LOOSE LIPS BUILD SHIPS? Secrecy and Human Capital Management in US NSA and Israel Unit 8200 A THESIS SUBMITTED TO THE INTERSCHOOL HONORS PROGRAM IN INTERNATIONAL SECURITY STUDIES CENTER FOR INTERNATIONAL SECURITY AND COOPERATION FREEMAN SPOGLI INSTITUTE FOR INTERNATIONAL STUDIES STANFORD UNIVERSITY By: Lisa Catherine Wallace June 2014 Advisors: Mariano-Florentino Cuéllar Colonel Joseph Felter Abstract How do intelligence organizations attract and make use of top talent? This paper approaches this question through a comparative case study of the labor ecosystems surrounding both the US' National Security Agency and IDF's signals intelligence branch, Unit 8200. As the cyber realm continues to assume a growing role in modern national security threat environments, intelligence organizations must grow and adapt to accommodate these new objectives. This inevitably involves the question of how to attract and make use of top talent in order to solve difficult and highly technical national security problems. Israel and the United States share similar national security interests, and both possess burgeoning and impressive high-technology clusters. This paper claims that a growing, public network of Unit 8200 and other Intelligence Corps alumni is extant in Israel's high-technology sector. Furthermore, affiliation with Unit 8200 has a positive signaling and social capital value. By contrast, this paper argues that alumni from the NSA do not possess as strong of a signaling or social capital value in the US. This paper argues that the NSA is hindered by the ontology, secrecy, and culture of the organization itself, as well as US public understanding of national security organizations and cyber threats. In Israel, this paper suggests that Unit 8200's associated signaling and social capital value benefits its alumni, Israel's technology sector, and the unit itself. This paper argues that this phenomenon is unusual, and despite the uniqueness of Israel's national security system, is prescriptive for the United States, where social capital and signaling is not directly leveraged by intelligence organizations as a recruiting tool. This paper argues that increasing the professional signaling and social capital value associated with intelligence organization affiliation is good for the organizations themselves by helping attract and make use of talent. Dedicated to Clifford Nass. Acknowledgements My completion of this project would not have been possible without the help of some truly exceptional friends and mentors. First, I would like to thank my thesis advisors Colonel Joseph Felter and Professor Mariano-Florentino Cuéllar, both of whom devoted an extraordinary amount of time and investment into helping me construct and realize this thesis. Tino, I have been continuously amazed by how much I manage to learn from every session we have. Your advice is always so succinct it sounds rehearsed. Thank you for your patience and steadfast support of my project and of me. Joe, your commitment to undergraduate education and teaching is staggering. I learned so many skills about writing, international relations, and project conceptualization from your mentorship this year, skills that will stay with me long after I graduate. This is only surpassed by what you have taught me about leadership, which will stay with me even longer. Thank you. I am also incredibly thankful to Dr. Martha Crenshaw and Dr. Coit Blacker, the Co-Directors of the CISAC Honors Program. I have learned more than I can say from their mentorship and teaching of the CISAC Honors class. Both Professor Blacker and Professor Crenshaw are true examples of world-class academics, and it has been a privilege to learn from them this year. Special thanks to our TA Shiri Krebs for encouragement and last-minute assistance with logistical details. Separate from the official advisors to this project, I would like to thank a number of individuals associated with CISAC who were enormously helpful in the completion of this thesis. I absolutely could not have completed this project without the help of Ryan Mayfield. Ryan's advice, editing, and moral support was absolutely invaluable. Additionally, I am truly grateful for Tim Junio's support, counsel, and friendship over the course of the past year. Thank you to Neil Narang, Patrick Cirenza, and Peter Davis for watching me rehearse my presentation and providing helpful feedback. Thank you very much to Gil-li Vardi and Amir Goldberg for initial discussions of this project and its disciplinary approach. Thank you to Russell Wald for keeping my project and research interests in mind and helping with interview scheduling. Special thanks to the cyber contingent of the CISAC Honors Program. Mailyn Fidler was invaluable with editing these chapters and extraordinarily generous with her time and support. Connor Gilbert helped significantly in project framing and keen input. I would also like to thank the rest of the CISAC cohort, Yassamin, Claire, Isabella, Lauryn, Elle, Daniel, James, Reed, and Keshav, for their friendship and mentorship. Small Unit Cohesion is a great thing. Finally, I would like to thank Marc Abramowitz, Yitz Applbaum, and Nimrod Ran for their help securing interviews and opportunities in Israel. I am forever grateful for those experiences and favors. Table of Contents Abstract ................................................................................................................................................... ii Acknowledgements ............................................................................................................................ iv Table of Figures ..................................................................................................................................vii Chapter 1: Introduction ......................................................................................................................1 Argument........................................................................................................................................................... 3 Methodology..................................................................................................................................................... 4 Significance....................................................................................................................................................... 6 Road Map........................................................................................................................................................... 6 Chapter 2: Conceptualizing Human Capital in Intelligence Organizations........................9 Organization Theory ...................................................................................................................................10 Signaling ..........................................................................................................................................................12 Networks .........................................................................................................................................................13 Chapter 3: Working for the Surveillance State: the US National Security Agency........16 The Cyber Age ................................................................................................................................................18 The Agency......................................................................................................................................................20 Case Limitations............................................................................................................................................21 The Network...................................................................................................................................................23 Secrecy..............................................................................................................................................................29 Current Strategy............................................................................................................................................37 Credential........................................................................................................................................................40 Conclusion.......................................................................................................................................................43 Chapter 4: Network Effects .............................................................................................................44 Unit 8200.........................................................................................................................................................46 Part 1: The Unit 8200 Network ................................................................................................................47 An Unenforced Policy of Secrecy........................................................................................................................... 47 Brain Security is National Security....................................................................................................................... 52 Part 2: The Unit 8200 Credential.............................................................................................................56 Whiz Kids......................................................................................................................................................................... 56 The Golden Ticket........................................................................................................................................................ 58 A Common Experience............................................................................................................................................... 61 Conclusion.......................................................................................................................................................62 Chapter 5: 8200 יחידה, Yehida Shmoneh-Matayim...................................................................64 Qualitative Evidence of the Network .....................................................................................................66 Human Capital Secrecy in Unit 8200......................................................................................................69 Survey Results ...............................................................................................................................................70 --Secrecy........................................................................................................................................................................... 71 --Unit 8200...................................................................................................................................................................... 73 --Social Capital............................................................................................................................................................... 75 --Credential..................................................................................................................................................................... 78 --Network ........................................................................................................................................................................ 79 Conclusion.......................................................................................................................................................81 Chapter 6: Conclusion.......................................................................................................................83 Theoretical Implications and Areas of Further Research...............................................................84 Bibliography ........................................................................................................................................88 APPENDIX I: Interview List.............................................................................................................95 Israel Unit 8200.............................................................................................................................................95 United States National Security Agency ................................................................................................95 APPENDIX B: Survey and Responses ...........................................................................................97 APPENDIX C: Survey Responses ................................................................................................. 107 Table of Figures Figure 1: Intelligence Community Job Disclosure for Survey (p. 75 / 72) Figure 2: Intelligence Community Unit Disclosure for Job Interview (p. 75 / 72) Figure 3: Intelligence Community Views on Unit Value (p. 77 / 74) Figure 4: Intelligence Community Importance of Experiences for Career Advancement (p. 79 / 76) Figure 5: Non-Intelligence Community Importance of Experiences for Career Advancement (p. 80 / 76) Figure 6: Intelligence Community Professional Collaboration With Comrades from Own Unit (p. 83 / 80) Figure 7: Non-Intelligence Community Professional Collaboration With Comrades from Own Unit (p. 83 / 80) Chapter 1: Introduction On October 11, 2012 former Secretary of Defense Leon Panetta delivered the keynote address to the annual meeting of the Business Executives for National Security in New York City. The subject of his address was the growing cyber security threats plaguing the United States Intelligence Community in the 21st century. During his speech he likened the reality of cyber threats to the terrorist threats plaguing the City of New York, promising the audience that just as a 9/11 would never again happen, Americans would also be protected from cyber disasters. Explained Secretary Panetta, 'Just as the DoD developed the world’s finest counterterrorism force over the past decade, we need to build and maintain the finest cyber operations. We’re recruiting, we’re training, and we’re retaining the best and brightest in order to stay ahead of other nations.' The cyber age brings with it extraordinary threats to the national security of all nations and presents complex challenges for intelligence organizations in deterring and defending against these threats. Intelligence organizations must grow and adapt to respond to emerging cyber threats, and so too must their human capital approaches to insure they are able to recruit and retain the level of expertise needed to meet these historically unprecedented demands. Each nation is subject to intelligence environments with unique constraints and limitations. But two significant challenges plague the strategies of all intelligence organizations to maximize the quality of their human capital: the necessity to maintain effective secrecy, and to attract skilled and competent knowledge workers. In the cyber age, the importance of attracting the best and brightest into intelligence organizations becomes just as critical to national security as effective cyber technology itself. A recent CSIS report illustrates this, contending that the cyber age represents a human capital crisis for intelligence communities for this reason: 'We need to be clear why human capability is so important. Tools and techniques…help greatly, but we will continue to need capable personnel to create such tools…If we have learned nothing else, we now know that those who seek …to do us harm… are every bit as smart as we are.' New human capital challenges of intelligence organizations inform to the central question of this thesis: How do differences in secrecy policies and human capital strategies impact on intelligence organization’s ability to attract top talent? To answer this question, this thesis conducts an organizational analysis of the human capital ecosystem surrounding two intelligence organizations with very different approaches to secrecy and human capital: the Israel Defense Forces (IDF) Unit 8200 and the US National Security Agency (NSA). This thesis finds that the NSA and Unit 8200 have two fundamentally different approaches to human capital management and argues that these differences impact on their recruitment and retention of highly skilled members. The NSA prefers to 'home grow' labor with technical skillsets, encouraging them to stay for the duration of their careers. Secrecy surrounding employment is practiced and enforced. Their counterpart organization in Israel, on the other hand, has a relatively unenforced policy of secrecy. Identification with secret units like Unit 8200 is technically illegal but rarely carries repercussions in a professional setting. In Israel, there exists a publically observable network of Unit 8200 alumni in the high-technology sector. Unique organizational features of Unit 8200 are observable in this network, and manifest as recognized positive attributes of alumni as knowledge workers in the business world. The efficacy of these features in the business world, combined with the positive signaling power of association with this network, perpetuate and reinforce the existence of the network within the Israeli technology sector. This thesis argues that secrecy policy remains unenforced because knowledge of Unit 8200’s alumni network and the positive signaling power for Unit 8200 alumni is beneficial for Unit 8200 itself. By contrast, this thesis argues that there does not exist a comparable public network of NSA alumni in the United States high-technology sector, and that the NSA’s secrecy approach is a contributing factor to this lack of development. Chapter 2: Conceptualizing Human Capital in Intelligence Organizations This thesis endeavors to understand how intelligence organizations attract and make use of their human capital; i.e., highly technical knowledge workers. In order to gain leverage on this question, this project uses organization theory to examine how the human capital strategies of intelligence organizations manifest within the organizations themselves and in their public alumni networks. Reviewing the literature, it is clear that the human capital strategy for intelligence organizations is primarily an optimization problem. All intelligence organizations are unique and subject to their own limitations. However, two constraints are common across intelligence organizations: the need to manage secrecy and protect classified information; and second, the need to attract people with highly technical skillsets. Organization Theory deals with the structure, culture and dynamics of organizations, and how these variables affect an organization's endogenous and exogenous impact in space. The sociological ideas of cluster genesis, population ecology, signaling theory, and network analysis provide a sociological and economic framework for thinking about the cases of the US NSA and Unit 8200 networks within their high-technology labor markets. Chapter 3: Working for the Surveillance State: the US National Security Agency Case analysis focuses on the United States National Security Agency (Fort Meade), examining its human capital recruitment, rotational training, strictly enforced secrecy policies, and the lack of a public alumni network in Silicon Valley and high-tech clusters. Interviews with former NSA personnel (such as Oren Falkowitz, founder of Sqrrl) and intelligence officials (including former FBI Director Robert Mueller and Colonel Charlie Miller) highlight how strict secrecy, the requirement to 'home grow' technical talent, long career retention expectations, and post-Snowden public perceptions create friction in individual signaling and credentialing in competitive private tech labor markets. Chapter 4: Network Effects Examines the primary signals intelligence arm of the IDF, Unit 8200, its evolution from Unit 515/848, and its human capital dynamics. The chapter develops a two-part theory: (1) An unenforced secrecy policy that allows a public alumni network to emerge because it benefits the military's recruitment and meets societal expectations of economic return; and (2) The Unit 8200 credential as a powerful market signal of baseline intelligence ('Whiz Kids'), social capital, and specialized training ('The Golden Ticket' and 'A Common Experience'). Chapter 5: 8200 יחידה, Yehida Shmoneh-Matayim Details empirical qualitative and quantitative evidence from Israeli tech ecosystems, online alumni networks (such as the 8200 Fellowship on LinkedIn/Facebook, 8200 EISP incubator), and an anonymous survey of Israeli high-tech professionals and IDF veterans. Key survey findings include: - 88% of intelligence alumni expressed willingness to disclose unit affiliation in job interviews if beneficial, despite formal secrecy rules. - 100% of intelligence alumni and 53% of non-intelligence respondents ranked signals intelligence as 'one of the most valuable' military backgrounds for high tech. - Intelligence alumni reported unit affiliation as more important for career advancement than their university degree. - Strong collaborative behaviors and mutual professional support exist among intelligence alumni within the high-tech sector. Chapter 6: Conclusion Summarizes theoretical implications and areas for future research. Comparing the human capital ecosystems of the NSA and Unit 8200 illustrates the tradeoff between strict secrecy and the creation of positive social capital/signaling mechanisms. While loosened secrecy carries risks, an overly rigid secrecy paradigm can impose hidden costs on recruiting, maintaining, and leveraging top technical talent needed to counter modern cyber threats. Includes comprehensive bibliography, Appendix I (Interview List with Israeli Unit 8200 and US NSA/government interviewees), Appendix B (Survey questions and tabular responses), and Appendix C (Survey response chart figures).