The End of Force Structure

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Relevance, responsiveness, rapid learning, and the renewal of entrepreneurship in military contracting (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 Robert Gates announced his recommen- dations for “rebalancing” the US federal military budget away from the threats for which the individual military services would like to prepare, and towards the more immediate ones which the govern- ment wants them to address. In the arms industry, budgets are business, so most of the analysis over the past few weeks has centered on the short-term winners and losers. For governments, however, spend- ing is substantially strategy, as it indi- cates what systems will equip the troops over the long haul, and thus what they are intended to do. With this in mind, we consider the longer-range implications of this budget request, and of other changes in military spending patterns around the world. Far from being the pound-foolish budget exercise that a few claim,1 Gates’ plan re- flects recognition of the broad trends of demand for the services of military forces. We can summarize these in four ways, as shown in the box below. While the term ‘Long War’ may be out of favor, in almost all figuring, the war against Salafism does not look to be short. Battles will most fre- quently be fought in the global fracture zone, the arc of instability, the great non- integrating gap.2 The appetite for the scale of intervention has decreased sig- nificantly after the long counterinsur- gency campaign in Iraq, and the still un- won fight in Afghanistan. Finally, lessons as diverse those of the 2006 Lebanon War and the 2008 Russo-Georgian War show that preparing for either big or small wars is insufficient. Opponents will use whatever means are necessary for at- taining their objectives. The effects are most obvious, of course, in the changing patterns of what govern- ments will buy. Presidential transports and combat search-and-rescue aircraft © Hasik Analytic LLC 1 1 May 2009 1 The Heritage Foundation has been particularly opposed. See James Jay Carafano, Obama’s penny-wise, pound-foolish defense budget, Washington Examiner, 13 April 2009. 2 See Thomas P.M. Barnett, The Pentagon’s New Map: War and Peace in the Twenty-first Century (Pen- guin, 2004). 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
  4. 4. dedicated to “single-digit” rescues are out.3 Systems well-suited to both global policing and higher-intensity fighting, from the Air Force’s MQ-9 Reaper reconnaissance-strike drone to the Army and Navy’s Joint High Speed Vessel, are being recommended for accelerated pro- curement. The trend is not confined to the United States, of course, and did not even origi- nate there. Many European governments, working with much less loose cash, have been making these balancing choices for some years. The Dutch government this week postponed from 2010 to 2012 its decision point for committing to the F-35 Lightning II Joint Strike Fighter for re- placing its F-16s; almost simultaneously, the Danish government postponed the same decision until at least this autumn.4 Reticence over fully funding Tranche 3 of the Eurofighter has been in the news so long it is no longer news.5 What is getting funded for the air is helicopters meant for chasing insurgents and hunting pi- rates—AgustaWestland 159 Lynx Wild- cats in the British Army and the Royal Navy, and more CH-47F Chinooks in the Australian Army.6 Wars, if they last long enough, have a focusing affect on the at- tention and the pocketbook. Note, however, that distance does purely mean more transport capability, whatever the form. In Britain, both the government and the opposition are questioning the executability of Airbus’s A400M pro- gram, and considering more C-130 Her- cules and C-17 Globemaster IIIs from Boeing and Lockheed.7 With respect to Secretary Gates’ budget, allowing the C-17 The End of Force Structure © Hasik Analytic LLC 2 1 May 2009 3 John 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. 5 But 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. 6 See 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. 7 Francis 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. 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
  5. 5. program to wind down as planned has been criticized as out-of-step with the otherwise small-war-friendly theme, but air transport problems in and out of Iraq and Afghanistan have thus far appeared manageable. Fixed-wing transports are not generally listed amongst the high- demand, low-density assets. Terrorist-hunting commandos, however, are another matter entirely. In 2004, US Senator John Kerry famously and vaguely called for doubling the size of US special operation forces. Whatever the services’ overall commitment to special compo- nents of the force structure, the Army’s Task Force Odin has been the toast of Washington and Baghdad. The USAF is belatedly buying from Hawker Beech- craft, in just this year, thirty-seven sensor-laden MC-12W King Air 350s.8 This month, British Defence Minister John Hutton is said to want to provide the the UK Special Forces “whatever they need in terms of personnel and finance.”9 The admired model is supposedly that of the Australian Defense Force, where the local Special Air Services Regiment is supported by a mere seven infantry bat- talions,10 and where amphibious lift is far more prized than big-deck, conventional aircraft carriers. As we argued in January in our paper Arming the Bug Hunt, the then-looming decision over ending production of the F- 22 Raptor stealth fighter would be an im- portant sign of things to come. While we asserted that continuing the program would not “necessarily signal business-as- usual... ending it as planned [would] clearly signal that a break [had] opened with the past.” Thus, we can now observe that US Senator Saxby Chambliss of Georgia did protest too much when he claimed surprise at Gates’ decision to halt acquisition at 187 aircraft, asserting that the choice was “purely budget-driven”.11 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 The End of Force Structure © Hasik Analytic LLC 3 1 May 2009 8 Bruce Rolfsen, Slots for fighter pilots plunge in 2009, Air Force Times, 6 April 2009 9 Sean 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. 11 John M. Doyle, Chambliss to Fight to Restore F-22, Aerospace Daily and Defense Report, 14 April 2009. 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.”
  6. 6. more F-22s means doing less of some- thing else” meant for the current wars.12 More so, the fighter’s eventual opposition remains unclear. As Gates put it, “the in- telligence I've gotten is the first [initial operating capability] for anything like a fifth generation fighter in Russia is 2016; in China it's about 2020.”13 In the end, then, the end itself was not surprising. Still, this is about more than trading stealth fighters at 10,000 meters for stra- tegic corporals in three-block wars.14 It is about procuring systems and training staff to handle the most plausible range of serious threats. As we wrote in Arming the Bug Hunt, the economics laureate Herbert Simon argued that bounded ra- tionality and uncertainty about the future lead people to satisficing solutions.15 The current embodiment of this approach could arguably be the capabilities-based planning approach that entered the Pen- tagon with Donald Rumsfeld, which deals with broad classes of threats rather than “dependence on a specific bounding threat as represented by one or a very few point scenarios.”16 A reasonable, rational- ist criticism might note that there are only about 200 countries on Earth, that only fifty of these have significant mili- tary forces, and that most of those are ei- ther members, affiliates, or partners in some form of the North Atlantic alliance. The criticism would then declare the problem of planning for waging war against the remaining miscreants in the set entirely tractable. Whatever the methodological approach, a consensus answer is emerging. For gov- ernments analyzing strategic options, the governing constraint is the number of troops needed to circulate through fre- quent, distant, small-war campaigns. Small wars are sometimes small by ne- cessity: with longer wars at greater dis- tance, fewer troops can be sustained in country. The United States fought North Vietnam and its guerrilla allies with 500,000 men, but sent slightly fewer to the quick and rather more successful 1991 The End of Force Structure © Hasik Analytic LLC 4 1 May 2009 12 Michael Donley and Norton Schwartz, Moving Beyond the F-22, Washington Post, 13 April 2009 13 Jim 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. 15 Herbert A. Simon, Rationality as a process and product of thought, American Economic Review, vol. 68 #2 (May 1978), pp. 1-16. 16 Paul K. Davis, Analytic Architecture for Capabilities-Based Planning, Mission-System Analysis, and Transformation (RAND, 2002), p. 8. 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.
  7. 7. campaign to retake Kuwait. Maintaining 150,000 troops in Iraq was rather strain- ing the US Army and Marine Corps, so the Afghan surge will not top 100,000. And despite frequent insistence all around on increasing the size of the US Army by some 70,000 troops, Gates has decided to halt its expansion at 45 bri- gades, in order to better staff those for- mations. There is almost no possibility that so large a force would be brought on line for a set-piece battle: the require- ment for 45 is set by the desire to keep nine or so deployed and fighting at a time. The question of force structure is thus be- coming subordinated to that of force gen- eration. Perhaps the most dramatic but quiet announcement of the past month was that calculations of force structure for US combat aircraft would henceforth include drones.17 True, the USAF is finally again considering procuring a manned turboprop attack aircraft,18 and it is hav- ing difficulty with the idea that pilots may not be required to even land aircraft anymore.19 The bigger shift in the think- ing lies with how capabilities are calcu- lated. Fighters are counted by the tails on the tarmac; drones are counted by the orbits-at-a-distance, and Gates wants at least 50 within the year.20 Note the change in language: the secre- tary spoke of retiring force structure (250 old fighters) to pay for more cost-effective force generation (new drone orbits). As he put it shortly after his budget an- nouncement, the allure of these drones The End of Force Structure © Hasik Analytic LLC 5 1 May 2009 17 Amy Butler, Future U.S. Fighter Force to Include UAVs, Aviation Week & Space Technology, 7 April 2009. 18 Stephen 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. 20 The USAF has actually held this objective for some time; see Roxanne Tiron, Q&A with Lt. Gen. Michael Peterson, The Hill, 9 July 2008. The general trend in military planning force structure → force generation
  8. 8. lies not just with “the Predators doing strikes; it is long distances and long dwells. [The] F-16 has a range of about 500 miles. The Reaper has a range of about 3,000 miles. This is going to be an increasing part of the Air Force arsenal.”21 About 200 Predators and 30 Reapers are thought to be available for missions in Afghanistan and Iraq today, and overall airborne reconnaissance assets have in- creased by 300 percent over Afghanistan, and 150 percent over Iraq, just since mid-2007.22 Moreover, the stealthy, jet- powered Predator C (Avenger) is not merely now flying; perhaps more signifi- cantly, congressmen are already earmark- ing for it.23 The end of force structure has implica- tions beyond just what defense ministries will buy over the next few years. Three broad trends are emerging in military- industrial planning, and each has strate- gic implications for military suppliers. First, consider how the US Army’s Vice Chief of Staff, General Peter Chiarelli, told the Association of the United States Army’s Winter Symposium in February that the service’s three top priorities to- day are connectivity, commonality, and survivability.24 He may have been speak- ing then about the once-and-no-longer Future Combat System; he could as well be quoted today referring to plans for up- graded MRAP vehicles. After five years of fighting insurgents with improvised mines, the US Army needed its service secretary or chief of staff to tell it that tanks and troop carriers with flat bot- toms, sitting just eighteen inches off the The End of Force Structure © Hasik Analytic LLC 6 1 May 2009 21 Jim Garamone, New Capabilities Play Vital Role in Budget Recommendations, Gates Says, Australia.To, 6 April 2009. 22 Walter 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. 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)
  9. 9. ground, were not survivable on the mod- ern battlefield, regardless of whether the program’s name started with future.25 Thus, investment strategy is gravitating from capital expenditure towards oper- ating expenditure.26 CapEx and OpEx may seem just accounting conventions, but the stylistic shift is significant, be- cause the planning horizon is appropri- ately shrinking. Since the location of the next battle is an unknowable-know, ig- noring any enemy’s current and obvious weapon of choice in favor of presumed long-range threats is unconscionable. More to the point, as a business strategy it is unsustainable. Relevance eventually beats old reference points from past wars, and when under fire, eventually is not generally a long time. This is about more than eschewing pro- jects that, to paraphrase Edna Mode, dis- tract from the now. The dramatic change will eventually be seen in asset manage- ment. In the long run, if only so many units can be expected to fight at once, then only so many assets will be needed to support them at once. Vehicles, ships, aircraft, and weapons wear out, but they are repaired and reset more readily than the people they equip. Maintaining smaller equipment sets, shared amongst rotating troops, maintained in country, saves money that can be used to more frequently and thoroughly upgrade the equipment that is actually committed to battle.27 For contractors, this means smaller pro- grams for new platforms, but more fre- quent purchases of new subsystems needed to respond technologically to emerging threats. It also means taking the aftermarket—wherever it is found—as seriously as original, serial production. In armored vehicles, United Defense LP thrived for a decade that way, receiving almost no new orders for armored vehi- cles after 1994. The hefty price for which it was sold to BAE Systems in 2005 was entirely due to pending demand by the US Army for refurbished and upgraded Bradleys. If this seems obvious, consider what the aftermarket really encompasses. Capabil- ity for logistics management can tap into not just revenue streams (with often lower profit margins), but information The End of Force Structure © Hasik Analytic LLC 7 1 May 2009 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. 27 While 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.
  10. 10. streams, which provide raw data on daily usage pattens faster than classically opaque governmental channels allow. Capability to provide training services gets one closer to the customer, tapping into contextually rich information streams that can even lead to implicit un- derstandings of operating concepts that are difficult to attain. Note that the un- derlying value in both these lines of busi- ness is not, as might be imagined, mate- rial or physical presence, but information. As it goes with the migration from CapEx to OpEx, the capital costs are low, but the operational subtleties can be challenging. Mastering them can be rewarding, both for the new business one can capture, and the existing business one can better en- able. To support this need for what matters now, industrial strategy is gravitating from building capacity to developing re- sponsiveness. Contingency requirements show the worst sort of variability for cost- efficiently fulfilling demand: their aperi- odic variations above steady state are ei- ther zero or quite large, and there is gen- erally no lead-in period to signal rising requirements. Some broad planning for peace support can and will be accom- plished in advance.28 Actual peacemak- ing—effectively small-scale warfare—will continue to be driven by Bonaparte’s maxim that on s'engage, et puis on voit.29 This means relying on responsive con- tracting, and particularly in the aftermar- ket. The steady trend in the 1990s rather accelerated with the emergent needs of two wars. Recent criticism of excesses, however, has been overblown: to assert that any waste in wartime spending is a “false choice” is to ignore the urgencies of combat.30 As Mark Cancian recently ob- served, and fortunately for both industry and the troops, there is simply no upfront money for more in-house, rear-area logis- tics capability, and no ongoing money for the inefficiencies of just-in-case capacity.31 Cooler heads seem to be al- ready prevailing in the definition of in- herently governmental functions: policy- The End of Force Structure © Hasik Analytic LLC 8 1 May 2009 28 Janine Davidson, Operationalizing the Comprehensive Approach: the Military as Enabler, speech to Combined Arms Center Senior Leader Conference, Fort Leavenworth, Kansas, 3 February 2009. 29 Richard 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. 31 Mark Cancian, Contractors: the New Element of Military Force Structure, Parameters, Autumn 2008, pp. 61–77.
  11. 11. making is included, but wrench-turning not so much.32 In exploiting these opportunities, the relatively advantaged contractors are not just those with excellent supply chain management skills. Mastering material handling, transportation management, information analysis, inventory manage- ment, retrograde logistics, and responsive manufacturing constitutes the price of admission. Military aftermarkets further require understanding of the exigencies of doing business with the government and the subtleties of doing business with the military. The specific challenge for further after- market development will be two-fold. In Europe, the larger problem lies in build- ing the business case, which are matter of not just finance, but marketing, because the customers often fail to grasp that their fixed costs will decrease—or simply vanish.33 This means mapping supply chains; attaching values to financial, ma- terial, and informational flows; and mod- eling savings. Sufficiently advanced and robust models can help predict out- sourcing opportunities in advance. The further challenge in the United States is political: as the government is tempo- rarily, if weakly, reacting badly to the promise of outsourcing, contractors will need for focus on forging the right rela- tionships with the federal depots. The de- pots will not hold all the cards, but they are politically no weaker, and industrially more capable, than they were a few years ago: they have cooperative contractors to thank in large part for that. Working within depot systems specifically requires strong financial, legal, and public rela- tions functions. Customers need to be convinced in advance that they will save money and get better service. The pile of laws and regulations that limit what can be done must be grasped, and the gaps exploited. People in localities which host logistical installations must be convinced that privatization is inevitable, and in- deed, in their long-term interests. Of course, what the depots, the Pentagon policy shops, and the enemy all abjectly lack is engineering design skill. As the ob- session with far-off planning and force structure wanes, technology strategy will shift from long cycle to short cycle inno- vation. The clock cycle of combat testing reinforces this, and responsive, entrepre- neurial contractors have made it happen. It is remarkable that General Atomics has brought three generations of reconnais- sance and strike aircraft—MQ-1A Preda- tor, MQ-9 Reaper, and MQ-1C Sky War- rior—from concept demonstration through four wars—Bosnia, Kosovo, Af- ghanistan, and Iraq—in the time that Lockheed Martin has brought the F-35 Lightning II up to flight testing. It is easy to argue that the Reaper is a much less complicated aircraft than the Lightning II, but this is entirely the point: it still carries much the same weapons, and sports the same infrared sensor, but it flies five times as far. Moreover, many of the lessons of the past seven years of war have been available for incorporation in The End of Force Structure © Hasik Analytic LLC 9 1 May 2009 32 Remarks by Jacques Gansler at the Houlihan Lokey defense industry conference on Political Transition and Economic Turbulence, Ritz-Carlton Hotel Tysons Corner, 9 December 2008. 33 Alex Miller, Performance-Based Logistics Works, Aviation Week & Space Technology, 3 November 2008, p. 78.
  12. 12. its design; with the F-35, fifteen years of development is simply not rapid learning. Building force structure for wars that may not happen can be accomplished with such absurdly long development cycles; generating forces for wars ongoing re- quires something different. Rapid learn- ing and responsive development, as Jac- ques Gansler once put it, requires “not 20,000 people in production, but 100 really smart engineers.”34 While big com- panies are required to build big sys- tems,35 big systems are somewhat reced- ing from favor. With smaller scale, pro- duction skill is not optional, but require- ments excess to recurring low rates can be outsourced as well. In a salient exam- ple, Force Protection delivered four thou- sand blast-resistant armored vehicles to several military customers between 2003 and 2009 not by squeezing all production through its relatively small factory in South Carolina, but by working with pro- duction partners in Michigan, Pennsylva- nia, Ohio, Texas, and England. Reliance on well-managed co-production networks can calm the turbulent growth than oc- curs after the chasm of customer accep- tance is crossed.36 As shown in the MRAP program, the attainment of a mass mar- ket can be managed in this way, but de- signing and building the prototype of the next generation in one’s product line can only be achieved with in-house technical talent. Metal-bending of any type can be leased today, but the secret sauce of software and systems engineering is more likely to be the differentiating capability. Still, tal- ent plainly extends beyond engineering. Difference lies in design, but this origi- nates in the conception of the idea, which requires a firm understanding of one’s customer’s culture and operating con- cepts. Learning and applying knowledge iteratively, particularly for the emergent needs of operating forces, demands judi- cious management of one’s intellectual capital. Too much leakiness risks the in- imitability which brings profit margins, but working within a production network on rapidly evolving programs requires a certain leakiness of at least tacit knowledge.37 Marketing complex, high- technology products, after all, is often a multi-firm effort, regardless of the whether the customer wears a gray suit or fatigues.38 The End of Force Structure © Hasik Analytic LLC 10 1 May 2009 34 Vago Muradian, Do Big U.S. Programs Stifle Innovation? Defense News, 10 May 2004. 35 Observation by Pierre Chao in Sandra I. Erwin, Pentagon Technology Wins in the Complexity Category, National Defense, April 2009. 36 Florian 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) 37 See James Hasik, Arms and Innovation: Entrepreneurship and Alliances in the Twenty-First Century Defense Industry (University of Chicago Press, 2008) 38 Benjamin 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.
  13. 13. The objective of that marketing is the success of the troops—albeit with the marketer’s specific kit—in those messy, distant, persistent, small wars of the 21st century. Freeing military planning from the Cold War—perhaps Great War—con- struct of force structures can bring rele- vant material, even tactical, solutions to those troops by tapping into entrepre- neurs’ capacity for rapid learning and re- sponsive production. Moving one’s think- ing in the direction of force generation recognizes the unknowable as such—and relies on the military-industrial entrepre- neur for answers. Entrepreneurship is popularly identified with small business, but it is more a matter of behavior, in- sight, incentive, and organization than simply the structure of the industry. Many of the most valued systems of the ongoing wars—the Reaper, the Stryker, the MRAP, the Joint High Speed Vessel, the MC-12W—got their start as immedi- ate or interim solutions to lasting military problems, but subsequently became insti- tutionalized as too important to discard in the hope of the next, new, undefined thing. Now, solutions as these are the new thing. While their early concepts have originated companies with as few as a dozen or as many as a hundred thousand staff, they have originated with entrepre- neurial engineers and marketers who chose not to wait for their customers to tell them what they wanted. As entrepre- neurs, those teams brought the customers what they needed, before they asked. The End of Force Structure © Hasik Analytic LLC 11 1 May 2009 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.

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