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'Third Offset' Strategy Calls for Fresh Thinking 


By Artie Mabbett and John Kovach 

Seeking to gain a competitive advantage by changing the conditions of the environment is referred to as an offset strategy. Defense Department leaders in recent years have been discussing a “third offset” strategy.

Offset strategies are intended to overcome technological or quantitative military advantages of our adversaries. During the Cold War, the first offset was realized with a superior nuclear arsenal designed to avoid larger expenditures on conventional weapons. Later in the 1970’s, smart weapons, sensors, targeting and control networks were introduced providing technological superiority to mitigate quantitative inferiority in conventional forces, the second offset.

In these times of declining defense budgets, and more importantly, the proliferation of advanced technologies by U.S. adversaries, particularly in the consumer electronics across the global market, the Defense Department is seeking to identify a third offset strategy to regain technological superiority and reverse the cost imbalance created by our adversaries’ lower-cost systems.

This next offset strategy cannot rely on investments in exquisite costly systems. Instead, we must identify ways to leverage existing technologies and maximize the operational utility of development efforts.

In light of this drive to find innovative solutions, the Defense Department has pushed a re-invigoration of the innovative spirit of the United States by supporting organizations like the strategic capabilities office and Defense Innovation Unit-Experimental. Across all domains of the industrial complex it is safe to say that the United States is still a leader in innovation and technology development and we benefit from having some of the most creative and inventive people in the world. As such, technology development is not our biggest challenge in meeting our adversaries’ military posture; fielding innovative technologies more rapidly and efficiently is the challenge we face today.

The defense community has fully embraced this challenge by investing in various technologies intended to truly change the battlespace, altering the playing field in order to maintain superiority. There is a strong tendency for the defense industry to search for that “special” technology or the “next big thing” to provide this offset.

As the previous two offsets have shown, technology is a necessary ingredient, but is just part of the overall strategy. Rather, technological superiority is an enabler of an investment strategy which maximizes the pace and efficiency of capability improvement putting operational and investment pressure on our adversaries.

The 2016 annual Government Accountability Office report on selected Defense Department acquisitions assesses a multitude of programs with timelines in excess of a decade from program start to initial operating capability. On average it seems the weapons themselves or components and upgrades are on a cycle of eight to 12 years whereas major platforms, such as ships, can be measured in decades. In many of these highly complex systems the rigor and pace necessary to ensure program success is understandable, particularly when large quantities of expensive platforms are involved. However, often times the Defense Department could be better served by looking for opportunities to introduce limited quantities of more targeted advanced capabilities more timely and cost effectively.

When looking at adversary cycle times we see that their agility and focus allows them to be inside of our production loop, often fielding counters to our capabilities as our systems are introduced to the warfighter, creating gaps and forcing reactionary responses. If that equation can be flipped, where the Defense Department can introduce advanced capabilities at a faster pace, it will put our adversaries in a more reactionary mode.

Today’s budgetary climate and acquisition process presents challenges to this approach, but there are ways to achieve the recommended effect. There are some select programs demonstrating more rapid acquisition approaches designed to meet critical objectives, but also to identify characteristics that could be the third offset, accelerated capability fielding. Within the framework of the traditional acquisition process there are a few key characteristics that could aid in streamlining and accelerating the fielding of new capabilities.

From the top down there needs to be a cultural shift to accept more risk in order to achieve greater gains in capability. The process in place currently emphasizes low-risk solutions and approaches; however, technically and programmatically there are times where significant gains can be made by taking calculated risk. Our current culture rewards individuals and programs for “not messing up” rather than incentivizing success.

A great example, albeit a bit extreme for acquisition, is the Defense Advanced Research Projects Agency’s mentality of “swinging for the fences.” Many of DARPA’s game-changing breakthroughs occur because of the willingness to accept the risk of failure. Acceptance of a “not perfect” solution must be an acceptable approach. The ability to reassess the requirement based on technical knowledge gained through the engineering process is a critical element to achieving an appropriate solution in an efficient, timely manner. In many instances an 80 percent solution early is more impactful and cost effective than a 100 percent solution late and over budget.

In order to manage risk, program progress should be paced by technical progress with structured reviews that support key decisions. This enables a program to focus on challenging problems and identified risk areas, supporting progress based on technical maturation and risk mitigation rather than strict entry and exit criteria based on standards. These efforts can benefit from active management supported by application and vigorous use of basic management tools and processes. As an example, a fully integrated program schedule and risk management approach allows the team to actively track technical progress, mitigate risks and allocate resources as needed to address potential challenges and opportunities.

“People” is a common thread seen throughout all organizational leadership and effectiveness discussions. Somewhat cliché, but the right people in the right positions can make a significant impact. A high-risk, fast-paced environment is not for everyone and selecting personnel with the correct technical skill sets in conjunction with programmatic and personality characteristics suited to this environment will pay dividends over the course of a program. Subject matter experts with a willingness to take on risk are critical in ensuring program success or even when deciding to “throw in the towel.”

Senior leadership needs to be able to rely on their teams to take calculated risks throughout the program. Key decisions need to occur on the timeline of the technology and progress of a program rather than based on the process. In order to achieve rapid decision-making, managers must have access to necessary stakeholders and be empowered by their leadership. The traditional hierarchy seen in many programs has numerous levels of leadership involved in decision-making based on the type and impact of the decision. This structure can create a risk-averse environment, stifling rapid decision making. A direct line from a program office to an executive steering board comprised of those major decision owners can greatly enhance decision timing as well as incentivize other stakeholders to ensure timely action. A streamlined organizational construct and empowered individuals can keep an accelerated program on pace and when staffed by the appropriate expertise can be agile and flexible enough to handle pop-up challenges.

These are a small sample of ideas that can be achieved today to accelerate the insertion of advanced capabilities by leveraging existing technologies and making use of rapid development and fielding processes.

By demonstrating our ability to bring these improvements to bear when we want and where we want will achieve the desired effects of the third offset regardless of the technology. Embracing concepts to accelerate capability improvements and maximize investments in technology will ultimately force our adversaries into a reactionary posture, thus allowing the Defense Department to maintain its technological and economic superiority for years to come.

Arthur (Artie) A. Mabbett is director of advanced technology at Raytheon Integrated Defense Systems. John Kovach is a consultant with 2 Circle Inc. This article does not contain technology or technical data controlled under either the U.S. International Traffic in Arms Regulations or the U.S. Export Administration Regulations. The opinions expressed herein are solely those of the authors and do not represent the business judgments of either Raytheon or 2 Circle Inc.

Photo: iStock

Reader Comments

Re: 'Third Offset' Strategy Calls for Fresh Thinking

Excellent points, but did not close the deal on the subject of people. The type being referred to are *at least* 1 sigma caliber, and the leadership is probably closer to 6 sigma (think Kelly Johnson, Steve Jobs, Elon Musk, etc.). When crafting a successful 3rd offset strategy the 'who is involved' is just as important as the 'what it will be'. General Mattis has made a career of knowing the people part, and that makes his selection as SecDef a key enabler.

Nat Jennings on 01/15/2017 at 19:03

Re: 'Third Offset' Strategy Calls for Fresh Thinking

Great article but missed a critical strategy to get existing technology solutions out into the field rapidly with minimal risk. The majority of government technology solutions already exist in the commercial world and can be provided to the government as commercial off the shelf offerings. Government innovation needs to look first at existing commercial technology solutions and avoid at all costs building their own version (FAR parts 10 and 12). This will significantly lower cost, price and risk to the government while providing at least part of the requires solution in significantly less time keeping the adversaries outside of our production loop.

Whitney Bobbitt on 01/13/2017 at 08:50

Re: 'Third Offset' Strategy Calls for Fresh Thinking

Great article. These comments are meant to highlight the 3rd offset cyber aspects versus dispute the premise of the article. The 3rd offset strategy adds to first and second offsets by recognizing and strengthening cyber domain operations and in that, the domain must be able to withstand natural and adversarial pressures. Not being ‘physical’ the cyber domain must embed within its structure equally cyber protective measures. Fresh thinking must begin here for cyber by expanding on an old ideal. Risk management, more specifically, cybersecurity risk management, must come from mature embedding of security and engineering quality continuously in the engineering lifecycle to ensure compliance to (at least) known minimum standards. Dependence upon 80% solutions to advance technology for certain advantages may indeed be necessary from a functional perspective but should never be the objective for cybersecurity. Taking on cybersecurity risk is a non-starter without properly engineering IT mitigations and/or acceptance statements based on due diligence protection factors. Fully compliant, substantive, and mitigated cybersecurity is achievable with proper acquisition and engineering management processes, leadership focus, and skilled engineering. Not surprisingly, the function quality is improved by this also. People are, at least initially (given 3rd offset AI goals), the common thread and training to ensure a focus on quality development is essential. Further, ensuring that the cement does not set around that initial 80% 'function' requires leadership vision and engineering diligence to improve and sustain the product continuously. 3rd offset advantages must demonstrate technical superiority but must remain effective by not being susceptible to loss of control or 1st, 2nd, or 3rd rate cyber hacking.

Bob Capitan on 12/13/2016 at 16:20

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