Management of Change

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the imminent deficiency of battle group-capable es­corts that is now one of the Navy’s greatest con­cerns. The stakes are even greater in submarines, where class acquisitions are initiated at 10-15 year intervals.

There is another side to the issue of warship ac­quisition that is even more critical in the long run. Since the CVN-68 design in the mid-1960s, only one warship class acquisition decision of the CNO— the FFG-7 by Admiral E. R. Zumwalt—has come to fruition. Congress mandated the CGN-36; the DD-963 and CGN-38 were fiats of DoD in Admiral T. H. Moorer’s time. Zumwalt’s sea control ship, surface effect ship, and DG (Aegis) never made it. CG-47 was DoD's dictate over Admiral J. L. Hol­loway Ill’s strike cruiser.

Meanwhile, attack submarine proposals to follow the SSN-688 class, called mid-70s’ SSN and SSNX, never got beyond initial concepts. Early in Admiral Thomas B. Hayward’s term, another SSN was tried and postponed, apparently to the mid-1980s. His other objective (DDGX) dragged on throughout his term and is still being defined. Regardless of how readers judge each of these propositions, all must agree that if the CNO’s leadership is nullified, we are all in deep trouble.

In military environments, it is easy to confuse capacity to manage change with personal leader­ship: they are very different. To continue the steer­ing analogy, the CNO has the corporate helm—with­out a rudder connected to it. Instead, the heading of the headquarters bureaucracy is determined by the composite force of numerous and tiny indepen­dent rudders (some have not been so little, notably that of the former nuclear power helmsman. Admiral H. G. Rickover.) Very few of these “rudders” are controlled by an initial programming decision to cre­ate a new ship acquisition project; even the ones that are have long time delays from inertia caused by programming and budgeting processes. Any ac­quisition decision by the CNO results in many more losers than winners: Under bureaucratic rules of engagement, all the losers keep control of their rud­ders—which makes predictable, timely corporate course changes virtually impossible.

For bureaucracy, substitute “large, human, func­tionally structured organization,” and this turns out to be a particular case of the modern universal prob­lem of corporate management of change. The pri­vate sector does not appear to have any sure formula for this either. When change permits an isolated and independent thrust, the general response is to create a new unit for it; existing units are then free to go on as before, or attrite away as the case may be, but they cannot frustrate the new thrust.¹

The private sector also has big troubles when it must turn an entire corporation: Witness the Big Three of the auto industry’s difficulties in down-

sizing their products over recent years.

Navy management of change through ship acqui­sition has always had to deal with the same basic causes of trouble as are at work today. It we look back prior to the mid-1960s, we can observe three corporate mechanisms that dealt with the same basic problems of warship acquisition that are at work today.

The first corporate mechanism was the Ships Characteristics Board (SCB). It exploited what now is called participative management. It involved all the first-line headquarters officers in a formal par­liamentary process for “getting the Navy s act to­gether.” Warship acquisition was started in each case by an initial CNO decision identifying a new ship objective, directing the SCB to preserve the CNO’s intention. Through a process that spanned as much as two years, the SCB was responsible for developing a complete “ships characteristics doc­ument for the CNO. A preliminary design was also completed, so the proposed characteristics were confirmed technically as being designable. In terms of management of change, the SCB did four essen­tial things: It provided a forum for competing ideas, (achieving constructive debate in a competitive en­vironment), obliged progressive resolution of tech­nical alternatives (under the disciplining influence of the concurrent preliminary design), exacted for­mal commitments by all responsible agency heads to implement the proposed ships characteristics, and gave the CNO an implicit Navy-wide professional commitment on which to base his advocacy in the political arena. (The SCB also let the CNO know when his directed objectives were not feasible.)

Upon approval of the proposed ships character­istics by the CNO, each agency head was account­able for lining up all the “little rudders” in his piece of the bureaucracy. This included reprogramming actions, resource reallocations necessary to con­form with the ordered corporate course, and the containment of residual dissent.

The second corporate mechanism was direct sup­port for the SCB. The Ships Characteristics Division of OpNav was the SCB's dedicated and continuing working staff, making the Board a deliberative body capable of progressive decision making. Technical support was provided by a directly responsive de­sign group, the Preliminary Design Branch of the Bureau of Ships (familiarly known as "420”). The Preliminary Design Branch put the progressive work of the SCB on a hard design basis, so that its final output could support a firm corporate commitment.

The third mechanism was discrete decision action on the SCB's output to accomplish the crossover from formulation to contract design, from achieve­ment of commitment to its implementation. When the CNO signed the ships characteristics document, the project was transferred from OpNav’s lead to the near-absolute implementation authority of the Chief of the Bureau of Ships. Thus, control re­mained directly identified with the CNO's personal authority until he turned it over for implementation of production as—and only as—approved.

worst of all possible ways, except for everything else that has since been tried.

The above mechanisms were lost in the course of Navy management changes that resulted from DoD centralization of management for systems acquisi­tions in the 1960s. Not surprisingly, DoD criticisms of the Navy focused on those very mechanisms. Senior DoD officials involved, starting with Secre­tary of Defense Robert McNamara, understood the macro-management of change, and they were out to

By current accounts, the SCB was an ineffective tool for developing ships characteristics, and the Bureau of Ships was an excessive assignment of authority. On the other hand, none of these ac­counts—to the writer’s knowledge—judge those mechanisms in terms of their joint contributions to corporate management of change. To paraphrase Winston Churchill, they may have comprised the

do all the managing. During the 1970s, DoD grad­ually loosened its macro-management, but the Navy has not reset to a comprehensive corporate view of macro-issues in warship acquisition. (Service offi­cials frequently complain about DoD’s micro-man­agement; this draws them into the inherent contest between Navy and the Office of the Secretary of Defense (OSD) bureaucracies.)

Two changes have been all-important for the man­agement of change. The first has replaced the hor­izontal bureau organization with a vertical head­quarters organization. On paper, this clearly defines lines of authority, but it really maximizes bureau­cratic layering thus admitting more opposing rud­ders, and increases their net leverage. In most cases, the “rudders” producing this leverage do not have a clear picture of what higher officials are trying to do—do not even know they are involved. Each of­fice simply continues to “do its own thing,” and has a net effect like that of Brownian motion.

Operating formally through a vertical organiza­tion precludes the direct coupling of key activities that made the corporate mechanisms of yesteryear workable. Now, the formulation activities of ship acquisition are so highly distributed vertically that the technical bases for high-level decision making cannot be reached by decision makers.² Manage­ment of change simply cannot work by remote-con­trol employment of multilayered paperwork.

The second change was adoption of modem project management dogma, but it looks better on paper than it works in reality. Ship Acquisition Project Managers (SHAPMs) are too far down in the bu­reaucracy to be effective. The reality of project man­agement is that it is intended to short-circuit bu­reaucracy. To do that, it must be positioned at the seat of the power it employs and have direct access to that power. During warship design formulation, that means the right hand of the CNO.

Recall the earlier observation that the FFG-7 is the only modern instance of a CNO intention in warship acquisition that held up. It succeeded be­cause the real project manager during the formula­tion stages was Vice Admiral Frank Price in OpNav. He did not have the title, but everyone understood that he was employing the full authority of Admiral Zumwalt. By concentrating on the FFG-7, Admiral Price found and preempted control of all the in­volved bureaucratic rudders. It worked. The FFG- 7 formulation survived essentially as originally di­rected by the CNO; whereas the DG (Aegis), sea control ship, and surface effect ship were left to lower level project managers and failed.

Since the bureau era, corporate management of change has been complicated by a fundamental al­teration in warship-related R&D circumstances. The result has been that major R&D programming and technology selection issues are now coupled into the formulation stages of ship acquisition. This draws in another organizational dimension of R&D com­petitions. Thus, the modern “act” troubling the Navy must be recognized as operating on two levels, with control of the R&D “sub-act” being required to deal effectively with the warship “act.”

Warships are built from the R&D pipeline and designed from subsystems, weapons, technology, and materials options predicted from that pipeline. The only macro-variable in this is the timing rela­tionship of R&D pipeline developments to warship design stages. Navy corporate practices are histor­ically predicated upon the R&D pipeline serially pre­ceding ship acquisition. Under this premise, R&D programming occurs far in advance of applicable warship acquisition, providing a well-defined range of options for warship definition and design data as needed for warship design. Nevertheless, the serial pipeline premise is inconsistent with basic DoD pol­icy, and the OSD has exercised its R&D program­ming and budgetary authorities to cancel that prem­ise by pipeline attrition.

Warships still must be built from the R&D pipe­line, which must now be created ad hoc as the es­sential technical foundation of each warship acqui­sition. Further, its programming must lead and thus progressively enable warship design. In these cir­cumstances, management of change has a high and critical content of R&D programming. This becomes an almost insuperable complication since R&D is a separate, functionally structured organizational do­main extending to the three-star level of OpNav.’

The Navy's warship “act” has been driven to a visible level of frustration by the R&D sub-act. There are now two modes of management of change. One is the conventionally recognized mode of war­ship acquisition. The other is the parallel—but un­structured—R&D programming mode for simulta­neous creation of the enabling R&D pipeline. These modes simply cannot be motivated and managed independently if they are to realize a common end— i.e., warship design formulation.

Warship acquisition is stepwise management of corporate change. It must happen in a controlled manner if U. S. sea power is to be sized and shaped predictably. Since warship acquisition is a recurring corporate imperative, specific corporate mecha­nisms and managerial forms are essential to make management of change successful. Three requisites must be satisfied.

The first requisite comprises procedures and prac­tices specifically and solely for the management of change through warship formulation. This starts with a choice of either participative management, along the lines of the old SCB, or unequivocal and untem­porizing implementation of project management. The SCB approach was enhanced by the horizontal bu­reau structure, making it nominally a body of or­ganizational equals. Whether a similar approach would be workable in the current vertical organi­zation is not clear. There are signs that the private sector is rediscovering the efficacy of participative management; the SCB concept deserves unbiased reconsideration.

Right-hand-of-the-CNO project management would combine the CNO's authority with the manager’s means to control the relevant rudders of the bu­reaucracy. He would act as the CNO's surrogate, and his authority would have to include the R&D “sub-act,” as well as the warship "act,” which would force the role to the CNO level.⁴ Since the role would be identified with the CNO's direct control needs, it would end after warship formulation—with a typical lifespan of two years. (Once formulation is completed, acquisition execution management could and should transfer to the professionally ca­pable domain of Naval Sea Systems Command.)

The second requisite is corporate recognition that OpNav is highly design-dependent for definitive warship formulation, cost reconciliation, and ad­vocacy. As indicated in Figure 1, these corporate functions are actually the purposes of the first three stages of design. OpNav's design dependency can­not be satisfied by formal paper flow through many vertical organizational layers. Direct and continu­ous coupling is essential.⁵

Emphasis on design for defining the commitment to change, and for enabling the CNO's control of the process, may be the most questionable aspect of such a proposal. Experience over the last 15 years shows that neither systems analyses nor “require­ments” documents—no matter how voluminous— can make OpNav independent in either respect.

The third requisite applies to the R&D “sub-act.” It must be integrated into the warship “act”—op­erationally and managerially, if not organization­ally.⁶ Getting around the contrary corporate mind­set would be greatly facilitated by recognition that ship acquisition comprises two markedly different levels of undertakings: warships and all other ship types. Warship acquisition is geared to the R&D pipeline at least through lead-ship construction, and the initial stages of warship design are operationally dependent upon it. Until these dependencies are subject to direct control by warship acquisition man­agement, the tail will continue to wag the dog.

Concentration on restoring a strictly internal Navy “act” as the corporate means for legitimate and indispensable exercise of the CNO's authority is essential. Since the mid-1960s. Navy practices have been little more than extensions of DoD's proce­dural directives for major system acquisitions. The effect has been to submerge Navy objectives in OSD criteria and to focus Navy actions on OSD "mile­stones”—thereby masking the CNO’s vital role. The CNO represents naval professionalism and this must become once again a distinct and concerted force in shaping U. S. sea power.

This paper has concentrated on basic principles.

to the exclusion of people motivations in high stakes conflict situations. Nevertheless, a valid synonym for corporate management of change at the level being considered would be “the highest-stakes power brokering in the land.” Power brokering extends beyond the Navy, involving national politics and huge defense industry competitions. To assume that such brokering can operate on the bases of human objectivity and paper management concepts is non­sense—it takes autocratic control and brute force management.

It appears, in retrospect, that the overall effect of Navy adaptation to the DoD management revolution of the '60s was to concede by omission the man­agement of change to DoD. Since then, the Secre­taries of Defense have gradually backed away from the activist role in this regard, but the Navy hasn’t readapted. The Administration is revising DoD di­rectives to restore the burden of initiative to the services to a degree that few knowledgeable profes­sionals ever expected to see. Not only is the need critical, but the Navy has much greater latitude to restore corporate control of its “act” than at any time in the past 20 years. Whether it does so, and how effectively it focuses on corporate macro-is­sues—to the exclusion of bureaucratic micro-is­sues—will have a profound effect on the future of U. S. sea power.

¹    The Strategic Systems Project (PM-1) is a partial analogy to the typical private sector approach. From its Polaris beginning, PM-1 has been an organizational cell with unique command and budgetary channels.

²     In the bureau days, the military and civilian heads of “420" were well known to all senior officers in OpNav and the bureaus. Involving them in facc-to-face discussions—up to the CNO—was the usual way of resolving tough design issues, and the SCB was a large part of their professional lives. Now. it is unlikely that any admiral outside the Naval Sea Systems Command knows anything about the equivalent group or who its key professionals are.

⁵ The Director, Office of Research, Development, Test, and Evaluation (OP-098) controls the critically relevant phases of R&D. titled Advanced Systems Development and Engineering Development.

⁴ This argument applies only to warships and advanced ship types of high/ new technology content. Other ship types, because of their much-reduced tie-in to the R&D pipeline, could be managed within NavSea.

⁴¹ If and when a direct OpNav design coupling is reestablished, as in the old SCB ”420" days, it will be found that conventional design criteria for the first three stages no longer adequately support OpNav's needs. Among other reasons, they do not provide the means for OpNav to come to grips with the warship affordability issue. The only effective answer to this dilemma lies in the use of warship design to elevate the Navy's net R&D investment objectives from functional subsystems and weapons to war­ships.

^hSome readers may be puzzled by the fact that Figure I indicates that ship acquisition is funded under RDT&EN through contract design, which implies that R&D is already integrated. Funding ship design under RDT&EN is a budgetary requirement of DoD, first imposed in 1967. Common funding is as far as it goes, however. The Navy still holds that ship acquisition is not development and has sustained the separation described herein.

Captain Eckhart is chief scientist at the autonetics marine sys­tems division of Rockwell International. He is a 1945 graduate of the U. S. Naval Academy and holds B. S. and M. S. degrees in electrical engineering. He served as head of the electrical/ electronics design branch. Bureau of Ships, and director of the ship concept design division at the Naval Ship Engineering Center.