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15 Dec 2021, by Amy Sarcevic
As Australia’s geopolitical relationships evolve and the strategic landscape becomes more complex, building sovereign capability on domestic shores is at the forefront of efforts to boost the nation’s warfighting efficacy. But with the threat outlook uncertain, how can the government optimise investment in its quest to future-proof military capability?
While Defence budgets may now be pushing past the global benchmark of 2.5 percent of GDP, spending is forecast to remain modest until beyond 2030, as the government recoups its COVID-induced debt. In this climate, there will be little margin for error when it comes to military investment. As Treasury Secretary Steven Kennedy highlighted, “when deficits are being used to support economic growth, the quality of decision making is crucial”.
Amid these threats and constraints Andrew Dudgeon AM, Partner and Leader of Defence Practice at McKinsey & Company, says agile product development – fuelled by Defence and industry collaboration – could be our vehicle towards a resilient, future-proof military.
“The past decade has seen a greatly increasing rate of change and complexity within the strategic environment. This represents a drastic variation from the ‘Great Peace’ we have grown accustomed to in the preceding five decades,” he said ahead of the 2022 ADM Congress.
“Amid this rate of change, existing capability strategies and plans are under stress; so too are product development and sustainment enterprise operating models. As such, we need to reimagine the Defence and industry relationship – viewing it as more of a mutual partnership, rather than the usual ‘buyer-customer’ dynamic. Joint investments and innovative contracting will help Defence and industry operate as a single team to ensure the rapid and adaptive delivery of military capability.”
Without a faster approach to product development, defence innovations risk obsolescence before their value and investment is fully yielded, he argued. “Traditional processes and procedures can, at times, lead to lengthy approval timelines, by which point the technology has all changed. We need to get in and tackle problems more quickly, learn how to fail fast, adapt, learn faster, and then upgrade in a spiral manner as things improve,” Dudgeon added.
Leading the way
Australia’s Boeing Loyal Wingman program sets a precedent for how product and capability development could look with a Defence-industry collaboration approach, Dudgeon said – a sentiment echoed by Chief of Air Force, Air Marshall Mel Hupfield. “The Loyal Wingman sets new standards for capability development and shows what collaboration between industry and Defence can achieve,” Air Marshal Hupfeld said in a recent statement.
The program has seen the Government and Defence contractor Boeing co-invest in a military combat aircraft, with input from more than 35 other companies. The first aircraft of its kind to be built on Australian shores since World War II, the Loyal Wingman is setting global standards in terms of design and manufacturing, via an innovative Defence-industry partnership approach. Moving from concept to first flight within just three years, the aircraft is progressing well in the flight testing phases; and there are plans to export the product in the near future.
“The Loyal Wingman is a great example of how to do things differently,” Dudgeon said. “It’s based on an innovative partnership with Boeing and Defence that really sets the scene on how to co-develop strategy, identify the right operating model, use innovative contracting methods, and share the right skills and people across the industry. It’s a uniquely Australian paradigm and one which we believe can be applied throughout the sector to develop capability in record times.”
The partnership approach works as a result of each party’s shared values and goals, he added. “Defence wants the efficient delivery of capability within budget. Industry wants to deliver the best quality products and make a positive return on their investment. It’s a win-win situation,” Dudgeon concluded.
Alongside agile product development and defence-industry collaboration, Dudgeon identifies four key constructs that will help Australia future-proof its military. He will share further insights at the 2022 Australian Defence Magazine Congress. The event will be held 3 February at the Hyatt Hotel Canberra.
Andrew is a leader in McKinsey and Company’s Defence, Aerospace, and Infrastructure Practices. He has held several senior command appointments within the Australian Defence Force, rising to the Rank of Brigadier. During his Military career he held several senior leadership roles within the Defence Materiel Organisation, saw operational service in the Middle East and Afghanistan, flew a wide range of aircraft and helicopters and was appointed a Member of the Order of Australia in 2007 for exceptional service to Australian Defence Force Aviation. He has held Chief Executive Officer roles at three global aerospace and transportation companies, including Rolls-Royce and Bombardier, in the United States and Australia.
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