Author: Frank Kendall, Under Secretary of Defense for Acquisition, Technology and Logistics
This article originally appeared in the November — December 2016 edition of the Defense AT&L magazine, and was first published on October 14, 2015.
Innovation has become a very popular word lately. Former Secretary of Defense Chuck Hagel announced the Defense Innovation Initiative about a year ago. At about the same time, the draft Better Buying Power 3.0 set of initiatives, focusing on technical excellence and innovation, were published for comment. Deputy Defense Secretary Robert O. Work has led the effort to develop an innovative “Third Offset Strategy.” Most recently, Secretary of Defense Ashton Carter announced the opening of the Defense Innovation Unit — Experimental, or DIU-X, in California’s Silicon Valley. President Obama has led the administration’s successful opening of several Manufacturing Innovation Institutes, most of which are sponsored by the Department of Defense (DoD). And more institutes are on the way.
Today it is possible to obtain advanced degrees at major universities in the fields of innovation and entrepreneurship. Many books and articles have been written on innovation, perhaps none more well-known than Clayton Christianson’s “The Innovators Dilemma.” I would like to add a few thoughts to that body of work by making some very unscientific (meaning unsupported by data) comments on the ingredients needed to foster and encourage innovation — and on the extent to which the DoD acquisition enterprise has or does not have those ingredients today.
The first and absolutely necessary ingredient is knowledge. Technical innovation is itself, almost by definition, a new idea. But new ideas are rooted in the knowledge that makes the new idea conceivable and practical. Part of Better Buying Power 3.0 involves increased support for education in STEM (science, technology, engineering, and mathematics). Our educational system provides the foundation of our knowledge, but that is just the beginning. Experience, exposure to a wide and diverse range of technical fields, and continuing in-depth study are all important. For the more exciting areas of technical innovation today, this knowledge is increasingly highly specialized and deep. I recently visited the Massachusetts Institute of Technology and spoke to researchers in the fields of biological process-based materials production, novel computational architectures, and autonomy. These are areas in which it is not possible to enable innovation unless one has a deep knowledge of the science and associated technology.
I believe that we are in the early stages of some explosive growth in the products that these and other technologies will make possible, but some very specialized advanced technology work will have to be accomplished to achieve that potential. Once that occurs, innovative applications of these technologies will be created at an exponential rate. In many cases today, the DoD is not the primary financial supporter of the relevant work. Nevertheless, the DoD’s basic research program still represents an important contributor, and it provides a basis by which the DoD can shape and capitalize on new technical knowledge as it is created. By reaching out to nontraditional sources, such as through the DIU-X, the DoD intends to increase its knowledge of the possibilities that commercial cutting edge technology can offer to DoD.
My second ingredient is freedom. By this, I mean the freedom to have a new idea and to take action in pursuit of that idea. I mean the freedom to fail and start again. I also mean freedom from bureaucratic constraints. Our free enterprise system provides this ingredient on a national scale, and it is the most powerful economic engine ever created. The United States stands out as a place where it is amazingly easy to start a new business. I’ve done it a couple of times.
Within the DoD, one of our most effective and successful institutions — the Defense Advanced Research Projects Agency (DARPA) — is a living testament to the value of freedom. I zealously guard DARPA’s freedom from the many parts of the DoD that see DARPA’s budget as an opportunity to fund something they need. The whole concept of DARPA is that the organization has the freedom to choose its own high-risk but high-payoff investments.
In DoD more broadly, we set strategic goals for technology investment, require a certain fraction of the Services Science and Technology work to be in these areas and leave those organizations the freedom to choose their own priorities for the balance of their work. Within DoD, we also allow our contractors to pursue Independent Research and Development (IR&D) as an allowable overhead cost with very little constraint.
I made industry a little nervous recently by proposing in Better Buying Power 3.0 to increase the DoD’s oversight of this work. The fundamental concern of industry partners has been the possible loss of freedom to make their own IR&D investment decisions. That was never my intent. I once ran a major defense contractor’s IR&D program, and I appreciate industry’s perspective. I appreciate the value, to industry and the DoD, of allowing industry to place its own bets on technology that might increase a firm’s competitiveness.
After carefully considering several alternatives, the policy I propose would merely require industry to brief an appropriate DoD officer or official prior to and after concluding an IR&D project, and to document that the meeting occurred as part of the accounting for the project. This policy would not require sponsorship or approval of an IR&D project by a DoD official, but it would require industry to communicate directly with appropriate DoD personnel and to obtain feedback on the proposed work and to communicate the results when the work is complete. This should not constrain industry’s freedom in any way that current regulations and statutes don’t already require, and it will provide the benefit of ensuring more frequent and effective communication between industry and government.
My next two ingredients enter the area of what I will call subjective human intangibles. These intangibles also are manifested in what we call organizational cultures. One could generate a pretty long list of the human qualities needed for successful innovation. The list might include innate intelligence, creativity or the ability to think “out of the box” and curiosity, to name just a few such qualities. These address the capacity to have a new idea. A great deal of work has gone into structuring organizational environments to encourage and foster creativity. This can include physical arrangements, workplace layouts, and a range of approaches intended to foster cultural norms that support creativity.
Some companies use problem-solving tests to identify candidates with high creativity. I believe all this work has merit, but I also think its goal is to select creative people and to draw out the inherent creativity that people either do or do not possess. I’m only going to mention two human qualities that I think have great importance, and that DoD managers at all levels should be especially conscious of: risk tolerance and persistence.
I was asked by a reporter during an interview 2 or 3 years ago if the DoD was taking too much risk in its programs. My response was that we are not taking enough risks. With respect to our major programs, I find myself pushed in two directions simultaneously by the political winds in Washington. At the same time that I am told the expectation for all our programs is to have no schedule slips or cost overruns, I also am told that we should go much faster in our programs and not have so much oversight. I’m sorry, but you can’t have it both ways.
To me, both perspectives miss the point. Development of new products, particularly a new generation of cutting-edge and militarily dominant systems, cannot be made risk free. If we want risk-free defense acquisition, we should just buy fully developed products from other countries. If, on the other hand, we want the best military in the world, and one in which our warfighters always have innovative and dominant equipment, then we are going to have risk in our programs.
One of our program managers’ most important responsibilities is to understand and proactively manage the risk inherent in any development program. (I wrote about that responsibility in an article in the July-August 2015 issue of Defense AT&L magazine.) To borrow a line from the movies, the secret of life is balance. We have to balance risk against urgency and resource constraints. If we are too cautious, our programs will take forever and be too modest in their ambitions. If we gamble wildly, we will waste precious resources and not meet our objectives.
At the enterprise level in DoD today, there is strong support for accepting the risk of embarking on a number of what I will call advanced technology demonstration programs. The recently completed Long Range Research and Development Planning Program has recommended several advanced technology demonstration programs for consideration in the Fiscal Year (FY) 2017 budget. Similarly, the Strategic Capabilities Office is proposing demonstration programs based on novel applications of currently fielded systems or those in development. In the FY 2016 budget, I was able to secure funding for the Aerospace Innovation Initiative that will culminate in X-plane-type and propulsion technology demonstrators that will create options for the systems subsequent to our current Joint Strike Fighter program. This fall, all of these demonstration proposals will collide with budget reality at the President’s Budget request level.
Needless to say, if sequestration occurs, that collision will be even more violent. In some cases, we could reasonably accept more risk and move directly into Engineering and Manufacturing Development (EMD) programs instead of pursuing concept demonstration programs, but we simply don’t have the resources to conduct those EMD programs.
My observation is that the politicization of these decisions does not generally lead to better results. We also have frequent leadership changes — which makes persistence in the face of difficulties more problematic.
The other intangible characteristic successful innovators demonstrate is persistence. When innovators encounter obstacles, they find ways through or around them. Two obvious historical examples are Thomas Edison and his quest for a practical light bulb, and the Wright brothers and their pursuit of controlled, powered flight. (David McCullough has written a new book chronicling the Wright brothers’ tenacious pursuit of powered and controlled flight.)
The DoD has sometimes been criticized for sticking with programs that encounter problems.
The F-35 fighter is a current example. Earlier ones in my experience include the C-17, the Advanced Medium-Range Air-to-Air Missile, and the F-18E/F fighter. In all those cases, we persevered and achieved good results. In other cases, we have stopped programs that, in retrospect, we probably should have continued. In still other cases, we kept going for far too long on programs that should have been canceled earlier. In general, my sense is that, for most programs, we can get to a product that meets our requirements if we have the patience and persistence to continue. There are exceptions, however.
There is an important difference between the persistence applied to commercial innovation and that applied to innovative products in DoD. For commercial products, both in start-ups and large corporations, the decision to continue product development when problems are encountered is driven by the judgment of the management (influenced by persistence and risk tolerance) and by the resources available to the firm. In DoD’s case, these decisions have a high political content — both internally and externally. My observation is that the politicization of these decisions does not generally lead to better results. We also have frequent leadership changes — which makes persistence in the face of difficulties more problematic. I have no solution to offer for all this other than to continue the work of the last several years to ensure we don’t start unaffordable programs, and to manage risk professionally and proactively in our development programs. The DoD spends taxpayer-provided money; we will always be under close public scrutiny, and we will always have internal competition for resources.
Innovation, in the commercial and the DoD context, tends to be based on collaboration. Multiple technical disciplines often have to come together, and the synergy between multiple disciplines may be the central feature of the innovative idea. In the DoD, technical ideas only reach the market when the using military Service decides to embrace the new concept or new product. This is not quite the same as the commercial market where “early adopters” from a large customer base may help a technology establish a foothold and gain credence. Commercial entrepreneurs build the better mouse trap first and expect customers to come. In DoD the customers, the military Departments, ask for fairly specific products and then budget the resources to pay for the development of those products.
The DoD also uses a formalized requirements process that is based on the perception of “gaps” in capability. Requirements are generated to fill these perceived gaps. This approach tends to be self-limiting and to discourage new concepts and innovative approaches that deviate from existing paradigms. Henry Ford’s famous quip that if he had asked his customers what they wanted it would have been a better horse has some relevance here. The fact is, however, that despite our formal process, requirements are often based on the priorities of senior Service leadership. For this reason, I welcome the initiative from the U.S. Senate to increase Service leadership involvement in acquisition.
A strong collaboration between Service leadership and the technical acquisition community, starting as early in the product life cycle as possible, is essential to effective innovation in the DoD, and it is a component of Better Buying Power. I would also add that close collaboration with the intelligence community is critical as well: Potential adversaries are moving very quickly to develop products clearly designed to defeat U.S. capabilities. The DoD must be both innovative and quick to market in responding to these emerging threats. Achieving these objectives requires strong and continuous collaboration between operators, the intelligence community and the technical acquisition community.
Funding Is Fundamental
There is one more necessary ingredient that I have not discussed yet. That ingredient is capital. Small start-ups and large businesses alike depend on capital to survive and to bring new products to market. So it is for the DoD, and this is my greatest concern today. Our capital comes from the budgets we receive from Congress. As long as we remain trapped in the grip of sequestration and as long we continue to prepare budgets that are far out of alignment with the funds we may receive, we will not be able to innovate effectively.
Innovation isn’t just about thinking outside the box, or about demonstrating new technologies and operational concepts. It is about developing, producing, fielding and training with those new capabilities. Today I believe our pipeline of new products in development is inadequate to deal with emerging threats. We are facing a major recapitalization bill for the strategic deterrent that is about to come due. There is nothing that I or the DoD can do to improve our productivity and efficiency that will fully compensate for inadequate capital. All the efficiencies I can even imagine will not make up this shortfall. By conducting well-chosen demonstrations, we can reduce the lead time to acquiring real operational capability, we can keep an essential fraction of our industrial base gainfully employed, and we can position ourselves for changes in threat perceptions and the availability of additional funds. But, without relief from the specter of sequestration, we cannot increase the relative combat power of the United States against our most capable potential adversaries.
I can point to numerous places in DoD where we are taking steps to improve our access to and use of each of these ingredients: knowledge, freedom, risk tolerance, persistence, collaboration and capital. For the last few years, we have worked hard to emphasize and increase the professionalism of the government acquisition workforce. Secretary Carter’s “Force of the Future” initiative is specifically intended to bring high knowledge people into our workforce. With help from the Congress through the Defense Acquisition Workforce Development Fund and a number of internal actions, we have continued to build on our strong foundation in this area despite budget constraints.
We are protecting and emphasizing the freedom of our managers to find creative solutions to technical and managerial problems. Last year, I tasked each of our program managers to communicate directly with me about problems, issues and recommended solutions. The result was a huge testament to the creativity, dedication and professionalism of our workforce.
The demonstrations that I mentioned, if they can be funded, show our willingness to take risk on new and nontraditional approaches to operational problems. Deputy Secretary Work’s “Third Offset” strategy, by its very nature, will require the DoD to accept the risk associated with new operational concepts and the technologies that enable them. Our ability to persist in bringing all of these initiatives to fruition remains to be seen, but the closely aligned leadership in the DoD — including the Secretary and Deputy Secretary of Defense, myself, and the new Joint and Service uniformed chiefs — makes me optimistic that we can collaborate to do so.
From their inception, the Better Buying Power initiatives, in every edition, have been about getting the most value possible from our available capital. With that possible exception — which is in the hands of the Congress — we possess or can obtain all the ingredients we need to bring innovative solutions to our warfighters.
Mr. Frank Kendall currently serves as the Under Secretary of Defense for Acquisition, Technology, and Logistics (AT&L). In this capacity, he is responsible to the Secretary of Defense for all matters pertaining to acquisition; research and engineering; developmental testing; contract administration; logistics and materiel readiness; installations and environment; operational energy; chemical, biological, and nuclear weapons; the acquisition workforce; and the defense industrial base. He is the leader of the Department of Defense’s efforts to increase the Department’s buying power and improve the performance of the defense acquisition enterprise. Prior to this appointment, from March 2010 — May 2012 he served as the Principal Deputy Under Secretary and also as the Acting Under Secretary.