You wouldn't guess it from the name, but the Department of Defense's business management modernization project isn't just another initiative to update business processes, rein in runaway costs or replace a tangle of legacy computer systems with an integrated network more suited to the 21st century. In fact, to hear Secretary of Defense Donald Rumsfeld tell it, it's not about business practices or financial accountability at all. In 2001, just prior to the Sept. 11 terrorist attacks, Rumsfeld said, "It is not, in the end, about business practices, nor is it the goal to improve figures on the bottom line. It's about the security of the United States of America. And let there be no mistake, it is a matter of life and death. Our job is defending America, and if we cannot change the way we do business, then we cannot do our job well, and we must."
Leading the transformation is an enor mous job with enormous responsibility. Rumsfeld has handed that responsibility to Paul Brinkley. As deputy under secretary of Defense for business transformation, he is overseeing the Defense Department's business management modernization program. Brinkley also heads the Business Transformation Agency (BTA), a new organization accountable for streamlining the thousands of systems that support logistics, acquisition, finance and personnel activity across the Department of Defense (DOD). But as Brinkley is quick to point out, the program's overall objective is not to cut the number of systems in use across the various branches of the military; it's something much more results-oriented: improving support for the country's warfighters.
The very existence of his organization within the DOD reflects the increasing complexity of our nation's security challenges. Just as our fighting forces need to become more flexible and agile in both deployment and tactics, so must the business processes that support the warfighters within the DOD.
Brinkley brings a record of success in similar private-sector challenges to the task. Prior to assuming his current position, Brinkley was senior vice president of customer advocacy and CIO for JDS Uniphase Corp., an international provider of optical technologies used in the communications, display and security markets. In this role, he was responsible for the global customer service, critical sales account management and information technology organizations. Before his promotion to the customer advocacy and CIO position, he served as the company's senior vice president of supply chain management and vice president of IT applications. In the IT post, he led one of the largest, most rapid business transformation efforts in the technology industry sector—integrating 40 acquired companies with 25,000-plus employees in locations across North America, Europe and Asia onto common systems and processes in less than 18 months. His previous experience includes senior management and technical roles in operations, engineering and IT with Nortel Networks.
Brinkley, who holds both a bachelor's and a master's degree in industrial engineering from Texas A&M University, has completed coursework requirements for a Ph.D. in operations research at North Carolina State University. A licensed professional engineer, he has received four U.S. patents for systems and process technologies, including a system incorporating unique algorithms for inventory optimization in multi-tiered distribution networks. Brinkley has published research on process optimization, production economics and artificial intelligence in such journals as The International Journal of Systems Science, Interfaces, The Journal of the Royal Statistical Society, and Technometrics.
He spoke recently with DC VELOCITY Editorial Director Mitch Mac Donald at his Pentagon office about the challenges he faces in his new role, why he believes he's up to those challenges and why it is imperative that the DOD overcome them.
Q: What prompted the DOD to establish the Business Transformation Agency (BTA) and what are its goals?
A: As we began a restructuring of the Business Transformation initiative early last year, [we realized that] the organization was clearly missing an accountable corporation headquarters-level entity so that when the department decided it was going to do something collectively, corporately, there was an entity that was responsible for actually executing that. Within the Department of Defense—and this is true in a lot of the federal organizations—the top-level organization, in this case, the office of the Secretary of Defense, has no execution authority. It sets policy and enforces policy among the different organizations in the department, but it doesn't actually execute operational activity. So when the department would decide it was going to create or drive an RFID initiative, for example, the execution of that initiative might not always receive the highest priority from the services or agencies, which had their own missions and their own sets of objectives.
Last summer, as we were getting ready to publish our transformation plan for the department, we noticed that glaring gap. Who is responsible for the things that we want to do as a corporation, as an entity? Who is accountable for getting that stuff done? Who is the person who actually stands up and says, 'Yes, I am accountable' and every month meets with the deputy secretary of Defense? So the Business Transformation Agency was established to create that toplevel corporate headquarters accountable entity. For that relatively small set of things that we have to do collectively as a department, there is now somebody accountable for getting them done.
Q: Somebody who owns responsibility of all the moving parts?
A: That is exactly right. For all the moving parts at the corporate headquarters level of the organization.
Q: In order for this agency to be a success, what needs to happen?
A: I think the biggest cultural challenge the department faces is one that's common to a lot of federal organizations. It gets back to what I mentioned earlier about the lack of execution authority at the top. There is a kind of corporate headquarters at the DOD, but corporate headquarters functions here are policy-oriented. They are not managerially oriented. The biggest challenge with this agency as the entity responsible for executing corporate-level process and system improvements is to embed in it that culture of management as opposed to that culture of "I set your policy, I tell you what to do and you are punitively rewarded if you don't execute." This is what we need to do as a corporate entity, how do we facilitate getting that done as quickly as possible? It is a managerial culture we have to establish here as opposed to a regulatory- or a policy-oriented culture. I would say that is the biggest challenge.
Q: Is there a "sunset" plan for the BTA or is this intended to be an ongoing agency within the DOD?
A: All of the Defense agencies are required to go through a bi-annual [review]. I think every other year they have to come up for review to assess their viability, whether they are still necessary for the overall mission of the department. I believe this particular agency was established with a 10year sunset. The very nature of its name, Business Transformation Agency, implies that it's temporal; you know at some point in the future we have established this kind of continuous improvement mindset within the department. Things can perhaps change, but that will take time.
Q: Could you elaborate a bit on the unifying of military programs and funding? It sounds as though it is very much a part of the process you just outlined, but it also seems, for lack of a better term, a rather important task.
A: Yes, it is. The department's attempt at business trans formation, again prior to early last year, was to approach this massive $500 billion entity as if it were a centrally managed monolithic organization, where things like dictating detail processes within its operations were attempted at the top of the department. But if you look at the big corporations—the GEs, the GMs and the IBMs—they don't attempt to micro-manage the entire organization from the top down.
This business transformation effort is no longer attempting to do that.What we are trying to do is identify the things that are important that we have to do collectively. We would have to do two things. The first is to determine how we can improve and enable joint support to the joint warfighting mission of the department. What data standards do we have to define corporately to ensure that our operations can interoperate to support a joint warfighting mission that has to be nimble and agile? How can we ensure that when someone needs to know, say, who we have with a certain set of skills, we can provide that information regardless of whether they're in the Army, the Navy, the Air Force, the Marine Corps or a Defense agency? How do we standardize our coding and systems so that a warfighter knows what physical assets are available for use? A Humvee is a Humvee, whether it's in the Marine Corps or the Army, and our asset tracking system should reflect that.
That is one perspective. The other challenge is, as a byproduct of getting the visibility and the seamless interoperability necessary to support joint war fighting, how do we also improve our financial transparency so that we can give a clear accounting of where all the money being injected into this massive organization goes and how it supports the national security mission? This is our other objective.
We are defining that DOD business enterprise in those two ways: How do we improve and enable joint support to the joint warfighting mission of the department and how do we ensure financial transparency to the taxpayer and to the Congress? And what are those things that we have to define in order to enable those two missions to take place? What is the DOD business enterprise, the corporate business enterprise? Once we've determined that, we have to stand back and let the services give the necessary guidance to their people and agencies so that they understand what is expected of them: unique identification, RFID, whatever. But then they are free to rapidly execute without feeling as though they are being micro-managed. This is very much like the way a large, multinational corporation would approach the problem of how to better integrate its supply chain operation.
Q: It sounds like we're talking about process improvement and integration.
A: That is exactly right, so it is a page out of that book. There is a uniqueness to it that makes it more chal lenging here in some respects. Then there are advantages here that I think actually make it less challenging.
Q: There has been some criticism of this initiative, and, in fact, of the BTA's very existence. Rep. Todd Platts (R-Pa.), for one, has expressed concern about the DOD's progress on its business modernization plan to date. What does the BTA need to accomplish in order to blunt the crit icism of, say, Rep. Platts?
A: Well, I actually have an optimistic view on this, which is why I am here. The department has tried many times in the past to modernize its business operations. It has usually attempted those with one of two objectives. Gosh, we sure do have a lot of systems and we can save a lot of money if we get rid of all these systems, right? The other thrust was, boy, I sure wish we knew where the money was. Those are both very admirable objectives, but as a lot of corporations learned in the late '80s and the '90s with large-scale business modernization efforts, simply installing something like an ERP system doesn't solve the problem. The question that you have to ask is whether the change is required because the strategic mission of the organization has changed, or because change is required because of customer- driven demands. IBM is a classic example of a company whose change was driven by a strategic imperative. IBM faced a survival test. It was going to change or it was going to go down. So it was able to change.
This will be a challenge for an organization like the Department of Defense with its 200-year tradition of standalone military services, which sometimes came together to project power but did so in a very structured, individualized way. For the first time in the department's history, those uniformed services now have to seamlessly interoperate. When you go into Iraq or into Afghanistan, you see the projection of force as being completely integrated, and it has to be. For the first time, the mission of the Department of Defense cannot be supported by the stand-alone 200 years of process of individualized culture.
That is a huge change in mindset for the DOD. It requires that things be done collaboratively. I'll use myself as an example. If I get hit by a bus tomorrow, there will be, and there needs to be, a guy just like me standing up here saying "The mission of the department now requires this change."
Up until now, the mission of the department wasn't the objective. Financial management improvements were the objective. Those are important, but they are not the mission. Our systems reductions are the objective, but that is not the mission. I actually think that at this moment in time, our national security objectives—being the need for agility and the need for interoperability—are creating a force in function and we are benefiting from Rep. Platts' public criticisms. Still, I expect he will continue to have concerns.We have a lot of delivering to do.
Q: One thing that has attracted the notice of Rep. Platts and many others is your sizeable budget: $4.2 billion. In addition to being supply chain and logistics professionals, our readers are taxpayers, so I will ask you straight out. What are you going to do with all that money?
A: Well, just let me be clear. The department is investing $4.2 billion in business modernization. Of that, $777 million is under the direct control of the Business Transformation Agency in fiscal 2006. The balance of that is under our direct approval authority through investment review and oversight. So, $4.2 billion is under our oversight and control through the deputy secretary of Defense and his monthly review of status and our ability to withhold funds or to freeze spending in order to ensure alignment with the DOD enterprise standards. That is a tremendous investment; $4.2 billion is a great total available market. I mean, there are industries launched to go after $4.2 billion a year. Our goal is to give a detailed accounting to the taxpayer and to your readers of what the department is spending that money on: every milestone, every dollar spent, every capability benefit that is supposed to improve at the DOD level and within our major services and agencies that execute business operations.
On Sept. 30 of last year, we published for the first time the department's enterprise transition plan. There are two ways to assess that transition plan. One way is, do I now understand what the department is doing with $4.2 billion? We did not write this document in techno-babble. It was written in plain English, so that it would be accessible by, say, someone who reads DC VELOCITY. That is one way to assess it.
The other way to assess it is: "OK, now that I understand what you are spending this money on, what do I think of it?" That is the work we now have under way. Our first step was to open it up: "Hey, guys, here is what we are doing." We are very open and I have said this in a lot of different venues. The entire document is available for download. We invite the defense industry and industry in general to go download that plan and provide feedback. "What do you think?" Be very direct because there are timelines in that plan that go out to 2012. I mean, that is an extremely faith-based approach to business system investment. The system investment that is going to go out to 2012 is a leap of faith. The IT industry is a fast-moving beast, so how does one have confidence in an investment that is out that far? Again, that gets back to scale. It's not necessarily realistic for an organization as large as the Department of Defense to say it's going to turn the whole thing around or even for a subsidiary organization to say it's going to modernize its operations in a year. So you see this trade-off between what we can do, how long it takes and whether it makes sense given the technology cycle. It is a back-and-forth discussion that now is taking place given that we have opened this information up and made it transparent both internally and to the public.
Q: That is indeed a long timeline. Have you established landmarks, milestones and metrics along the way to gauge your progress?
A: Without a doubt. In our transition plan, we provided sixmonth milestones. Traditionally, the department orients its business system investments around the defense acquisition process, which has some major milestones: initial operating capability, final operating capability and such. But here, you have a different kind of path, one where you might go for long stretches without seeing any benefits. It is a two- or three-year timeline to an initial operating capability or whatever. So the patience level for the organization with system investments like that is growing thin.
There is a cultural change we have to make here. In every meeting we have with our collective organization, it is like a mantra: "Our goal is to get better every six months for the next 10 years. Every six months, things get better for the next 10 years."We publish what we are going to do every six months. We just hit a whole raft of six-month milestones that were published in our transition plan back in September.
That's a big cultural change for the department, because, again, the department doesn't operate on a 10-year cycle. The department is on a political cycle. Every two years, every four years, leadership changes. People come and go. So how do you create a continuous improvement culture in an organization where there's a significant change in senior leadership every four years or at best, every eight years New people are going to come in and they are going to look at it with a fresh set of eyes. How does one sustain a continuous improvement mindset in an environment like that? That is a cultural effort that we have undertaken. I think the way you do it is through transparency. You communicate to the public, you communicate to the Congress, you communicate internally. Here is what we are going to do. Though we're going to hit more than we miss, we are going to miss a few of our targets. The ones that we miss we are going to recover, and every six months things get better. Create that expectation of continuous improvement in this process, not instant change. You cannot expect in one term to transform something this large. It just doesn't work that way. It doesn't work that way in industry—it took IBM 10 years to transform itself into the company it is today. It certainly can't work that way in government.
Q: You came to the DOD from the private sector. How do you compare the culture and environment here with what you experienced in the corporate world?
A: A For a long time, JDS Uniphase, which made extremely complicated physical devices used in fiber-optic technologies, experienced almost unprecedented growth rates of literally 100 percent revenue quarter over quarter. At its peak, the company, which was an aggregation of merged technology corporations, was running about 40 factories around the world, all serving the same set of customers. As we merged, customers would say, "I don't want to deal with lots of different JDS Uniphases. I want to deal with one." In order to grow, we had to unify, so you had that mission-required change.
Then, in a well-publicized market reversal, the bottom fell out of fiber-optic technology. We had to go through another crisis, which was one of mass consolidation and streamlining. So how does one rapidly respond? You just grew and you put an infrastructure in place to allow the company to seamlessly interoperate and then you use that infrastructure to massively downscale its operations in order to survive an 85-percent drop in revenue in less than six months. It declined to under a billion a year in less than a year.
Q: Driven mostly by?
A: Driven by the glut of fiber-optic network build-out. We had a backlog. I was running customer service at the time. We had significant amounts of order backlog that essentially they said we didn't need. Suddenly this massive, streamlined, rapid execution engine you built had to contract, and our organization had to align itself behind a new mission—a mission that demanded change if the company was going to survive in the face of an unprecedented decline in revenue.
I don't know that there are too many leading tech companies that could suffer an 85-percent drop in revenue and still survive. The fact that JDS Uniphase not only survived but is now back on a healthy trajectory is testimony to the ability of an organization to change when faced with crisis and the leadership it had through that time. A lot of people came and went, but they all took their turn at the wheel and helped steer that company through a tremendously difficult time.
Now, compare that to the DOD. As we did at JDS Uniphase, we have to ask ourselves: What does the mission require? Obviously, after 9/11, everything changed. The department has to respond in an agile, nimble way to an array of threats that are unlike any threats the Department of Defense has ever faced. The warfighters have learned to adapt to that. That drives an immediate need for our business operations to adapt. Again, aligning behind mission need to me is the key here. That is the similarity.
Q: What are the most glaring differences between the DOD and the private sector in terms of getting things done?
A: When you work in the private sector, you don't realize how much you take for granted the fact that you have a P&L. The P&L embeds itself in every decision you make. In a supply chain, obviously, the trade-off between customer service and inventory levels and placement is the most obvious example. It embeds itself in everything you do.
In the federal government, you don't have a P&L. You have a totally different financial process. That financial process leads to a totally different set of behaviors—not bad behaviors, just different behaviors—and you have to learn how to align your vision and your objectives with that set of motives, which are financial motives, mostly mission-oriented motives. That requires a big mental adjustment for someone who's accustomed to an environment where you've got to make the numbers every quarter or somebody is going to pay. This to me is the biggest difference here.
I do think that the other challenge here in the department, and again it is related to our scale, is figuring out how to proceed at the corporate level of the organization, the corporate headquarters level for this massive entity.How do we delegate authority and empower people in the subsidiary organizations to rapidly transform their operations within this umbrella of standards and interoperability and the few systems that we have dictated at the top? How do you make sure that the people at the corporate level understand why their work matters to the guy at the pointy end of the spear?
Essentially, we have to learn to do what great companies do, and link everything back to the customer. You walk into a great company and the guy who pushes the broom knows why it is important to have a clean floor, why that matters to the customer. If I know my work matters, then I care about it and I do it faster and I am more engaged in it. If I think that my work is arcane and up in the clouds—yeah, somebody says it's important, but I don't know whether it really matters—then I'm not going to feel the same sense of urgency that I would if I were convinced that my performance made a difference.
Q: Given the scope of the DOD's business transformation plan, I have to assume that you're going to face some resistance to change. Whatever decisions you make at the top, some of the folks, if you pardon the term, "pushing the broom" are going to want to go on pushing the broom the way they've always done it. How much salesmanship is involved in getting folks to go along with your plans?
A: I know what you're talking about. That kind of sales-oriented advocacy. I don't know that we have had to do that much in this effort so far. I know that will be coming as we begin to hit some of the more painful transformational milestones, where some of the information barriers are broken down and people suddenly can see other people's assets or financials. In the past they couldn't. I think one big advantage we do have in this regard is the naturally engrained command and control mindset already in place.
I can't overstate how valuable it's been to have the direct involvement of the deputy secretary of Defense, who comes from a corporate background himself. I am also blessed to work directly for someone who also has a private-sector background. So you have two guys who have worked in corporate-level settings who understand the need to refrain from trying to manage everything from the top down.
We have now put the structure in place where we set standards and enforce standards but delegate authority within the services to optimize their operations within those standards. That is a very different approach. The services were used to having people at the top tell them how to do every aspect of their job. With this new approach, they feel they've been freed from what has been, in some cases, burdensome engagement. So now, there is a lot more collective energy, though I know we're going to hit some rough patches.
We have monthly meetings at which all the senior leadership in the department, the service secretaries, the defense agency directors, and the under secretaries gather to discuss at a pretty detailed level what it is we are trying to achieve and why we need to work together in a common direction. That senior-level engagement has created the kind of momentum in the department that you would normally have to create through salesmanship. But I'm not naïve. I know there will be times in the next six, 12, 18, 24 months where we will run into roadblocks.
Q: As you were speaking, it occurred to me that you're actually operating in a culture that's very different from the typical corporate environment, where you have to convince people to cooperate. Here you have people who grew up "military" and are accustomed to carrying out orders.
A: There is a bit more of that here, though perhaps not as much as you might expect. On the civilian side of the department, they see a nice, clear tiered set of objectives and milestones and points where each level has to engage and what it is accountable for delivering. You do see a more rapid alignment here than you might see in a private organization.
Q: Some might say this is just an instance of the DOD's trying to adopt more private-sector practices. Is that an oversimplification?
A: A No. It is not. I will give you an example.As I mentioned earlier, we have made our transition plan available to the public and have invited comments. It has been interesting to read the feedback. People from the defense industry who understand what the DOD is look at it and share a certain set of opinions. But when people from the private sector who don't deal with the DOD look at this, they often don't understand it at all. They are used to data-based decision making. That is something we may have lacked here and that's something we aim to change.
We have brilliant decision-makers in this department—some of the most brilliant decision-makers in the world, right? They are really bright people who know how to make decisions and can be decisive and can take what is presented to them, formulate a strategy, and move forward and execute on it. What they have lacked is ready access to information and data. It's going to be interesting to watch what happens when we empower this incredible decision-making engine with the type of information industry takes for granted. That's going to be a pretty lethal combination.
Q: What about the reverse? Do you envision a day when the private sector could be taking its business transformation cues from the DOD?
A: I don't know about the business transformation issue, but I think things like that have already happened. Everyone knows, for instance, that the Internet was invented within the Department of Defense. DOD systems formed the backbone of what became the Internet. It is interesting that a whole new industry, a whole new economy, has emerged around that backbone. Industry has invested a significant amount of money in a certain business model around data-based, enterprise-centric applications.
Q: Does your initiative include plans for spreading the word about the DOD's business transformation to the rest of the American population? Assuming it does, how do you intend to keep taxpayers informed about what you're doing and why? Are interviews with magazines like mine part of the plan?
A: Yes. DC VELOCITY reaches a very targeted audience of people who are passionate about a particular topic that also matters a great deal to the nation's defense: How well our supply chain can execute. It matters to the nation's defense in ways that go beyond just the DOD's learning how industry is able to be more agile and nimble.We look for as many venues as we can to let people know that things are happening. As I said, this culture struggles to adapt to a model of things getting better every six months for the next 10 years. The public at large doesn't think that way. The public wants results every quarter. If you don't deliver them in two or three quarters, you are out. That is just the world we are in.
Q: Any closing thoughts?
A: I would just like to recap what I've told you. I think we're at a moment in the department's history where we have a mission requirement combined with a focused leadership that is business-oriented in its background and certainly a will among our congressional overseers to see that the department makes rapid improvement. I see eyes glaze over sometimes in large presentations and such because people have heard a lot of this before, but I am—and I remain after a year and a half here—extremely optimistic that we are on a path to success and have defined success. This thing is getting better every six months for the next 10 years. We are getting people to understand that this is the outcome we are looking for here. I think this was a great opportunity for us. I appreciate your coming by.