As published in The Mandarin on February 20, 2023 by John Glenn
I fear the Defence Strategic Review, now in the hands of the prime minister and defence minister, will be a fizzle — not a flash and a bang.
There is no strategy without execution, and I am afraid the department does not engender confidence, other than militarily, in its abilities. It especially struggles in the areas of innovation and procurement.
Defence resists change. These are not my words — read the 2015 First Principles Review (FPR) that highlights this resistance: “Defence’s lack of transparency, propensity for obfuscation and willingness to ‘game the system’ for its own advantage”. The FPR goes on to talk about the lack of trust in Defence as they play “the reform game, rather than delivering on intent …”
It seems the FPR itself has fallen foul of the game. In 2018 the ANAO reported progress with the FPR’s two-year implementation plan had proceeded well, but the Capability Acquisition and Sustainment Group (CASG) — the Defence procurement agency — was unlikely to complete its reform until 2023. Eight years for a two-year program says it all.
The FPR intended that CASG outsource their project work and reduced the organisation by 2,000 staff. Instead, CASG engaged exclusively with four companies, major service providers (MSPs), to address their workforce needs. That’s $3.5 billion spent without ongoing competition; a $650 million annual spend with each company equating to about a 2,500 contracted workforce.
This is significant resistance.
Turning Defence into an innovative organisation capable of rapidly fielding new, and relevant, capability is primarily though, but not entirely, a procurement issue. Rumour is this is raised in the latest strategic review.
We don’t need another blanket review. Neither do we need to fire everyone and start again — as some pundits have suggested — or accept more of the same. The problem is part cultural, part structural and part governance.
Here are six initiatives, listed easiest to hardest and mostly just good leadership, that would disrupt the status quo.
1. Clean up the mess
I mean clean up the mess literally, Defence-wide.
The work environment is a mess. Throw out the paperwork that has been sitting on shelves for years. Fix the furniture that does not work. Buy some cleaning material and have people wipe down their desks. Get a decent cafeteria or two. Self-respect starts with self.
Build some decent conference rooms. Workspaces that encourage collaboration and innovation — not hierarchy and control. Engage and empower the workforce, don’t control them.
The IT is a joke. Two years after COVID hit, Defence is just building collaborative online spaces. No cameras on desks, and no way to engage with industry unless they are already inside the network.
There are few, if any, conference rooms with online capabilities. Even when online, staff don’t turn on their cameras.
This is a workforce largely tied to their desks, avoiding engagement and modern work practices. According to Defence’s own 2022 Employee Census, less than 50% of the workforce is inspired to innovate (49%) or do their best work (53%). It’s an instructive, and somewhat sad, read.
You don’t get an innovative, active, driven workforce if they are operating in an environment that is a decade, or more, behind. People should not be apologising for the organisation’s infrastructure and IT, but they do regularly.
The cheapness of Defence is evident, and it’s a false economy. There is a reason why good companies invest in their workspaces. It’s an investment in people and it pays off.
Solving this just needs a better question. Don’t ask IT, Security and Facilities what can be done, ask them how they are going to achieve what needs to be done.
2. Ask for better answers
Measure and report. The big difference between industry and bureaucracy is the difference between high-performing and average.
Knowing the effectiveness of the business allows focus on the ineffective: people, process and technology.
It’s also how you manage change. Writing directives and expecting them to be enacted, common practice, is more wishful thinking than management. Measure the change – and its effect.
Don’t accept performance avoidance – be critical, reject obfuscation. For example, the CASG implementation of the FSR or the nonsense of AGSVA security clearance processing times that are measured from when AGSVA deems they have received properly completed applications. It is gameable and dangerous.
Defence learned how dangerous with the Rizzo Review of 2011 — where Navy ships maintained by CASG were undeployable — but the reporting was full of green traffic lights as every level nuanced numbers.
Reporting needs critical review everywhere — truth and clarity. Nowhere to hide. Government should demand this level of transparency with annual reports. Today they focus on activity, ‘how much was spent by how many’, it should show how well the work was done.
Measurement and reporting changes behaviours. Demand more, demand better.
3. Rapid capability belongs to capability managers
There’s a nice logic to having all procurement inside one organisation — it just doesn’t work in practice. In 1994, when the McIntosh Review amalgamated the separate Navy, Army and Airforce acquisition branches into the Defence Acquisition Organisation — which has morphed over the years into CASG — there have been multiple attempts to create an agency independent of Defence.
The culture of independence is rampant, creating a demarcation between CASG and the rest of Defence. CASG demands capability managers are explicit in their requirements. Acquisition is at arm’s length, delivering to the requirements and timeframes that suit — despite changing needs.
CASG serves the three masters of budget, schedule and minimum risk. The capability manager is focused on the timely fielding of enhanced capability — faster than an adversary. The organisations have conflicting goals.
Processes bind changes and hierarchies build dogma. I can say from experience — few know why those processes exist but are convinced compliance is paramount, bound to process and risk reticence. It makes negotiating a contract a nightmare!
CASG is bound by its culture and history. They are a millstone around the neck of speed and innovation. It might change, but the change will be slow and resisted — so by definition CASG has to be avoided where rapid is needed.
Couple rapid, continuous incremental improvement more closely to the capability manager. Where speed, flexibility and adaptability are precursors to success, where changing threats demands responsive fielding of new and adapted capability. Capability owners are best placed to trade risk and process for timely outcomes.
Leave the large, long-term, process-heavy programs with CASG. Frankly, they have little influence over the delivery of programs such as shipbuilding and government-to-government procurement. The ships will arrive when the shipbuilders and other suppliers are ready!
The creation of a single Capability Development Group didn’t work and has been unwound, we can also change what is given to CASG – they don’t have to do everything.
4. Reboot industry innovation
Defence’s approach to innovation is process-bound — procurement-like, and heavy on governance and management. As one entrepreneur said: “There is no innovation at the end of 80 pages of a proposal”.
The current Defence innovation process stops at ‘the good idea’; fielding it is done through a traditional procurement process. As best as we can ascertain, there has only been one “innovation” that’s been through this process and been fielded. Hardly a success.
It’s not a capability innovation if it isn’t fielded.
Innovation isn’t just about capability. It should be providing leverage in a global supply chain we cannot control. If we have things our partners want, we can trade those to get what we want. Fostering innovation is a strategic activity, for both capability and resilience, and needs to be mentored outside a traditional procurement view.
The keepers of process are a threat, innovation cannot exist inside “normal practices”. It must be mentored and protected by senior executives until the innovation is “normal practice”.
Put innovation with the capability owners and allow them to fund it through to fielding. Don’t penny pinch, and don’t starve entrepreneurs of funds. These are not market-driven initiatives, because there is no market. Defence innovation is a Defence mentored outcome.
You don’t buy and manage innovation; you foster it with freedom and funds.
If Defence wants a different outcome, Defence will need to do something different.
5. Leverage industry experience
The service industry is seen as a transactional resource. Contracted resources are engaged to work within the organisation, under the direction of its middle managers. This is the organisation where an employee is most likely to spend their entire career. No new ideas, no differing views – reinforcing yesterday today.
Ex Defence personnel are prized and preferred. Defence has fostered the growth of an industry that mirrors them. Small and large companies have doffed their cap on bended knee. Whatever the client wants because that’s how you make money.
CASG in particular, but not alone, is a closed shop. Safe, lazy, and unhealthy.
Defence is full of people who know Defence. The military is expert on the military. Industry is expert in getting things done and breaking down barriers. At least those who aren’t a mirror of their client and have the honesty and courage to test them.
Defence doesn’t need more of the same if it wants something different.
Stop the perpetuation of the closed shop, the cartel-like behaviours and the revolving door of staff. Move more delivery out of Canberra to give access to a broader experienced workforce, bringing new ideas and new ways of working into the mix.
There are ways to contract for effects and outcomes even where there is ambiguity of outcomes and deliverables are uncertain. Defence just needs to be open to the concept that things can be done differently and have the courage to manage a journey and not control a workforce.
6. Nudging Westminster
In Australia, we have a high threshold for good corporate governance in public companies. Boards with diversity of experience are responsible for strategy and its execution. A clear obligation to work in the best interests of the business by putting personal interests aside.
We don’t apply the same standards in multi-billion-dollar public sector organisations. Political self-interest is high, overriding decisions in the best interests of the organisation. There is no independence or diversity of experience.
Government should clearly be responsible for direction and the top level of strategy but perhaps we can adopt some commercial principles and give execution a nudge. It’s a big leap, but based on past evidence, more of the same is destined to fail.
Put a board in place with oversight of capability development and acquisition. Not the usual “steering group” of recycled public sector board members – but senior experienced private sector directors and executives – not from the defence industry but from rapidly changing, highly competitive industry sectors. I know, from experience, that they will challenge the status quo, non-performance, poor reporting and complacency.
They will demand a strategy for execution of a new approach to capability delivery, and evidence of its execution. They might just provide the support, guidance and impetus to break free of the quagmire. They will ensure that alternative approaches will be properly considered, and innovation protected. This is how we bring commercial acumen into Defence – quickly.
The secretary and senior executives still answer to the minister and Parliament – but so too does the board. Creating just a little tension and preventing avoidance.
Commercial boards are more adept at forcing breakthroughs – they come with the impatience inherent in owning a P&L and reporting to the markets. They will demand performance and not be accepting of resistance and obscuration. We could do with a bit of that.
It will take a brave minister.
One with the courage to match what the sailors, soldiers and aviators are likely to need. To make a difference, to get a different outcome, the minister needs to demand that things be done differently.
The trouble is, and FSR and others have said this before, the resistance to change needs to be broken. A better environment, putting the means to solve the problem with the organisation that owns the problem, and paying attention to the implementation of change are simple answers.
Leaders step forward to the point of influence.
Defence needs more intervention than we have seen traditionally, at least until it is back on the path of being innovative and responsive in capability delivery.
About the author
By John Glenn
John Glenn is founder and Managing Director of Kiah Consulting, a multi-million-dollar company that specialises in consulting to, coaching and training government and industry to deliver improved public service outcomes.