Innovation lessons defence can learn from other sectors

The changing nature of national threats, like the five terror attacks we saw in the UK in 2017, is shaping how government sees national security. That means any future National Security Capability Reviews are likely to continue the shift away from defence and instead focus on national security, while defence capability is covered elsewhere. A trend we can see in recent events.

With a need to make savings in defence, some programmes could therefore be scaled back. On top of this, major defence programmes will need to improve current delivery, despite their increasing complexity and shortages in specialist skills.

Traditional ways of delivering defence programmes can’t work in this environment, but many of the challenges have already been overcome in other sectors. Having analysed approaches on more than 100 major non-defence programmes, we’ve seen four common themes to successful delivery:

Innovate funding to tackle budget constraints

Funding for major government programmes is tightly controlled, particularly in defence. The NSCR should try to address these pressures, but it will likely put more strain on some defence programmes.

Longer-term spending plans, early access to funding, wider industry engagement, and increased revenue from assets and Intellectual Property create more flexibility.

Despite this, the Defence Equipment Plan is growing in scale and complexity, with the only savings being made through disjointed improvements to ‘ways of working’. To make a significant difference in the future, organisations need to be more innovative with their limited budgets and explore alternate funding systems.

Our research on delivery approaches used by over 100 programmes shows how organisations outside defence address funding shortages and annual budget cycles. Longer-term spending plans, early access to funding, wider industry engagement, and increased revenue from assets and Intellectual Property create more flexibility.

Genomics England, for example, has gained more support from industry by giving pharmaceutical companies access to genomics data for research. This extra support would otherwise have been very costly.

Create governance that helps decision making

Delivery organisations responsible for complex defence programmes should be given a high level of autonomy. In practice, this means designing delivery programmes with the independence and ability to make quality, un-biased decisions at a high tempo, allowing rapid response to change.

Major programmes outside defence use this approach and see tangible benefits. Crossrail, for example, established distinct space between the delivery organisation, Crossrail Limited (CRL), and the sponsors. This created the independence needed to focus on managing the programme, and the ability to make decisions quickly. An independent board, made up of experienced executives and non-executives, brought the necessary expertise to make this work, leading to a better-managed programme and greater stakeholder confidence.

Successful implementation relies on capturing and analysing high quality performance and management information. But, more importantly, it needs appropriate delegation of decision-making, empowerment, and budgetary control.

Attract, retain and manage talent

To meet time and budget targets, major programmes need expertise and experience. However, this isn’t always readily available to government, especially with the greater pay and incentive freedoms in private industry. This is highlighted in niche areas, where it’s not financially viable to retain and invest in specialist skills that are rarely needed.

To combat these challenges, defence needs the freedom to attract, retain and manage talent. This would reduce the cultural effect of churn and the associated ‘corporate memory loss’, which can harm public sector programmes.

To create sustainable skills, Crossrail created a tunnelling skills academy that overcame the challenges of an ageing workforce specialist engineering expertise. The academy attracted funding from the Skills Agency and benefited from state-of-the-art equipment sponsored, loaned or gifted by industry partners. The result was a skilled workforce and an enduring legacy in niche skills development.

By giving more freedom, delivery organisations can create tailored procurement procedures, better market engagement and new incentives.

Stepping away from existing limits not only improves access to the right people, but can significantly increase both the tempo of recruitment and flexibility of employment. The result is a programme delivery organisation that’s more responsive to programme schedules and unforeseen change.

As the NSCR is likely to focus on the reallocation of skills and resources, defence programmes should look to leverage the benefits of workforce freedoms, including those developed within the Whole Force Approach.

Collaborate with industry

Major defence programmes struggle to manage the costs of procurement, especially when faced with limited competition among suppliers and tight deadlines. By giving more freedom, delivery organisations can create tailored procurement procedures, better market engagement and new incentives. These freedoms also enhance collaboration between programmes and industry, which the NSCR can encourage and defence must seize.

For example, Highways England’s move to a 5-year budget made them more able to engage the market, discuss long-term infrastructure spend with suppliers, and manage finances around major construction projects and asset lifecycles.

Similarly, the non-negotiable deadline for the 2012 Olympics could have put the London Organising Committee in a poor negotiating position if supplier deadlines slipped. Instead, their procurement freedoms meant contracts included incentives for good performance and penalties that made it possible to fund replacement services.

Seize the opportunity

Designing a programme delivery organisation that follows these four trends is a step-change in approach. It’s a change defence must embrace quickly. Fresh budgetary pressures are likely to come with the NSCR’s likely shift to a ‘whole system’ national security approach.

Innovative finances, governance autonomy, HR freedoms, and industry collaboration have already created a track record of success in major public programmes. Defence can do the same if it’s supported by a culture built around a shared purpose, and a leadership with the experience, ability and credibility to find new ways of working.

If the benefits of implementing this delivery model are to be realised, the leadership team must live the culture the organisation needs. In doing so there’s a chance to leverage the best of both private sector disciplines and public sector ethos, purpose and values.

Johnny Gilbert, Will Gordon and Oliver Bennett are defence experts at PA Consulting Group.

Image: Capt. Jim McCall, USN