June 20, 2016

CNAS 2016 Tenth Annual Conference: Defense Innovation – Between a Rock and a Cliché

BEN FITZGERALD:  Good morning, everyone.  If you take a look at your agendas, you’ll see that this talk is about innovation, but really, I want to talk about one thing: why change is so hard in the Department of Defense.  As you may have noticed, the times they are a changing.  But change isn’t really our strong suit, especially at the institutional level.  From my perspective, our challenges with change undergird almost all of the most pressing national security issues we face today.  And this is going to continue until we internalize the need for ongoing change, not just in our bureaucracy, but in the models that underpin that. 


Now, the reason that I said that this talk was about innovation is because that’s the term that we’re using for change today, but change is a longstanding challenge for us, one where even a terminology is difficult to settle on.  Before we had innovation, we had transformation.  We’ve also had adaptation.  And we get some really cool terms right revolution in military affairs and network-centric warfare. 


We have to keep coming up with these terms because we have a tendency to wear the term out before we’ve actually had a chance to implement the change that we were after.  But ultimately – and so today, when we talk about innovation, that covers everything from the Secretary of Defense’s change agenda to the Third Offset Strategy, I suspect even the redesign of the cafeteria in the Pentagon may be some form of innovation.  Go pop eyes, right? 


The challenge, though, is that the terminology problem is just a symptom of a deeper set of problems.  And we have many of these symptoms that we need to deal with.  In addition to our terminology challenge, we tend to identify or try to identify singular issues, problems, and solutions.  And we boil down really complex challenges into leadership or education or authorities, when really it’s all of the above. 


In addition to that, we create false binaries.  Is future warfare going to be irregular or conventional?  Should we engage in threat-based planning or capability-based planning?  Will the future be about Silicon Valley or defense industry?  Unfortunately, we also have a tendency to get a little bit too clever for ourselves. 


I was at a very serious meeting a few months ago talking about offset strategies.  And someone there said, we don’t really need an offset strategy, we need an inset strategy.  And just to be clear, that’s not a thing.  (Laughter.)  Now, it sounds clever, but I mean, where do you go with that?  Like if we were to inset at the outset perhaps we could avoid an offset before the onset of conflict.  I mean, come on. 


More seriously, though, one of the most practical things that we tend to do is we create workarounds to the core system, and that’s things like the Joint IED Defeat Organization or the Defense Innovation Unit-Experimental or the process that we established to acquire MRAPs.  Now, I’m all for subverting the system, especially when we need quick results, but, as Lt. Col. Dan Ward says, at what point can the workaround just become the actual system for what we do? 


Now, from my perspective, we engage in these sort of clichés of innovation because deep down we don’t believe that the Pentagon is capable of fundamental change, but we need to do something.  So we spin our wheels in these clichés of innovation, while remaining caught against the hard place of an apparently unchangeable bureaucracy.  But again, why is that bureaucracy apparently so unchangeable even by the standards of regular bureaucracies?  Obviously, it’s many things.  It would be bad if I said it was one thing after what I’d just said before.  But I’d like to just draw on a couple of those points for you today. 


The first is that our model for our bureaucracy is still very much rooted in the Cold War.  That in itself is not a revolutionary observation, but it applies very particularly to the ways in which we seek to change or innovate.  Let me give you an example from the work I do on strategy, technology, and business. 


During the Cold War, we developed a model for a technology competition with the Soviet Union.  We were facing one large monolithic threat and we had a grand strategy for addressing that in containment.  Underneath that strategy, we were able to align what became known as an offset strategy.  And that offset strategy saw us invest in information technologies.  When I say information technologies, I mean things like microprocessors, GPS, data compression, computer networking, things in which the United States had unique advantage and access to. 


Based on those component investments, we’re able to develop military system, precision munitions, intelligence surveillance and reconnaissance, command and control networks, and we’re able to do that at the same time as we developed new concepts by which to fight with those concepts – those technologies.  So most notably, we developed air-land battle, but there were a number of constituent components there. 


We’re able to develop all of that through government funded R&D, in close collaboration with defense industry.  And as we deployed those systems, we were able to lock in those advantages through expo controls.  And at the end of the day, we had developed an astoundingly capable fighting force, which created a credible deterrent, which is what we needed.  And at the same time, we developed the Internet and we positioned generations of American businesses at the forefront of a new economy. 


Not bad.  Not bad at all, especially given that if you talk Bill Perry, who was behind the – (inaudible) – he will tell you that the acquisition system was no better in 1973 than it is today.  But the challenge is today we are still taking basically the same approach.  The underlying model to the way that we compete with technology is basically the same, even though we’ve done some reforms.  But the context and the inputs that necessitated that model in the Cold War and made it work have all changed. 


We don’t face a singular monolithic threat or challenge today.  We need to deal with a range of them from China to Russia, North Korea, regional instability, terrorism, cyber threats.  And each of those threats is evolving rapidly and in a different direction.  In addition to that level of the problem, we have a much wider range of technologies that we need to invest our finite resources in or mitigate against, and we don’t have unique access to almost any technology today as we did in the 1960s, for example.  And our R&D purchasing power has declined as the rest of the world has increased their spending, particularly in the commercial sector.  So that mean that the world has changed, but fundamentally we haven’t.  And this is the crux of our challenge. 


So as we try to move forward, we need to think about ways to update that system, even though it remains a challenge.  And that brings me to my second point, the ways in which we seek to innovate, the ways in which we seek to change are already built into our bureaucracy.  And we believe that we’re innovating and in many instances we actually are.  We do R&D.  We do war gaming.  We develop new concepts of operation.  We invest in new technologies.  We have schoolhouses.  We have labs.  We have future’s groups.  We have strategic initiatives groups.  In fact, we have so many of these organizations that they often end up in competition with each other.  And it can be very difficult for a new idea, especially one that’s truly out of the box to fight its way through the ranks of entrenched innovators. 


And this is why it becomes very difficult or very frustrating for many people in Washington and in the Department of Defense when they’re told that they need to look to Silicon Valley or some other external area for innovation.  We’re already doing that, why do we need to do something different?  But the type of innovation that we need is not necessarily the type of innovation that we’re optimized for.  That’s Cold War era competition between two peers. 


Let me give you an example of what I mean with what I believe is the world’s first comparison of the F-22 Raptor and Uber.  So Uber is really hot right now.  In fact,  if it keeps going on its current level of hotness, it’s going to end up as the go-to example for innovation in defense circles.  You know, like Google last year or Apple, a couple of years ago, where you’d have retired officers telling people that we need a smartphone in the hands of every rifleman.  I’ve actually done an experiment on that.  It’s a terrible idea. 


But – also, while I’m speaking, parenthetically, why is it that we always just pick like one tech company and just the one that’s in the news?  Like we never say, let’s look at Lift or LinkedIn or Amazon Web Services.  Those guys do some interesting stuff as well.  But I digress. 


Uber, Uber did not develop any new technology.  Uber didn’t reinvent the Internet.  They certainly didn’t reinvent the car or smartphones or GPS.  They developed new algorithms and software.  Don’t want to understate how difficult that can be.  But this was not a DARPA hard technical problem.  Where Uber has been very innovative, though, is in their business model.  They have empowered you as a rider to request a car of your choosing at a time and place of your choosing reliably and fairly securely.  And they’ve empowered a large number of people to drive in very flexible ways and earn an income.  And at the same time, they have challenged status quo concepts about employments, licensing, unions, all sorts of things. 


So despite the fact that we think of Uber as a tech company, it’s really not the technology that has been innovative.  But when we think about the F-22, that is a legitimately technically innovative platform.  It’s a marvel of modern engineering.  We integrate stealth and super maneuverability and super cruise and synthetic aperture radar and fusion sensor – sensor fusion systems, all on a single platform for the first time.  It’s amazing.  But we use that aircraft with concepts of operation that we’d had for a while and we built using the acquisition methods that we followed for decades.  Meaning that an aircraft that was conceived in the late Cold War era hasn’t seen combat until Syria.  And a couple of things have changed in the meantime. 


So the – and, given that it took that long to build and the cost control issues that we had, we only ended up building 187 of them.  So despite the fact that the aircraft is technologically innovative and does everything that the United States Air Force asked for it, is it really that innovative?  Despite the fact that it’s way, way harder to build than some stupid app. 


And the way that I think about that is has it meaningfully increased that deterrence against near-peer threats?  Has it ensured our air superiority deeper into the 21st century and was it worth the billions of dollars that we invested in it relative to other technologies or concepts that we might have invested in? 


I also need to say it sort of confuses me a little bit.  If you look at Uber, it’s currently valued at about $66 billion, which for those of you who are involved in financing is something that I fundamentally do not believe in.  It’s a funny number.  But it’s not that much smaller than the $72 billion at which Lockheed Martin is valued, which says something about how we generate value in the 21st century. 


Now, despite all of that, it’s understandable that we would seek to hold on to our prior methods of innovation that were very successful during the Cold War.  And some of them are still very successful today.  I’m not advocating that we simply throw away everything that’s more than five years old, but we really need to think about the implications of the lack of change in our innovation methods because what it’s doing is it’s turning our organizations, and in some cases, our deployed forces into static target arrays for our adversaries’ innovation.  Whether that’s innovation in their own weapon systems or new concepts of operation or grey zone conflicts or warfare or in their collaboration with the industry, we need to change because they are changing. 


So ultimately, when we think about our innovation challenge, I think that’s the crux of it.  How do we navigate a path between clichés and weak thinking on the one hand, and an apparently immovable – (inaudible) – that we’ve created as sort of a statute of bygone glories?  That’s a pretty negative assessment, I think, and particularly so when we think about where we are in our change history right now, which is in the middle of a window which is actually quite remarkable in that it presents us opportunities to execute some fundamental change. 


We have leadership in the building and on the Hill, all of which want to see some change and they’re taking practical steps to do that, even though they have some differences of opinion about how to execute.


Now, the Secretary, who we’re about to hear from in a few minutes, has been appropriately outspoken about the need to have innovation.  And in addition to his public speaking, he’s established the Defense Innovation Advisory Board with Eric Schmidt from Alphabet in charge.  He’s established a Silicon Valley outpost, the Defense Innovation Unit-Experimental.  He’s even supported a bug bounty to allow hackers to sort of find weaknesses in our information systems, which is always unheard of, and it just wrapped up and it was very successful. 


He’s also gone after personnel reform, looking at his Force of the Future initiative.  And importantly from my perspective, in collaboration with his deputy, Bob Work, he’s pushing forward on the Third Offset Strategies, looking at new concepts of operation and weapons hacks through the Strategic Capabilities Office in the short term, and laying the foundations for future innovations in robotics and artificial intelligence and human-machine teaming, and the concepts which we’ll use to employ those on the battlefield. 


The services, too, should not – are not being left behind here.  We’re seeing an increased focus on experimentation and prototyping. Cyber Command and SOCOM have been very creative about pushing their authorities for acquisition.  The Navy has been very creative about its personnel management within existing authorities.  And the Marine Corps has done excellent work on force structure reviews and implementing concepts like the Special Purpose MAGTF. 


And then, when we look at the Hill, between the Senate and the House Armed Services Committee, we have language teed up in this year’s National Defense Authorization, which it voted on and implemented successfully, will perhaps be some of the most wide-sweeping change we’ve seen in a generation.  We’re talking about reducing the number of four-star billets.  We’re talking about getting rid of the position of the undersecretary of defense for acquisition, technology, and logistics, while reshaping that AT&L enterprise.  Changing the strategic planning process.  No QDR to argue about every four years.  I don’t know what think tanks are going to do.  And then, also going after meaningful personnel issues, providing the Department new authorities to hire and fire people.


So this is all very positive.  The challenge, though, is that nothing that I just talked about is necessarily going to be in place a year from now.  It’s all on the edge and it could be shut down very, very easily, which begs the question, where to from here, especially as we enter a period of a change of administration, presidential administration and potentially some significant changes on the Hill.  Are we going to maintain this window of opportunity for change or are we going to double down on the day-to-day issues which are driving our agenda globally?  And those are some very important issues with things flaring up around the world.


Secretary Carter’s philosophy, his theory of change has been about generating momentum.  He’s making small bets, showing what’s possible, and encouraging others to continue that agenda beyond his tenure.  I have to confess, I was kind of skeptical about this when he first took office and started this approach, but when you look at the sheer volume of things that have been stacked up, I’ve got to believe that at least some of those are going to get through. 


The challenge is going to be how do we maintain that momentum into the new leader.  The way that we have been able to create this window of opportunity at all has been about senior leaders who are willing to spend political capital.  And that’s going to be required in that new administration.  At the same time, the new secretary is going to have an opportunity to take all of this work and make some early decisions.  That’s going to be critically important.  That’s also going to mean that that secretary is going to need to shift his or her focus from innovation at the edges, which is what we have today, into innovation at the core of the Pentagon.  That’s going to mean going after things like the requirements system or test and evaluation or the Inspector General’s Office or recruitment and retention, base realignment and closure, all of the unglamorous stuff.  It’s not going to be front-page news.  It’s not going to be super exciting, but it’s some of the most consequential stuff that we can do if we want to maintain success in the future.


Now, a new secretary is going to have a number of advantages compared to the changeover that we had eight years ago.  In these eight years, I think we’ve developed a much better understanding of the nature of the challenges that we face today and in the future and some of the solutions are becoming more apparent.  But the theory of change is going to need to move rapidly from momentum to execution.  And when I say execution, I mean Bob Gates style, take no prisoners.  Fire people if you have to.  Make it happen, execution.  And I believe that this is possible.       


The beginning of a new administration is usually a time to lay out your geostrategic themes.  And that’s important.  We need to keep doing that.  But if we don’t undertake some change, we’re not going to be able to offer the best possible policy options or military options to a commander-in-chief. 


So in closing, I’d like to focus on last area that makes change difficult inside the Department of Defense.  And that is that no one person or organization is empowered to drive change, but almost everyone can stop it.  So how do we deal with that environment?  In 1956, the academic and polemicist C. Wright Mills at Columbia University talked about an American system of organized irresponsibility.  It’s a fantastic line.  I’d like to believe that’s not who we are. 


At the same time, it’s very easy to fall into the trap of just blaming the Pentagon or the services or the Hill or Washington, especially if you’re not in that particular organization, right, like it’s always the other guy.  But to the extent that we fail to change, that’s a collective failure.  It’s a failure we’re all responsible for, me and all of you.  It’s a failure of will and belief and leadership and it’s not acceptable. 


So for us to address this is going to require a collective effort, whether that’s people inside the Department pushing the limits, legally, of existing authorities or folks on the Hill creating new authorities and removing roadblocks, or having industry continue to push really bold solutions, out of the box thinking and investing in new technology.  And maybe, maybe even having think thanks to develop some practical solutions, many of which you’re going to hear later in the afternoon. 


Ultimately, though, the Pentagon is always going to be a large bureaucracy.  It’s never going to change as quickly as we would like it to and it’s never going to move that quickly.  But we need to reposition that bureaucracy and its model to benefit from the global trends that we see in the 21st century environment, not suffer from them, which is what’s happening today.  We’ve done this before and we can do it again.  It is simply going to require some change, whether we call it innovation or something else.  Thank you all.  (Applause.)


End Transcript