While the idea of capability portfolios is not new, the concept has gained more traction in recent years since the US DoD 2006 QDR provided new direction for accelerating the transformation of the Department to focus more on the needs of Combatant Commanders and to develop portfolios of joint capabilities rather than individual stove-piped programs.” Continued under Institutional Reform & Governance (IR&G) initiative leading to the September 2008 DoD Directive 7045.20. Although the term is US-specific (TTCP by now?), similar trends are taking place in most other ‘developed’ defence organisations.
After the financial crisis, the concept of portfolio management has come under pressure from the public. Our sense is that the way in which financial institutions have used portfolio theory in their risk assessment models is a salutary tale for defence organizations : it points to some of the dangers in the WAYS in which portfolio management can implemented (make sure you understand the models, mind the fat tails), but it does NOT invalidate the basic insights of the theory (next slide)
The essence of capability portfolio theory is to think of defence capability as about a portfolio investment in which capabilities have to be diversified across different partition schemes based on insight of the tradeoffs between these investment choices. The next set of slides will in essence identify 10 areas where current capability portfolio thinking is changing: The definition of capabilities itself the links along the security chain for which capabilities are developed ...
From a narrow definition of capabilities (first mostly materiel, a bit personnel – and first service-based, now gradually more and more ‘joint’ (with mixed success). Current trend towards a broader (but still purely military) definition of capabilities throughout the DOTMLPF-chain (DOTMLPF analysis in JCIDS, lines of development in UK, FICs in Australia, ‘systeme de forces’ in France). Next step likely to go towards whole-of-government approaches (via ‘3D’): e.g. Expeditionary civil servants; and (via first homeland defence and security, then possibly to forward defence and security) – also whole-of-society capability planning. The FINAL step would be to get a better balance of capability between ‘own’ capability and building forward resilience for ‘others’ (see the World Food Programme, 75.
The new Dutch national security planning system (the method of which is sketched in the new 2007 national security strategy) is currently (to our knowledge) the most ‘whole of government’ approach to capability planning. The new approach consists of three new major components (on TOP of the existing planning mechanisms within the departments): A new government-wide (meta-) foresight function, feeding A national risk assessment which in turn forms the basis for A strategic planning system for national security, based on government-wide capabilities-based planning The following slides will give some more details on the main innovative elements of this system.
One of the first innovations in this system is the ambition to develop a government-wide security foresight capability. The Dutch government engages in a surprisingly high (in international comparison) number of foresight exercises throughout its government, many of which are directly or indirectly related to national security. What it lacked, however, was a ‘meta-security-foresight’ capability – the ability to tap into this knowledge for the purposes of strategic planning. The government-wide security foresight capability is the basis of the new Dutch government approach to security planning. HCSS suggested a scheme with three time-horizons: a longer-term time horizon (provisionally established at more than 5 years); a medium-term horizon (from 6 months to 5 years); and a short-term horizon (less than 6 months). In the first two time horizons, departments engage in foresight activities that in turn feed a national risk assessment mechanism (which will be described in subsequent slides). In the long-term time horizon, a team scans existing foresight exercises both inside and outside the government to identify beyond-the horizon threats and opportunities that might affect the Netherlands. Examples might include things such as the rise of China, technological developments in key areas such as bio- and nano-technology; or the advent of super-empowered individuals. The risk assessment-component within this time horizon is of necessity be fairly limited – it mainly consists of a first broad assessment of the implications of these trends for the Netherlands. On the basis of a meta-foresight methodology developed by HCSS, the inter-agency national security team develops a ‘menu’ of longer-term challenges, which is presented to the Council of Ministers. They select a number of themes from within this menu-card for further in-depth analysis. The selected ‘strategic trends’ are then subjected to a more in-depth inter-departmental analysis by developing a number of ‘reasonable worst case scenarios’ for each trends. These scenarios are then ranked on that basis of a national risk assessment methodology (which has been made public). Finally
The items that the cabinet takes out of the (meta-)foresight are then subjected to a government-wide analytical exercise we call the National Risk Assessment. This exercise yields a matrix that indicates the rlativel likelihood and impact of those items for Dutch national security.
This was the 2008 National Risk Assessment matrix that was presented to the Cabinet in May 2008 and then forwarded to Parliament and made public.
The third and final innovation is that the interagency team uses the high-consequences scenarios of the NRA to develop capabilities on the basis of the same scenarios that were developed for the NRA, and on the basis of a new generic task list that was developed in order to identify the government tasks associated with those scenarios. In a final step, the team develops ‘soll’ and ‘ist’ capabilities for these tasks, which are then compared with each other, leading to a set of recommendations for capability reinforcement that are published together with the National Risk Assessment.
[This cycle is the security chain as we use it in the Netherlands National Security Approach. It merges the main components of what is sometimes called the security chain, with the key components of what is called the policy chain). Capabilities (however defined – see trend 1) were traditional mostly focused on the ‘response’-stage of the security chain. We have seen in recent year a counter-clockwise increase in focus to first Prevention, then Analysis (most clearly in the Dutch, British and French national security strategies) . We do not yet observe a further trend to also strengthen the evaluation function.
One of the big (underappreciated) stovepipes in our defence planning systems is the timehorizon-stovepipe (current (operational) planning vs. Medium-term planning vs. Long-term planning). During the Cold War and in its immediate aftermath, most capabilities planning went into medium-term planning (since no real operations were taking place). As OPTEMPO started picking up in the post-Cold War period, most planning resources were invested in current (operational) planning, mostly at the expense of both other planning horizons. Recent shocks (financial crisis) may trigger renewed interest in longer-term planning. We want to emphasize here that the main advantages of long-term planning (and the principal reason to take it more seriously than we do today) is that it allows one to relax some of the main assumptions that are generally accepted at any given moment in time and to think more ‘out of the box’ (also in terms of solutions).
The very model of ‘defence and security’ is also undergoing some important changes. In the immediate post-Cold War period, most countries (with the exception of the US) were essentially focused on defending the homeland. Capabilities were developed primarily from that point of view (even if they were pooled in alliances as in the case of NATO). In the post-Cold War period, most countries recognized – at different speeds and with differing degrees of conviction – that traditional territorial defence was no longer the single corner stone of national defence and started restructuring their defence forces to make them more expeditionary (i.e. back to forward defence). After 9/11, homeland security and defence missions once again had to be (and were) reintegrated in the mission set for defence forces. But the main model for these hybrid home AND forward defence forces was the firebrigade model: the forces were to intervene after (or JUST before) a crisis erupted (see also trend 2), to put out the fire, and then – once the end state achieved – redeployed back home or elsewhere. In recent years, we see an incipient trend (in line with an earlier similar shift in the development aid community) toward building local security resilience on a more persistent basis instead of projecting Western military forces only in cases of crisis (often when it is too late). The capability implications of this trend are far-reaching but not yet fully recognized.
The scientific base on which governments develop defence capabilities was traditionally overwhelmingly skewed towards the natural ‘hard’ sciences. We are currently witnessing (post-9/11, post Iraq/Afghanistan) a renewed interest in broadening the scientific base of defence capabilities to reinclude the social sciences. Given the different ‘business model’ behind these sciences (with most relevant capabilities in many countries anchored in the academic community), tapping in this new capability base is proving a challenge.
This shift in thinking about the scientific base of defence capability development is currently probably most visible in the Joint Operations 2030 Long Term Scientific Study, which took an entirely novel approach to capability generation that tries to remedy some of the (generally acknowledged) flaws in ACT’s Long Term Requirements Study. The next slides describe the approach taken in JO2030.
The ‘future’ has always played a central role in defence planning, even if the way in which this was done has changed over time and continues to change. During the Cold War, the future was (thought to be) entirely predictable. The ‘canonical’ Soviet threat was modeled in (ever more complex and sophisticated) various high-resolution models and ‘forward defence planning’ was essentially (purposive) operational planning projected towards the future. After the end of the Cold War, the single ‘Soviet’ scenario was replaced by an ever increasing number of scenarios that were supposed to cover the full spectrum of military activities. Quasi-operational planning methods were applied to generate capabilities from each of those scenarios (one-on-one), which was a step forward vis-a-vis the single point-scenario approach. But quickly analysts came to the conclusion that a highly specific set of scenarios (point scenarios) was vulnerable to various unforeseen shifts in the strategic landscape. The problem here is that often the highly specific scenarios that are used for operational (or short-term contingency) planning are ‘dual-used’ as long-term scenarios for forward defence planning. This allows military planners, who tend to be much more familiar (and comfortable) with operational planning than with forward planning, to fall back on existing planning ‘investments’ that typically suffer from excessive ‘presentism’. Succumbing to the temptation of turning forward defence planning into a form of glorified operational planning, however, means that typically insufficient uncertainty is built into the scenarios, thus leading to suboptimal capability choices. To deal with this (recognized) point-scenario problem, some key countries are currently building in ‘shocks’ or ‘branches’ around their existing scenario set – and we clearly are seeing a trend towards more parameterized approaches to foresight. Our own expectation is that we might see some additional changes in the way the future is used for strategic planning – in line with the way in which the business world is now increasingly deals with this. These new changes may include more ‘modest’ approaches to the future. In our own work, we are currently doing more ‘meta-’foresight (summarizing the insights from a larger set of foresight exercises), complemented with even more side-sight (benchmarking – finding interesting practices from other defence (or even non-defence) organizations.
Another interesting trend in capability planning is that countries are (slowly) moving from ‘marginal planning’ (essentially replacing obsolescent defence capabilities with new ones without much insight into the underlying ‘value for money’ across all capability partitions) to more ‘systemic defence planning’ – in which decisions are made on the basis of more insight into the trade-offs between various capability partitions. Two examples of this (taken out our Closing the Loop book) are : The gradual institutionalisation of risk management in the capability development processes of a number of countries. IN the 2009 benchmark exercise done by HCSS, we found strategic risk management to be weak to non-existent in the countries referents we looked at. Currently, risk management typically takes place after the capability audit has established the shortfalls and surpluses between current and expected capabilities and the capability goals. During the risk management stage different options are weighed against each other, and an evaluation of the possibility of one impacting the other is made. The result is a prioritisation of the various capability options. The risk management slidebar is our interpretation as to what degree a formal risk management methodology is embedded in each nation’s capability generation process. We found risk management in the Australian Defence Force to be exceptionally institutionalised in its capability generation process. In conjunction with capability generation, risk management has its own department, a standardised methodology for conducting risk analysis, and a comprehensive management framework that is distributed throughout the organisation. Risk management is also incorporated into each evaluation per performance target in the Defence Annual Report. A second example is the institutionalisation of Balance-of-Investment studies. By this parameter we mean to ascertain to what degree Defence incorporates a methodology for conducting a cost-benefit analysis for the development of one capability over another, balancing both a capability’s ‘worth’ in functional terms of the capability as well as financial terms . This is an important trend, as it allows defence organisations to move away from what could be called ‘marginal planning’ towards more systemic planning. In ‘marginal planning’, there is solely a replacement of capabilities that have come to the end of their life-cycle, and defence planning is essentially confined to such exercises ‘on the margin’. The trend towards more insight into the basic balance-of-investment considerations should enable policymakers to move towards more systemic planning methods. The differences between the referents here are quite pronounced. The UK and Australia have both explicitly formalised a balance-of-investment analysis into their planning processes, which shows how thoroughly the logic of capability based planning is engrained in these two countries. In Australia, this whole of force analysis is conducted by the Defence Planning Group and is an important factor for the Capability Development Group’s Defence Capability Update which examines specific capability platforms. The data on France is somewhat inconclusive, since the more concrete elements of their capability planning are not as accessible as the phase where needs are determined. It appears that balance-of-investment analysis is subsumed into the PP30 studies, but it is not explicitly stated as such. Data is also inconclusive on Denmark and the question is less relevant for the WFP which does little capability planning of its own. Special mention needs to be made of the usage of the specialised tools in the UK and Australia for performing balance-of-investment studies. The UK appears to have developed a suite of tools for Strategic Balance of Investment analysis, of which we have some information on one particular tool – the Combined Highly Integrated Method for Effectively Rebalancing Assets (CHIMERA). Australia uses a tool known as the Capability Options Development and Analysis System (CODAS). Of further note is the explicit usage in the UK of the SAG scenarios for performing balance-of-investment studies, making the SAG scenarios a recurring element in all stages of British capability generation.
One important ‘trend’ we can observe in the way in which developed countries plan for defence planning is that the two (previously separate) disciplines of ‘capability-based planning’ and ‘performance management’ are starting to coalesce in what could be called a ‘ strategic defence management loop ’. This picture visualizes an ideal defence planning loop. The highest political authorities define the high-level policy objectives for the organization. These objectives are in essence the expression of a number of policy choices (what do we want to use our armed forces for?). But they also represent the high-level guidance (which we will call planning parameters) that are provided to defence planners in order to create a defence posture that can accomplish the tasks set within a set of given resource constraints. This guidance should at least consist of a description of the security environment, a definition of the ambition level to which the organization should aspire, and the resources that should be made available for achieving that ambition. The planners within the defence organization then have to translate the political guidance they receive from the political leadership into meaningful parameters that can guide concrete choices. Examples of such concrete parameters may include: the type of missions, the area within the violence spectrum, concurrency requirements missions, the long-term limits within budget, etc. In the next stage defence planners derive real capabilities from the defence guidance they were given and assemble those into a coherent defence force that can realize the high-level policy choices withing the set budgetary constraints. This is accomplished via an analytical/political process that includes such elements as expert judgment, various methodological tools such as scenarios, capability audits, risk management studies, balance of investment studies, and so on. Once capability choices have been materialized into a concrete defence posture, the organization has to develop ways of assessing its own effectiveness and efficiency based on the results it achieves. To this end, performance measures are developed, monitored and reported first within the (defence) organization itself, and then subsequently also to the highest-level political authorities that initially formulated the high-level policy parameters Finally, completing the loop, this strategic performance assessment should lead to a strategic reflection on – and possibly correction of – the course set out, i.e. ‘steering on output’/strategic management. This final stage is arguably the key link in the strategic management loop, although in our analysis we are just now starting to see the bodies emerge in the referents that are in a position to exercise this form of strategic management. Breaking up a process ‘chain’ in such separate ‘links’ does not do justice to the more complex interlinkages that exist already today between some of these various defence planning efforts. Yet we still found it analytically useful to separate these phases as, however interlinked they may – and must! – be, they still represent distinct analytical exercises that can only coalesce into one organic whole on the basis of a genuine strategic commitment to systemic defence planning.
10 Trends in Capability Planning for Defence and Security
Developing Capability Portfolios: 10 Trends An Idiosyncratic and Iconoclastic View Stephan De Spiegeleire Senior Scientist The Hague Centre for Strategic Studies NATO International Conference on Defense Capability Portfolio Analysis Paris May 12-14, 2009
Trend 1 – Broadening Definition of ‘Capability' D O T M L P F
Planning for National Security – The New Dutch Whole-of-Government Approach 1. Government-wide analysis A. Strategic foresight B. Horizon-scanning B. Thematic in-depth foresight Report strategic foresight Process Product Decision- making Report Threat-picture Report themes and scenarios Cabinet decides on themes for thematic in-depth analyses C. National risk-assessment National Risk Picture 3. Follow-up Legislation Risk prioritization Measures Policy Planning assumptions programme tasks and capabilities 2. Strategic planning Required capabilies Current capabiliities Capabilities gap Capability- requirement Werk - Cabinet selects priorities on basis of national risk picture Cabinet decides on capabilities to be strengthened through normal budget system
Government-Wide National Risk Assessment Methodology
Government-Wide National Risk Assessment – Assessing likelihood Hazards Class Quantitative (%) Qualitative description of danger A < 0,05 Highly improbable B 0.05 – 0.5 Improbable C 0.5 – 5 Possible D 5 – 50 Probable E 50 – 100 Highly probable Dangers Class Qualitative description of danger A No concrete indication, and event is thought to be inconceivable B No concrete indication, but event is conceivable C No concrete indication, but event is conceivable D Event is thought to be quite probable E Concrete indication event will occur
Government-Wide National Risk Assessment – Assessing Impact
Government-Wide National Risk Assessment – 2008 Risk diagram
Government-Wide National Security Planning – Planning for National Security (CBP) National security planning method Foresight (Scenarios,…) Values Interests ForAffairs Interior Defence Who? ... With what ? Capabilities What? Tasks Analysis Prevention Response Evaluation What? Task fields Risks
Trend 2 – Back on the Security Chain From response to prevention (but not much further)
Trend 3 – Shifts in Planning Horizons Away from Presentism? Personal and notional estimates !!! <ul><li>Defence Planning-Horizons: </li></ul><ul><li>current </li></ul><ul><li>medium-term </li></ul><ul><li>long-term </li></ul>YEAR 60s 70s 80s 90s 00s 10s Low Medium High
Trend 4 – National Security Model Towards resilience?
Trend 5 – Scientific base Broadening scientific capability base
SAS-066 Joint Operations 2030 – Long Term Scientific Study <ul><li>What is it ? </li></ul><ul><li>A study that will offer insights into the impact that advancing technologies could have on a range of the capabilities that could be required in future NATO led Joint Operations. </li></ul><ul><li>What are the objectives ? </li></ul><ul><li>Consider the impact of future global security environments on joint ops across a range of representative scenarios </li></ul><ul><li>Determine types of capabilities and projected capability gaps that may exist in these future environments </li></ul><ul><li>Consider how applied technologies will impact future capabilities </li></ul><ul><li>Identify system concepts to close capability gaps or significantly enhance capabilities </li></ul><ul><li>Who is the Lead Nation ? </li></ul><ul><li>Canada. </li></ul><ul><li>Who are the participants ? </li></ul><ul><li>To date they include : </li></ul><ul><li>Canada, Czech Republic, Denmark, Germany, Hungary, Italy, Belgium, Netherlands, Norway, Romania, Slovak Republic, Turkey, USA, ACT, NAAG, NIAG, NATO DCS, NURC </li></ul>The 5 Phases of the JO 2030 Study : PHASE 1 Define the strategic environment, scenarios, & CONOPs PHASE 2 Explore future capability needs through a Thematic Analytical approach PHASE 3 Identify capabilities needed in 2030 that derive from the Thematic Analysis and ACT’s Long Term Requirements Study PHASE 4 Out reach and search for solutions PHASE 5 Hold Multinational Workshop and write the final report Timelines: Phase 1 began in the fall 2006, the study is currently nearing the end of Phase IV and has a projected completion date of Dec 2009 . Mr Paul Massel – DRDC-CORA CORT Team Leader JO 2030 Study Leader [email_address]
JO2030 approach… Long Term Capability Requirements Long Term Requirements Study JO2030 Thematic Approach JO2030 Capabilities JO2030 Issues Capability Requirements Solution Concepts
How was Joint Operations 2030 implemented? <ul><li>‘ Realised Strategy’ Approach </li></ul><ul><ul><li>Combined ‘Intended’ and ‘Emergent’ approaches </li></ul></ul><ul><li>Thematic method </li></ul><ul><ul><li>Themes developed (each detailed in point paper) </li></ul></ul><ul><ul><li>Eighteen themes identified (summary available) </li></ul></ul><ul><ul><li>Coverage assumed not to be comprehensive </li></ul></ul><ul><li>Issues </li></ul><ul><ul><li>Developed from each Theme </li></ul></ul><ul><ul><li>Problem statements (60) </li></ul></ul><ul><li>Capabilities </li></ul><ul><ul><li>Driven by Issues </li></ul></ul><ul><ul><li>Describe desirable outcome </li></ul></ul><ul><ul><li>Theme, Issue, Capabilities (TICs) generated (355) </li></ul></ul><ul><li>Solution approaches and system concepts </li></ul><ul><ul><li>Developed with SMEs </li></ul></ul>
The Themes Small Team Operations Standing Arrangements Political Transformation Blurring of Peace & Conflict Cost Escalation Different C2 Paradigms Staying Power Moral, Mental & Physical Domain Planning Under Deep Uncertainty Dual-use Technology Space is Opening Up Regeneration Non-Military, Non violent threats Coalition Operations Changing Man-Machine Interaction Structure Technology Economics Focus and Coherence Information & Media Strategic Compression Super Empowered Individuals Environment Long Term Commitments Political Level
JO2030 Outputs Structure Theme Theme Issue Issue Issue Issue Issue Capability Capability Capability Capability Capability Capability Capability Capability Capability Capability Capability Capability T I C
TiCV: 3 - 4 - 4 - 141008 JO 2030 Theme-Issue-Capabilities sheet Issue : Future structures The need for agile, flexible and adaptive answers to (intrinsically unpredictable) changes in the security environment warrants a radical rethink of how armed forces are structured and maintained. Models from the business world may be examined for applicability. Outsourcing of services and reliance on market adaptation mechanisms must be considered Capability : List : A Theme : Planning Under Deep Uncertainty In the past, where conditions were relatively certain, Alliance defence and operational planning processes were deliberate and reflected ‘strategy as design’. The fluidity and pace of change within the emerging globalised environment will increasingly demand that planning for Alliance operations will be done under conditions of deep uncertainty. Deep uncertainty is present when decision makers do not know or cannot agree on: the current system model of how things fit together, prior probabilities, timing and cost. This will require a new suite of methods and analytical tools to support decision makers in a ‘strategy as process’ manner to develop capabilities that are flexible, adaptable and robust .
Solution Solicitation Sessions <ul><li>Engaging with the Experts </li></ul><ul><li>Develop Solution Approaches or Systems Concepts for T I Cs </li></ul><ul><li>Outreach via: </li></ul><ul><ul><li>RTO Panels (coord’ by TC-730) </li></ul></ul><ul><ul><li>Nationally organised events </li></ul></ul><ul><ul><li>Personal networks </li></ul></ul>
Solution Approaches / Systems Concepts <ul><li>Description of solution concept </li></ul><ul><ul><li>What does it do and what does it look like? </li></ul></ul><ul><li>How do we get there? </li></ul><ul><ul><li>Current status </li></ul></ul><ul><ul><li>Early indicators / Critical points </li></ul></ul><ul><ul><li>Parallels / Precedents </li></ul></ul><ul><li>Technical category / operational domain </li></ul><ul><li>Enablers / Drivers </li></ul><ul><li>Acceptability & Affordability </li></ul><ul><li>Controversy </li></ul><ul><li>Leaders in the field (Studies, links, references) </li></ul>