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Disruptive Innovation—Time to Rethink "Big A" Acquisition?

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Disruptive Innovation—Time to Rethink "Big A" Acquisition?

by Brian Schultz


Innovation is critical to both our economic and national security interests. Innovation can have multiple meanings, depending upon who is talking about it. In defense acquisition, we typically think of new or novel products, including the use of dual-use commercial technology to support defense needs. Eric Schmidt, Chair of the Special Competitive Studies Project and former CEO and Chair of Google, makes the case that we are in a technology “race” that will determine the future of geopolitics (Foreign Affairs, March-April 2023).

The conflict in Ukraine demonstrates how innovation can rapidly overcome traditional tactics. A few examples are the use of many types of unmanned aerial systems in combined arms, software packages developed by volunteers, and Starlink for high-speed internet to overcome jamming. While innovation is occurring throughout the DoD, significant institutional barriers continue plaguing adoption of innovative technologies into our warfighting capabilities.

Before we look at these barriers, consider the distinction between sustaining and disruptive innovation. In defense acquisition, we can think of sustaining innovation as efforts to create or improve products or processes that perform better and are of higher quality than those that currently exist. By contrast, disruptive innovation seeks to create novel products and processes that change the business model paradigm, making previous methods ineffective or even obsolete. Netflix disrupted the home entertainment industry with its subscription-based streaming service, rendering obsolete the earlier business model of renting movie tapes and discs. As Tom Goodwin observed in his 2022 book, Digital Darwinism: Survival of the Fittest in the Age of Business Disruption, “The barrier to disruptive innovation often isn’t knowing enough—it’s knowing way too much about how things have always been."

Our acquisition decision-making processes support and incentivize sustaining innovation while hindering disruptive innovation. This is a serious concern because disruptive innovation can provide game-changing solutions and may be the key to winning the technology race that Schmidt described. According to the Federation of American Scientists, there is significant disruptive potential for national security in technologies such as laser isotope separation, neutrino and anti-neutrino detection technology, high-energy lasers, hypersonic strike technology, artificial intelligence, big data analytics, low-cost overhead persistent sensing technologies, and advanced cyber capabilities.

While we need both types of innovation, we must find ways to accommodate more disruptive innovation, perhaps even at the expense of sustaining innovation. Valuable insights can be gained from the industry approach to portfolio management.

Disruptive innovation barriers begin with DoD’s decision support systems, also known as the “Big A.” These systems include the Joint Capabilities Integration and Development System (JCIDS) for requirements; the Planning, Programming, Budgeting, and Execution System (PPBE) for resources; and the Defense Acquisition System (DAS) for acquisition. To be effective, all of these decision support systems must interact within the other systems’ constraints. For example, if JCIDS requirements change, funding through the PPBE may be needed, followed by acquisition actions through the DAS.

These systems are no longer effective in their current form. They are too cumbersome, bureaucratic, slow, and narrowly focused in a program-centric model. If disruptive innovation is desired for defense acquisition, it must start by addressing issues with the Big A. Many studies and panels have offered ideas for reform, including adoption of a portfolio management model as detailed in the 2019 Section 809 Panel report. Meanwhile, we see minor refinements to the same processes that incentivize and reward sustaining innovation.

The National Defense Authorization Act for Fiscal Year 2022 establishment of the Commission on Planning, Programming, Budgeting and Execution (PPBE) Reform presents an opportunity to start this overhaul. A typical complaint about PPBE is the time required—at least two years—to obtain funding for new initiatives.

While we await the commission’s recommendations, it is hard to imagine just how one of the decision support systems can be significantly reformed without making changes in the other two. JCIDS, PPBE, and the DAS must all change in unison to achieve the end result of more responsive and agile processes. This interaction is challenging because the systems are driven by different factors. JCIDS is driven by capability gaps, PPBE is driven by the calendar, and the DAS is driven by events (Figure 1).

How can we reform these Big A decision support systems to foster disruptive innovation and meet the dynamic threats that we face today? This type of change would constitute a significant paradigm shift and require us to rethink our business processes, governance, and even statutory authorities. Let’s look at each system and discuss some possible reforms, starting with requirements.

JCIDS, managed by the Joint Staff, provides a process for using combatant command inputs on capability gaps, operational requirements, and funding priorities within constrained budgets. The Joint Staff reviews ensure that cross-Service issues are addressed and duplication of capability needs among the Services is limited. While JCIDS’ portfolio structure is based on functional capability areas, requirements map back to individual programs as capability documents. These documents often offer lengthy lists of requirements that become locked down after JCIDS validation. Any subsequent changes must go back to the Joint Staff for approval.

A JCIDS Alternative: High-level, Mission-based Requirements

It is best to develop high-level capstone requirements that align with mission portfolios rather than generate a lengthy and time-consuming set of program-unique requirements that inevitably will change. Innovation efforts should inform requirements to develop an incremental and fast-paced delivery of mission capabilities and maximize operational impact.

This is not a new concept. The Section 809 Panel report discussed this portfolio approach in detail. MITRE’s March 2020 report, “Modernizing DoD Requirements,” offered similar approaches to modernize this system and encourage greater innovation.

Earlier, we briefly discussed the second big system, PPBE, the decision support system that DoD uses to obtain resources. It originated in the 1960s under then Secretary of Defense Robert S. McNamara. In PPBE’s logical flow, planning involves strategy, programming aligns agency resource requests with the strategy (and budgetary constraints), budgeting builds defensible spending plans, and execution assesses resource-allocation effectiveness.

Funding lead time is only one of the PPBE challenges. Flexibility to move funding across program boundaries is limited by reprogramming rules and other statutes. Innovation funding often is restricted by Research, Development, Test, and Evaluation appropriation and budget designators and is conducted in technology stovepipes outside acquisition program offices.

Figure 1. DoD Decision Support Systems​

Figure 1. DoD Decision Support Systems

 

Innovation efforts should inform requirements to develop an incremental and fast-paced delivery of mission capabilities and maximize operational impact.

A PPBE Alternative: Resource Flexibility

PPBE reform priorities should include resourcing mission portfolios rather than programs, reducing lead time, and adding flexibility. If one accepts the Agile premise that we must welcome new requirements (even late in development), then investment funding should be programmed and budgeted each year for these evolving new requirements with flexibility to shift resources within the portfolio. This is similar to how industry operates where investments are continually evaluated for their potential value and return on investment. Resources are shifted to exploit new opportunities while halting or curtailing projects that lack a high-value return. Funding allocations are prioritized and allocated based on needs and the ability to capitalize on opportunities.

The final system is the DAS. The DAS is based on a program-centric model managed through Service (Army, Navy, Marine Corps, and Air Force) programs with some joint and international programs. It is designed to support sustained innovation through incremental capability enhancements to individual programs.

The DAS underwent a significant change with the release of the Adaptive Acquisition Framework (AAF) in January 2020. The AAF provides a set of six pathways to enable the workforce to tailor strategies to deliver better solutions faster. One significant change is the software acquisition pathway that provides for rapid and iterative capability delivery to the user, an important enabler for modern DoD software practices. Another new pathway is the Middle Tier of Acquisition, which is used for rapid prototyping and rapid fielding. This pathway provides enhanced flexibility for systems with proven technologies that require minimal development. The other pathways (Major Capability, Urgent Capability, Business Systems, and Services) are refinements based on previous models.

DAS Alternative: Portfolio Versus Program-centric Model

We must break away from the program-centric acquisition model in order to support disruptive innovation. Adopting a portfolio-based acquisition system would facilitate this transformation by shifting the focus from the program to the mission capabilities. A common complaint in acquisition is about the technological “Valley of Death” that arises from the challenge of rapidly inserting new technology into existing systems.

Program managers are taught and incentivized to manage scope and deliver within the boundaries of the acquisition program baseline they sign at the beginning of product development. Introducing design changes to insert new technology can break this baseline agreement and require a lengthy resource allocation process in PPBE and a revalidation of the new requirement in JCIDS. This becomes very difficult and encourages deferment to a subsequent increment.

By contrast, a portfolio-management model would charter and incentivize program managers to work with resource sponsors, users, industry, and technology experts to assess how technology could be inserted to enhance joint mission capabilities, irrespective of which programs may be involved. Disruptive innovation would be part of the portfolio charter and would not be constrained by the current funding, requirements or process constraints. It should be significantly easier to transition disruptive (or sustaining) technology to a portfolio instead of a single program. 

Congressional oversight could be enhanced with a view throughout the enterprise of existing DoD capabilities and planned enhancements, along with greater insight into mission-effectiveness enhancements.

Parting Thoughts

Modernization of our decision support systems should be an urgent priority. Some even suggest it should be treated as though we are on a war footing. A good first step is to initiate a pilot portfolio-based model with appropriate authorities to assess this model.

Having worked in acquisition for more than 40 years, I understand the complexity and magnitude of the changes outlined in this article. Political, statutory, and cultural implications for this paradigm shift, just to name a few areas of concern, are obvious. However, we must win this technology race, and defense acquisition will be a big factor.

One potential concern is oversight by Congress. The new systems would need to establish appropriate tripwires requiring congressional notification and/or approval at the portfolio level. Recapitalization of large weapon systems could still be funded and managed under separate procedures outside the mission portfolios. Congressional oversight could be enhanced with a view throughout the enterprise of existing DoD capabilities and planned enhancements, along with greater insight into mission-effectiveness enhancements. This insight could be achieved by developing and using appropriate metrics and reporting systems.

This article did not address industrial barriers, which are critical parts of the innovation challenge. Those will provide a hot topic for another day.

The thoughts expressed here only scratch the surface of the many considerations needed to implement a Big A that supports disruptive innovation. Please let me know your disruptive thoughts! 


SCHULTZ is a professor of Program Management and an executive coach in DAU’s Capital and Northeast Region at Fort Belvoir, Va.

The author can be contacted at [email protected].


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The views expressed in this article are those of the author alone and not the Department of Defense. Reproduction or reposting of articles from Defense Acquisition magazine should credit the authors and the magazine.


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