The Defense Business Board has another great presentation, this one on Innovation – Attracting and Retaining the Best of the Private Sector.
They highlight that DoD needs both sustaining and disruptive innovation. Sustaining innovation tends to be “top down”, addressing known problems with contracted and independent R&D. Disruptive innovation tends to be “bottom up”, the source of major breakthroughs from non-traditional, self-funded development.
They found DoD has a closed system that discourages innovation. From components that are hard wired into programs to a vertically integrated supply chain restricting competition.
The unintended consequences of budget reduction actions will hurt future innovation. Cost focus via LPTA reduces staff and technical quality discouraging industry investments in innovations.
DoD lacks sufficient understanding of business operating models and drivers of innovation. The fundamental business imperative is to increase earnings per share. Profit is the lifeblood of the capitalist system and is risk calibrated.
They also summarized the slow acquisition process has 7-10 year platform cycle vs. 18 month Moore’s Law technology cycle. The development curriculum for DoD acquisition workforce is inadequate.
The DBB lays out eight recommendations:
- Establish FAR Part 12 as default procurement method for non-platform acquisitions
- Require adoption of modular approach to new mission-essential platforms
- Rebalance policies on Intellectual Property
- Remedy unintended consequences of budget reduction actions
- Provide clear and consistent senior-level messaging of DoD goals and policies
- Systemize and mandate DoD workforce education as condition for promotion
- Simplify DoD internal processes and policies: ensure consistent long-term leadership
- Re-examine industry structure and incentives from standpoint of future DoD needs
A final series of factoids: The market cap of Apple, Exxon-Mobil, Google, and Walmart each exceed the entire defense industry. Apple could buy nearly the entire defense industry today with their cash on hand.
So what are you thoughts on the DBB Innovation report? I believe they go beyond the standard acquisition reform report and identify some key recommendations acquisition executives could implement today. Which findings or recommendations resonate with you most?