Rethinking Defense Program Management for a New Era
Global demand for advanced defense systems is surging. Geopolitical instability, rising military budgets, and depleted stockpiles are pushing the industry to improve speed and agility. In 2024, US foreign military sales topped $115 billion—more than triple the 2021 level—as nations rush to modernize their capabilities.
But program performance hasn’t kept pace. From 2020 to 2023, major US defense acquisition programs ran nearly $46 billion over budget. Average delivery timelines stretched from 8 years to 11. Top contractors wrote down $17 billion in losses. A recent executive order mandates Department of Defense scrutiny of major programs that fall 15% or more behind schedule or over budget.
The current system needs an overhaul—and the payoff for improving program execution is significant. For defense contractors, the upside includes margin gains of 200 basis points or more, greater competitiveness in new program bids, and stronger customer satisfaction. For defense departments, it means billions of dollars freed to invest in additional systems, new capabilities, or urgent mission needs.
Widespread adoption of a smarter approach could accelerate time-to-mission by years—and deliver real, lasting value to defense companies and their customers. Those that move first will free up capacity and gain advantage in a fiercely competitive market.
The high cost of business as usual
Traditional improvement efforts, such as process optimization, typically deliver short-lived incremental gains. That’s because they tinker at the edges rather than address the root causes of underperformance. They tend to optimize existing inefficient processes and rarely remove unnecessary work.
The biggest constraints hide in plain sight—at the seams between functions, suppliers, and programs. Companies often fail to address accountability for constraints in these overlapping areas, making them hard to diagnose and even harder to fix. Changes initiated by the engineering organization, for example, may overlook the implications for manufacturing or the supply base.
Leading companies that confront those constraints achieve step-change improvements of 20% to 50% in cost and schedule performance. These firms embrace a zero-base assessment of what work is done and how it gets done. And they harness deep analytics to help the organization commit to bold change.
How to move the needle
The most efficient defense companies move beyond siloed fixes and embrace a smarter, system-wide approach. These high performers follow four principles:
1. Focus on the program, not the function.
Leaders take a cross-functional, cross-site view to identify constraints at the seams. This broader lens reveals the root causes of cost overruns and delays that are often buried between P&L lines or organizational charts.
2. Rethink from zero.
Winning teams use a clean-sheet approach to decide what work is required—and what is not. They eliminate nonessential steps and redundant processes, focusing only on activities that produce outcomes.
3. Lead with data and analytics.
Change is difficult. Hard data and deep analytics are vital to helping the leadership team overcome entrenched resistance to change. Data and analytics pinpoint root causes and make the case for bold change—building alignment from the C-suite to the shop floor.
4. Engage with the front line.
Sustainable improvement happens when the people closest to the front line are part of the solution. Managers that work shoulder to shoulder with frontline teams build trust, generate early wins, and keep momentum strong.
Companies adopting these principles are already delivering results, despite constraints such as talent shortages or suppliers that may seem outside of their control. One major shipbuilder facing talent shortages and financial losses saw frontline productivity drop by 50%. By applying a zero-base assessment and program-led approach, the company more than doubled productivity in key areas within three months.
A leading spacecraft manufacturer successfully applied the same principles to address a quality issue at a sole source supplier that had prompted a 14-month launch delay and risked more than $100 million in lost revenue. The company’s bold rethink of the solution compressed the subsystem delivery delay by 50% and avoided the revenue loss.
A moment to lead
The defense industry is entering a new era of sharply increased demand, putting capacity and timelines under strain. Traditional program management is ill adapted for this new environment.
Companies that overhaul program execution today—rebuilding for speed—will be best positioned to win. These leaders will redefine what defense performance looks like for years to come.
This article is a sponsored post from Bain & Company
