing for a basic understanding of accounting, finance and business, sales and Entrepreneurship. Level is attained when coursework is completed.
Level II – (3 months. self paced and driven – online) Advanced reading and intermediate coursework on business, accounting, finance, sales, marketing, and Venture Capital with additional focus on regional and industry specific studies. Level is attained when coursework is completed and formal paper has been accepted by the Warrant Officer Institute.
Level I and Level II blocks of instruction and books, provided by Skillsoft, are available now through the AKO portal. And with completion of these programs automatically reflecting in ATRRS, very little additional administration is needed.
Level III – (6 months. Internship and Schoolhouse) Advanced coursework on business, and financial and fund management focused heavily on regional studies and culminating in a thesis paper. First component of study would be a two month internship with an Innovation Center or Investment Fund (Angel or Seed, Private Equity or Venture Capital), with the second being University style, civilian advised classes and thesis development and completion conducted at the WOI at Ft. Bragg.
Additionally, there are a growing number of top level universities offering MBA programs which combine studies in entrepreneurship and Venture Funding. The WOI and Regiment would work with the American College Equivalency and one or more of these universities with the purpose to provide 180As who have completed Level III, and served a period of time in such capacity, with an MBA or to be within a few credits of such.
Level I and Level II training should not be limited only to 180As but should be available to any 18X qualified individual. Acceptance into Level I studies would require approval of the first Level II 180A in the Command. However, approval into Level II studies would require approval of the first Level III in the Command and would be solely dependent on a demonstration of superior comprehension during Level I study and during application.
The first step would be to add those things which do not require any or very little additional investment in time or money. Level I training is one of these, as is the introduction of an EDP database. As part of the previously referenced proposal to the WOI, I developed the Level I and II curriculums from courses now available through AKO which could be rolled out immediately at no additional cost. As well, an SQL database is being developed by a member of the Regiment which could easily be maintained by the IT department of USASOC and which could be made available through the existing USASOC, Group or Battalion portals at very little cost.
Though the coursework for Level II has also been identified and is now available through AKO, a position need be established within the WOI responsible for formalization of Level I and II certification. This same office would be responsible for providing guidance as to who should be recommended to proceed to Level II, to qualify and approve the first class of applicants and to make final determination of who is awarded Level II certification. The individual chosen to head this office would be a civilian (though prior SOF experience would enhance efforts) and must be experienced in business, Venture Capital and academia. Additionally, this office will develop the Level III program, attain necessary supports and relationships, conduct requisite hiring and make determination as to who will attend the first class.
Finally, prior to graduation from Level III, individuals will be identified from the class who possess superior understanding and comfort with the Mind of the System and the Mind of the Disruptor and with Entrepreneurship and Venture Capital. It will be these individuals, and the many Level Is and IIs who are also driven to contribute, who go on and are the driving force and intelligence which expand this meager beginning into the overall program. However, this is not a short-term project, and though steps can and should be taken immediately, it is projected to take up to five years for the final EDP structure and its many tools, resources, relationships and body of practitioners to be in place to make a major impact.