Risky Business

After getting wrapped around the axle yesterday on the tried and true budget method of “Salami Slicing” I never got around to opining on risk, so here goes!  During much of my early career, risk didn’t enter into my decision making process, at least not consciously.  Of course, flying from aircraft carriers is all about risk and how to manage it, but risk management is already baked in.  The “powers that be” know that if you have a certain number of practice landings, maintain technical currency in your aircraft and fly regularly, the risk of an accident is minimized.  Over the years I’ve seen the Navy’s thinking about risk mature.  The time was, when one went on deployment, you could expect to lose a couple of airplanes and several aviators in a typical 6-7 month cruise.  Because of a focus on managing risk, the loss of a single aircraft or crew member is a rarity.  (keep that thought in mind).  On a personal level,  as one moves up the leadership ladder, the onus for managing risk shifts from the institution to the individual leader.  My opinion is that one of the reasons people become effective leaders is that they concentrate on minimizing risk to the people and equipment under their command, not on minimizing personal risk to their themselves (careers). Of course, there’s always a healthy tension between accomplishing the mission and minimizing the risks associated with it.  Safety is paramount!!! But if safety were really paramount, we would never fly, because it’s a dangerous business!  That’s where leaders earn their pay—making the trade off between risk and reward.  In the Navy, it’s interesting to see how the various warfare communities manage risks.  In the Surface Navy,  the decisions on risk rest principally with the Commanding Officer.  The CO does this by being intimately involved in planning and executing the training, day-to-day operations and mission execution of the ship.  The CO has the Officer of the Deck and his Tactical Action Officer to do the minute-by-minute execution, but the CO is always available for problems as they arrive.  An aviation CO has to worry about many of the same things at the surface CO, but must depend on his crews to exercise judgment when hundreds of miles away for the ship. Hopefully the aviation CO has instilled a good sense of risk management in the aircrews when they have to make risk decisions without his/her advice.

The point of my little blurb is to highlight that operationally, commanders do a great job of managing mission accomplishment and risk so that mission is maximized and risk is mitigated, minimized or eliminated.  Fast forward to the Pentagon.  Now those commanders who were so good at minimizing operational risk must deal with a new risk, budget execution risk, or said another way, “What are the chances that this program will be successful, given the level of funding?”  I was one of those commanders.  As an operational commander, I insisted on making sure all risks associated with a mission had been considered and mitigated…….no less than about 98% chance of safe success was tolerated.  But when it came to taking risks associated with the Navy budget, I was far more tolerant.  For instance, “What’s the chance that an LCS will only cost $220 Million?”, I would ask the Program Manager.  When the answer came back,”About 20%”, I would say, “OK.  Guess we will have to go with that.”  Why was my risk tolerance so much greater as a budgeteer?  Most likely it was because most of the decisions affected events far in the future and I would not be around when programs matured.  That attitude was reinforced by the excessive optimism that always goes with budget building.  This notion of budgetary risk is not new nor mine.

Former CNO Vern Clark once asked me as the N81 (Navy’s Ops Research group) if we could characterize the risk built into the budget and it was a very hard thing to do.  I don’t remember all the details but as I recall we came up with several categories of risk:

  1. Institutional Risk.  The degree of support by leadership of a particular program.
  2. Execution Risk.  The degree to which a program was underfunded
  3. Political Risk.  The degree to which this program was supported by the Administration or Congress
  4. Financial Risk.  The degree to which the assumed efficiencies built into the budget were achieved
  5. Economic Risk.  the degree to which the economy would support the Five Year Defense Plan

Some of these risks were subjective and others data-based.  The aggregation of them would give the CNO an idea of how much risk was being carried by a particular program.  Financial risk was the most interesting of the four.  It turned out we discovered that we had assumed away tens of Billions of dollars in efficiencies, but never went back to see if we achieved the saving associated with the efficiencies.  In a sense, it didn’t matter because once we take the money, it is never put back.  I’ll end up by saying the FY15 budget on the Hill now has a fair chunk of “Efficiencies” in it.  Will they be achieved?  What exactly is being done to put these efficiencies in place?  How will you know if the efficiencies were achieved and what will you do if they are not? Are these efficiencies or wedges (unexplained cuts)? These are the questions the Hill should be asking the risk-takers in the Pentagon.

Top Shoe! General Powell was Right!

I was very pleased to see a piece in San Diego Union-Tribune this morning about the establishment Ship Turn a Top Gun-type school for our Surface Warriors.  VADM Tom Copeland, Commander of Naval Surface Forces established  “Top Shoe” (my term, not his) to foster a generation of young surface warriors who really know their craft, not just their weapons systems.  For those outside of the Navy, there are a few terms which you should probably know. Aviators are know as  “Brown Shoes” because they wore brown shoes with their working uniforms and their aviation green dress uniform (which was reserved for aviation only).   Aviators commonly referred to the Surface Lou's Photo Warfare community as “Black Shoes” because they  wore the traditional black shoes with everything, including their pajamas.  They also seemed to have penchant for wearing those thick plastic, black-framed eye glasses that no self-respecting Brown Shoe  would be caught dead in.  Over the years, aviators tended to drop the Black from the equation and generally used the term “Shoes” to describe their beloved surface counterparts.  I don’t know what’s happened in the last few years with aviator uniforms, but I know the Aviation Greens are gone and thankfully, so are the black glasses.

When I was on the Joint Staff during the time that General Powell was the Chairman of the Joint Chiefs, I remember receiving bits of wisdom on the occasions that I happened to be in a meeting with him.  There are the famous 13 rules for leaders ( in any position, military or otherwise) that General Powell is known for and worth repeating here:

  1. It ain’t as bad as you think.  It will look better tomorrow.
  2. Get mad, then get over it. (my personal favorite)
  3. Avoid having your ego so close to your position that when your position fails, your ego goes with it.
  4. It can be done.
  5. Be careful what you choose: you may get it.
  6. Don’t let adverse facts stand in the way of a good decision.
  7. You can’t make someone else’s decisions.  You shouldn’t let someone else make yours.
  8. Check the small things.
  9. Share credit.
  10. Remain calm.  Be kind.
  11. Have a vision. Be demanding.
  12. Don’t take counsel of your fears or naysayers.
  13. Perpetual optimism is a force multiplier.

I also seem to recall a few others that didn’t get so well publicized.  I can’t vouch for their authenticity, but with all due respect to one of my greatest role models, I have always attributed these two to the good General as well.

  1. There are no rumors in the Pentagon.  Sooner or later everything comes true.
  2. There’s nothing new in the Pentagon.  It’s all been seen before.

The establishment of the “Top Shoe” school reminds me of the second unofficial rule.  As a young lad I was very lucky to be assigned to a “Black Shoe” staff as one of the few aviators aboard (back then it was called a Cruisier-Destroyer Group) and  part of my training was to attend the dreaded Tactical Action Officer School (TAO).  It was the most intense six weeks of training I have ever experienced.  But when I graduated, I knew just about everything about operating the combat systems, the threat, tactics and the logistics of running combat operations.  In my mind it was a “Top Gun” for Surface Warriors.  Over the years I think that TAO training was scaled back in favor of more technical subjects.  With the  establishment of the new school it appears the emphasis is back and I think it’s a great idea. Let’s hope it doesn’t fall prey to the budget axe.

But remember…with all due respect to my surface buddies……..there’s nothing like launching from a carrier, zipping around at Mach 1, turning and burning against a worthy adversary, and winning the fight (Fox 2, You’re Dead!).  And after all that, you still have to come back and land your 20 ton machine of death on a pitching and rolling deck before you can brag about your victory in the ready room. That’s Top Gun!!!!!

 

Play Nice and Share

Ever watch toddlers playing together?  It doesn’t take long for one of them to decide that something belongs to them and they jealously guard it.  Sometimes even hitting other children trying to take the toy.  That’s a lot like what sometimes happens in the world of Shared Services. Agencies are sometimes not all that anxious to share their IT systems.  babiesplayOn the flip side, other agencies are not usually begging to migrate their systems to someone else’s system.  There are bright spots in the Federal Government…just check out this website to see some great examples of Shared Services in action.

Why then do organizations continue to resist the sharing of IT-related services?  Mostly because of a perceived lack of control would be my guess.  “I don’t want to be at the mercy of something or someone that I can’t control,” seems to be the prevalent attitude.  Why, on the other hand, do agencies decide to set up Shared Services Centers?  It’s the money!  The prospect of using another agency’s money  to pay their bills in these times of tight government budgets is very tempting.  So regardless of the motivations, it’s a win-win.  Everybody gets to benefit from reduced costs in procuring, maintaining and upgrading the systems.  And the question of control is pretty silly don’t you think?  I have seen the same issues of control arise in my other life in the world of non-profits.  Admin and IT costs were eating our lunch, reducing the funds available to help our constituents. We decided to approach similar organizations and see if they would be interested in sharing back-office and IT functions.  We are all under the same financial pressures so you think it would be no brainer to share some things.  But a funny thing happened.  There were organizations that would rather just wither and die than to share anything.  That’s a rather short-sighted view and does a dis-service to those the organizations are supporting, don’t you think?  In the end, survival trumped control and the economics drove us to share back-office and IT functions, without losing our outward identity to the public.  Yet we reduced administrative costs by over half.  Survival can be a powerful motivator.

That’s what’s lacking in the Federal Shared Services arena–survival.  Survival is not an issue for most Federal organizations.  It doesn’t matter how poorly they are run or how woefully inadequate their budget is, they just keep on keeping on.  So I think the key to enforcing Federal Shared Service initiatives is to put an element of survival into the mix.  How to do that I leave up the the wonks, but I would suggest it’s all about the money.  Put someone in charge and give them the purse strings.  Then things will happen. Until then we will just jealousy guard all our toys, refusing to share with anyone. That’s not how I want my kids to be and it’s now how we should want our government to be.

 

One Olympics Ends, Another Begins

The Defense world is all atwitter at the upcoming peek at the DoD 2015 budget that Secretary Hagel will be giving today and thus kicking off a new round of olympic games, the Budget Olympithon (let’s just call it the Bolympics), which will most likely last until at least Christmas.  After two weeks of the NBC olympi-blitz I was growing just a bit weary of yet another human interest story.  Unfortunately never-ceasing “breaking news” about the olympics will be replaced with never-ceasing “breaking news” about the DoD budget for the next 8 months .  I know I sound a bit cynical, but after scanning the copious quantities of DoD budget-related news this morning I had to sigh.  I am always fascinated at the obsession of the press with the “Winners and Losers” angle.  Given the huge barrel of bucks residing in the Pentagon coffers it’s hard to picture a loser.  My experience is that there are big winners and some not so big winners and then the rest of the pack.  Ironically the winners are generally the ones who deserve to win the least, while the solid performers wind up paying the bills.  It’s the ultimate penally for being good–they take your money to reward another program for being bad.  Particularly interesting given the recent “focus” on ethics and truth-telling at DoD.  Let me see…”Rob the poor to pay the rich?”  Did I get that right?

Anyway, there is huge swirl around the DoD budget this year and SECDEF Hagel will increase the vorticity today at 1PM EST as he divulges the worst kept secret in DC-The DoD Budget.  Already we know it will basically ignore sequestration and come in around $496 Billion with $30 Billion or so in war costs, plus another $26 Billion in “unfounded”….. oooppsss,  I mean “unfunded” requirements (see Kids in the Grocery Store Checkout Aisle).  Your losers: Less Army, less Marines, less ships, less airplanes, less ground vehicles, less commissary subsidies, more TRICARE premiums, less compensation, fewer overseas bases, less of this and less of that.  Your winners: Less JSFs but at higher cost (odd how that is considered a winner isn’t it?), more ethics, more readiness, more American-made flags flying over our bases and more technology investments.  There are a few that I have a hard time placing in a category: Like a pay freeze for top brass (already the most richly compensated group in DoD, especially considering the fact that many of the top guys will actually make 10-15%  or more more in retirement than on active duty). But alas, we all have to make sacrifices, don’t we? Or how about the National Defense Strategy itself?  It’s hard to see where the money for the shift to Asia-Pacific region ( a major part of the strategy) resides in the budget. Are they winners or losers? Only our panel of Bolympic judges (sometime known as Congress) can tell.

I also am fascinated  by the disconnect between the concern by leadership to be ethical and the budget submission.  The happy talk is that people are DoD’s most important resource, yet that’s where a big chunk of cuts are placed.  I’m not talking about reducing the number of people, but all the other promises that were, oh so easy to make,  when we were at war…like Tricare benefits, commissary subsidies, robust training funds, and a few more.  Compared to the waste in the procurement system, the money spent on those programs is not significant, yet that’s where the focus goes.  What’s ethical about that?    So in my mind,  when the smoke clears here’s the message I hear:  The outstanding day-to-day performance of our people is DoD’s most important asset, so let’s cut that funding so we will have money to pay for our poorly performing programs like JSF or Enterprise Resource Planning IT systems.

So get ready for the thrill of victory and the agony of defeat!  I predict there’s going to be a lot more agony that thrill in the Bolympics this year.

Mini Cooper or Lamborghini: What should you drive?

I feel compelled to react to acting Deputy Secretary of Defense Christine Fox’s remarks yesterday regarding the questionable combat capability of the Navy’s controversial Littoral Combat Ship (LCS). Her views are that the threats to surface ships are so great that we ought not invest in them, especially the less capable LCS. Instead we should put our bucks in submarines (to the tune of about $2 Billion apiece) and other “enablers” like Electronic Warfare capabilities. She’s obviously been bitten by the Sub Bug! The facts are that we simply can’t afford the high-end “Lamborghinis” in the quantity necessary to make a difference in an uncertain peace or war. The idea behind the LCS was not to be a part of a “Main Battle Force” going toe-to-toe with some imagined foe of the future (The Chinese I assume), but instead the LCS was part of an “engagement” fleet, capable of operating in areas where US presence makes a difference. Frankly I’m as much surprised by her remarks in their timing as in their substance.
Ask yourself if you think we are likely to become involved in some sort of major world conflict between superpowers anytime in the next few decades. That’s where we need high-end ships like carriers and submarines, and frankly they are so potent that we don’t’ need that many of them. I think a rational person would say that our future, at least in this century, is  building relationships in key areas, South America, Africa and the Asian Pacific. This is exactly what the LCS was designed for. They too, are the enablers that Ms. Fox stresses the need for.
And then there’s the question of numbers. Imagine yourself standing on the beach of an emerging democracy somewhere in the littoral. What’s going to give you a better sense that America is supporting you, a black SSN sail and a rudder sticking our of the water  a couple of thousand yards off the coast or an LCS, a couple of hundred yards off the coast?
The latest flights of Arleigh Burke destroyers cost north of $1 Billion; Zumwalt destroyers well above $3 Billion, Virginia Class submarines around $2 Billion and the granddaddy of them all, $10-12 Billion for an aircraft carrier. While I love the capability, they just aren’t focused on what we need and can afford. We are likely to become a Navy of 100 ships if we focus our investments on the high-end. LCS is compromise between capability and cost. We have to think about both.
So I’m confused. DEPSECDEF says surface ships are vulnerable, but supports the biggest of them all, an aircraft carrier. She says enablers are important, but fails to support a key enabler, the LCS. The sad fact is that while we all want lots of submarines and other high-end capabilities, we can’t afford them all.  It’s too easy to get enamored of the high-end when one sits in the Pentagon day after day where the predisposition is to go BIG and fancy.  It’s where the money is, but money for whom?  We need a reasonable balance, focused on likely threats. It is indeed a balance between capability on cost.

There’s nothing wrong with buying a Mini when your goal is to zip around, parking in unlikely places and have a little fun while doing it.  That’s why you get it.  When you have a Lamborghini, you park it in a deserted area of the parking lot, if you drive it at all.  You impress the rich who can afford one, but insult the poor who can not.  A wise person keeps both in the garage, and drives the one appropriate for the situation.

Leadership: What Works!

There has been a lot about leadership in the news lately (Check out yesterday’s comments).  I read this morning in the Army Times about one retired general’s efforts to improve his post-military image by hiring an image consultant!  I would rather focus on what’s going right and hope, that in doing that, we could actually fix what is going wrong.  One thing is for sure:  You should spend your time fixing those things you already know are wrong before trying to figure out what else is wrong.  Federal agencies and companies spend lots of time and money on conducting employee surveys and subsequently “admiring” the problem, but I believe those that actually take serious actions on what they find are few.  I ran across an Best Places to Work 2014 about the Federal agencies that consistently score high in the best places to work in government and why.  Take some time to scan it and you will find something that  you can do differently to enhance your leadership skills.