CEO Perspective: Steps Needed for a More Innovative and Collaborative Defense Industry

CEO Perspective: Steps Needed for a More Innovative and Collaborative Defense Industry

February 16, 2024

In the nearly two years since Russia’s brutal and unprovoked invasion, European and North American governments have rallied to support Ukraine with robust military assistance. NATO allies, recognizing years of underinvestment, have simultaneously sought to strengthen their own arsenals to deter future aggression against their states.

But despite a strong and unified international response, we quickly encountered systemic limits to production, innovation, and partnering. Not only had our collective system adapted to relatively sustained peace, it had not evolved beyond a 20th century platform production and innovation model.

Complex, single-point-of-failure supply chains proved difficult to ramp, exposing key skill shortages. And the contracting and international processes to mitigate proved too slow and inflexible. Tactical wartime innovation revealed the potential of integrating digital technology at operational and strategic scale, but it was also evident that advantage was still “up for grabs.” And leveraging a network of allies and partners to strategically array defence production in a more resilient manner – to withstand economic, global health, regional instability, or other disruptions – was shown to be a necessary initial condition, not an afterthought.

So as political, military, and industry leaders convene this week for the Munich Security Conference, we should focus at least part of our discussion on the steps necessary to address these challenges and create a more resilient, innovative, and collaborative defence industrial base. We must change in several ways:

First, we must apply the concept of “anti-fragility” to the defence industrial base to increase resilience in the face of shocks and disruptions. Anti-fragility measures include stable investment levels, supply chain diversification, and a reduction in red-tape that can deter small and medium-sized businesses from participating in the defence enterprise. Expanding tools like bulk buys of critical components and materials and multi-year procurements can deliver better long-term value to taxpayers and increase industry’s ability to ramp-up production—these tools, however, have lacked broad national commitments since the end of the cold war.

Second, we must increase the mission capability of platforms we already produce by aggressively adopting and inserting 21st century digital technologies into and across the defence enterprise. We must integrate these technologies with a standards-based, open architecture approach. An open approach will allow the United States, Europe and other international allies and partners, defence primes, suppliers, and start-ups alike to work from the same framework, which will enable greater interoperability across our armed forces.

Key to this effort is teaming with commercial technology companies, which in some cases invest up to ten times what the defence industry is able to invest in research and development. By embracing an all of industry approach, we can leverage existing commercial technology and investments in innovation to increase the effectiveness and interoperability of defence systems and produce them more quickly and affordably. We also must include companies that specialise in semiconductors, strategic raw materials, cybersecurity, cloud computing, AI, advanced communications and more. And while some large defence companies have engaged the largest commercial technology firms (Verizon, Intel and Microsoft in the U.S.; HiLASE laser technology research centre in the Czech Republic and the Technical University of Cluj-Napoca in Romania, among others), in many cases our acquisition systems struggle to procure digital capability at relevant speed.

Finally, scaled defence industry, with their broad market and partnering potential, must achieve greater collaboration with allies and partners in alignment with the U.S. National Defense Strategy, including the establishment of key production and maintenance facilities in trusted nations. To that end, national defence industries must work together to expand supply chain capacity and accelerate delivery of key systems.

No one company – or even one industry – can operate alone to meet today’s global defence and security needs. Together and in partnership with national governments, we can overcome these systemic challenges, better respond to ongoing crises, and extend deterrence. And now is the time to have that conversation.