A Better Business Model for Transnational Armaments Cooperation
The business model of transnational cooperation in armaments development and production is not working. Though founded on the promise of achieving economies of scale, especially through long production runs, the political allocation of work share tends to undermine this proposition. In its place, we propose an alternative model organized around the promise of achieving innovation in development among a small core of customers who share a compelling military-technical challenge. Because the resulting business model of transnational cooperation is a more coherent expression of how firms can ally across borders to make money and sustain profitability, it is also more likely to realize material solutions and options that show a fair return on defense ministriesâ investments in these ventures.
Sometimes itâs what you spend, and sometimes itâs where and how you spend it.
Congress should be removing barriers to innovation, not erecting barriers to competition.
On 18 September, Scotland votes on the question of independence from the United Kingdom, and the polling strongly suggests a vote of no. On 9 November, Catalonia could be voting on the same issue vis-Ă -vis Spain, but the polling slightly suggests a yesâif the Spanish Constitutional Court allows the vote to take place. NATO members should treat neither case lightly, but the independence of Catalonia would pose fewer military problems for the alliance than that of Scotland.
Itâs much easier to kill an arms exporting franchise than to build one.
The armaments export policies of Germany and Japan seem to be crossing paths this month. His recent approval of the export of a whole tank factory to Algeria notwithstanding, German Economy Minister Sigmar Gabriel is said to have been piling up license requests on his desk, content to do nothing, save to tell German arms makers to find other work. At the same time, Japanese Prime Minister Abe has declared, at least in principal, the entire Japanese arms industry open for business globally. This could produce submarines for Australia, and even a new fighter jet.
The MRAP experience still shows how military requirements need to hew to the state of the art in attainable technologies.
Commercial or military, autarkic or globalized, public or private?
What are the industrial base issues that need to be considered in any defense strategy? In this age of austerity in military spending, we are hearing calls for bolder policies that would break with past practice, rewarding companies for taking risks, and punishing those that failed. We hear assertions that defense ministries should think seriously about what capabilities they want to preserve as economic constraints force choices in future force structure, and ultimately strategy. We should applaud these efforts to highlight industrial considerations in formulating strategy, for the question remains fresh. But in thinking about formulating public policies in this area, I believe that an overarching framework is important. I recommend orienting on three dimensions, each of which encompasses a spectrum of potential defense-industrial policies.
Better outcomes in military procurement still await a better-educated workforce.
In April 2010, then-Under Secretary of Defense Ashton Carter promulgated the first version of his Better Buying Power concept, which mandated (amongst other things) "should-cost" reviews for major procurements. The strategy aims to determine what a weapon should cost, if the government and the contractors work together to eliminate unnecessary expenses; the alternative is to simply pay whatever the contractor bids, and thus what the weapon will cost in the absence of any intelligent follow-up. The initial memorandum was rather short on details for implementation, so ever since then, the way forward with this seemingly sensible approach has been subject to considerable debate. In a commentary yesterday in Defense News, Christian Hagen of consultancy A.T. Kearney endorsed the Pentagon's ongoing enthusiasm, but emphasized three inputs as critical to success: capable people, reusable processes, and pilot programs. All are important, but finding good people may be the salient issue.
The appointment of SVP Emil Michael to the Defense Business Board is a good start.
Last week, the Defense Department announced that fully eight new members would be joining its Defense Business Board, the panel that advises the Pentagon on, well, business. We might hope that the Defense would pay more attention to its Business Board, but at least the makeup of the newcomers indicates renewed interest in recruiting people from the outside world. Saliently, as the Wall Street Journal noticed, the list includes Emil Michael, an SVP at Uber, that fast-growing car-sharing outfit that is making cab companies very nervous the world over. Last December, Defense Industry Daily wrote that Uber should be interesting to "anyone interested in supply chains and yield management. Itâs all about minimizing idle time for capital goods.â