FIST: Beating the Innovators’ Dilemma; Faster, Better Weapons Buying

Rachel Kleinfeld, president of the Truman National Security Foundation. As Congress awaits word from the Pentagon as to just how it will manage sequestration (the plan is due to Sen. Carl Levin‘s Senate Armed Services’s Committee today), we’ve got this interesting piece from Rachel Kleinfeld, a member of our board of contributors and president of the progressive Truman National Security Project. Kleinfeld argues for broader adoption of an innovative acquisition approach called FIST. No, this isn’t yet another version of acquisition reform, which has done so little to improve acquisition. Breaking D readers will recognize some of the arguments. Think of Bob Gates’ frequent mention of 80 percent solutions. Read on. — The Editor. Clayton Christen, a Harvard business school professor, wrote The Innovators’ Dilemma to describe how disruptive innovation can undermine successful companies. First, market leaders dismiss disruptors, because the little guy can’t possibly threaten them. Then, they pay some attention, but they can’t change old habits and standard operating procedures fast enough. Then, the disruptive start-ups put them out of business. America’s military is facing disruptive challenges ranging from improvised explosives to cyber attack. We still need our advanced stealth bombers and missile systems – but they can no longer ensure security against all threats. To avoid being toppled like other dinosaur companies, we need to make FIST – Fast, Inexpensive, Simple, and Tiny – standard operating procedure for our military. FIST is an idea that Lt. Col Dan Ward and a growing group of procurement leaders in the DoD and DHS have been applying for the past years. It’s not a right or left idea – it’s simply better, and it turns long-standing defense procurement ideas upside down. For instance: standard procurement practice is to ensure maximum capabilities for our warfighters. That means requirements grow and grow. Since large, expensive projects create room for corruption, contracts become more and more baroque to ensure accountability. When requirements change five years into a contract, it takes renegotiation. The contractor throws more people at the problem to try to end on time, the time lines increase, the budget increases, and delivery slows. Now, we might have been able to put up with slow, expensive projects during the long, costly Cold War, when change occurred at a slower pace. Today, expense matters. We are in a short term state of sequester, and long term, our debt itself is a national security problem. Meanwhile, we are fighting multiple hot wars in which late delivery can lead to death on the battlefield. An 80 percent solution now beats a 100 percent solution delivered later. But FIST isn’t just about a “good enough” system. The biggest challenge to conventional wisdom is recognizing that reducing requirements and increasing speed don’t worsen outcomes, because of the rapidity of technological change. Nowadays, a two-year-old phone is outdated. A ten-year-old computer is antique. A contract set for five years, much less 20, will either lock in long-obsolete technology – or inevitably change so many times that it is an exercise in futility. Imagine getting delivery today of cell phones requisitioned in 1993, when they were the size of a briefcase! FIST tells procurement officers: keep a fixed schedule and delivery date – but keep requirements open, so that technological change can be built into the product. To handle the uncertainty, have a small, tight team able to respond rapidly to change during development, deployment, and post-deployment. This has worked well for rapid acquisition projects that were “spiral developed” (constantly prototyped and tested by users) during our recent wars – such as the V design on the bottom of an IED-resistant MRAP. Even when making a large, complex fighter jet, project pieces can be broken down into small parts, which develop quickly, use heavy prototyping, are tested by end users, and improve over multiple iterations. FIST is not just a clever idea – it works. Lt. Col Ward, FIST’s champion, has demonstrated numerous examples of success – such as the Marine Corps’ Harvest Hawk gunship that in just a year-and-a-half went from idea to battlefield deployment in Afghanistan, or the Air Force Project Liberty ISR aircraft that took just nine months. The DoD’s fastest supercomputer was created using FIST principles, and it was delivered for one tenth the price of a typical supercomputer and uses less than one one hundredth the energy. It works in industry, too: Rally Software found an average 37 percent decrease in time to market and a 16 percent increase in productivity using FIST processes– findings that hold through multiple studies. So who is against saving the taxpayer money, delivering better products, and serving the warfighter? Well, some of the more hidebound parts of the defense industry, which make their money on large, slow, expensive projects where costs can be added in to each stage of the process. The larger and more complex the contract, the greater the barriers to entry to competition from smaller firms, who must instead subcontract bits and pieces of the work from the few big defense contractors. We need a world-class U.S. defense industry. That means we need the industry to be profitable. And industry can be highly profitable using FIST methods – it just requires changing traditional billing and contracting structures. This will threaten some industry leaders by reducing barriers to entry, but it needn’t reduce profitability. Beyond business models, FIST also requires cultural shifts. For many, complexity equals sophistication. Managing high cost programs bring prestige. As Ward has written, shifting to a FIST system means getting militaries to switch from valuing the most advanced, complex, expensive system to valuing a system that is affordable, effective, and available when we need it – not during the next war. It’s time to make FIST the norm, and acknowledge that often, adding more requirements and more cost simply leads to over-priced, over-engineered goods that have more points of failure – and therefore, fail when you most need them. We owe warfighters more. Rachel Kleinfeld, a member of the Breaking Defense Board of Contributors, is president of the Truman National Security Project.

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