Using business strategy thinking in Defence planning

Building an understanding of how big corporations make decisions can help to predict how those businesses will cope in changed circumstances. Can similar approaches help to plan the future of Australia’s defence forces?

Gaining an understanding of how complex and inter-related systems work can help companies to gain an edge in identifying opportunities and guarding against challenges.

As an expert in Strategy and Entrepreneurship at UNSW Business School, Professor Shayne Gary has more than two decades experience of applying the techniques of systems modelling to the challenges of the complex, dynamic business world.

“All the decisions we make are based on a model,” Professor Gary said.Most of the time those models are mental models.”

“We don’t even think of those decisions as being made using a model because it’s just what’s happening in the background in our cognition.”

Professor Gary said understanding what drives those decisions — particularly within an organisation or company — can be used to predict what will happen when some factors change.

“I help elicit the mental models from the people who have the real depth of knowledge and experience in the domain, whatever it is,” he said.

“That process is oftentimes a somewhat lengthy one because people disagree even within the same organisation about what causal relationships are operating in their domain.”

Once there’s an agreed understanding about interdependent system of causal relationships that drive changes over time in the system, that knowledge can be transferred to a computer simulation.

There, assumptions and different strategies and decisions can be tested.

“We do some scenarios and corporate wargame simulations,” he said.

“Let’s test different scenarios and see if the strategies we have in mind are actually going to be robust, are going to be feasible, are going to deliver good outcomes.”

“Or, whether we find weak points in those strategies — and need to think about how to develop better strategies.”

Professor Gary said an example of how the approach can be applied is in the world of corporate mergers and acquisitions.

“Basically, the company — the acquirer — has already spent whatever money they’re going to spend to acquire the target. And now the question is, are they going to extract the value that they thought they were going to extract?”

“Now, what are the different levers you have at your disposal to execute the strategy?”

Professor Gary is interested to see if the thinking that’s helped companies to understand strategic opportunities and challenges can be applied to the future of Australia’s defence forces.

He’s been speaking to colleagues at UNSW Defence Research Institute about ways they can collaborate.

“If you fast forward twenty or thirty years, what sorts of challenges will the Australian defence forces have to deal with?” he said.

“If you think about five to ten new capabilities, or enhancements to existing capabilities — for building them over the next ten to fifteen years to deal with what happens in twenty to twenty-five years, what are those going to be, and why?”

Longer investment and development timeframes may mean some different approaches to those challenges, Professor Gary said.

But it’s not a big distance from the world of business.

“The time horizons might be different,” he said. “But having said that, it all depends on the context.”

“In some cases in commercial organisations, like big electricity generation firms, their time horizons can be forty years.”