2 July 2016

Long Live the Business Transformation Agency

June 30, 2016
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This past October marked the ten year anniversary of the creation of the Defense Business Transformation Agency (BTA). It was an anniversary that passed without fanfare, which in the grand scheme of all things celebrated in Washington is probably fitting. To those of us involved with the founding and early growth of the BTA, this anniversary is both a sad and precautionary tale, but one we believe provides valuable lessons that can inspire others to maintain the fight for greater government agility and accountability. 

As the BTA’s original proponents, and ultimate co-founders, we believed that creating this new defense agency was not only required to control and rationalize business IT spending across the DoD enterprise, it was necessary to achieving the goal of improving cost management and operating efficiencies for the Department’s business mission. Most recognized that business transformation in DoD was going to be a decades-long proposition just as it had been for other large industrial enterprises. Unlike large private sector organizations, however, the DoD is a unique entity that turns over senior leadership every few years. Creating an agency within the Department plants a “permanent change agent” that could theoretically survive elections, different presidential administrations, and multiple waves of political appointees with diverse agendas and managerial competencies. Our insistence that the BTA be created was largely based on the assumption that once you create a government agency it is next to impossible to kill it. It was a form of “organizational jujitsu,” in that our intent was to use the character of the bureaucracy against itself—to create a permanent anti-body within the DoD that would drive change over decades. This was correct in principle, but wrong in the sense that we disregarded what role the nature of the agency as a challenger to the status quo would play in its own longevity. 

The ambitious vision for the BTA meant that the agency required very different organizing and operating principles than those that existed in other agencies and organizations in the Department. We seeded the senior leadership of the BTA with people we recruited from the private sector by using the Special Hiring Authority granted by Congress. Additionally, we made it clear that the Agency would never be a permanent home for any staff member or leader. Rather, we designed the BTA to be a “petri dish” of sorts that would allow us to build a new DoD business culture attuned to modern commercial business practices, focused on its customers (our soldiers, sailors, airmen, marines—and taxpayers), and most importantly, employing world-class levels of innovation and collaboration. We also directed that the agency create a true revolving door between commercial industry and government that would allow us to attract the best talent, but only seek to retain them in a “virtual network” of like-minded reformers rather than permanently in the agency, or in the Department of Defense more broadly. It was our view that the BTA would be a highly prized assignment for the best and brightest from within the Department’s military and civilian ranks—an assignment that would be very competitive to receive and highly beneficial to the individual’s professional advancement. Further, we demanded a culture of “intolerance”--intolerance over how things were, intolerance over what was deemed impossible, intolerance over organizational silos and bureaucracy, intolerance over wasteful spending, and most importantly intolerance over corrosive quips like “close enough for government work” and “you can’t fix government” that were pervasive and reflected poorly on an organization tasked with such an important mission.

In what can only be described as a short-term budget drill, the BTA was shut down in 2010. Despite its short tenure, however, there are important lessons to be learned from the agency’s successes and failures about the prospects for true business transformation in the Department of Defense, or government in general. The following three are particularly good ones to remember:

Leaders follow Leaders. Every single successful business transformation/modernization effort is characterized by relentless engagement and support from a very senior leader, be it the CEO, Cabinet Secretary, Agency Director, Commanding Officer, etc. While large scale change cannot rest on the shoulders of a single individual, it also cannot happen without a single strong advocate at the top of the organization. The most important job of this individual is to engage other leaders at all levels to ensure objectives remained aligned and focused. The BTA’s most effective period was when it was overtly championed by the Deputy Secretary of Defense and the Under Secretary for Acquisition, Technology and Logistics, all of whom had experience in leading large private sector organizations. Their interest and engagement was critical to aligning leaders across the Department and to creating agency advocacy. This type of persistent and consistent leadership of business transformation efforts are absolute requirements for success.

Money Talks and Bureaucracies Listen. Department leaders often bemoan the fact they have to answer to a “board of directors” consisting of 535 members of Congress. It is a valid point, and it is easy to sympathize with Department officials who in congressional testimony must endure the critiques of members who may not have a complete understanding of the management complexities facing the DoD. Generally speaking, however, the defense bureaucracy is pretty good at spending what Congress deems as its priorities. Congress, therefore, must become more adept at funding business mission improvement initiatives, and in holding the Department (leaders) accountable for results. Most importantly, the billions spent on business systems must be paired with a concurrent commitment to, and investment in, human capital reform that enables improved business operations, ensures greater agility, and imposes stricter accountability for outcomes. 

Culture Drives Change, not Vice Versa. Successful business transformation is essentially organizational culture change on a broad scale. Efforts to effect change by focusing too much on new technology, policy, or managerial mandates, sub-optimize the potential of the initiative. The key to effective organizational culture change in government, and in defense particularly, is a relentless “hearts and minds” campaign. In DoD, BTA attempted to accelerate this process through the infusion of private sector talent, many of whom took significant pay cuts to join the team because of a sense of service and an intellectual desire to help solve very difficult problems. While important, this injection of motivated talent can only do so much. Motivating the broader workforce to change its own culture is far more challenging. Many will argue that government bureaucracies lack the ability to use compensation as an effective lever to motivate and encourage change. While federal payscales complicate true pay for performance schemes, in our experience government employees have two far more powerful motivating incentives. The first is service. In DoD this is a particularly strong motivator as most within the Department recognize the significance of its mission and the relationship of their work to the security of our warfighters and our nation. Culture change in DoD cannot lose sight of this relationship, but rather it must take advantage of it to impart a sense of urgency and commitment on the part of the workforce. The second is less obvious, but equally as powerful: the culture must believe, and be vested, in the success of its leaders. This means that DoD leaders, whether they are politically appointed or career civil servants, must set very high standards for collaboration, openness, communication, fairness, compassion, intensity, and commitment if there is any hope of impacting culture in a positive way. Leaders must demonstrate zero tolerance for organizational silos and an aversion to the accumulation of power, while building broad coalitions that align resources and momentum in a common direction. 

Ten years from now the BTA story will have faded even more fully into the annals of DoD organizational history. The lessons of its founding and early success should not be forgotten, however. At a time when expensive information process and systems failures plague important initiatives across the federal government, understanding and addressing the shortcomings of government management of transformation initiatives is critical to national security and fiscal sanity. Hopefully some of those who were inspired by the BTA’s short-lived, quixotic attempt to infect the Department with a new way of thinking about improving its business mission will carry these lessons forward and preserve its legacy. In the meantime, to all those who bought in to the BTA’s vision, and who still believe in the possibilities and principles that the agency strove to embody, we say “Happy Anniversary”--- and thank you.

Thomas Modly is the former Deputy Under Secretary of Defense for Financial Management. Paul Brinkley is the former Deputy Under Secretary of Defense for Business Transformation. Mr. Modly and Mr. Brinkley were appointed by Congress as the founding Co-Directors of the Defense Business Transformation Agency (BTA) in 2005.

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