The End Of Force Structure

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Relevance, responsiveness, rapid learning, and the renewal of entrepreneurship in military contracting (April 2009)

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The End Of Force Structure

  1. 1. THE END OF FORCE STRUCTURE Relevance, responsiveness, rapid learning, and the renewal of entrepreneurship in military contracting The second in a series on military-industrial markets in 2009 Hasik Analytic LLC
  2. 2. THE END OF FORCE STRUCTURE The second in a series on military-industrial markets in 2009 Summary Recent announcements in the US and the UK regarding the rebalancing of military spending priorities reflect broad and ongoing evolutionary change in the demand for military forces. The familiar scenarios for which force structures had long been planned are giving way to actual preparation for the messy, distant, persistent, small wars of the 21st century. Indeed, the very construct of force structure is giving way to force generation as the dominant paradigm of planning. This new focus on supporting forces in the field, rather than force structures in garrison, is leading to three broad changes in military-industrial planning. In investment strategy, capital expenditure is giving way to the relevance of operating expenditure; in industrial strategy, capacity is increasingly less valued than responsiveness; and in technology strategy, long cycle innovation is yielding to the rapid learning of short cycle innovation. In this new, more dynamic environment, entrepreneurial suppliers can succeed by tapping into the information streams of logistics and training markets, by tackling aftermarkets with the same gusto as serial production, and by embracing engineering and product development as their best bet for finding an inimitable capability. The result will be customer needs that are met before they are stated, and defensible profit margins for the forward thinking. Fortis fortuna adiuvat. ABOUT THE AUTHOR James Hasik is a principal of Hasik Analytic, and a founder of the firm. He is a member of the Council on Emerging National Security Affairs, and serves as Senior Defense Consultant to CRA International. He can be reached at jhasik@hasikanalytic.com ABOUT US Hasik Analytic LLC is a management consultancy dedicated to the success of the industrial organizations that supply the tools of global security Hasik Analytic LLC
  3. 3. The End of Force Structure The second in a series on military-industrial markets in 2009 Early this month, US Defense Secretary demand for the services of military forces. Robert Gates announced his recommen- We can summarize these in four ways, as dations for “rebalancing” the US federal shown in the box below. While the term military budget away from the threats for ‘Long War’ may be out of favor, in almost which the individual military services all figuring, the war against Salafism does would like to prepare, and towards the not look to be short. Battles will most fre- more immediate ones which the govern- quently be fought in the global fracture ment wants them to address. In the arms zone, the arc of instability, the great non- industry, budgets are business, so most of integrating gap. 2 The appetite for the the analysis over the past few weeks has scale of intervention has decreased sig- centered on the short-term winners and nificantly after the long counterinsur- losers. For governments, however, spend- gency campaign in Iraq, and the still un- ing is substantially strategy, as it indi- won fight in Afghanistan. Finally, lessons cates what systems will equip the troops as diverse those of the 2006 Lebanon over the long haul, and thus what they are War and the 2008 Russo-Georgian War intended to do. With this in mind, we show that preparing for either big or consider the longer-range implications of small wars is insufficient. Opponents will this budget request, and of other changes use whatever means are necessary for at- in military spending patterns around the taining their objectives. world. The effects are most obvious, of course, in Far from being the pound-foolish budget the changing patterns of what govern- exercise that a few claim, 1 Gates’ plan re- ments will buy. Presidential transports flects recognition of the broad trends of and combat search-and-rescue aircraft Broad trends in the demand for military forces in time: short → long in space: near → far in scale: large → small in scope: conventional → full spectrum 1The Heritage Foundation has been particularly opposed. See James Jay Carafano, Obama’s penny-wise, pound-foolish defense budget, Washington Examiner, 13 April 2009. 2See Thomas P.M. Barnett, The Pentagon’s New Map: War and Peace in the Twenty-first Century (Pen- guin, 2004). © Hasik Analytic LLC 1 1 May 2009
  4. 4. The End of Force Structure dedicated to “single-digit” rescues are Reticence over fully funding Tranche 3 of out. 3 Systems well-suited to both global the Eurofighter has been in the news so policing and higher-intensity fighting, long it is no longer news. 5 What is getting from the Air Force’s MQ-9 Reaper funded for the air is helicopters meant for reconnaissance-strike drone to the Army chasing insurgents and hunting pi- and Navy’s Joint High Speed Vessel, are rates—AgustaWestland 159 Lynx Wild- being recommended for accelerated pro- cats in the British Army and the Royal curement. Navy, and more CH-47F Chinooks in the Australian Army. 6 Wars, if they last long The trend is not confined to the United enough, have a focusing affect on the at- States, of course, and did not even origi- tention and the pocketbook. nate there. Many European governments, working with much less loose cash, have Note, however, that distance does purely been making these balancing choices for mean more transport capability, whatever some years. The Dutch government this the form. In Britain, both the government week postponed from 2010 to 2012 its and the opposition are questioning the decision point for committing to the F-35 executability of Airbus’s A400M pro- Lightning II Joint Strike Fighter for re- gram, and considering more C-130 Her- placing its F-16s; almost simultaneously, cules and C-17 Globemaster IIIs from the Danish government postponed the Boeing and Lockheed. 7 With respect to same decision until at least this autumn. 4 Secretary Gates’ budget, allowing the C-17 Presidential transports and combat search-and-rescue aircraft dedicated to “single-digit” rescues are out. Systems well-suited to both global policing and higher-intensity fighting...are being recommended for accelerated procurement 3John Young, then under secretary of defense for acquisition, technology, and logistics, complained in this way to a Defense Writers Group breakfast meeting on 20 November of last year, and insisted (in a break with his earlier approach to the job) that “we have to question the requirement from the beginning.” 4 Niall O'Keeffe, Dutch opt to postpone JSF decision, Flight International, 24 April 2009; Fighter jet deci- sion postponed, Copenhagen Post, 24 April 2009. 5But for the latest news, see Gerrit Wiesmann, Alex Barker, and Sylvia Pfeifer, UK defies calls from part- ners to make £1bn Eurofighter payment, Financial Times, 25 April 2009. 6See Douglas Barrie, Off the Endangered List, Ares: a Defense Technology Blog, 27 April 2009; and Fu- ture Lynx Helicopter becomes Lynx Wildcat, Defence Equipment and Logistics blog, 27 April 2009. Australia—CH-47F Chinook Helicopters, Defense Security Cooperation Agency, news release, 23 April 2009. Notably, the Wildcat name is consciously being recycled from Grumman’s F4F fighter, which had been sold to the Royal Navy in the Second World War, for a frigate-based attack helicopter. 7Francis Elliott and Sam Coates, Defence no longer a no-go area for cuts, says George Osborne, The Times, 27 April 2009. Perhaps more dramatic is the Tories’ rethinking of the commitment to renewing the Trident submarine flotilla; see Patrick Wintour and Nicholas Watt, Tories cast doubt on £21bn Trident nuclear missile upgrade, Guardian, 1 May 2009. © Hasik Analytic LLC 2 1 May 2009
  5. 5. The End of Force Structure program to wind down as planned has local Special Air Services Regiment is been criticized as out-of-step with the supported by a mere seven infantry bat- otherwise small-war-friendly theme, but talions, 10 and where amphibious lift is far air transport problems in and out of Iraq more prized than big-deck, conventional and Afghanistan have thus far appeared aircraft carriers. manageable. Fixed-wing transports are not generally listed amongst the high- As we argued in January in our paper demand, low-density assets. Arming the Bug Hunt, the then-looming decision over ending production of the F- Terrorist-hunting commandos, however, 22 Raptor stealth fighter would be an im- are another matter entirely. In 2004, US portant sign of things to come. While we Senator John Kerry famously and vaguely asserted that continuing the program called for doubling the size of US special would not “necessarily signal business-as- operation forces. Whatever the services’ usual... ending it as planned [would] overall commitment to special compo- clearly signal that a break [had] opened nents of the force structure, the Army’s with the past.” Thus, we can now observe Task Force Odin has been the toast of that US Senator Saxby Chambliss of Washington and Baghdad. The USAF is Georgia did protest too much when he belatedly buying from Hawker Beech- claimed surprise at Gates’ decision to halt craft, in just this year, thirty-seven acquisition at 187 aircraft, asserting that sensor-laden MC-12W King Air 350s. 8 the choice was “purely budget-driven”. 11 This month, British Defence Minister All resource allocations are budget- John Hutton is said to want to provide driven, and the F-22 has famously never the the UK Special Forces “whatever they flown over Iraq or Afghanistan. Thus, as need in terms of personnel and finance.” 9 Air Force Secretary Michael Donley and The admired model is supposedly that of Chief of Staff General Norton Schwartz the Australian Defense Force, where the wrote in the Washington Post, “buying All resource allocations are budget-driven, and the F-22 has famously never flown over Iraq or Afghanistan. Thus, as Air Force Secretary Michael Donley and Chief of Staff General Norton Schwartz wrote in the Washington Post, “buying more F-22s means doing less of something else.” 8 Bruce Rolfsen, Slots for fighter pilots plunge in 2009, Air Force Times, 6 April 2009 9Sean Rayment, SAS and other special forces to be expanded to defeat al-Qaeda, Telegraph, 25 April 2009. 10 Isabel Oakeshott and Michael Smith, SAS to expand in Army shake-up, Sunday Times, 26 April 2009. John M. Doyle, Chambliss to Fight to Restore F-22, Aerospace Daily and Defense Report, 14 April 11 2009. © Hasik Analytic LLC 3 1 May 2009
  6. 6. The End of Force Structure This is about more than trading stealth fighters at 10,000 meters for strategic corpo- rals in three-block wars. It is about procuring systems and training staff to handle then most plausible range of serious threats... and the governing constraint is the number of troops needed to circulate through frequent, distant, small-war campaigns. more F-22s means doing less of some- threat as represented by one or a very few thing else” meant for the current wars. 12 point scenarios.” 16 A reasonable, rational- More so, the fighter’s eventual opposition ist criticism might note that there are remains unclear. As Gates put it, “the in- only about 200 countries on Earth, that telligence I've gotten is the first [initial only fifty of these have significant mili- operating capability] for anything like a tary forces, and that most of those are ei- fifth generation fighter in Russia is 2016; ther members, affiliates, or partners in in China it's about 2020.” 13 In the end, some form of the North Atlantic alliance. then, the end itself was not surprising. The criticism would then declare the problem of planning for waging war Still, this is about more than trading against the remaining miscreants in the stealth fighters at 10,000 meters for stra- set entirely tractable. tegic corporals in three-block wars. 14 It is about procuring systems and training Whatever the methodological approach, a staff to handle the most plausible range of consensus answer is emerging. For gov- serious threats. As we wrote in Arming ernments analyzing strategic options, the the Bug Hunt, the economics laureate governing constraint is the number of Herbert Simon argued that bounded ra- troops needed to circulate through fre- tionality and uncertainty about the future quent, distant, small-war campaigns. lead people to satisficing solutions. 15 The Small wars are sometimes small by ne- current embodiment of this approach cessity: with longer wars at greater dis- could arguably be the capabilities-based tance, fewer troops can be sustained in planning approach that entered the Pen- country. The United States fought North tagon with Donald Rumsfeld, which deals Vietnam and its guerrilla allies with with broad classes of threats rather than 500,000 men, but sent slightly fewer to “dependence on a specific bounding the quick and rather more successful 1991 12 Michael Donley and Norton Schwartz, Moving Beyond the F-22, Washington Post, 13 April 2009 13Jim Garamone, New Capabilities Play Vital Role in Budget Recommendations, Gates Says, Australia.To, 6 April 2009. 14 Charles C. Krulak, The Strategic Corporal: Leadership in the Three Block War, Marines, January 1999. Herbert A. Simon, Rationality as a process and product of thought, American Economic Review, vol. 68 15 #2 (May 1978), pp. 1-16. 16Paul K. Davis, Analytic Architecture for Capabilities-Based Planning, Mission-System Analysis, and Transformation (RAND, 2002), p. 8. © Hasik Analytic LLC 4 1 May 2009
  7. 7. The End of Force Structure campaign to retake Kuwait. Maintaining was that calculations of force structure 150,000 troops in Iraq was rather strain- for US combat aircraft would henceforth ing the US Army and Marine Corps, so include drones. 17 True, the USAF is finally the Afghan surge will not top 100,000. again considering procuring a manned And despite frequent insistence all turboprop attack aircraft, 18 and it is hav- around on increasing the size of the US ing difficulty with the idea that pilots may Army by some 70,000 troops, Gates has not be required to even land aircraft decided to halt its expansion at 45 bri- anymore. 19 The bigger shift in the think- gades, in order to better staff those for- ing lies with how capabilities are calcu- mations. There is almost no possibility lated. Fighters are counted by the tails on that so large a force would be brought on the tarmac; drones are counted by the line for a set-piece battle: the require- orbits-at-a-distance, and Gates wants at ment for 45 is set by the desire to keep least 50 within the year. 20 nine or so deployed and fighting at a time. Note the change in language: the secre- tary spoke of retiring force structure (250 The question of force structure is thus be- old fighters) to pay for more cost-effective coming subordinated to that of force gen- force generation (new drone orbits). As eration. Perhaps the most dramatic but he put it shortly after his budget an- quiet announcement of the past month nouncement, the allure of these drones The general trend in military planning force structure → force generation Amy Butler, Future U.S. Fighter Force to Include UAVs, Aviation Week & Space Technology, 7 April 17 2009. 18Stephen Trimble, USAF chief says “light strike” fighter could be needed, Flight International, 24 April 2009. 19 Christian Lowe, No Robot in the Loop Here, Defensetech, 28 April 2009. 20The USAF has actually held this objective for some time; see Roxanne Tiron, Q&A with Lt. Gen. Michael Peterson, The Hill, 9 July 2008. © Hasik Analytic LLC 5 1 May 2009
  8. 8. The End of Force Structure lies not just with “the Predators doing will buy over the next few years. Three strikes; it is long distances and long broad trends are emerging in military- dwells. [The] F-16 has a range of about industrial planning, and each has strate- 500 miles. The Reaper has a range of gic implications for military suppliers. about 3,000 miles. This is going to be an First, consider how the US Army’s Vice increasing part of the Air Force arsenal.” 21 Chief of Staff, General Peter Chiarelli, About 200 Predators and 30 Reapers are told the Association of the United States thought to be available for missions in Army’s Winter Symposium in February Afghanistan and Iraq today, and overall that the service’s three top priorities to- airborne reconnaissance assets have in- day are connectivity, commonality, and creased by 300 percent over Afghanistan, survivability. 24 He may have been speak- and 150 percent over Iraq, just since ing then about the once-and-no-longer mid-2007. 22 Moreover, the stealthy, jet- Future Combat System; he could as well powered Predator C (Avenger) is not be quoted today referring to plans for up- merely now flying; perhaps more signifi- graded MRAP vehicles. After five years of cantly, congressmen are already earmark- fighting insurgents with improvised ing for it.23 mines, the US Army needed its service secretary or chief of staff to tell it that The end of force structure has implica- tanks and troop carriers with flat bot- tions beyond just what defense ministries toms, sitting just eighteen inches off the Emerging trends in military-industrial planning for investment strategy: CapEx → OpEx (relevance) for industrial strategy: capacity → responsiveness for technology strategy: long cycle → short cycle innovation (rapid learning) 21Jim Garamone, New Capabilities Play Vital Role in Budget Recommendations, Gates Says, Australia.To, 6 April 2009. 22Walter Pincus, Airborne Intelligence Is Growing Component in Fight Against Insurgents, Washington Post, 28 April 2009. 23 Stephen Trimble, Exclusive: Predator C Makes First Flight, FlightGlobal/The DEW Line, 8 April 2009; Richard Simon, Earmark requests by Californians in Congress get increased public scrutiny, Los Angeles Times, 16 April 2009; and Stephen Trimble, General Atomics reveals Predator C 'Avenger' UAV, Flight International, 21 April 2009. The choice of the name may be telling. The rather stealthy Avenger proto- type has apparently been built with both a tailhook and folding wings, presumably for carrier landings and storage. Just as AgustaWestland and the Ministry of Defence are recycling the name of a manned fighter from the Second World War, the new name for the Predator C harkens back to that of another Grumman aircraft, the TBF Avenger torpedo bomber. More significantly, the last US military aircraft to bear the Avenger name was General Dynamics and McDonnell Douglas’s ill-fated A-12 naval stealth bomber. General Atomics may be aiming to achieve what those two contractors abjectly failed to do, what Lockheed Martin should do by 2014 with the F-35C, and what Northrop Grumman has been striving to do with its X-47B Pegasus: put a stealthy strike aircraft on a carrier deck. 24 C. Todd Lopez, Vice chief: Army pushing power to lowest level, Army News Service, 3 March 2009. © Hasik Analytic LLC 6 1 May 2009
  9. 9. The End of Force Structure ground, were not survivable on the mod- are repaired and reset more readily than ern battlefield, regardless of whether the the people they equip. Maintaining program’s name started with future. 25 smaller equipment sets, shared amongst rotating troops, maintained in country, Thus, investment strategy is gravitating saves money that can be used to more from capital expenditure towards oper- frequently and thoroughly upgrade the ating expenditure. 26 CapEx and OpEx equipment that is actually committed to may seem just accounting conventions, battle. 27 but the stylistic shift is significant, be- cause the planning horizon is appropri- For contractors, this means smaller pro- ately shrinking. Since the location of the grams for new platforms, but more fre- next battle is an unknowable-know, ig- quent purchases of new subsystems noring any enemy’s current and obvious needed to respond technologically to weapon of choice in favor of presumed emerging threats. It also means taking long-range threats is unconscionable. the aftermarket—wherever it is found—as More to the point, as a business strategy seriously as original, serial production. In it is unsustainable. Relevance eventually armored vehicles, United Defense LP beats old reference points from past wars, thrived for a decade that way, receiving and when under fire, eventually is not almost no new orders for armored vehi- generally a long time. cles after 1994. The hefty price for which it was sold to BAE Systems in 2005 was This is about more than eschewing pro- entirely due to pending demand by the jects that, to paraphrase Edna Mode, dis- US Army for refurbished and upgraded tract from the now. The dramatic change Bradleys. will eventually be seen in asset manage- ment. In the long run, if only so many If this seems obvious, consider what the units can be expected to fight at once, aftermarket really encompasses. Capabil- then only so many assets will be needed ity for logistics management can tap into to support them at once. Vehicles, ships, not just revenue streams (with often aircraft, and weapons wear out, but they lower profit margins), but information 25 Greg Grant, Army to Keep FCS Vehicle Money: Gates, DoD Buzz, 16 April 2009. 26 We thank Nicholas Friberg, president of BAE Systems C-ITS, for this observation. 27While this would be novel, even radical, for the US Army or the British Army, it is old hat to the US Ma- rine Corps and the Royal Marines. The RM organizes its 100 or so armored vehicles (Vikings, soon to be Warthogs) into a separate Armoured Support Group, to be attached to individual commandos or compa- nies as needed. The USMC maintains its tank, armored reconnaissance, and assault amphibian battalions separate from its infantry battalions, and assigns vehicle units to foot units according to operational need, just as it would be with Army or Marine or Air Force helicopter squadrons. For the 2003 campaign in Iraq, where considerable armored opposition was anticipated, the Marines attached an artillery battalion, an armored reconnaissance battalion and the equivalent of an assault amphibian battalion to each of the three infantry regimental combat teams in the 1st Marine Division, and full tank battalion to two of those. See Bing West, The March Up: Taking Baghdad with the United States Marines (Bantam Books, 2004), pp. 267–9. This flexible employment of assets allows the Marines to focus procurement spending on sys- tems that define their roles, like the Expeditionary Fighting Vehicle and the V-22 Osprey tiltrotor aircraft. For better or worse, it provides for more flexible and potentially better budgeting. © Hasik Analytic LLC 7 1 May 2009
  10. 10. The End of Force Structure streams, which provide raw data on daily ther zero or quite large, and there is gen- usage pattens faster than classically erally no lead-in period to signal rising opaque governmental channels allow. requirements. Some broad planning for Capability to provide training services peace support can and will be accom- gets one closer to the customer, tapping plished in advance. 28 Actual peacemak- into contextually rich information ing—effectively small-scale warfare—will streams that can even lead to implicit un- continue to be driven by Bonaparte’s derstandings of operating concepts that maxim that on s'engage, et puis on voit.29 are difficult to attain. Note that the un- derlying value in both these lines of busi- This means relying on responsive con- ness is not, as might be imagined, mate- tracting, and particularly in the aftermar- rial or physical presence, but information. ket. The steady trend in the 1990s rather As it goes with the migration from CapEx accelerated with the emergent needs of to OpEx, the capital costs are low, but the two wars. Recent criticism of excesses, operational subtleties can be challenging. however, has been overblown: to assert Mastering them can be rewarding, both that any waste in wartime spending is a for the new business one can capture, and “false choice” is to ignore the urgencies of the existing business one can better en- combat. 30 As Mark Cancian recently ob- able. served, and fortunately for both industry and the troops, there is simply no upfront To support this need for what matters money for more in-house, rear-area logis- now, industrial strategy is gravitating tics capability, and no ongoing money for from building capacity to developing re- the inefficiencies of just-in-case sponsiveness. Contingency requirements capacity.31 Cooler heads seem to be al- show the worst sort of variability for cost- ready prevailing in the definition of in- efficiently fulfilling demand: their aperi- herently governmental functions: policy- odic variations above steady state are ei- 28Janine Davidson, Operationalizing the Comprehensive Approach: the Military as Enabler, speech to Combined Arms Center Senior Leader Conference, Fort Leavenworth, Kansas, 3 February 2009. 29Richard K. Betts mentions the seemingly swashbuckling Napoleonic approach in his review of Wesley’s Clark’s Waging Modern War: Bosnia, Kosovo, and the Future of Combat (Public Affairs, 2001). Clark disapproved of Clausewitz's alternate dictum “that sane people should not start wars unless they have plans for how to finish them” as “an unreasonable standard” for such a broad alliance. Bonaparte, of course, when he had to fight, preferred to fight coalitions; all the same, the campaigns in both Kosovo and Iraq were messy but ultimately strategically successful. See Compromised Command, Foreign Affairs, July/August 2001. 30 Ross Colvin, Obama takes aim at costly defense contracts, Reuters, 4 March 2009. 31Mark Cancian, Contractors: the New Element of Military Force Structure, Parameters, Autumn 2008, pp. 61–77. © Hasik Analytic LLC 8 1 May 2009
  11. 11. The End of Force Structure making is included, but wrench-turning ago: they have cooperative contractors to not so much. 32 thank in large part for that. Working within depot systems specifically requires In exploiting these opportunities, the strong financial, legal, and public rela- relatively advantaged contractors are not tions functions. Customers need to be just those with excellent supply chain convinced in advance that they will save management skills. Mastering material money and get better service. The pile of handling, transportation management, laws and regulations that limit what can information analysis, inventory manage- be done must be grasped, and the gaps ment, retrograde logistics, and responsive exploited. People in localities which host manufacturing constitutes the price of logistical installations must be convinced admission. Military aftermarkets further that privatization is inevitable, and in- require understanding of the exigencies deed, in their long-term interests. of doing business with the government and the subtleties of doing business with Of course, what the depots, the Pentagon the military. policy shops, and the enemy all abjectly lack is engineering design skill. As the ob- The specific challenge for further after- session with far-off planning and force market development will be two-fold. In structure wanes, technology strategy will Europe, the larger problem lies in build- shift from long cycle to short cycle inno- ing the business case, which are matter of vation. The clock cycle of combat testing not just finance, but marketing, because reinforces this, and responsive, entrepre- the customers often fail to grasp that neurial contractors have made it happen. their fixed costs will decrease—or simply It is remarkable that General Atomics has vanish. 33 This means mapping supply brought three generations of reconnais- chains; attaching values to financial, ma- sance and strike aircraft—MQ-1A Preda- terial, and informational flows; and mod- tor, MQ-9 Reaper, and MQ-1C Sky War- eling savings. Sufficiently advanced and rior—from concept demonstration robust models can help predict out- through four wars—Bosnia, Kosovo, Af- sourcing opportunities in advance. ghanistan, and Iraq—in the time that Lockheed Martin has brought the F-35 The further challenge in the United States Lightning II up to flight testing. It is easy is political: as the government is tempo- to argue that the Reaper is a much less rarily, if weakly, reacting badly to the complicated aircraft than the Lightning promise of outsourcing, contractors will II, but this is entirely the point: it still need for focus on forging the right rela- carries much the same weapons, and tionships with the federal depots. The de- sports the same infrared sensor, but it pots will not hold all the cards, but they flies five times as far. Moreover, many of are politically no weaker, and industrially the lessons of the past seven years of war more capable, than they were a few years have been available for incorporation in 32Remarks by Jacques Gansler at the Houlihan Lokey defense industry conference on Political Transition and Economic Turbulence, Ritz-Carlton Hotel Tysons Corner, 9 December 2008. 33Alex Miller, Performance-Based Logistics Works, Aviation Week & Space Technology, 3 November 2008, p. 78. © Hasik Analytic LLC 9 1 May 2009
  12. 12. The End of Force Structure its design; with the F-35, fifteen years of ket can be managed in this way, but de- development is simply not rapid learning. signing and building the prototype of the next generation in one’s product line can Building force structure for wars that may only be achieved with in-house technical not happen can be accomplished with talent. such absurdly long development cycles; generating forces for wars ongoing re- Metal-bending of any type can be leased quires something different. Rapid learn- today, but the secret sauce of software ing and responsive development, as Jac- and systems engineering is more likely to ques Gansler once put it, requires “not be the differentiating capability. Still, tal- 20,000 people in production, but 100 ent plainly extends beyond engineering. really smart engineers.” 34 While big com- Difference lies in design, but this origi- panies are required to build big sys- nates in the conception of the idea, which tems, 35 big systems are somewhat reced- requires a firm understanding of one’s ing from favor. With smaller scale, pro- customer’s culture and operating con- duction skill is not optional, but require- cepts. Learning and applying knowledge ments excess to recurring low rates can iteratively, particularly for the emergent be outsourced as well. In a salient exam- needs of operating forces, demands judi- ple, Force Protection delivered four thou- cious management of one’s intellectual sand blast-resistant armored vehicles to capital. Too much leakiness risks the in- several military customers between 2003 imitability which brings profit margins, and 2009 not by squeezing all production but working within a production network through its relatively small factory in on rapidly evolving programs requires a South Carolina, but by working with pro- certain leakiness of at least tacit duction partners in Michigan, Pennsylva- knowledge. 37 Marketing complex, high- nia, Ohio, Texas, and England. Reliance technology products, after all, is often a on well-managed co-production networks multi-firm effort, regardless of the can calm the turbulent growth than oc- whether the customer wears a gray suit or curs after the chasm of customer accep- fatigues. 38 tance is crossed. 36 As shown in the MRAP program, the attainment of a mass mar- 34 Vago Muradian, Do Big U.S. Programs Stifle Innovation? Defense News, 10 May 2004. Observation by Pierre Chao in Sandra I. Erwin, Pentagon Technology Wins in the Complexity Category, 35 National Defense, April 2009. 36Florian Steiner, Formation and Early Growth of Business Webs: Modular Product Systems in Net- work Markets (Physica-Verlag, 2005); Gordon A. Moore, Inside the Tornado: Marketing Strategies from Silicon Valley’s Cutting Edge (Harper Collins, 1995) See James Hasik, Arms and Innovation: Entrepreneurship and Alliances in the Twenty-First Century 37 Defense Industry (University of Chicago Press, 2008) 38Benjamin Gomez-Casseres, Group Versus Group: How Alliance Networks Compete, Harvard Business Review, July-August 1994, pp. 62–74. See also Melissa Schilling, Towards a General Modular Systems Theory and Its Application to Inter-Firm Product Modularity, Academy of Management Review, vol. 25 #2 (2000), pp. 312–334. © Hasik Analytic LLC 10 1 May 2009
  13. 13. The End of Force Structure The objective of that marketing is the Many of the most valued systems of the success of the troops—albeit with the ongoing wars—the Reaper, the Stryker, marketer’s specific kit—in those messy, the MRAP, the Joint High Speed Vessel, distant, persistent, small wars of the 21st the MC-12W—got their start as immedi- century. Freeing military planning from ate or interim solutions to lasting military the Cold War—perhaps Great War—con- problems, but subsequently became insti- struct of force structures can bring rele- tutionalized as too important to discard vant material, even tactical, solutions to in the hope of the next, new, undefined those troops by tapping into entrepre- thing. Now, solutions as these are the new neurs’ capacity for rapid learning and re- thing. While their early concepts have sponsive production. Moving one’s think- originated companies with as few as a ing in the direction of force generation dozen or as many as a hundred thousand recognizes the unknowable as such—and staff, they have originated with entrepre- relies on the military-industrial entrepre- neurial engineers and marketers who neur for answers. Entrepreneurship is chose not to wait for their customers to popularly identified with small business, tell them what they wanted. As entrepre- but it is more a matter of behavior, in- neurs, those teams brought the customers sight, incentive, and organization than what they needed, before they asked. simply the structure of the industry. Credits On the cover: An MQ-9 Reaper drone aircraft, still carrying four Hellfire missiles and a 500-pound bomb, prepares to land after a mission in Afghanistan on 17 December 2007. U.S. Air Force photo by Staff Sgt. Brian Ferguson. On page 7, left: An A-10 Thunderbolt II assigned to the 25th Fighter Squadron comes in for a landing at Osan Air Force Base in South Korea on 23 July 2008, as three F-16 Fighting Falcons from the 36th Fighter Squadron wait to launch. U.S. Air Force photo by Senior Airman Christopher Boitz. On page 7, right: An MQ-9 Reaper takes off from the Balad airfield in Iraq on 17 July 2008. U.S. Air Force photo by Tech. Sgt. Richard Lisum. © Hasik Analytic LLC 11 1 May 2009

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