What Defense Acquisition Can Learn from Santa
Hint: Adam’s Smith’s invisible hand is the real magic of Christmas
Imagine the PPBE process and DMAG meetings Santa chairs as he seeks to manage the Elf-industrial base and its annual production and delivery. Imagine the billion or so requirements that Santa needs to generate, validate, and deliver on. How do the Elf Project Managers oversee it all? Santa is managing the ultimate monopsony and delivering outcomes on time and on budget year in and year out. He’s never even had to resort to a continuing resolution. What lessons could the military-industrial complex learn for U.S. Defense Acquisition?
Spoilers below: don’t read further if you are below the age of 10
Of course, that is the lesson. Christmas present fulfillment would never work if it were a centralized system where Santa and the Elf services were responsible for managing the requirements and production. It would not be possible to manage the toy-industrial capacity and meet the diverse and evolving requirements of so many individual children.
The market is what works. Decentralized buying authorities devolved to parents (warfighters) enable them to be hyper-responsive to their circumstances (i.e. their children). That enables a broad market of toy makers to compete annually with new concepts, new products, different pricing strategies, etc. There are winners and losers. The market guarantees purchases every year, and this predictability and visibility into demand is what enables toy suppliers to forward invest their own capital into winning.
There is no cost, schedule, and performance safe harbor for a parent to find shelter from kids who didn’t like their presents. Instead, the feedback is harsh and swift and essential to a cycle of learning from experience. Bad requests from the kids result in toys that don’t deliver value beyond a day, but they do buy the kids knowledge of what is needed to make better requests in the future. Bad fulfillment from the parents leads to eggnog-fueled sulking and reflection on how to do better. Content over process is on full display.
Santa doesn’t try to manage the market because he knows that’s an oxymoron. Instead, he lets the market work for him. Similarly, the DoD should unleash market forces so that the warfighter can be as satisfied as a kid on Christmas day.