Defence collaboration: Raydon Gates interview | KPMG | AU
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Defence collaboration: An interview with Raydon Gates

Defence collaboration: Raydon Gates interview

Effective collaboration between organisations must start at the top. As part of our research into collaboration in the defence sector we talked with senior leaders to gain their views on the challenges and opportunities that closer cooperation will bring. In this interview Mike Kalms, Lead Partner, Defence Industry spoke with Raydon Gates, former Chief Executive, Lockheed Martin Australia & New Zealand.


Partner, Operations Advisory

KPMG Australia


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Raydon Gates, Former Chief Executive, Lockheed Martin

Raydon Gates, formerly of Lockheed Martin Australia & New Zealand

Given the recent policy announcements such as the First Principles Review (FPR) and Defence Industry Policy Statement (DIPS) where do you see the current state of play in the relationship between Defence and industry?

My feeling is these are statements of intent and I think it is a wonderful intent and I think it’s long overdue, but now we’re at the point of ‘what next?’. From my perspective, it’s going to mean greater collaboration between Defence, particularly between the Capability and Sustainment Group (CASG) and industry.

What could that collaboration look like?

In my mind it’s about early engagement. In terms of industry now being a ‘Fundamental Input to Capability’ (FIC), it’s about having a mature conversation between CASG and industry to discuss desired outcomes, as opposed to rock solid requirements.

As a FIC, the very first part is making sure we’re working together so that the customer, or more importantly, the war fighter has the very best option — the best capability, to protect the nation’s sovereignty.

In terms of the new arrangement after the FPR, we also need engagement with each of the services. How do we engage with the Navy, Army and Air Force? Who do we engage with? And more and more, I’m seeing from our perspective it is a joint engagement with other primes as well because most of the programs are bigger than any single service provider.

With your global experience, do you see the other nations looking to collaborate as deeply as Australia?

From the countries where we focus - no one has got this one worked out yet. The US domestic market is not at this level, neither is the UK. The UK is trying to drive efficiencies, given that the programmes are now so big, taking up so much of the budget that they become much more political than in the past.

In Australia the question becomes, how do we ensure that a programme this big, such as the submarine, has the right input for Australia? How does it benefit Australian industry but does so without detracting from the capability?’ So, I think that the whole concept that we see in FIC and the smart buyer initiative is world leading.

How do you compare senior level engagement and policy vs. specific tactics to support collaboration lower down in industry and Defence organisations?

In the end, we do have to get tactical. You can be fine at the strategic level but where we actually come together is not at the CEO or Chief of the Air Force level. Organisations have to come together further down. You can have wonderful strategic visions, but we need the tactical side to be sorted as well for them to be enacted. Otherwise the middle level are stuck between understanding what we’re trying to do and a piece of paper right in front them that says that probity has to come into this. So it is very much a tactical, process-driven requirement that sits there as well as the policy.

Results from our recent survey suggest there’s potentially a challenge at the middle levels in adopting more collaborative behaviours – how do you see this?

I recognise that, from both industry and within Defence, but that’s where these changes have to come from and this is what CASG is very conscious of too. There are a lot of people who have been in an environment for decades that has been untrusting of industry. A lot of that was driven by the fact that we didn’t know what they required because there was no engagement until an RFP or something came on the street. So, it is changing, again through success, that working together does actually give you a greater product.

What role do you see R&D and innovation playing in this wider collaborative effort?

Industry has a responsibility to step up and show leadership, thought leadership, and demonstrate how we can be a fundamental input to capability here in Australia. We must ensure there’s an environment that promotes and actually effects the growth of our small to medium enterprises, encourages them to continue in their niche and compete in the global supply chain.

Our new STELaR Lab initiative is exciting for us because it is a pure research and development. It’ll be staffed by PhDs and post-PhDs. It is situated in Melbourne because of the high standard of research done by the University of Melbourne and supported by organisations like the Defence Science Institute. It’s a big jump by Lockheed Martin, it’s our first off-shore R&D lab but we saw the importance of industry stepping up to its responsibility as being part of a FIC.

Often related to R&D and also the acquisition phase of major programmes is the issue of intellectual property (IP) – what are your views on the tension between IP and capability development?

I think the C4000 warfare destroyer is a classic example. What we need the government to do is not direct how we work together but what outcome they’re looking for. And then they have to make some sophisticated decisions. They said, we’re going to have the Lockheed Martin Aegis system but we want Raytheon to be the programme director and we said no. We have got 40 years’ experience in Aegis and we will work with Raytheon, and that’s exactly the outcome, we’re doing that right now. Just because you want to balance contractual arrangements, we are not going to give our IP to a competitor. We need to understand the IP issue and be mature in the way we approach the protection of it – creating an environment where the protection of IP can be tested as opposed to it becoming a show-stopper.

How do you see leadership skills helping to foster a culture of innovation?

Leadership means that if you’re a good leader. Innovation by its very nature means that there will be more failures than successes. So a strong leader has to be able to accept failure and you let your team understand that failure is not terminal. You’ve got to create an environment that allows people to try things and if they don’t work, come back, revisit, and try again till success. Now that’s easy to say. Sometimes in an environment when money’s involved it’s a tough game.

What do you think would be the next pressing priority when it comes to changing the culture of collaboration in the defence sector?

Two words: trust and examples. We need to shift the culture so that there is trust with industry being involved and we need to start looking for those early examples that demonstrate success. This is going to be hard but we do need some early and major successes that I can take back to my bosses in the United States. More importantly to my middle management, that leadership can drive cultural shift inside CASG, and the service chiefs can drive change back down their service lines. We need everyone saying ‘this is an example of exactly why we have industry as a FIC and this is an example of why we are looking to change the culture to the advantage of the war fighter.’

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