ADROITA talks to ADM about partnering for success

Written by Adroita Editor Fri May 28

In the June 2021 edition of Australian Defence Magazine, our CEO, Sarah Pavillard, explains the key to delivering a truly capable ADF and securing Australia’s future is for Australian manufacturing businesses and Defence to join forces to unlock latent Sovereign Industrial Capability.

Take a moment to consider the challenges facing Australian businesses right now, particularly in the technology and manufacturing sectors. For some, the challenges are existential. Many have hit a major slump. Their key market, oil and gas, is not just contracting, it’s tanking. They believed that key customers would never shut down, but in 2020 – the year of COVID-19 and devastating bushfires and floods – many of them did. Now, more than ever, Australian businesses need to secure supply chains and become more resilient. Thankfully, sovereignty and resilience are now well and truly on the national agenda – not only because of policy tweaks responding to the triple-shock fire, flood, COVID crises, but also because it’s in Australia’s strategic interests to do so.

A force for good

The Australian government detailed a new approach in its 2020 Defence Strategic Update and 2020 Force Structure Plan, evolving the strategy set in the 2016 Defence White Paper. This update identified key changes in Australia’s strategic circumstances, most notably that:

  • The most important strategic realignment since WWII is happening in the Indo-Pacific (Australia’s neighbourhood) right now.
  • The potential for high intensity conflict, whilst still unlikely, is increasing.
  • We no longer have a 10-year strategic warning time for that potential conflict, therefore, Defence planning has to change.

This new approach recognises the need to grow ‘the ADF’s self-reliance for delivering deterrent effects’ and sets as a priority ‘more durable supply chain arrangements and strengthened sovereign industrial capabilities to enhance the ADF’s self-reliance’. Defence is pivoting to respond to this rapidly changing and increasingly complex international strategic environment, with government committing $270 billion over the next 10 years to fund investment in support of the future force’s capability required to meet these challenges. The government is driving Defence to deliver on its commitments to industry, and is now co-funding up to 80 per cent of key grants for capability or capital improvement by Australian businesses, which will improve their ability to deliver within the Defence industry sector and meet Sovereign Industrial Capability Priorities.

What may be holding things back?

The issues that we at ADROITA hear each and every day about the challenges facing Australian businesses and emerging Defence industry, and the Department of Defence as well, can be distilled into three issues:

  • The cost (time and money) is too high. Most Australian businesses end up at a stand-still when first considering Defence because they know it is going to take time and money, and they lack confidence about how to make it happen in a way that will make the investment worthwhile.
  • Partnering is extremely complex. Any business facing the challenge of accessing Defence for the first time, or the challenge of growing one or two existing capabilities into a bigger program of delivery to Defence, faces very high levels of complexity.
  • Both sides are a closed shop. From the outside looking in, Defence truly is a closed shop. The networks are tight, and have formed over decades. Defence has a complex ecosystem of different procurement divisions, global prime contractors, a research and development agenda, and long-term industry partnerships, so understanding who will drive the demand for the business’s products and services is challenging at best.

How do we move it out of the ‘too-hard basket’ for Defence and business?

Defence has established a clear agenda for enabling the ADF to achieve its future outcomes, and mapping a business’s capability and capacity across these high level requirements is a critical first step. It requires imagination and vision – both on behalf of the business, but also Defence.

  • Capability and capacity. Identifying business’s capability and capacity, in consideration of what Defence needs, is key. Defence doesn’t just want to buy an existing product – it wants what lies beneath the ability to create that product or deliver that service.
  • Defence needs. Most businesses taking the journey towards being a Defence supplier need to pivot their thinking. Defence is a needs-driven organisation, and the standards required to deliver into Defence are amongst the highest in industry – for good reason.
  • Sovereign Industrial Capability Priorities (SICPs). Defence is willing to pay a premium for Australian goods and services – in fact, it is strategically imperative, as outlined in the Defence Industrial Capability Plan.
  • R&D Agenda. The R&D agenda is the final piece of the puzzle, and in some instances it’s the hardest piece to identify for a business. However, unlocking capability to participate in the Defence R&D space, offers businesses the opportunity to offset the cost of investing in cutting-edge research to solve future Defence problems – and at the same time evolve their own business offering.

Partnering to unlock potential

It’s clear that fast-tracking success across Defence in the rapidly changing strategic environment can only occur through partnerships – but collaboration is just the start. Partnership implies so much more than ‘working together to achieve an outcome’ – it requires mutual respect and recognition of skills and capability, implicit trust, a relationship of necessary equals, and a focus on solutions. Not only do businesses open doors to different revenue streams within the Defence sector (contracts vs grants), but they open the door to future proofing their entire business, whilst supporting Defence to future proof Australia’s sovereign interests. Hence, it’s a win-win for all.