Defence Renewal Annual Report 2014-2015 - Framework for Continuous Improvement

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Executive Summary

As we finish our second year in implementation, the words of the Defence Renewal Charter remain relevant: Defence Renewal is the Defence Team’s ambitious effort to comprehensively transform our major business processes and create a lean and efficient organization that can generate savings to be reinvested in military capabilities and readiness. Through Defence Renewal, we will deliver the modern, first-class military envisioned in the Government’s Canada First Defence Strategy, sustain the operational excellence for which we are known, and continue to earn the support and trust of Canadians.

In last year’s Annual Report, we spoke of building the foundation for Defence Renewal. This year, we’ve progressed and are realising a Framework for Continuous Improvement: a framework that relies upon an integrated structure of major business processes -- a combination of people, policies, and tools -- in order to enable successful Force Readiness and Capability Development.

With an additional $84 million in savings realized in FY 2014/15, the total savings through Defence Renewal is now $158 million. These savings have been reinvested back into Force Readiness in such areas as operational spares, and support to training infrastructure. We have made significant progress in important areas such as Inventory Management, Warehousing and Distribution, IT Support Management, Infrastructure Management Centralization and Rationalization, Military Career Management, and Renewing the Cadet and Junior Canadian Rangers Programmes. We have also experienced challenges and learned a great deal more through detailed study and analysis. In November 2014, a 9% or $100 million refinement to the Defence Renewal Programme reinvestment profile was presented to the Investment Resource Management Committee (IRMC). The adjusted and more accurate profile indicates that by moving the overall programme by approximately 18 months, we will achieve an estimated recurring reinvestment opportunity of $700 - $1050 million by FY 2019/20.

Concurrently, we have made progress on improving our culture and organizational practices to build the conditions for lasting change. The eight Organizational Practice initiatives represent improving behaviour which was viewed as important to the Defence Team but not adequately visible. There has been significant progress in enhancing Strategic Clarity and initial first steps towards improving Disciplined Business Execution.

Defence Renewal depends upon a robust governance structure led by the Defence Strategic Executive Committee and IRMC. To enable engagement, transparency and oversight from an enterprise perspective, subcommittees — led by senior leaders and including all stakeholders — meet regularly throughout the year. For the most part, the governance structure is effective although we have recognized some areas in which it could be strengthened to achieve more focused oversight. As a result, the DM and CDS tasked the VCDS and Assoc DM to chair a newly established Defence Renewal Oversight Committee to ensure consistent application, measurement, analytics, and reporting of Defence Renewal progress, savings, risks, reinvestments and challenges. It will also examine and facilitate stronger horizontal linkages between initiatives and across different groups. To assist in the governance, the External Advisory Committee convened its first meeting in April; the inaugural meeting of four senior executives from relevant Canadian industries has initiated a spirited exchange of best practices and lessons learned in large scale business process improvement.

The Defence Renewal Team completed an initial scan of similar defence department transformation, renewal, and reform initiatives amongst select allies. Given the significant differences in underlying factors in each country, two key insights were offered: it may be better to seek nuggets of wisdom than measure through comparison; and understanding the implementation process is as important as knowing the content of reforms. DRT will continue with this analysis and benchmarking.

In order to assist Defence leaders to understand and take decisions on the broader impact of change the DRT led an extensive effort to catalogue and examine the major change initiatives facing the Defence Team. Synchronizing initiatives will assist the DM and CDS in prioritizing, deconflicting and sequencing major outcomes and activities, and will reduce risks related to unintended downstream consequences. We look forward to the next steps in implementing the processes and governance related to this activity.

Communications is a critical component of any change initiative. In many ways, we have not leaned forward in communicating our story of Renewal and even broader transformation and reform. As mentioned by one of the civilian business leaders at the External Advisory Committee, the fact that DND and CAF are conducting an internally driven organisation-wide continuous improvement programme is a significant good news story. Through the next phase of renewal, we will invest more time and effort in maintaining a two-way dialogue with members of the Defence Team, reinforce leadership driven engagement, and utilize contemporary tools to increase awareness and build confidence.

Looking forward, we can take pride in our achievements in Defence Renewal: it is a continuation of a culture that has proactively embraced continuous improvement, adaptation, and innovation which is a hallmark of the Canadian military throughout its storied history. Given the continued engagement by Defence leaders at all levels, and the hard work of front-line sailors, soldiers, aviators and Public Servants across Canada, we have built an impressive and robust framework to realize our vision of a lean and efficient organization. We will continue to find ways to conduct the defence business smarter; free up resources that can be reinvested in operational capabilities and readiness; and, deliver the best military capabilities at the best value for Canadians.

J.G. Milne, MSM, CD
Defence Renewal Lead