The US has the biggest military budget in the world. But it must now focus on innovation

Headquartered at the Pentagon, the US Department of Defense consists of 17 defense agencies with an enormous workforce of around 3 million, making it the largest employer in the world: over 1.3 million men and women on active duty, 826,000 serving in the National Guard and reserve forces, and 742,000 civilian personnel. According to the Stockholm International Peace Research Institute, the US spent around $596 billion on its military in 2015 – the highest military budget in the world, equivalent to 3.3% of its GDP and 9.2% of total government spending. The “intelligence community” within the Department of Defense alone runs an estimated budget of $70 billion a year and employs 200,000 operatives worldwide.

Yet, despite being a resource-rich organization, the Department of Defense risks losing its competitive edge in the global security landscape, unless it instils innovation in its three core pillars: technology, people and management practices.

Although innovation and government are sometimes seen as mutually exclusive, the Department of Defense has historically pioneered many state-of-the-art technologies that later became ubiquitous. For instance, the Defense Advanced Research Projects Agency (DARPA), whose mission is to “make pivotal investments in breakthrough technologies for national security”, has funded an impressive portfolio of military-driven R&D efforts that led to major commercial spinoffs. Notable examples include the internet, Siri, and GPS, which was initially developed to help the US Navy identify the exact location of submarines and improve precision in hitting targets. Similarly, cellphone cameras have their origins in high-speed electro-optical sensors used as targeting equipment in weapons and military technology.

On the one hand, the democratization of these key technologies and their rapid adoption across the globe has revolutionized entire industries and led to considerable gains in productivity, prosperity and new job creation. On the other hand, it has presented a new security paradigm, challenging the superiority that the Department of Defense enjoyed.

Moving forward, the Department of Defense is exploring new and innovative models to stay ahead of the curve – whether by shifting towards a venture capital role, continuing to sponsor cutting-edge technological development in-house, or integrating technology developed by entrepreneurial innovation clusters in Silicon Valley and elsewhere into its systems.

When it comes to attracting and retaining top talent, the Department of Defense is literally on the look-out for the human capital force of the future. Given that it takes 25-30 years of service to become a US General, recruitment planning must start early on: today’s hires, for instance, are the anticipated 2045 generation of US Generals. As a result, rising levels of obesity in America, the increasing rate of high-school dropouts, the level of educational attainment, and other such national issues are sources of concern to the Department’s Senior Leadership.

On his first day in office, Secretary Carter spearheaded a bold new vision of human capital planning. It involves a focus on millennial recruitment, targeting candidates in STEM fields, enriching the diversity of the workforce, offering generous benefits, and launching various incentive programmes that will render a career path at the Department of Defense more attractive. The creation of the Entrepreneur-in-Residence Program, the expansion of the Corporate Fellows Program, and increasing the size of the Career Intermission Program are a few examples of the suggested HR reforms.

Nevertheless, the Department of Defense remains a hierarchal organization with a certain degree of bureaucracy. Furthermore, given the sensitive nature of the job, a portion of its employees work in isolated secure rooms called Sensitive Compartmented Information Facilities. The Department is also not immune to the Federal Government’s hiring freezes, budget cuts, and other Congressional limitations, and may not have the ability to compete with the private sector when it comes to remuneration. Yet, beyond traditional career choice considerations, working for the Department of Defense is not just another job – to borrow from the “Service Before Self” core values of the US Air Force, it is “an uncommon profession that calls for people of uncommon dedication”.

In order to rapidly adapt to tackle emerging threats, the Department of Defense must also optimize its organizational and management approaches. Despite the wealth of resources available at its disposal, they remain finite. And in today’s complex world, there is an increasingly pressing need to extract more value out of existing resources in productivity and efficiency measures rather than to seek out additional resources that may not be readily available or promptly allocated.

In the wake of 9/11, a more unified, coherent and integrated approach has brought together the 17 organizations that fall under the scope of the Department of Defense. Today, the Department seeks to create more value by building agility into its structural hierarchy and operational performance in a move towards a lean transformation.

Making the world a safer place is no easy task, but getting the recipe right is key. Solving 21st century security challenges in a world where technology is ubiquitous, people are more connected than ever and organizations are flat requires an unconventional plan of action that integrates the millennial perspective by design. As the largest enterprise in the world reinvents itself in an age of transparency, openness and public access to information, it must re-examine the underpinning assumptions of the past in order to redefine the global security landscape of the future.