The U.S. Department of Defense is one of the most complex organizations in the world — so how is it approaching generative AI? A new report from Wharton’s Prof. Serguei Netessine and WG’25 Andrew Stiles examines the DoD’s early steps toward integrating GenAI and highlights lessons that industry leaders can apply in their own organizations.
The report lays out a framework for evaluating GenAI adoption, drawing attention to both the promise and the pitfalls of this fast-moving technology. Key takeaways include:
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Smarter spending over bigger budgets: Success depends less on pouring in funds and more on allocating resources strategically across units.
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Efficiency vs. resilience: GenAI can unlock major productivity gains, but systems need safeguards, like red-teaming and scenario planning, to prevent fragile overreliance.
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Strategic partnerships: Collaborations between defense and AI firms (such as Palantir + Shield AI, or OpenAI + Anduril) highlight how aligned data access, engineering capacity, and R&D cycles create lasting value.
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The data rights challenge: Long-term adoption hinges on evolving contracting practices that balance security, innovation, and ownership of critical data.
While focused on the U.S. military, the findings are highly relevant to private-sector organizations grappling with their own GenAI transitions. The defense sector’s scale and stakes make it a revealing testbed for how institutions can integrate emerging technologies responsibly and effectively.