The Defense Business Board has another great presentation, this one on Innovation – Attracting and Retaining the Best of the Private Sector.
They highlight that DoD needs both sustaining and disruptive innovation. Sustaining innovation tends to be “top down”, addressing known problems with contracted and independent R&D. Disruptive innovation tends to be “bottom up”, the source of major breakthroughs from non-traditional, self-funded development.
They found DoD has a closed system that discourages innovation. From components that are hard wired into programs to a vertically integrated supply chain restricting competition.
The unintended consequences of budget reduction actions will hurt future innovation. Cost focus via LPTA reduces staff and technical quality discouraging industry investments in innovations.
DoD lacks sufficient understanding of business operating models and drivers of innovation. The fundamental business imperative is to increase earnings per share. Profit is the lifeblood of the capitalist system and is risk calibrated.
They also summarized the slow acquisition process has 7-10 year platform cycle vs. 18 month Moore’s Law technology cycle. The development curriculum for DoD acquisition workforce is inadequate.
The DBB lays out eight recommendations:
- Establish FAR Part 12 as default procurement method for non-platform acquisitions
- Require adoption of modular approach to new mission-essential platforms
- Rebalance policies on Intellectual Property
- Remedy unintended consequences of budget reduction actions
- Provide clear and consistent senior-level messaging of DoD goals and policies
- Systemize and mandate DoD workforce education as condition for promotion
- Simplify DoD internal processes and policies: ensure consistent long-term leadership
- Re-examine industry structure and incentives from standpoint of future DoD needs
A final series of factoids: The market cap of Apple, Exxon-Mobil, Google, and Walmart each exceed the entire defense industry. Apple could buy nearly the entire defense industry today with their cash on hand.
So what are you thoughts on the DBB Innovation report? I believe they go beyond the standard acquisition reform report and identify some key recommendations acquisition executives could implement today. Which findings or recommendations resonate with you most?
Digital disruption is a mindset that bypasses analog
barriers, gaps, boundaries to deliver value
James McQuivey, Digital Disruption
Thanks to DAU for publishing Digital Pentagon in the Nov/Dec edition of Defense AT&L Magazine.
The time has come for the Pentagon to retire its Industrial Age management model and invent a radically new approach for the Digital Age. The Department of Defense (DoD) faces an increasingly complex operational environment at a time of decreasing defense budgets. The DoD would yield better results if it harnessed its strategic initiatives to enabling innovation instead of strict cost-cutting measures. The enterprise that more than 40 years ago helped invent the Internet for research and development collaboration must leverage the Web as a platform to network its acquisition workforce…. (see full article).
George Westerman has an interesting post Should Your CIO Be Chief Digital Officer? on Harvard Business Review.
He discussed the emergence of the Chief Digital Officer (CDO). Here are some key excerpts:
In many companies, “digital” is a cacophony of disconnected, inconsistent, and sometimes incompatible activities. One company had three simultaneous mobile marketing initiatives, conducted by different groups, using different tools and vendors. Other companies have multiple employee collaboration platforms with different rules and technologies. The problem is exacerbated as business units do their own things digitally, or as companies hire vendors who can only do things their own way.
The CDO’s job is to turn the digital cacophony into a symphony. It’s OK to experiment with new businesses and tools, but experimentation must be coupled with building scalable, efficient capabilities. The CDO creates a unifying digital vision, energizes the company around digital possibilities, coordinates digital activities, helps to rethink products and processes for the digital age, and sometimes provides critical tools or resources.
In an increasingly digitizing business world, most companies need better digital leadership and coordination. You need to create a compelling digital vision, coordinate digital investments, drive appropriate synergies, build a clean technology platform, and foster innovation. You need to energize a busy workforce and generate shared understanding in your senior executive team.
As we draw down from the wars in Iraq and Afghanistan, our force needs to make a very difficult transition from a large, rotational, counterinsurgency-based force to a leaner, more agile, more flexible, and ready force for the future.
Deputy Secretary of Defense Dr. Ashton Carter
See Dr. Carter’s full remarks at the National Press Club on May 7, 2013.