Effective collaboration between organisations must start at the top. As part of our research into collaboration in the defence sector we talked with senior leaders to gain their views on the challenges and opportunities that closer cooperation will bring. In this interview Bernard Lauinger, Partner, Defence spoke with Major General Andrew Mathewson, Head Helicopter Systems Division, Department of Defence.
Are there any particular circumstances where collaboration between Defence and industry has been vital?
In an environment where the product, the helicopter, is not as mature as we had anticipated, the only way you can genuinely resolve problems is a collaboration that’s based on transparency and trust. In one situation that hasn’t always been the case but it’s being resolved now through collaboration, with a co-location of our teams and transparency of both technical and commercial data.
What do you see as some of the common barriers to collaboration?
One of the key ones is intellectual property (IP) which can influence a collaborative relationship. Defence often has very limited rights from an IP perspective and that means we are very much beholden on industry. However, I genuinely believe that if you can establish an open, transparent arrangement where you understand each other’s risks, you’re then in a far better place to solve issues from a strategic perspective.
You have to understand the implications of not acquiring intellectual property rights. I’m not saying that you have to buy them but you have to understand the consequences of not buying them and also setting up robust commercial arrangements to ensure transparency.
How do you see the intersection between 'hard' issues such as contracts and 'soft' areas like culture in supporting collaboration?
It depends on the culture and the collaborative nature of the partnership that you are dealing with. If you’ve got senior leaders that share a vision then you’ve got a better chance of delivering the best outcomes without relying on the contract.
In one case we had agreed quite a substantial construct of how we would work together and how we would respect each other in a partnering agreement. Sadly, it all fell over when the product was not delivering what Army and Navy needed. We worked with the most senior levels in all of partner companies, invited them to Australia to sign new contracts with our Minister for Defence Materiel at the time and agree a new contractual arrangement with the Commonwealth that had a better balance between the commercial levers and transparency which was really quite fundamental.
In one case we completely restructured a contract to what we call ‘repair-by-the-hour’ which means industry gets paid the majority of their money when we fly aircraft, so that means everyone is aimed at the same strategic outcome – making the product work. That shifted the focus for both the Commonwealth and industry from having fights over little elements of the contract towards delivering outcomes to the customer.
Beyond contracts what are other important tactics to promote collaboration?
On one programme we have recently co-located our staff with industry sitting desk-by-desk. This was quite a cultural challenge at first to bring our people to sit next to industry and to bring industry next to our people, to overhear conversations and to talk about issues with immediate effect. This has helped to break down a lot of barriers.
What could Defence leaders do differently to build relationships with Industry?
You must understand who your genuine stakeholders are. Sometimes the structures of Industry partners can be complex and in some cases it might not be the local entity that has the level of influence you need, but the overseas parent company. Defence leaders may have to reach far deeper into the parent companies, build relationships and cut deals with the people who are looking from a more strategic perspective. They also may have to build relationships with the governments and Defence Ministers where that parent company sits to help negotiations.
You don’t always need to do that. It is a far simpler circumstance when you are buying a product from the U.S. for example and specifically through foreign military sales. It’s a very different construct and that is absolutely a collaboration because we don’t get to put any of those strong commercial pieces in place, it’s down to the relationship, at all levels.
What skills are needed to build stronger relationships?
We provide some teams with country specific cultural training, and not just the cultures of the prime contractors, but the cultures of fellow customers. Collaboration is more than just your relationship with your Industry partner, it’s also collaboration with fellow customers and trying to work together and influence them as well.
It’s very easy to become polarised around what actually are very small issues. This can often happen, particularly when teams are separated and don’t really understand the pressures on industry. So building empathy and confidence to look at a situation and call out both poor and great behavior is increasingly important.
Sometimes it’s about commercial issues but more often than not there’s something else that both sides haven’t fully realised. So having the confidence to engage regularly is essential in my view.
How is technology playing a role in the changing nature of collaboration?
Technology in the defence space is becoming far more complex and integrated and this leads to interface and interoperability issues between different companies. This complexity, in my view, will drive not only the way we will be doing business in Capability Acquisition and Sustainment Group (CASG) in the future but also the way industry needs to work together between the competing parties.
For example we integrated an American Lockheed Martin Hellfire Missile System onto a European Tiger helicopter, and that drew together two broadly competing entities but to great effect. In another example we had a system that was made by two competing entities and they simply couldn’t collaborate to the extent that it’s causing delay and cost. We simply cannot have that sort of failure in relationship by industry in the future. We’ve got to find a way for industry to be on this collaborative path not just the customer and the Commonwealth.
I think that as you introduce further complexity around electronic warfare systems, missile systems, sensor systems, and the platforms and being able to mix and match effectively in a far more agile way than we’ve ever been able to do in the past. That’s going to require (and it’s happening already) better relationships across industry. You can’t live in a stove pipe, you’ve got to be able to integrate systems and deliver the required outcomes.
Where do you see Small to Medium Sized Enterprises (SMEs) supporting both innovation and collaboration?
SMEs play a big role to play in all this because by and large they are focusing on a small piece of technology or a small component of the capability. They need to have a relationship with the larger Original Equipment Manufacturers (OEMs) and the OEMs have to recognise that they can’t be on the forefront of innovation on every aspect of future weapons systems. It’s increasingly about bringing those two entities together collaboratively to deliver something to Defence, very rapidly and at a reduced cost.
Looking ahead, how will the ability to manage collaboration relationships evolve across the defence sector?
We’re embarking a transformation of CASG and moving toward out-sourcing more of our work to industry and for them to do more of our transactional activities. We’re moving from outsourcing maintenance to outsourcing outcomes – and that leads to far longer commercial relationships and therefore an increased need to partner and collaborate. The fact is that there will be less choice for the Commonwealth to move from one partner to another partner.
To succeed right from the start, my view is that we need to have an open and transparent relationship that’s framed in a sound commercial structure. While you need a shared goal, both sides also need a mechanism to spot and realign poor behaviours.