Crafting an ADF innovation strategy that fits today’s environment

Anyone building a military strategy to achieve theatre, national, and/or multinational objectives requires defining ends, ways and means. Shrewd strategists are also keenly aware of the importance of understanding the environment in building any strategy. US Joint Doctrine 2-19 makes this point clearly: Strategy formulation must consider the strategic environment (e.g., geography, character, and relationship of political entities and their interests, and resources) subject to norms and constants present. These factors present themselves differently in each strategic interaction and exert considerable influence on a particular strategic situation. 

The business literature around technology highlights the challenges many companies face in effectively innovating despite significant financial investments and management attention. Gary Pisano argues in the Harvard Business Review that many innovation efforts fail because companies lack an innovation strategy. Simply committing an organisation to innovation isn’t enough. Just as with military strategy, an effective innovation strategy requires committing to a specific goal, understanding the environment and aligning effort across the organisation. 

Assumptions of a 10-year warning time for major conventional attack no long exists for Australia. So, what does this change mean for the goals of Defence innovation? Increasing the Australian Defence Force’s capability in high-intensity warfare should be prioritised, as this is the primary threat to the nation. The primary weight of innovation effort and investment should also focus on initiatives that will pay off in the next five to 10 years, given the increased near-term threat facing the nation. This isn’t to say that all longer-term efforts should be terminated, as best practice suggests maintaining a portfolio of innovation efforts, but the near-term must be the priority. 

With this primary goal in mind, what is the innovation environment and how has it changed over the past 40 years? In the early 1980s, governments in the US and Australia were the largest funders of research and development (R&D) consisting of 47 and 83 per cent of total R&D funding in each respective economy. At that time, 2.5 per cent of GDP was spent on R&D across all sources in the US and 1 per cent in Australia. By 2020, the picture had changed dramatically. Total spending on R&D had grown to 3.5 per cent and 1.8 per cent of GDP in the US and Australia with the government share of total R&D funding falling to 20 and 30 per cent, respectively.

With total spending on R&D larger than it was 40 years ago and the government share of funding dramatically smaller, what does this mean for Defence’s innovation strategy? The DARPA model “to make pivotal investments in breakthrough technologies for national security” was well suited to the early 1980s when the government was the primary source of R&D funding and needed to create its own technology advances. Today, an abundance of new and improved technology is being developed and delivered in the commercial world. Much of this technology can have utility in a military setting with little or no modifications. It only makes sense that Defence’s innovation strategy should find a way to leverage commercial capabilities.   

To best formulate an innovation strategy, one must also understand that there are different kinds of innovation. Using Pisano’s terminology (as terms aren’t consistent in the literature), radical innovation involves mating new technology with existing ways of doing business. The development of the jet engine for fighter or passenger aircraft is a historic example of radical innovation. Disruptive innovation involves doing business in new ways using existing technology. Ride sharing services are an example of this type of innovation, leveraging existing cell phones and software capabilities to geolocate, coordinate trips and process payments for both drivers and riders. 

What do the desired goals and environment tell us about innovation strategy for Defence? More effort should be placed towards realising disruptive innovation, specifically in finding ways to apply technology from non-traditional defence suppliers to solve difficult military problems. Our AUKUS partners recognised this opportunity and stood up new organisations to meet the challenge. The US Defense Innovation Unit (DIU) is “accelerating the adoption of commercial and dual-use technology to solve operational challenges at speed and scale”. JHub, under the UK’s Strategic Command, is “connecting world-class technology and talent with users across Defence”.

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Personnel in both organisations gather and understand military problems, research solutions and potential providers and then reach out to commercial firms with promising technologies. Once a solution is identified, it can be tested and/or procured rapidly. Special acquisition authorities granted to these organisations are designed to field solutions in months rather than years. A key element of both models involves “scouts” in the organisation to connect the military to the best available solutions. Many high-technology firms in the commercial world aren’t well versed in the arcane language of defence acquisition or requirements. The scouts are responsible for reaching outside the traditional defence ecosystem to find solutions.

A changed strategic and R&D environment demands new thinking in Defence innovation. While DARPA may have been the right model for driving innovation decades ago, our AUKUS partners have come up with new approaches better suited to today’s technology landscape. Defence must better leverage the capabilities and products of non-traditional defence firms to ensure ADF warfighters have access to the best capabilities for high-intensity conflict. A new Defence organisation that leverages innovation scouts should be given the mandate and authority to rapidly access and deliver capabilities from the commercial world. 

Carl Rhodes is founder of Robust Policy, a Canberra firm providing high-quality analysis and policy solutions. Previously, he served 25 years with RAND Corporation including a term as director of RAND Australia.