Digital Transformation in Defence – Balancing the Strategic and the Tactical

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Digital transformation has created new business models and continues to disrupt.  Whole industries have, and are changing, with data exploitation being a key point of differentiation.  This is being delivered by using innovative, cloud-enabled, digital technologies.  Digital Transformation is not merely an ‘innovation’ opportunity for the defence industry, but a necessity because adversaries already have ready access to technology advances and can assemble considerable capabilities at pace.

Organisations are frequently challenged with becoming a ‘digital organisation.’ To our minds such organisations display a number of characteristics:

• They adopt new technologies to reinvent their business model. For example, the provision of a platform to support suppliers and customers with an aggregated offering,
• They utilise an ecosystem of diverse suppliers, underpinned by technology that adheres to open standards, to provide collaborative, innovation in a fast-moving world,
• They integrate channels (with digital at the core) and automate processes yielding improved efficiency and effectiveness with a focus on user experience and end-to-end performance management,
• They ‘reimagine’ processes horizontally so that they cut across traditional vertical organisational and technical silos,
• They utilise analytics for deductive predictive modelling (e.g. predictive maintenance) extending to Artificial Intelligence (AI) to provide ‘learnt intelligence’ and advice on a course of action with an inferred logic,
• They manage data as an asset to fuel differentiation, particularly in horizontal process execution,
• They are able to command the trust of decision makers in data through the application of sound governance that includes provenance, transparency and measures of confidence and bias.

So, an example in defence digital transformation could focus on the reinvention of through life support of assets, with a ‘digital thread’ stretching from product concept through manufacturing to operate and support as covered at a high level in our previous blog.

Making it happen

However, the challenge is in ‘making it happen’ and we offer the following perspectives [1]:

• Digital technologies are developing very quickly, to the extent that some talk about ‘exponential’ technologies. Consequently, there is an emerging and growing adoption gap between the pace of technology development and the ability of organisations to adopt that technology,
• Organisations’ ability to embrace both the increasing pace of change combined with increasing complexity has been constrained by the sequential, phased ‘waterfall’ delivery approach of: design, build, test and deploy and then upgrade. Progress has been further aggravated by protracted contracting, particularly in the Public Sector. In the most progressive organisations, the adoption gap is being managed better by using agile which offers:
  • rapid user-centric design through the definition of journeys,
  • building solutions incrementally offering faster time to value; or rather value is brought forward,
  • adoption of a ‘test and learn’ approach with the ability to course correct, e.g. in response to testing or a changing technology landscape,
  • utilisation of DevSecOps enabled by new automation technology platforms and agile ways of working which enables continuous, factory like, product development and improvement.
• Further, the dynamics of this change means that delivery operating models must be reinvented too. New talent, capabilities and behaviours like technical skills, the ability to adopt and scale agile, collaborative working across vertical silos, the delegation of decisions from organisational heads to Product Owners on the front line and building a ‘learning organisation’ become the challenge. This is a transformation in its own right; regardless of delivering technical solutions to users. Further, we would argue that an agile approach can be used to transform non-technical operations as referenced in IBM’s ‘Enterprise Agility’ transformational offering.

Addressing the challenges

The net of all this change is that there are some real points of friction. To our mind this is brought into sharp focus by the conflict between the ‘strategic’ and the ‘tactical’ which manifests itself in several ways:

Challenge 1. Waterfall is typified by deep strategic thinking and detailed upfront design followed by delivery, whilst agile might be perceived as delivering more tactical user centric improvements

Our opinion: All strategic projects require a robust strategy so that the big picture is understood, dependencies managed and a future state targeted. We would argue that the strategy and design should be underpinned by needs that are derived from user journeys. However, journeys should only be sufficient to scope the solution and value, determine the dependencies and the roadmap, and inform the right vendor choices. Although too much strategic thinking slows the process, on complex projects we would argue that undercooking the strategy and design is often worse. All too often organisations use agile to successfully make small scale incremental change, and as programmes get larger and complicated, the thinking is not coordinated resulting in disconnects at all levels between and within programmes. An enterprise level way of managing this is through strategic ’value orchestration’ in which a portfolio of programmes and projects is managed to strategy and value; but that’s another topic for discussion.

Challenge 2. To manage supplier risk, organisations feel the need to produce detailed requirements

Our opinion: We argue that pages of requirements in an RFP, supposedly reflecting a strategy, serve limited value and take excessive effort and time to develop and respond to.  Furthermore, by the time the work is contracted, the world might have changed.  It is far better to select a partner earlier in the process, based on a core strategy and scope, and then work collaboratively with the partner to understand and the refine the strategy and needs and move quickly to agile delivery.  Ultimately, better results are achieved by focusing on business outcomes rather than reams of minutiae requirements. This philosophy is reflected in the agile manifesto.

Challenge 3 – Light agile processes require traditional waterfall governance to manage risk

Our opinion: Many organisations feel that it is appropriate to overlay agile with an additional layer of traditional governance for strategic projects. The more strategic and complex the project, the greater the governance administration multiplier with for example, weekly written progress reports and adherence to a micro milestone plan. Worse, business leaders intervene on a frequent, sometimes daily basis, because they are fundamentally untrusting. Leaders should provide strategic direction and sponsor change and respond only to project derived escalations.  The agile processes and ceremonies are proven. If significant scaling is required for more strategic projects, there are frameworks, like the Scaled Agile Framework (SAFe), that can be used, but they can be a transformational journey in their own right! Fundamentally, the approach has to be as light and nimble as possible.

Note that SAFe does have an overarching strategic framework, starting with ‘strategic themes’. Further, IBM’s agile approach talks about different ‘loops’ to calibrate and provide cadence to the delivery, with a six-monthly ‘business loop’, for example, which addresses budgets and strategy.

In the public sector, accountability necessitates a need for checks and balances. However, this can be done using agile which can surface progress and issues simply. For example, with a briefing using an operational Kanban board and a review of the backlog status. At most this could be summarised on a simple slide; a complex document is not required.

However, there should always in an unrelenting focus on value be it qualitative outcomes, financial or experience for example. Furthermore, managing project progress also needs KPIs focusing on time, budget and behavioural change. Strategic and tactical value must be addressed throughout the project life cycle, from project concept to completion and operate.

Not only does traditional project management over-the-top of agile create unnecessary work and cost, but it also creates superfluous roles whose activities are almost designed to slow progress and burn resource.

Overall, education and behaviours need to change to make digital transformation work. A key problem is that old school Systems Integrators and business advisors make significant revenue through governance and programme management which reassures their clients; it is an unvirtuous cycle that needs to be broken. Ironically, it should probably best broken using a ‘test and learn’ process.

Challenge 4 – Fixed price contracts is the only way procurement can be sure the business gets what it needs within a budget

Our opinion: We argue that contracts should be aligned to delivering incremental steps against an indicative scope and effort determined in the strategy.

A ‘backlog’ of nearer term activity is delivered in a series of ‘sprints’ targeted at particular outcomes or value (e.g. the strategy step in Challenge 2). This is best managed by delivering work and value against a resource capacity.

The customer in this instance still holds the power. They have their own Product Owners from the business making decisions on priorities. Further, the customer can intervene and reset at the end of each sprint or series of sprints if progress or quality is not sufficient. With this level of collaboration and near real-time Product Owner scrutiny, risks and issues are far better managed and value better achieved.  This produces a more trusting and strategic relationship; but with progress and estimations which can be continually calibrated against the big picture in the strategy.

How can the defence industry respond?

In summary, we advise those in the defence industry to:

• Embrace digital transformation because it is an inevitable paradigm shift in defence affecting the whole product life cycle and is core to Multi-Domain Integration (MDI),
• Understand the complex challenges that are demanded by new technologies and ways of working; the biggest change being cultural. Treat digital transformation as a programme in its own right, building a capability that can then support technical projects,
• Start by collaboratively creating a user centric strategy, based on journeys, that binds the solution to a clearly articulated intent and roadmap. Simply put, the strategy should be sufficient to define the core design and to prioritise, scope and sequence projects,
• After, the strategy, build technical solutions quickly through agile projects that are shaped and tested against the strategic context,
• Scale in a progressive and managed way and adopt an agile framework that works for you,
• Engage partners as early in the programme life cycle as possible so they jointly build and shape the strategy and the solution with you,
• Contract with partners a capacity basis based with the ability to manage incremental sprints to deliver targeted value; allowing for course corrections,
• Keep the governance simple; avoid agile with waterfall governance over the top. Manage progress, quality and value within teams during sprints,
• Always, always have a strategic reference point; be very wary of being unconsciously tactical because of perceived, and incorrect, perceptions about being ‘agile’.

References:

[1] The Technology Fallacy: How People Are the Real Key to Digital Transformation by Gerard C Kane, 2019)