DoD Transformation: Harnessing Knowledge and Achieving Growth Through Value Innovation
by Linda Lewandowski, ICF International
Implications of the Changing Global Environment
A high-level U.S. Department of Defense (DoD) decision-maker recently remarked, “We’ve spent the last several years investing in technology, and the result is that I have more information now, much more, than I had before, but it doesn’t help me make better decisions.” His comments underscore how DoD, similar to many organizations, has struggled with the recognition that complex technologies have not single-handedly advanced these organizations or transformed them adequately to respond to continual change.
One important element of DoD transformation is to dramatically increase organizational agility, which will require the redesign of command and control (C2)1. In fact, compelling evidence outside DoD substantiates the importance of design in achieving organizational fitness. For example, Procter & Gamble (P&G) found the design process to be a key driver of continuous innovation and fitness for reacting to rapidly changing competitive landscapes. P&G has identified how to blend innovation into the design process, which has imbedded in it continuous learning and adaptation. "Your products run for election every day," says P&G chief executive officer A.G. Lafley. "And good design is critical to winning the campaign."2 P&G’s design process is an engine for continuous innovation and its structure allows access to knowledge across the organization, its products, and employee skills. Knowledge alone, however, does not ensure growth and increased competitive fitness. Leadership also is required to foster an environment in which creativity and innovation can flourish.
Information Age transformation is global and spans all competitive spaces, so harnessing collective knowledge is the key to growth and advantage. Organizations must systematically change their structure, management, operations, training, and education. To begin its transformation, DoD can adapt promising or proven business models and practices, structure the organization around the knowledge assets that will encourage value innovation, abandon the traditional C2 model, and move toward an adaptive enterprise design. These actions require significant changes to DoD’s business model, staff competencies, and leadership skills. A new design for C2 is critical to move DoD in the direction of edge organizations. Moving from hierarchy to edge involves allocation of decision rights, dissemination of information, and patterns of interaction among participants, and requires a “human-centric” design.3
The center of transformation, which also is the distinction between success and failure, is an organization’s ability to create an enterprise design that enables greater performance. Lessons learned both within and beyond DoD have begun to confirm the importance of a human-centric design. Although our environment has changed dramatically, the key role of the human being has endured. In fact, many researchers, visionaries, and others who study macro forces and drivers of change expect the human factor to prove even more significant in the years ahead for sensing, making sense of, and choosing solutions that mitigate risk and produce successful outcomes. Given the complexity and speed of change today, no single human or single organization is able to solve problems successfully, which has tremendous implications for C2.
Toward an Adaptive Enterprise
The changing nature of competition in a closely connected world means organizations must compete in learning, adaptation, speed of creating new knowledge, and innovative application of knowledge to drive value. Such an environment has a major impact on strategy, organizational structure, and business models, and foretells changes for human capital competencies. For DoD, this environment demands a dramatic shift in concept of operations and vision of capabilities.
The changing nature of competition and its impact on security operations was recognized by the visionary and influential Vice Admiral (ret.) Arthur Cebrowski, whose research and experience led him to develop the theory and principles of network-centric operations. According to Cebrowski, "Network-centric rather than platform-centric warfare means radical changes in how forces train, organize and allocate resources." Regarding intellectual capital, Cebrowski proposed, "Information-based processes are the dominant value-adding processes in both the commercial world and the military. Yet the military fails to reward competence in these areas. Operator status is frequently denied to personnel with these critical talents, but the value of traditional operators with little acumen in these processes is falling, and ultimately they will be marginalized, especially at mid-grade and senior levels."4
Cebrowski’s observation indicates the necessity to redefine the term operator in the context of DoD evolving toward an adaptive enterprise. In an effects-based context, an operator is knowledgeable and skilled in the application of all available instruments of power and influence to achieve desired national security outcomes. The definition of operator would be consistent across DoD, but decision-makers would have the knowledge and skill to set the context, develop strategies, and coordinate resources that will contribute in achieving effects.
Succeeding in the Adaptive Enterprise
In an atmosphere of accelerated change and unprecedented uncertainty—propelled by technologies that drive greater connectedness and transparency—leaders face a competitive landscape that challenges traditional methods of strategy development, planning, and practice, yet provides extraordinary opportunity to support value innovation. The adaptive enterprise holds tremendous promise to steer organizations to greater competitive fitness through the creation of new organizational designs. These new designs systematically make sense of complex environmental signals, choose the right options, and respond to customer needs within unpredictable environments. DoD senior leaders and managers facing discontinuous change must build capacity for the knowledge, methods, and tools to transform their organizations into adaptive enterprises, with minimal disruption to current operations.
An adaptive enterprise design calls for a capabilities-based approach to managing physical and informational assets, anticipating customer needs, and responding rapidly and effectively to add value for all end users. For DoD, this involves managing networked, modular, reconfigurable capabilities in real time rather than in sequential, fragmented functions and linear processes.
Required Competencies of the Adaptive Enterprise
Research on global business and government agencies has demonstrated that the adaptive enterprise model, its methods, and practitioner tools provide today’s organizational leaders and managers with a new approach to understanding the environment, anticipating demands, and continually developing and applying knowledge to produce innovative solutions and services. Haeckel outlined five core competencies or capabilities that adaptive enterprises must develop and excel at when adopting a sense-and-respond model: knowing earlier; managing by wire; designing a business as a system; dispatching capabilities from the customer request back; and context-giving leadership.5
An adaptive organization is structured for action and characterized by modular, reconfigurable capabilities, adaptive management systems, and robust operating designs that can survive independent of external threats, technologies, geographic areas, and organizational boundaries. To produce value for clients, information must be managed across the organization to enable smart and rapid decision-making for coherent and precise application of resources. However, developing new ways of operating with the customer in mind is often incompatible with the multiple structural layers and linear processes found in traditional organizations. To sense customer needs and deliver value faster and better than the competition, traditional organizations must move from centralized to decentralized decision-making.
Advances in technologies allow cheaper communication and collaboration across physical, informational, and organizational boundaries, enabling creative decentralized decision-making structures.6 New cross-enterprise organizational designs will help decision-makers at all levels systematically sense, interpret, and respond to situational and environmental turbulence. New management models, infrastructure, and practices will permit successful adaptation to competitive challenges. A new breed of risk takers and bold leaders will be needed to confront disruptive and discontinuous change, for failure to lead and implement systematic transformation will threaten organizational extinction.
For DoD, this transformation requires a dramatic shift from budget-based to capabilities-based planning and execution focused back from the customer (i.e., effects) and not back from the product (i.e. weapons system). A modular design of capabilities that can be integrated rapidly permits capability modules to be tailored to the scale of the problem. As an adaptive organization’s capability matures, it can anticipate customer needs and formulate appropriate responses, offering a model for conducting business in an information-rich and increasingly connected world.
Additional competencies are required to move DoD from centralized to decentralized decision-making, lead organizational transformation, and build capacity for applying knowledge and skills to achieving operational effects. New leadership and management competencies will be required to establish the context or commander’s intent, coordinate resources, and support team members in achieving desired outcomes. Cultivating individuals and teams requires leveraging collective knowledge and skills to achieve success. Malone’s research shows that today’s organizations operating in traditional hierarchical structures fall far short of realizing and taking advantage of people’s true potential for creating value. According to Malone, "In the old world of large-scale, mostly routine production, taking maximum advantage of everyone’s intelligence and creativity wasn’t critical, and the top-down, command-and-control management style was usually quite effective. But as organizations become more decentralized, as knowledge work comes to dominate the economy, and as innovation becomes increasingly important, taking advantage of people’s true intelligence and creativity will become one of the most critical capabilities of successful businesses."7
A leader’s role in this type of organization includes building infrastructures and incentives for sharing information that will continue to decrease transaction costs and increase the speed of decision-making to drive customer value or the quality of effects. Malone also defined the core capabilities for distributed leadership:8
Creating New Competencies
A competency-based approach to human capital development is central to increasing new knowledge and skills to meet the demands of evolving toward an adaptive DoD enterprise. Without the intervention of innovative leaders, new competencies are not likely to evolve within the current organizational structure. Thoughtful design of this intervention is critical to the timely and consistent evolution of future competencies with the demands of the future Joint Force. To that end, the new elite needs to emerge through co-evolutionary development, which allows for continual refinement of joint concepts and competencies through seamless integration of concept design and experimentation—including rapid prototyping and direct interaction with operational users—to produce transformation shaped by changing demands.
Disruptive innovation is necessary to bring about the new elite and associated competencies, but bold, risk-taking leadership and increased cognitive skills also are required. The compelling nature of this change and the urgency to acquire necessary competencies sooner rather than later demand a well-planned and integrated strategy for the future.
Continuous Transformation Through Co-Evolutionary Design and Two-Way Learning
Integrating continuous transformation so capabilities and competencies emerge is important for institutionalizing a mechanism for value innovation. This ensures that implementing a transformational strategy is not an end in itself, but a continually evolving and adapting set of leadership skills, technologies, methodologies, functions, activities, and infrastructure, with associated doctrine, tactics, techniques, and procedures. These interdependent elements of a human capital strategy must respond to the evolving global security environment, experience gained through their implementation, and advances in technology.
Adaptive enterprise leadership and management capability should develop in a co-evolutionary manner, using techniques to stimulate disruptive innovation through continuous, parallel, and cross-correlated development and refinement of concepts, processes, technologies, and organizations. By employing these elements simultaneously, the objective is to start influencing change immediately.
An experimentation framework and experimentation campaign plan should feature two-way learning with participation and support from subject matter experts and users of adaptive enterprise knowledge, methods, and tools to validate emerging hypotheses and techniques. Experimentation also provides the means to explore, discover, test, validate, and adapt to feedback, lessons learned, and operational experience.
Co-evolutionary development products and experimentation results then lead to creation of a transition roadmap, which can provide assessments and guidance to DoD for supporting the growth of new competencies. A systematic capabilities-based approach will require portfolio management and investment strategy knowledge, skills, and tools within DoD. Thoughtfully adapting knowledge, tools, and practices of other organizations will benefit DoD’s ability to plan, organize, and manage transformation deftly within the limits of a declining budget.
These approaches eventually will yield results across DoD and beyond, which will influence technology, policy, acquisition, operations, organization, and the private sector. These changes will broaden the industrial base through public-private partnerships and strengthen U.S. core competencies for an increased competitive advantage.
FOOTNOTES
1Alberts, D. S., & Hayes, R. E. (2007). The future of C2. The International C2 Journal, 1(1).
2Reingold, J. (2005, June). Fast Company, 95, 56.
3Alberts, D. S., & Hayes, R. E. (2003). Power to the Edge: Command and Control in the Information Age.
4Borchgrave, Arnaud De United Press International. International Intelligence. Commentary: 21st Century's Clausewitz, UPI, editor at large.
5Haeckel, Stephan H., Adaptive Enterprise, Creating and Leading Sense-And-Respond Organizations, Harvard Business School Press, 1999.
6Malone, Thomas W., The Future of Work, Harvard Business School Press, 2004, p.126.
7Malone, Thomas W., The Future of Work, p.153.
8Ibid, p.162.
Implications of the Changing Global Environment
A high-level U.S. Department of Defense (DoD) decision-maker recently remarked, “We’ve spent the last several years investing in technology, and the result is that I have more information now, much more, than I had before, but it doesn’t help me make better decisions.” His comments underscore how DoD, similar to many organizations, has struggled with the recognition that complex technologies have not single-handedly advanced these organizations or transformed them adequately to respond to continual change.
One important element of DoD transformation is to dramatically increase organizational agility, which will require the redesign of command and control (C2)1. In fact, compelling evidence outside DoD substantiates the importance of design in achieving organizational fitness. For example, Procter & Gamble (P&G) found the design process to be a key driver of continuous innovation and fitness for reacting to rapidly changing competitive landscapes. P&G has identified how to blend innovation into the design process, which has imbedded in it continuous learning and adaptation. "Your products run for election every day," says P&G chief executive officer A.G. Lafley. "And good design is critical to winning the campaign."2 P&G’s design process is an engine for continuous innovation and its structure allows access to knowledge across the organization, its products, and employee skills. Knowledge alone, however, does not ensure growth and increased competitive fitness. Leadership also is required to foster an environment in which creativity and innovation can flourish.
Information Age transformation is global and spans all competitive spaces, so harnessing collective knowledge is the key to growth and advantage. Organizations must systematically change their structure, management, operations, training, and education. To begin its transformation, DoD can adapt promising or proven business models and practices, structure the organization around the knowledge assets that will encourage value innovation, abandon the traditional C2 model, and move toward an adaptive enterprise design. These actions require significant changes to DoD’s business model, staff competencies, and leadership skills. A new design for C2 is critical to move DoD in the direction of edge organizations. Moving from hierarchy to edge involves allocation of decision rights, dissemination of information, and patterns of interaction among participants, and requires a “human-centric” design.3
The center of transformation, which also is the distinction between success and failure, is an organization’s ability to create an enterprise design that enables greater performance. Lessons learned both within and beyond DoD have begun to confirm the importance of a human-centric design. Although our environment has changed dramatically, the key role of the human being has endured. In fact, many researchers, visionaries, and others who study macro forces and drivers of change expect the human factor to prove even more significant in the years ahead for sensing, making sense of, and choosing solutions that mitigate risk and produce successful outcomes. Given the complexity and speed of change today, no single human or single organization is able to solve problems successfully, which has tremendous implications for C2.
Toward an Adaptive Enterprise
The changing nature of competition in a closely connected world means organizations must compete in learning, adaptation, speed of creating new knowledge, and innovative application of knowledge to drive value. Such an environment has a major impact on strategy, organizational structure, and business models, and foretells changes for human capital competencies. For DoD, this environment demands a dramatic shift in concept of operations and vision of capabilities.
The changing nature of competition and its impact on security operations was recognized by the visionary and influential Vice Admiral (ret.) Arthur Cebrowski, whose research and experience led him to develop the theory and principles of network-centric operations. According to Cebrowski, "Network-centric rather than platform-centric warfare means radical changes in how forces train, organize and allocate resources." Regarding intellectual capital, Cebrowski proposed, "Information-based processes are the dominant value-adding processes in both the commercial world and the military. Yet the military fails to reward competence in these areas. Operator status is frequently denied to personnel with these critical talents, but the value of traditional operators with little acumen in these processes is falling, and ultimately they will be marginalized, especially at mid-grade and senior levels."4
Cebrowski’s observation indicates the necessity to redefine the term operator in the context of DoD evolving toward an adaptive enterprise. In an effects-based context, an operator is knowledgeable and skilled in the application of all available instruments of power and influence to achieve desired national security outcomes. The definition of operator would be consistent across DoD, but decision-makers would have the knowledge and skill to set the context, develop strategies, and coordinate resources that will contribute in achieving effects.
Succeeding in the Adaptive Enterprise
In an atmosphere of accelerated change and unprecedented uncertainty—propelled by technologies that drive greater connectedness and transparency—leaders face a competitive landscape that challenges traditional methods of strategy development, planning, and practice, yet provides extraordinary opportunity to support value innovation. The adaptive enterprise holds tremendous promise to steer organizations to greater competitive fitness through the creation of new organizational designs. These new designs systematically make sense of complex environmental signals, choose the right options, and respond to customer needs within unpredictable environments. DoD senior leaders and managers facing discontinuous change must build capacity for the knowledge, methods, and tools to transform their organizations into adaptive enterprises, with minimal disruption to current operations.
An adaptive enterprise design calls for a capabilities-based approach to managing physical and informational assets, anticipating customer needs, and responding rapidly and effectively to add value for all end users. For DoD, this involves managing networked, modular, reconfigurable capabilities in real time rather than in sequential, fragmented functions and linear processes.
Required Competencies of the Adaptive Enterprise
Research on global business and government agencies has demonstrated that the adaptive enterprise model, its methods, and practitioner tools provide today’s organizational leaders and managers with a new approach to understanding the environment, anticipating demands, and continually developing and applying knowledge to produce innovative solutions and services. Haeckel outlined five core competencies or capabilities that adaptive enterprises must develop and excel at when adopting a sense-and-respond model: knowing earlier; managing by wire; designing a business as a system; dispatching capabilities from the customer request back; and context-giving leadership.5
An adaptive organization is structured for action and characterized by modular, reconfigurable capabilities, adaptive management systems, and robust operating designs that can survive independent of external threats, technologies, geographic areas, and organizational boundaries. To produce value for clients, information must be managed across the organization to enable smart and rapid decision-making for coherent and precise application of resources. However, developing new ways of operating with the customer in mind is often incompatible with the multiple structural layers and linear processes found in traditional organizations. To sense customer needs and deliver value faster and better than the competition, traditional organizations must move from centralized to decentralized decision-making.
Advances in technologies allow cheaper communication and collaboration across physical, informational, and organizational boundaries, enabling creative decentralized decision-making structures.6 New cross-enterprise organizational designs will help decision-makers at all levels systematically sense, interpret, and respond to situational and environmental turbulence. New management models, infrastructure, and practices will permit successful adaptation to competitive challenges. A new breed of risk takers and bold leaders will be needed to confront disruptive and discontinuous change, for failure to lead and implement systematic transformation will threaten organizational extinction.
For DoD, this transformation requires a dramatic shift from budget-based to capabilities-based planning and execution focused back from the customer (i.e., effects) and not back from the product (i.e. weapons system). A modular design of capabilities that can be integrated rapidly permits capability modules to be tailored to the scale of the problem. As an adaptive organization’s capability matures, it can anticipate customer needs and formulate appropriate responses, offering a model for conducting business in an information-rich and increasingly connected world.
Additional competencies are required to move DoD from centralized to decentralized decision-making, lead organizational transformation, and build capacity for applying knowledge and skills to achieving operational effects. New leadership and management competencies will be required to establish the context or commander’s intent, coordinate resources, and support team members in achieving desired outcomes. Cultivating individuals and teams requires leveraging collective knowledge and skills to achieve success. Malone’s research shows that today’s organizations operating in traditional hierarchical structures fall far short of realizing and taking advantage of people’s true potential for creating value. According to Malone, "In the old world of large-scale, mostly routine production, taking maximum advantage of everyone’s intelligence and creativity wasn’t critical, and the top-down, command-and-control management style was usually quite effective. But as organizations become more decentralized, as knowledge work comes to dominate the economy, and as innovation becomes increasingly important, taking advantage of people’s true intelligence and creativity will become one of the most critical capabilities of successful businesses."7
A leader’s role in this type of organization includes building infrastructures and incentives for sharing information that will continue to decrease transaction costs and increase the speed of decision-making to drive customer value or the quality of effects. Malone also defined the core capabilities for distributed leadership:8
- Visioning - concrete image of some outcome that you are deeply committed to achieving
- Sense making - being able to make sense of ambiguous data and recognize trends before others do
- Inventing - finding ways to achieve your vision and continually inventing new ways to do things
- Relating - managing relationships with others to achieve vision
- Managing your own time; putting human values at the center
Creating New Competencies
A competency-based approach to human capital development is central to increasing new knowledge and skills to meet the demands of evolving toward an adaptive DoD enterprise. Without the intervention of innovative leaders, new competencies are not likely to evolve within the current organizational structure. Thoughtful design of this intervention is critical to the timely and consistent evolution of future competencies with the demands of the future Joint Force. To that end, the new elite needs to emerge through co-evolutionary development, which allows for continual refinement of joint concepts and competencies through seamless integration of concept design and experimentation—including rapid prototyping and direct interaction with operational users—to produce transformation shaped by changing demands.
Disruptive innovation is necessary to bring about the new elite and associated competencies, but bold, risk-taking leadership and increased cognitive skills also are required. The compelling nature of this change and the urgency to acquire necessary competencies sooner rather than later demand a well-planned and integrated strategy for the future.
Continuous Transformation Through Co-Evolutionary Design and Two-Way Learning
Integrating continuous transformation so capabilities and competencies emerge is important for institutionalizing a mechanism for value innovation. This ensures that implementing a transformational strategy is not an end in itself, but a continually evolving and adapting set of leadership skills, technologies, methodologies, functions, activities, and infrastructure, with associated doctrine, tactics, techniques, and procedures. These interdependent elements of a human capital strategy must respond to the evolving global security environment, experience gained through their implementation, and advances in technology.
Adaptive enterprise leadership and management capability should develop in a co-evolutionary manner, using techniques to stimulate disruptive innovation through continuous, parallel, and cross-correlated development and refinement of concepts, processes, technologies, and organizations. By employing these elements simultaneously, the objective is to start influencing change immediately.
An experimentation framework and experimentation campaign plan should feature two-way learning with participation and support from subject matter experts and users of adaptive enterprise knowledge, methods, and tools to validate emerging hypotheses and techniques. Experimentation also provides the means to explore, discover, test, validate, and adapt to feedback, lessons learned, and operational experience.
Co-evolutionary development products and experimentation results then lead to creation of a transition roadmap, which can provide assessments and guidance to DoD for supporting the growth of new competencies. A systematic capabilities-based approach will require portfolio management and investment strategy knowledge, skills, and tools within DoD. Thoughtfully adapting knowledge, tools, and practices of other organizations will benefit DoD’s ability to plan, organize, and manage transformation deftly within the limits of a declining budget.
These approaches eventually will yield results across DoD and beyond, which will influence technology, policy, acquisition, operations, organization, and the private sector. These changes will broaden the industrial base through public-private partnerships and strengthen U.S. core competencies for an increased competitive advantage.
FOOTNOTES
1Alberts, D. S., & Hayes, R. E. (2007). The future of C2. The International C2 Journal, 1(1).
2Reingold, J. (2005, June). Fast Company, 95, 56.
3Alberts, D. S., & Hayes, R. E. (2003). Power to the Edge: Command and Control in the Information Age.
4Borchgrave, Arnaud De United Press International. International Intelligence. Commentary: 21st Century's Clausewitz, UPI, editor at large.
5Haeckel, Stephan H., Adaptive Enterprise, Creating and Leading Sense-And-Respond Organizations, Harvard Business School Press, 1999.
6Malone, Thomas W., The Future of Work, Harvard Business School Press, 2004, p.126.
7Malone, Thomas W., The Future of Work, p.153.
8Ibid, p.162.
