Advanced Manufacturing Marketplace (AMM)

Five Leading Business Strategies for Defense Innovation

by petemodi | Sep 12, 2019 | Agile, Digital, Mindset

Thinkers50 is a leader in identifying, ranking, and sharing extraordinary management and business thinking. If you haven’t seen their site and annual awards, it’s definitely worth browsing to learn from some of the world’s most brilliant business thinkers.

MIT Sloan published an article profiling Five Key Business Insights from (MIT’s) Thinker’s 50 Nominees. While DoD can’t be run like a business, given the unique aspects of government and warfare, some key insights from these thinkers apply to defense acquisition and operations.

Insight 1: Platforms optimize value creation

Today’s successful businesses don’t just offer high-quality products or services — they create platforms to connect producers and consumers in high value exchanges. As Parker, Van Alstyne, and their colleague Sangeet Paul Choudary write in their book “Platform Revolution,” companies like Airbnb and Uber gain from information and interactions. Investing in platforms allows companies to connect consumers and providers in two-sided markets.

DoD has produced major systems for decades, but how many are truly platforms? Billions are spent on complex aircraft carriers and 5th generation fighters, yet they are closed systems that often struggle to communicate with related systems. The Army attempted to group too many ground vehicle programs into a single Future Combat Systems (FCS) program, which was cancelled after spending $19B. FCS holds the top spot for the largest cancelled DoD program in history. Meanwhile, the versatile 60-year old C-130s are a great example of a successful DoD platform generating a family of aircraft to address diverse missions.

While DoD tries to develop platforms and systems of systems, it isn’t structured to do so. DoD’s requirements, acquisition, and budget systems are still very program-centric. DoD captures requirements via JCIDS program documents, budgets are appropriated via program elements, and program offices are established to execute per the approved acquisition program baseline. The Section 809 Panel (disclosure, which I supported) strongly advocated for a broader portfolio management approach to managing Big-A Acquisition (requirements, acquisition, and budgets). To rapidly and effectively deliver an integrated suite of capabilities, DoD needs to rethink the core Big-A structure, processes, and authorities.

DoD’s acquisition, technology, and operational communities must continue to design platforms to optimize lethality and mission impact. Each warfighting domain (land, sea, air, space, and cyberspace) must exploit a set of core platforms (vice major systems). If DoD can effectively develop around a core set of open platforms, they can minimize vendor lock, accelerate tech insertion of innovative solutions across a broader industry base, and strengthen alliances with International partners. This enables the U.S. and its Allies to stay ahead of emerging threats and deliver capabilities at the speed of relevance.

In traditional business models, companies controlled the factors that led to their success. Parker and Van Alstyne argue that today’s successful companies have upended that model, with value creation coming from sources outside the company’s control. Google and Apple, for example, rely on an ecosystem of external developers, which allows the companies to scale faster and reap the rewards. The result is a move from internal production to external orchestration.

The one area where DoD has the greatest opportunity for speed, agility, and innovation is in software. The Defense Innovation Board, chaired by former Google CEO, conducted a comprehensive Software Acquisition Practice study to address the most critical risks and opportunities in defense systems. One of their top recommendations included: “Require access to source code, software frameworks, and development toolchains – with appropriate IP rights – for DoD-specific code, enabling full security testing and rebuilding of binaries from source.” DoD can’t be beholden to their system’s prime contractor for new capabilities. If each Program Executive Officer (PEO) designed platforms of capabilities whereby an array of traditional and non-traditional vendors can contribute, the growth could be exponential.

“To build the ecosystem, platform sponsors often embrace modular technologies and encourage partners to supply downstream complements in competitive markets.” Congress mandated a Modular Open Systems Approach (MOSA) to major weapon system platforms and components, yet the prime contractors’ business model incentivizes them to resist and subvert MOSA. There is an opportunity for a prime contractor, or disruptive new entrant, to develop a new business model around an open platform. Identify a model where they can generate more revenue and profit when other companies and government users develop capabilities on its platform. Dr. Griffin, USD(R&E) is aggressively pursuing research in 10 leading technology areas to assess and engage an array of partners to modernize DoD. The Defense Innovation Unit (DIU) scouts and contracts with leading tech companies to solve defense problems.

In warfare, agility is the key to success. The National Defense Strategy highlights: “Cultivating a lethal, agile force requires more than just
new technologies and posture changes; it depends on the ability of our warfighters and the Department workforce to integrate new capabilities, adapt warfighting approaches, and change business practices to achieve mission success.”

Similarly in defense acquisition, agility is key to success. USD(A&S) Ellen Lord’s Adaptive Acquisition Framework and Contracting Cone outline dynamic arrays acquisition pathways and contracting strategies. We’ve championed Agile software development across DoD for years, tailoring processes and culture to enable smaller, frequent deliveries to be responsive to changes in operations, threats, technologies, and user priorities. Leveraging policies, precedence, and partnerships are keys to effectively implementing change.

Digitally transforming DoD’s acquisition enterprise has been my white whale for over 20 years. See Digital Defense Acquisition 2024 for the latest vision on what a high performing digitally charge enterprise could do to enable military superiority for decades. Acquisition professionals and industry require a new suite of digital strategies and tools to navigate the complex environment with greater speed and agility. Harnessing the collective knowledge of the acquisition workforce (and industry) to devise acquisition strategies and execute programs across each phase of the acquisition lifecycle. Digital strategies enable greater workforce productivity, accelerated delivery, and higher probability of success. These allow acquisition professionals to navigate the complex environment with speed and success to regularly deliver capabilities users value for mission impact.

Gregersen’s research about leadership shows the power of asking questions. Innovative leaders recognize that they might be in isolated positions and create intentional strategies to fix that — even if they might be uncomfortable. One case in point: a question burst, Gregersen’s method of sitting through a series of rapid-fire questions without providing the answers. Focusing on questions rather than answers provides a new, less-familiar lens to explore issues and leads to better brainstorming, Gregersen proposes. Leaders should also aim for “catalytic questions,” which dissolve barriers to creative thinking and channel the pursuit of solutions.

Successful acquisition programs and leaders regularly question requirements, strategies, and solutions. Given the decade or longer it can take from needs to deliver solutions, many things can change in operations, threats, technologies, budgets, risks, and more. While you have an approved JCIDS requirements document, is it still what the users need 5-10 years later? Are there new technologies and commercial solutions that offer greater performance and/or reduces costs from our current design? As you present your program at a major milestone, have you thought through how to maintain competition across the lifecycle, address security and sustainment in your design, and ensured an open approach to rapidly integrate new technologies in the future? MITRE’s Innovation Toolkit offers a suite of tools to guide problem solving to ensure you’re designing the right thing and designing the thing right.

For the acquisition leaders and practitioners reading this, what challenges and opportunities do you see in applying these five insights?

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