An implementation directive for Better Buying Power 2.0 was recently released by OSD (AT&L) Mr. Frank Kendall. Better Buying Power (BBP) 2.0 provides refined guidance to the acquisition community on how the Armed Services should approach meeting Deputy Secretary of Defense Dr. Carter’s guidance on ensuring affordability while increasing productivity. This effort will ultimately improve defense spending outcomes to deliver better value to the taxpayer and warfighter. I applaud what I have read in the memorandums and believe the DoD will be successful in time. However, as I have come to understand the Better Buying Power 2.0 initiative, I believe that I would be negligent if I did not bring up, what I consider to be, a basic flaw to making Better Buying Power 2.0 successful. That basic flaw is the DoD’s understanding and acceptance of risk associated with Better Buying Power 2.0. More importantly, a cultural change is required to enable BBP 2.0 to be successful. Personnel will have to be accept change in the acquisition process and the career uncertainty associated with increased risk associated with affordable, timely capability acquisition. The cultural change will require leadership backing, time, and support to be successful.

Better Buying Power (BBP) 2.0 seeks to obtain innovative, affordable, timely products while improving competition, acquisition tradecraft, and professionalism, with additional effort focusing at reducing unproductive costly activities. Current acquisition processes use rigid requirements, strict oversight, and burdensome approval committees while placing execution responsibility on a program manager. The core of BBP 2.0 remains true to the current process but suggests regulation oversight be relaxed while putting additional responsibility on a program manager to be the solution for effective acquisition, Akin to a zero defect mentality. The BBP 2.0 goals of innovative, affordable, and timely products are attainable, however, only with the freedom to experiment, make mistakes, and have the ability to make instant decisions while developing and executing a program on a limited or non-attribution basis. In essence, to be successful, BBP 2.0 must communicate the acceptance of some degree of failure during execution while clearly communicating expectations of product capabilities.

Program risk is accepting the variability in potential outcome of trying new things to create products that are innovative, affordable, and timely. Regulation, overabundance of requirements, and oversight committees do not provide the flexibility required for a truly responsible program manager to make rapid decisions while creating innovative solutions. There currently exists too much career risk in today’s acquisition culture for program managers. Subsequently, program managers are unmotivated to take on the responsibility of employing new technologies, processes, or procedures to create truly innovative, remain affordable and be timely.

Better Buying Power 2.0 appears to seek the benefits of industry based practices but instills mechanisms that attempt to eliminate risk. My opinion is that without the appropriate addition of program and career risk into the BBP 2.0 discussion, the benefits will not be realized and acquisition will remain as it is today. Obtaining the goals of affordability, cost reduction, and reduced acquisition cycle time are desired traits of BBP and achievable – however, a critical enabler is acceptance of program risk. The core desires of BBP 2.0 will increase the risk to achieving product requirements or require program personnel to take on the personal career risk; use of judgment vice committee consensus as a method for decision making. The current culture of risk aversion leads to excessive product requirements, micromanagement, and minimal introduction of innovation to weapons systems. In today’s acquisition environment, could we achieve huge successes like breaking the sound barrier as in the past? I contend that a risk adverse culture plagues the innovative industries of ages past (Defense, Aeronautics, and Space) and has produced little innovation over the last twenty years. If left unchecked, the Defense industry will be surpassed by countries that support a more risk tolerant industry.

Affordability is driven by minimization of requirements, minimization of verification and validation (V&V), documentation, and competitive hardware prototyping & demonstration from a development perspective – basically less activities that overhead cost. A trade off relationship between cost, desired performance, and functionality of a product or service must consider the value added of relevant versus irrelevant (nice to have) requirements. A first step in requirements reduction was the concept of Performance Based Specs (PBS) to minimize Mil-Spec requirements. However, in certain areas, the rational Mil-Specs were replaced with subjective requirements with no standard set of the V&V process. Uncertainty and ambiguity during V&V led to disagreements between contractors and government program personnel in “proving” requirement compliance.

The “proof” impasse is in where lies the disconnect; government personnel desiring to take no risk and the contractors taking minimal judgmental risk. This behavior can lead to conflict, extra cost, and schedule impacts due to additional testing, and V&V “add-ons” that occur later in programs. Requirements, rather, should focus on a set of relevant and meaningful specifications to the user of the product and not be generated for the sake of job security (more on this later). The minimization of requirements translates to a finished developed product that is close to that desired but may not be ideally 100 percent complete. Everyone wants a Ferrari when a Ford Focus will still accomplish most of what you want at a fraction of the price. Case in point, how many requirements did the X-Prize have for going to space? How much V&V was there prior to manned launch? Private individuals can make a high affordable capability to go into space, return, and launch again in a matter of days with very few requirements and the acceptance of risk that the governments would not currently allow. How much the government culture has changed.

Innovation is the concept of bringing invention to the marketplace. Innovation by definition has risk associated with it. Can it be developed in time? Will it perform as expected in a real environment? Can it be manufactured and at a reasonable cost? Is it equal to or better than the next best alternative? If it does not work as predicted is it still good enough or is there a back-up plan in case of failure? Reiterated, risk is associated with innovation.

When innovating, it is important to ensure all parties understand the difference between real, must have, relevant requirements and nice to haves or filler requirements. I believe you will find there are affordable solutions that meet the must have requirements. Providing solutions with bells and whistles working properly to fulfill the nice to haves are what increases cost and creates schedule slips in large procurement programs. Can government procurement live with X-Prize level requirements?

So, when programs are being executed, careful focus should be on the must have requirements while the nice to have requirements should be worked on until it is good enough with funds available. It does not make sense to hold up a program and withhold product from the warfighters because of nice to haves not meeting 100% of requirements. This, of course, is a judgment call that can result in career risk by the program manager unless a culture exist allowing leaders to take action that might not make every stakeholder comfortable.

A Skunk Works type program does exactly that; focuses on must have requirements and generally incorporates 5 to 6 revolutionary technology changes. Everything else that goes into weapon systems development is considered, generally speaking, off the shelf or modified off the shelf product. This limited set of revolutionary technology stems from creating a sort of “control group.” I.e. when experimenting with new capability it is best to have smaller control groups of newness to understand how something may or may not work.

Enter, the Skunk Works Concept: Rapidly developing and fielding innovation with selected invention (5-6 inventions max), minimal documentation, staff, overhead function, controls, committees, decisions at lowest point possible and supported by leadership. More importantly Skunk Works is about an organizational culture that is developing and fielding affordable innovation. Over my career I have worked for or with Lockheed Martin Skunk Works, Boeing Phantom Works, Northrop Grumman Advanced Technology Design Center, McDonnell Douglas New Aircraft and Missiles Product Group, and the LTV Advanced Development Program. The culture that enables those places work well and achieve capable products is based on allowing programs manager full authority, flexibility, little oversight, and the willingness to try new things that may fail. In each case, all organizations embrace the concept of “failure breeds new knowledge.”

A Skunk Works type program, like what BBP 2.0 is proposing, will not work without a proper culture fostered and grown. Culture is the most important feature to enabling BBP 2.0 to be successful. A good starting point to guide culture is Kelley Johnson’s 14 rules for program management and Ben Rich’s article on The Skunk Works Management Style. A review of those sources will provide insight into “how the magic happened” before bureaucratization of advanced development programs. In the past, organizations have successfully created capability that was only previously dreamed of through this development & management method. Albeit, it was not always perfect, but it worked, was affordable, and in all cases achieved some level of capability delivered in the near term versus a pseudo perfect solution two decades later.

The last two decades have also been marked with “design by committee” management styles. Consensus is the desired approach to design and everyone has to agree on the solution. This ensures irrelevant requirements and V&V are added to a program reducing any possibility of innovation, highly affordable products. Prior to “design by committee,” idea, program, and technology champions drove innovation and created products that where affordable and actually produced capabilities. The role of the champion has been destroyed by the “committeeization” of programs. Champions have been put to pasture and many have retired or left the industry. As a result the current culture assigns a tremendous career risk to people who try and effect change and do not conform to design by committee. BBP 2.0 must understand that champions are to be cherished and have authority to make judgment calls for the interest of the product delivered to the warfighter. The DoD must develop new champions, cultivate and protect them to enable BBP 2.0.

Change also requires suppressing the concept of “corporate anti-bodies” that are present in organizations. Corporate anti-bodies are the people and systems that do not adopt change that attacks and kills anything new, just as a human body’s immune system kills anything it deems foreign and a threat to the way things are. Corporate anti-bodies will reject new technology or new business practices and they need to be managed. There are two solutions I can think of to manage corporate anti-bodies: eliminate the anti-bodies or convince the anti-bodies that they are still valid and important contributors if they look at change as a way to boost them further.

Nullifying corporate anti-bodies takes time and a hands on approach whether it is adapting a new technology or business practice. As an example: I have coached many SBIR firms over the years when I was working at Lockheed Martin Skunk Works working F-35 Improvements & Derivatives. Typically, SBIR firms would engage executives on a particular technology and receive the impression that their technology would be utilized on the F-35. However, what really happens is contrary to the SBIR firm’s expectations. Executives, will in turn, have one of their technical experts, or Subject Matter Experts (SMEs), look into the technology and provide a recommendation. Getting a second opinion from a trusted source sounds like a rational approach that anyone would do, but as it turns out, SMEs generally are corporate anti-bodies that reject just about every new technology that comes along. You may ask: “Why would an SME do this and why would an executive ask a SME if their behavior is prone to rejection?”

Rejecting usually stems along the lines of threatening the SME’s knowledge base or empire. Executives rely upon their SMEs for expert judgment and expect an unbiased assessment. The resultant, as it turns out, entails executives asking SME’s who have the most to lose by adopting some new technology to make a judgment call on the company’s behalf. It’s inevitable that a SME will side with conservatism, consciously or unconsciously, in order to protect their job. So, who else can an executive ask? I believe that it is not about who is asked but identifying an unbiased method or process for evaluation.

Short of creating a fundamental shift to industry, I have coached firms to work with the particular SMEs and socialize the technology with them. The socialization attempts to create an unbiased review of the pros and cons of something (do not over sell or under sell), then making the affected parties comfortable with the change. Ensuring the SMEs they are not at risk of losing the status of SME (eliminating a career risk fear) will allow innovative technology to gain exposure easier. This method is time consuming, but does tend to pay off; as it is more likely the technology is transitioned than before if not socialized. If not socialized and outright rejected, then I have seen technology elevated to the next level of management that can overrule the SME– which further builds animosity and resistance now at a community of SME level. This same approach can be applied to business models. Erasing the fear of career risk is critical to a successful model otherwise corporate anti-bodies will still resist change.

Implementing Better Buying Power 2.0 requires a resolute effort with clear understanding and acceptance of program risk while creating and maintaining a culture that encourages experimentation and potential failure without personal career risk. Replicating a Skunk Works model will, with appropriate culture changes, provide innovative environment for technology development, prototyping, and small production runs. However, models are also required for larger production runs and for providing services. Further consideration, beyond the two Skunk Works documents mentioned above, should be given to a mixture of the disciplines of Business Strategy and Corporate Entrepreneurship. These disciplines provide multiple proven models and processes for implementing and maintaining innovative, affordable, and timely products to market. Doing so will create the new innovative, affordable, and timely products while taking appropriate risk that the DoD desires.

Posted by Steven Griggs, PhD, MBA, MA in Policy

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