don’t get that kind of change in culture without a crisis of one form or another that forces fundamental relooks at how you organize, how you do things. Tat crisis for a military can be the beginning of conflict, and now all of your theory about how things should work goes out the window. You’re facing a true adver- sary and you’ve got to rethink how you do things. In some ways, I would argue, the Army has been forced to get a little bit flatter because we’ve been fighting a very flat, nonhierarchical adversary, one who certainly has a very different orga- nizational structure. In some cases we’ve had to match that. We’ve learned lots of lessons on how to do the “light fight” in the last decade.
Coming out of a war, we have a differ- ent set of challenges—budgetary ones that will once again force a look at how we’re structured and how efficient the institution is, and how you function and maintain capability with far less budget and yet not much relief in terms of what’s expected of the Army from a capability standpoint. So those kinds of [things] usually drive the search for efficiencies or create the imperative for business model innovation.
Tere’s another element at play that relates to the topic of enabling technolo- gies. Te better you can measure the performance of an organization and the better you can analyze and understand the process of how your organization works, the more efficiently you can run it. It’s the equivalent of medieval architec- ture versus Renaissance architecture—as mathematics and the understanding of physics got better, you could reduce the tolerances and you didn’t have to build in as much margin because you could better analyze the structure. I think corporate America has been going through the same phenomenon. Operations research
theory and tools have improved and we can better understand how it [corporate America] functions. So, therefore, you can more efficiently organize today than you could 20, 50, 100 years ago.
Tere is a limit, though, to how we design an organization that lives at the edges of tolerances and extremes of efficiency. Part of the inherent tension in any mili- tary organization is that you actually want to build in larger margins of error than in the commercial world because you face more extreme potential results in the case of failure or just bad luck. Te consequences of burning through that margin are far more significant than in the commercial world—people die, battles are lost, countries fall.
So I would argue [that] it’s a falsehood to claim that you’d ever want a mili- tary organization to be as efficient as a commercial organization. Te con- sequences of failure are so large that a certain amount of inefficiency should be accepted to create redundancy and
“strategic reserves.” Tis is where the real subtleties come into play: If we want parts of our military organization to have inherent reserves, margin for error, inher- ent inefficiency relative to the optimum, then, in a tighter budget environment you would want—perhaps I should say need—all the noncritical functions to be extremely efficient to afford the cushion you want on the pointier end of the spear.
Army AL&T: People like Elon Musk, of Tesla and SpaceX, and others talk about how failure is not only an option but a must because if things aren’t failing, you are not innovating enough. Government is a different story. No one wants to fail the taxpayer.
Chao: Well, that goes back again to a cultural issue. Tat wasn’t always the case,
and the tolerance for failure is something that we have lost, I would argue, over the course of the 1980s, 1990s, 2000s.
I think the willingness to tolerate risk has returned somewhat. Te conflicts of the 2000s and 2010s created an imperative to take some level of increased risk. Tere’s a good historical case study to prove that as an institution, we need to accept a higher level of risk if we want innovation. For example, look at the Poseidon mis- sile program and you will see old video footage of the test missiles coming up out of the ocean, spinning out of control and exploding. We tolerated those failures then. But, to your point, today, probably within 24 hours you’d have Congress all over you because those same videos would be on CNN a thousand times a day, and that creates that pressure not to have those types of mistakes. And yet it is exactly those kinds of mistakes that drive understanding and knowledge and innovation, frankly. And so the fear of failure that has crept into the system, into the culture, over the last 30 years— I believe—is a really dangerous thing. And this institutional fear of failure can only be beaten back, I would argue, by leadership and the willingness to protect those who take risks and fail, and cele- brate [those risks] as opposed to knocking them [the people] down.
We certainly have institutions that have that fearlessness about failure, in places like DARPA [the Defense Advanced Research Projects Agency] or the NASA of the Apollo era, historically. So, that tells me that it’s not genetically impos- sible for the Pentagon, that it’s something cultural that’s crept in.
In a combat situation, the unwilling-
ness to accept failure and a high level of caution can often cause strategic failure, failure on a grand scale. In peacetime
ASC.ARMY.MIL 115
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