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Defense Budget 

Military Innovation in the Age of Austerity: Why I Love Budget Cuts 

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By Dan Ward 

What will the projected military budget cuts do to the defense technology environment? Despite the widespread chorus of concern from industry and government alike, the cuts may actually do everyone — particularly American war fighters — a lot of good.

I have spent much of the last decade researching and advocating austere innovation. The data I’ve uncovered show that “innovation is not necessarily or even primarily a function of budget,” as a pair of Navy commanders so eloquently explained in a 1994 Joint Force Quarterly article. They went on to state that innovation is generally driven “by the need to make more efficient use of shrinking resources,” and concluded that many “innovations came at a time of low budgets and small forces.” Other research corroborated these findings, supporting the idea that a new weapon’s effectiveness is inversely proportional to its funding levels. To put it plainly, smaller budgets lead to better systems.

This apparently counterintuitive observation is solidly supported by a significant body of data, much of which I documented in a 2009 master’s degree thesis at the Air Force Institute of Technology. Rather than recap all the data, let’s examine the relationship between austerity and innovation by briefly looking at the dynamics of budgetary restraint.

When money is easy to come by, there is a natural tendency to try to solve problems by adding dollars. Unfortunately, big budgets can lead to lazy thinking. Restraint, on the other hand, fosters creativity by taking obvious (but expensive) options off the table and forcing technologists to pursue lower-cost alternative approaches — which tend to perform as well if not better than the business-as-usual technologies. And yes, extensive combat experience shows that when we solve problems using intellectual capital instead of financial capital, the resulting solutions are usually better — more effective, more reliable and more likely to be available on an operationally relevant timeline.

Next, a restrained budget keeps programs focused on actual priorities, avoiding the unaffordable delays and expenses associated with unwarranted departures from the core mission. A tight budget is a good excuse to reject requirements creep, and when there is no money available to pay for new components, we end up with an elegantly streamlined tool that simply does what it needs to do, with minimal friction or excess weight.

Because time is money, small budgets tend to drive short timelines. When working on a shoestring, we don’t have enough dough to spend a long time building the thing. This tendency towards speed is a significant benefit in its own right, but it also helps in a handful of other areas. By keeping program timelines short, programs are exposed to fewer changes (operational, technical, political, financial) and thus are more stable. Short timelines also enhance personal accountability and facilitate learning. This is because a project with a short timeline has reduced personnel turnover, which increases the likelihood of project leaders directly experiencing the impact and consequences of their actions.

Another facet of the problem is complexity, which (like money) is the root of all sorts of trouble. Excessive levels of complexity increase a system’s price tag and development schedule while degrading its performance and reliability. Thankfully, budgetary constraints can help reduce complexity, both organizationally and technically, because complexity is an unaffordable cost within an austere environment. When money is tight, we cannot afford to make our systems, processes or organizations highly complex. We are forced to simplify, and this is a good thing.

Put all these pieces together and we find that operating in a fiscally austere environment tends to result in affordable, simple products that are available when needed and effective when used. As an added bonus, the work force gets smarter and more capable. Everybody wins.

To be sure, it’s possible to spend a small budget unwisely, but it’s easier to misspend a big purse. When there is pressure to make every dollar count, that pressure points us away from excessively complex, gold-plated, over-engineered weapons and reduces the risk of technical obsolescence or operational irrelevance.

Now, correlation does not prove causality. Therefore, the correlation between small budgets and superior performance, however strong, does not mean we can simply remove dollars from every program and automatically reap amazing benefits. Such a superficial course of action would be a serious misunderstanding of the data. There is still a need to make thoughtful decisions about priorities, where to spend dollars and where to not spend them. But the argument that fewer dollars automatically means inferior weapons or a hollow tech base simply does not hold water.

Along with being good news for war fighters, a tight budget environment is also good news for the overall health of the defense industry, on several fronts. While any change to the status quo inevitably creates new winners and losers, the final result of such a shift is likely to be a stronger, more agile industrial base.

Fewer big programs and more small programs means defense R&D dollars can be spread across a wider spectrum rather than concentrated in a few big contracts. This means more competition, which may make some companies uncomfortable. But competition raises the bar for everyone and increases the quality of the products our war fighters rely on. And there’s nothing to say today’s top companies can’t win tomorrow’s contracts, right?

If profit matters, and I’m told it does, then it is worth noting that smaller, simpler programs are more likely to successfully deliver... and success is more profitable than failure. It may be a matter of opinion, but I’m pretty sure a profitable small program is more desirable than a high-cost one that’s losing money.

It is admittedly unusual for a military technologist to say nice things about budget cuts, but the data is compelling. Smaller expenditures clearly correlate with better operational performance and, incidentally, better programmatic outcomes (i.e. delivering on time, on budget). As I wrote in a 2004 article titled Doing Less With More, “if we want to provide America’s soldiers, sailors, airmen and Marines with innovative capabilities, we need to spend less money developing systems.” This current round of budget cuts may give us the opportunity to do just that.

Lt. Col. Dan Ward is an active duty acquisitions officer in the U.S. Air Force, currently deployed to ISAF HQ in Kabul, Afghanistan. The views expressed in this article are solely those of the author and do not reflect the official policy or position of the U.S. Air Force.

Reader Comments

Re: Military Innovation in the Age of Austerity: Why I Love Budget Cuts

I am a student of defense and strategic studies i was of the view that only huge spending and needed to make good weapons but on reading your article i have corrected my concept thanks

Manzoor Hussain on 11/29/2012 at 23:47

Re: Military Innovation in the Age of Austerity: Why I Love Budget Cuts

A reality is that incumbent vendors have a tendency to be selected time and again. And there's little incentive to build beyond spec if they'll make money on the next round of contracts anyway. I've always been and always will be a fan of government setting clear specifications and standards and letting industry bring it from a leveled playing field.

OTS on 06/22/2012 at 19:32

Re: Military Innovation in the Age of Austerity: Why I Love Budget Cuts

Could you provide a link to your thesis. I looked online but I could not located it. Thanks, ag.

AG on 03/11/2012 at 13:01

Re: Military Innovation in the Age of Austerity: Why I Love Budget Cuts

Dan, I have enjoyed your work ever since my indoctrination into the "I" part of the MIC. Unfortunately, your approach is easily dismissed as 'radical' since it is contrary 'to the way its always been done' in recent history. It has taken a long time to ingrain the current, pervasive 'more is better' attitude and resistance often seems futile. But I am trying my best. Thanks for the help.

hek on 02/06/2012 at 10:36

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