The armed forces are being encouraged to be aware of the cost of their product and the value for money it represents. A management style that combines best commercial practice and traditional skills is needed, says Sir Benjamin Bathurst Bathurst.
In the past decade the armed forces, alongside other public organisations in Whitehall and beyond, have come under increasing pressure to demonstrate the value we give against the resources we consume. We have looked closely at the best business practices in the private sector and are now seeking a path which is both more businesslike in its approach and as effective in protecting the interests of the nation as it has been in the past.
This decade has been a time of unprecedented change. The Berlin Wall is down, the Warsaw Pact no longer stands glaring at NATO, and the Soviet Union has broken up. This is change on a truly macro scale and we who manage defence must respond positively to the challenge. Selling insurance in a crime wave is good business but selling defence in peacetime is too readily seen as a bear market.
But should we be cashing in our peace dividend with such vigour? In the past three years the UN has undertaken 11 missions compared with 13 in the previous 30 years. This is not peace, yet neither is it the long planned for 'all out' war in Europe and the North Atlantic. It is an unstable condition, feeding on local hatreds and aspira tions, which calls for a much broader concept of defence, not merely of the UK and her interests but of the whole of the international community.
Against this background, defence must be sold and managed as an effective business able to meet every new and unpredictable demand. It must be a flexible business capable of providing a service wherever and whenever the Government requires it - whether in the Tropics, the Arctic, at sea, on land and in the air. And it must give value for money to the customer, the taxpayer. However, times and our aspirations have changed and we cannot hope, as we once did, to keep the peace alone. We are still fully committed to NATO and we are increasingly aware of our European responsibilities within the wider context of United Nations activity and the military support it requires.
To this end the Ministry of Defence has to provide a military capability that is ready for any eventuality from minor crisis to all-out war. The essential element here is the preservation of both our operational effectiveness and the flexibility to respond to the unexpected.
The end of the Cold War and the disappearance of that very obvious threat has led to a reappraisal of the size of the armed forces. Nevertheless, our determination to maintain the highest possible standards of performance remains undaunted. For instance, within our 140-ship fleet, whose capability ranges from Trident SSBNs and aircraft carriers to minehunters, we now have a force of about 35 destroyers and frigates. At the time of the Falklands War it was nearer 60, but the quality has improved; we have removed older units and replaced them with newer, more efficient and effective ships and submarines. The frigate and destroyer force is now at its most modern for 40 years.
In addition to the rationalisation of our military capability we have far-reaching plans to match the support infrastructure with the 'front line' strength, to remove overcapacity and increase the efficiency with which we manage the business. Recognising the demands being made on the public purse we have embraced the Government's Financial Management Initiatives and the many other schemes designed to encourage us to think along more commercial lines, to think not merely in military terms but to be more aware of the cost of our product and the value for money it represents to the customer. We must never forget that, if at the moment of crisis our product proves to be inadequate, we will have failed to give value and the investment will have been wasted. To speak plainly, we will lose.
To achieve this move to a more commercial approach we have adopted a new management strategy which delegates authority for the management of resources to the lowest level at which it can be matched realistically to output; and we have embraced a management planning system and made significant steps in addressing the problem of measuring our output. These changes, together with the introduction of market testing and the creation of agencies, are making the business of defence more competitive and responsive to the customer-supplier relationship.
There are clear lessons to be learned but I am very conscious that our primary purpose is to be ready for military action and to sustain it for as long as necessary. This calls for a most careful balance between the efficient management of peacetime routine and the responsiveness to meet the next crisis. Crisis is our business and it requires a management style distilled from best commercial practice and the command skills that have served us so well in the past.