Tech Evolves Quickly. So Do Threats.

Defense spending is on the rise – but so is uncertainty. As wars redraw Europe’s security map and AI outpaces regulation, governments and industries are racing to keep up. The old rules – slow procurement, siloed R&D, rigid hierarchies – simply can’t apply anymore.

Elbit Systems hosted a special webinar that brought together global voices from defense, academia, and tech. The panel included Fiona (a Professor at MIT and Vice Chair of the NATO Innovation Fund), Matt Steenman (CTO, Elbit Systems of America), Eli Friedman (VP of Innovation, Elbit), and Shuki Yehuda (EVP for R&D, Elbit Systems).
The tone was candid from the start. Yehuda highlighted the power of Israel’s innovation mindset: “The Israeli perspective on innovation is relevant also to the U.S. defense ecosystem.” His point echoed a recurring theme throughout the session: innovation doesn’t happen in isolation. It demands cross-border, cross-sector collaboration.

But collaboration alone isn’t enough – especially when it comes to constrained R&D budgets. Despite rising U.S. defense spending, Steenman expressed doubts about any meaningful boost to long-term research. “Even with geopolitical tensions and budget growth, we’re unlikely to see a spike in R&D allocations,” he noted. Ongoing conflicts in Ukraine and the Middle East have shifted focus to immediate needs, leaving future innovation as something to be sponsored more and more by industry and not the U.S. government.

 Europe’s Defense Market Reawakens

Fiona offered a more optimistic outlook for Europe, pointing to countries like Poland, Germany, and the UK, which are now increasing both defense budgets and tech investment. “For years, defense spending across Europe was stagnant. That’s changing,” she noted. “We’re seeing real ecosystems take shape – backed by support for startups and academic research. That’s where we’re seeing real traction.”
The discussion shifted to talent – specifically, who’s entering the defense sector and what’s driving them. “In Israel, we’re seeing more young professionals coming back to defense work, motivated by a strong sense of responsibility,” said Friedman, who explained that Elbit Systems is embracing the Venture Client Model as a strategic approach to innovation, positioning itself as a design partner and market validator for cutting-edge defense-oriented start-ups.

"By fostering collaboration across the government, private sector, and entrepreneurial ecosystems, Elbit is creating a dynamic environment where innovation thrives," he said. 

"This model allows us to tap into the agility and creativity of start-ups while leveraging our robust internal innovation capabilities. It also opens the door to the broader world of open innovation, ensuring that we remain at the forefront of technological advancement. Through this synergy, Elbit not only accelerates the development of next-generation defense solutions but also strengthens its role as a catalyst for transformative change in the industry."

Steenman described a more nuanced picture in the U.S., where career decisions on whether to join the defense industry are made early in a career and there is not a lot of ebb and flow of talent in and out of the industry. Still, he emphasized that purpose matters and that is one way that Elbit America tries to set itself apart. “At Elbit America, people aren’t here just for a paycheck. They’re here to help make the world safer.”

Fiona shared a telling example from her own campus experience. “A few years ago, only a handful of students attended our defense innovation clubs. Now? We’ve got over 80 participants – from MIT, Harvard, and even overseas – many of them driven by a personal connection to global security.” She described a generational shift in mindset, where young innovators increasingly view defense not just as a job, but as a mission.

The war in Ukraine came up repeatedly throughout the discussion. Panelists agreed it has driven a surge of practical innovation – especially in Europe. “We’re seeing rapid UAV development across the continent,” said Friedman. Fiona added, “Ukraine is not just a battleground – it’s a proving ground. We’re studying its industrial and supply chain strategies closely.” She emphasized the global importance of building diverse regional capabilities in defense manufacturing and tech.
Still, innovation doesn’t thrive on urgency alone – it needs infrastructure, incentives, and smart policy to take root. “Startups need flexibility early on, but also a path to scale,” said F. “We should think modular, think integration, and avoid the bureaucratic traps that kill momentum.” Steinman agreed: “Whether public or private, being a good investment partner is critical. You have to be realistic about timelines and market maturity – especially when it comes to dual-use technologies.”

Where AI Helps – and Where It Doesn’t

The panel closed with a conversation about AI – its enormous potential and its risks. “Generative AI can enhance decision-making and operations,” said Fiona, “but near the frontlines, it becomes far more risky – especially when systems start making predictions or recommendations in real time.”
Steenman added: “We work in a highly regulated environment. You can’t just plug GenAI into a weapons system. It’ll take years of careful validation and oversight before widespread operational fielding.”
The takeaway? Defense innovation is accelerating – but not fast enough on its own. It will take ecosystems, partnerships, and bold thinking to rethink how technology, policy, and purpose align. In a world where yesterday’s solutions no longer suffice, standing still is no longer an option.