Aust + NZ Defence Directory 2021-22

AUSTRALIAN + NEW ZEALAND DEFENCE DIRECTORY 2021/22 INDUSTRY GROUPS, ASSOCIATIONS & GOVERNMENT DEPARTMENTS SOVEREIGN INDUSTRY CAPABILITY EDI ORIAL SOVE IGN I UST Y

HARD CHOICES BUT CLEAR BENEFITS I n what can only be described as a period of ‘business unusual’, the Australian defence sector has fared well and, in some respects, has been an exemplar for others to follow. Issues of resilience and capacity, which Defence has been grappling with for some time, now have a renewed urgency and national focus. For me, the defence sector’s response to the COVID-19 pandemic has reinforced the importance of a key element of our sovereign industrial capability, that is, the concept of ‘line of sight’. With it, indi- viduals, teams, and organisations can confidently overcome bumps along the way because they are aligned to a clear set of priorities and work towards a known – and shared – objective. Without line of sight, trust can be lost, approaches can be fragmented and the bumps along the way can seem insurmountable. Defence has made renewed commitments to some of the key concepts in the landmark 2016 White Paper and policy suite. Significant announcements about future investment forecasts have been matched by strong support for innovation, sovereign industrial capability and industrially-focused re- search. In response to the COVID-19 pandemic, Defence’s leaders have provided brilliant leadership and flexibility in engaging openly and transparently with industry, including with industrial innovation partners like DMTC, which is gratefully acknowledged. With regard to our sovereign capability, Defence has done some of the heavy lifting by identifying and issuing plans for capabilities that Australia needs to build within its industrial base to ensure that mod- ern Defence systems and equipment are right for the job. From a policy standpoint Defence has rein-

Mark Hodge Chief Executive Officer DMTC Ltd

forced the notion of shared responsibility. Defence expects industry to actively engage in due diligence to determine in-country capacity and develop value-for-money solutions to maximise opportunities for Australian industry participation. Organisations like DMTC play a key role in this, working with primes and small businesses alike. But that’s by no means a declaration of success. Sovereign capability means different things in different contexts. Australia may never have either the scale of demand nor the wherewithal to develop and build the likes of an Aegis combat system from scratch. But should we have an in-country capability to understand it, to be able to upgrade or add to it, and to sustain it ourselves? At its heart, sovereign industrial capability means asking, “do we have the skills and knowledge and IP available to us to do what we need to do for the benefit of the country?” Worthy ambitions to see this objective as meaning that we own everything or have the capability to do everything are not affordable or realistic. We risk running into difficulty with either overly optimistic or overly proprietary views. The conversation can be too easily hijacked by what I’d call the airport billboard mentality. You can understand why any one individual industry player might opportunistically say “To be sovereign you need my product” but if sovereign industrial capability is based on products alone, then we will inevitably lose an important part of the picture. We need to shift the conversation to be about underpinning technology and capability, not solitary products. The capability of individual industrial and research sector players in Australia has rarely been in question. It’s the joining and the linking and their ability to partner and form a cohesive ecosystem that requires attention. The sovereign capability question is not just about individual businesses providing individual products, it’s about the ability to respond when needed. And that’s got to be about networks, about structures, and about collaboration. And, of course, an ability to rapidly apply our minds, capabili- ties, and resources to a problem as it emerges rather than being constrained by the known limitations of any one proprietary offering. DMTC’s reputation and credibility in the defence and industrial sectors has been hard-earned and demands constant attention. In many respects we stand on the shoulders of our capable industrial and research partners, who continue to work with us to embrace the challenge of capability through collaboration. A key ingredient is the appetite for innovation. The business of innovation leadership is fluid, diverse, and a specialist endeavour. DMTC must carefully balance the credibility and reputation that its proven operating model enjoys with being open to new approaches. We must ‘be innovative about how we innovate’ but do so in a structured and strategic way. DMTC has shown that harmonising the cultures and success drivers of the research sector, the industrial sector and government practitioners is not only possible but is an investment that delivers real dividends. Successfully integrating the different motivations, drivers and approaches creates an environment for purpose-driven collaboration. This is where the magic happens. Human capital is another significant consideration, particularly, but not only, for the R&D sector. Sovereign capability is akin to a national insurance policy, providing Defence with peace of mind, knowing that enough smart people and enough knowledge exist in-country to ensure Australia can pivot to meet emerging challenges. In recent times, DMTC has extended its engagement across government agencies, welcomed new partners to its activities and added expertise and depth to the management team. All of these additions affirm our line of sight into the future and give us a great deal of confidence for continued success.

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