Defence Industrial Strategy in an adaptive age

The upcoming UK Integrated Review of Security, Defence, Development and Foreign Policy and associated Defence Industrial Strategy (DIS) will be the latest in a long line of reviews in this area over the last couple of decades. Previous reviews have had mixed results. Almost all have attempted to predict the future, then encouraged Defence to focus investment and research and development efforts accordingly.

But the future is rarely predictable, particularly now, and industrial strategy is not a static problem with a static solution. Just look at the events of recent years: technological developments, the increased breadth of potential adversaries, Brexit, COVID-19, and the erosion of the boundaries between war and peace.

Predictions of what military capability will be required tend to be obsolete long before an ‘aim and shoot’ industrial strategy has the chance to have an impact. Take, for example, the 2017 defence policy, which lacked the built-in flexibility to enable industry to respond to continuous change. It failed to predict the broader range of threats and the emergence of space and cyber as new theatres of operation. Nor did it foresee the increased focus on information advantage, modularity, integration, adaptability and exploitation of new technology in order to generate capability that is more than the sum of the parts.

For a DIS to be impactful, it must engender an industrial base that is every bit as adaptive as the Armed Forces need to be. While achieving this is easier said than done, the 2021 Integrated Review and DIS provide a pivotal opportunity to establish an adaptive system. To seize this opportunity, the three areas of focus should be:

1. Design for flexibility in a volatile world

Instead of focusing Defence industry efforts on responding to a snapshot of the future, any view of the future should assess axes of uncertainty, or how the world might change. This creates a range of future scenarios in which to explore how industry may need to change. An example of this is below:

Any view of the future will need to consider the differences across domains and technological areas, providing direction and investment confidence on prioritisation areas. And it must be enabled by an approach to force development that considers industry implications earlier in the process. This will enable industry to focus investment on developing capabilities of critical strategic importance, while maintaining the flexibility to respond to specific emerging requirements.

2. Create a collaborative system between industry and government, with systematic information sharing

The need for adaptability in capability development and delivery increases as Defence moves to engage across a wider set of operations through the Integrated Operating Concept 2025. To deliver the required transformation “from an industrial age of platforms to an information age of systems” through a more adaptive enterprise, the Ministry of Defence (MOD) and industry will need to collaborate, and do so with much more systematic information sharing. Without this, it will be very challenging for the enterprise to invest and deliver with the development cadence required.

Specifically, the MOD needs to be able to securely share its capability challenges in order to drive confident and focused industry investment, and to encourage competition or identify areas where more public-private sector partnering is required. With the cadence of capability development expected to be high in many areas, a regular forum to share progress, understand challenges on all sides and adapt as needed will be vital. Increased use of common standards and open architectures will be critical to this blended approach – specifically in enabling access to and participation of smaller, niche and emerging players that may just, with clear integration pathways, deliver battle-winning capability. Capability delivery therefore needs to be segmented so that areas requiring many players and free market behaviour can be treated differently from those that require partnering to maintain sovereign capability. The aim should be to create an ecosystem where innovation, collaboration, entrepreneurialism and flexibility are actively incentivised.

For example, Team Tempest is made up of a group of industry partners: BAE Systems, Rolls Royce, Leonardo and MBDA. These partners are working with the RAF’s Rapid Capabilities Office and the MOD to develop the technologies needed for the next generation of combat air. This collaboration is enabled by sharing requirements early and a proactive focus on de-risking the programme and sustaining capability.

If existing industry participants and potential market entrants can see the opportunities for future success in a capability system characterised by open architectures and behaviours, greatly improved market engagement and investment focus should follow. This will lead to more efficient and effective delivery of the right capability for the future.

3. Generate confidence in delivery

Since the optimism of the 2006 DIS, a good deal of room has been created for cynicism, so any new strategy must be compelling even to those who have seen previous attempts wain. The success of any strategy is defined most by what is done to implement it.

This means any strategy needs to contain clear, tangible actions with identified owners extending beyond the electoral horizon. And these actions must be deliverable in practice, not just in theory. With closer collaboration required to make DIS a success, it needs to be actively managed by the MOD and appropriately resourced by all involved. The MOD must regularly measure the effectiveness of the strategy in delivering the required outcomes and take corrective action where required. Ultimately this means resourcing a team to manage delivery, track progress and hold action owners accountable. Active management or shelf-ware; that is the choice.

Conclusion

The context Defence finds itself in calls for more than a tweak to what has been done before. A fundamental DIS mindset shift is needed to deliver a sustainable and prosperous industrial base incentivised to innovate for an evolving market.

Developing a strategy that creates the environment in which this can happen will require hard choices, such as where between free markets and managed markets different segments will need to sit. If the approach described here is taken, the enterprise that supports our Armed Forces can be every bit as adaptive as we need it to be to fight and win in an uncertain world.