The Defence Procurement Strategy has changed the landscape, though to what extent remains unclear. But declining defence budgets throughout much of the western world have challenged government and industry approaches to acquisition. Sean Riley, who leads the Integrated Mission Support Solutions (IMSS) program for Raytheon Missile Systems in McKinney Texas, says the current business model is ineffective. During a keynote address at WestDef in Calgary in July, he laid out the four pillars for evolving a new normal.
As global defence budgets decrease, they have dramatically affected acquisition models. This in turn has forced new strategies and behaviours that are creating unparalleled challenges for the Department of National Defence (DND) and the defence industry. It is challenging cultural boundaries and driving bad behaviours, be it a perception of industry entitlement or a focus on product rather than service or capability.
So what options do we have? We can either do business the same way, and expect different results – the very definition of insanity. Or, we try to do business differently by learning and understanding the motivations of all parties involved. We have to evolve.
On the IMSS portfolio, we use a four pillar system to drive our change agenda: Partnering; Common vision; Challenge the status-quo; and Metrics. Together, these elements of change can drive you to a new business model as you seek to work in collaboration as a true partner with DND. Let me explain.
Partnering
Partnerships have to be based on trust. In many cases, and I speak from my experiences with DoD, our relationships are generally antagonist. They are not based on trust and it is hard to have honest conversations. We must be able to talk critically with our defence partner and not leave hurt feelings. When DoD or DND says, “I really want you to do this,” industry must be willing to say, “Wow, you really DON’T want me to do that. I don’t think you understand the price tag you’re putting on by asking me to do that. Let me give you an alternative way to do it.” Without that basis of trust between partners, you will not be able to understand the motivations of both parties.
For most of us in industry, our motivation is driven by profit. We in turn have to understand DND’s motivations. We have to understand that their particular concern is driving the best results for the end user. This means you must be committed to a win-win solution. Without that, you will not succeed in today’s dynamic environment. Instead, there will be finger pointing, platforms will suffer, and the end users will stop accepting your product. Let me emphasize that: in this case it is likely that industry will be the party that gets the black eye – it will not be DND. The end users will talk negatively about your products. At the end of the day, we in industry actually have more to lose.
To combat this, you’ve got to be able to have honest communication. That means no secrets or hidden agendas. With honest communication, you can have critical debate. You can argue and no feelings are hurt. Critical debate is required so either party can say what needs to be said. You must be able to tell your partners what they need to hear, not just what they want to hear. In the end, you will ultimately fail if antagonism and distrust are still elements of your relationship.
Common vision
There needs to be unity of direction. You need agreement on the path you intend to take. You may debate which one to take, but in the end you need a path forward that is win-win. And it must be the one focus of the team – DND and industry. Through this common vision vertical alignment will be established. The common vision must be articulated properly to everyone on the team, including your supply chain partners. Everybody has to understand what their roles and responsibilities are, and everyone needs to be moving toward the same outcome.
As you establish common vision, strategic communication is critical. You and your partners must be able to have conversations on the direction you’ve taken and when and if to make course corrections when something in your environment changes. Those conversations must be regular. As a team, you have to be ready to modify. In the flagship program of IMSS, which is considered one of the best Performance Based Logistics (PBL) programs in DoD, we meet once a month, and spend one day talking about strategy and our common vision: where we are, what has changed, where we need to go, and how does that affect both the government and Raytheon. Without strategic conversations, you will end up going down a singular path, which will create complacency. Vision is the driving force of strategy.
Challenging status quo
This is my favourite pillar. I really like playing the part of the maverick. To do this effectively, you must be willing to be different. That goes for your government or defence partners as well as for you. They must be willing to stand up and articulate the vision: “This is what we’re going to do. It’s the right thing to do, even though it is not normal practice.” You need stamina to do it because, trust me, you’re going to run into resistance many times before you reach that common vision. You will also need to have a strong voice. If you are not confident in your message, no one else will be either. And you have to feel safe in your message, which comes from the support of your partners standing with you.
In the end, you must be prepared to do what is right, not solely what a customer wants. We as an industry run into this question a lot. We know what’s right, but we also know what they want. You’ve got to be able to ask tough questions. Usually we end up talking about symptoms, not about real root causes. And so we don’t change the things that need to be changed. Asking questions is the way to do that. If you’re asking the questions appropriately you can avoid creating a defensive environment, and it allows you to drive to the real root causes. Questions are the energy of change.
Finally, you need diversity of experience. When you look around at your team, how well do you understand what they have done before they became part of your team? How many people in industry actually pay attention to that, beyond what a person has done in your company? We tend to keep people employed on the same program for 20 years. Diversity of thought is critical to progress. It allows you to look at your problem from multiple perspectives and decide what needs to be changed. You must also build a culture of change that is safe. Failures should be acceptable. I don’t know how we expect people to learn, if not through failure. In the IMSS portfolio, our one rule is that you’re allowed failure, but it just can’t be repetitive – the same failure for the same reason.
Metrics
I find this to be one of the things we in industry distort the most. What do metrics mean to most of us? Reams and reams of data. We want to measure everything. We have a saying on our team, “Define an action.” Metrics must be definable and they must create action to drive the right behaviours. We use only five or six metrics internally and we only use one with the customer. The five or six metrics we use have mutated three times in the last 18 months. Too many metrics are ineffective, and they cause distraction.
When you’ve got reams and reams of data and one set of data is telling you to do one thing and another set is telling you to do something else, you get paralysis by analysis. And it happens a lot. Metrics should drive the behaviours you want your team to establish. For instance, in our flagship program, one of the areas we wanted to focus on was the number of shipments it took to manage the distribution network to support the fielded units. So we created a metric that looked at how many shipments we were doing from different locations, and we were able to cut the number of shipments in eight months by more than half. That was done because the cost of shipping was seen as one of the highest cost elements of our distribution network. Now we’ve decided we want to know how many inventory transactions we do per shipment, so we’ve now focused on a new problem, and evolved the metric to be able to look at how our bundling is saving us money because we’re reading more transactions per shipment. This is all done with a customer by our side. Good metrics will drive best behaviours.
Summary
To evolve, we have to endure. To endure, we have to evolve. To do this, we have to become a true partner. We have to be willing to step out of our comfort zones and have open, honest communication with our partners that’s based on trust and being strong in tone.
We must be aligned. Without alignment – a common vision, where we want to go as a program, how we want to get there, and the timeline in which we intend to get there – it will be difficult to achieve a win-win scenario.
Finally, as a team we must be willing to challenge everything. Nothing is sacred, nothing is protected. Everything has to be looked at as an opportunity for change. Facts and data must drive the evolution. Your data has to transform and become information to validate the evolution.