Military pinstripes: all hoopla aside, the Armed Forces are getting serious about learning from business

Chief Executive, The, June, 2004 by Rick Newman

When Maj. Gen. Ross Thompson arrived at the Army's Tank-Auto-motive and Armaments Command in 2001, he didn't like what he found. The organization, responsible for procuring and maintaining most of the equipment that soldiers use on a daily basis, fit the stereotype of a bloated military bureaucracy, like something out of M*A*S*H or Catch-22. "They weren't pushing the envelope," says Thompson. "I'd ask, 'Why is that there?' and I'd get the answer, 'We don't know. It's been there awhile.'"

Instead of issuing orders and chewing out his subordinates, however, Thompson consulted business reviews and hired management experts from the corporate world. A young reservist on temporary duty at a depot in Red River, Ark., that overhauls vehicles happened to work as an industrial engineer in his civilian job; he recommended to Thompson some lean manufacturing techniques that might reduce waste and make the depot more efficient. Thompson was all for it. He hired lean-manufacturing consultants such as VSE and Simpler Consulting, and he encouraged his subordinates to enroll in Six Sigma management training, setting an example by undergoing the training himself. When he completes the "black belt" course later this year, Thompson will be the most senior military official ever to have eamed Six Sigma stripes.

For years, the military has paid lip service to corporate management theories, outsourcing small amounts of work to the private sector, trying to focus units on their "core competencies," sending officers to seminars at the stock exchanges or other money-making enterprises. But the prevailing wisdom has insisted it was business that needed to take a page from the military, not the other way around. Dozens of military manuals, promising the secrets to successful operation, have been reprinted for general consumption. Such 2004 titles as Leadership the Army Way and Operation Excellence: Succeeding in Business and Life the U.S. Military Way are just a few of the dozens of management theory books lining the business shelves of most bookstores (see box, facing page).

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But the intellectual tide seems to be reversing: The U.S. military has begun streamlining its operations the corporate way. A few major units are implementing reforms that are breaking down hidebound bureaucracies for the first time in decades. In the Second Gulf War, the Air Force employed a "reachback" concept that allowed on-site commanders to tap into intelligence and logistics experts back in the U.S.--a kind of reverse offshoring that reduced the number of troops in the war zone requiring housing, food and protection. The Navy is experimenting with programs that would centralize certain specialties, such as weather and oceanography, at the fleet level, instead of having experts in those fields on every ship. And the Army says it is saving hundreds of millions of dollars by adopting modern industrial techniques. "A lot of people in the commercial sector are surprised we're into this," says Gen. Paul Kern, commander of Army Materiel Command, or AMC, which oversees the tank and armaments group, among others. "People really are looking for more efficient ways to get the work done."

Despite these similarities to the corporate world, the military remains a unique institution driven by motives other than profit, and therefore faces its own challenges. For one thing, money saved is sometimes simply stripped out of a unit's budget and allocated to another aspect of military spending (with no shareholders to weigh in). Leadership that turns over every two to three years can make it difficult to institutionalize corporate practices. And in combat units, where lives are on the line, redundancy is often preferable to efficiency. "It's hard to walk into a tactical organization in the Army and say, 'Let's talk about Six Sigma,'" says Kern, "especially when the whole Army is fighting."

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Parts of the military, however, have found that today's rigorous national security demands leave them no choice but to do more with less. In the Army, for instance, more soldiers are currently deployed overseas--in Iraq, Afghanistan, the Balkans and elsewhere--than at any time since the cold war. Operational expenses are so high that the Army was forced to cancel procurement of the Comanche, a stealth helicopter that would have been far more immune to ground fire than the Apaches that got shot down last year in Iraq. And the equipment that all those deployed troops are using, much of it more than a decade old, is wearing out at record rates.

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That means it is imperative for Army Materiel Command--whose $26 billion budget makes it the military equivalent of a Fortune 100 company--to turn around its equipment overhauls more quickly and return some money to the Army's coffers. To accomplish that, AMC has instituted dozens of reforms at all levels of the organization. Employees at a depot in Corpus Christi, Tex., where the Army overhauls helicopters, work alongside technicians from engine-maker General Electric; about three years ago they started going through GE's Six Sigma quality training, one of the nation's benchmark programs. AMC says its turnaround time for recapitalizing a Black Hawk helicopter has dropped from a full year to 150 days. At Red River, workers have doubled productivity, refurbishing eight truck engines per day, instead of four. And Kern, a devotee of Lean Thinking by James Womack and Daniel Jones, says cutting out waste has allowed him to reduce his headquarters staff from about 1,200 to 900--with better results. When Kern sends out "taskers," or questions for the staff, responses now almost always arrive in less than a week, compared with 60 days or longer in the past.