Imagine a 190 million dollars price tag! Guess what that would be for? Well..its for US Air Force fighter jet F-22 which was recently referred to by Congressman Barney Frank as a classic example of unnecessary military spending. Imagine the cost to the US govt, considering that 20 new F-22s are added to the Air Fleet every year and by 2011, US Air Force will have 187 in all. Time and again over the last decade, it has been argued that the inability to control aircraft costs is a key vulnerability in the long-term military strength of the United States. Now consider a price-tag of $33 million. What could that be for? Well.. it is for Joint Strike Fighter aircraft f-35 which has been designed to be the world's premier fighter aircraft for not just the air force but also the navy and the marines. Amazingly, the F-35’s are supposed to be four times more effective than legacy fighters in air-to-air combat, eight times more effective in air-to-ground battle combat, and three times more effective in reconnaissance and suppression of air defenses. The point that I want to emphasize is that the JSF F-35 has been able to offer exceptional value to all three branches of the military at such lower costs. The question is how and does this offer any lessons for optimizing Govt. spending in other areas. Let us first have a look at how the military traditionally designs, orders and purchases its aircraft. With aircraft stationed on aircraft carriers thousands of miles away from the nearest maintenance hangar, the Navy wants a fighter that is easy to maintain and yet durable as a Mack truck so that it can absorb the shock of carrier landings and constant exposure to salt air. To support troops in remote and hostile conditions the Marines need an aircraft that performs as a jet fighter and yet hovers like a helicopter and is equipped with various countermeasures such as flares and electronic jamming devices to evade low-altitude ground-to-air missiles. Tasked with maintaining global air superiority, the Air Force demands the fastest aircraft and superior tactical agility along with stealth technology to make it less visible to enemy radars. As the Navy, Marines, and Air Force differ widely in their conceptions of the ideal fighter plane, each branch designed and built its own aircraft independently with a long list of highly customized features focusing on design customization, weapons customization and also mission customizations. F-22 being top of the line for the Air Force, F-18 for the Navy and AV-8 for the marines. The Joint Strike Fighter (JSF) program challenged this industry practice and aimed to build one aircraft for all three divisions by identifying and combining only the most important of features required by all three defense branches while reducing or eliminating everything elseâ€"that is, all the features that had been taken for granted by each branch but provided little value, or those that had been overdesigned in the race to beat the competition. Interestingly, the Navy’s answer boiled down to only two: durability and maintainability, Air Force to agility and stealth and marines to STOVL and countermeasures. The JSF project research revealed that the two highest-cost components of the three branches’ aircraft were the same: avionics (software) and engines. The shared use and production of these components held the promise of enormous cost reductions. By focusing on these key decisive factors and dropping or reducing all other factors the JSF program was able to offer a superior fighter plane at a lower cost. In fall 2001, Lockheed Martin was awarded the massive $200 billion JSF contractâ€"the largest military contract in history. The first JSF F-35 is set to be delivered in 2010. To date, the Pentagon is confident that the program will be an unqualified success, not only because the strategic profile of the JSF F-35 achieves exceptional value at but also, equally important, because it has won the support of all three defense branches. Additionally it has offered an excellent way of optimizing government spending. So, what really are the lessons here. First and foremost, across the board budget cuts is not the only way of controlling government costs. Secondly, by challenging the traditional segmentation approach (that focuses in differences of needs among market niches) and pursuing desegmentation (by focusing on the commonalities between markets instead of differences) has the potential of creating huge savings. Thirdly, as the recent decades have seen an increased trend on customizations and personalizations in almost every area, there is a need to assess and re-evaluate this trend to cut out extra costs from the systems. Just as the JSF F-35 project has been able to optimize military spending on aircraft, a similar approach should be applied to optimize govt. spending in many other areas. It is imperative, especially given the state of the economy for the govt. to initiate and support similar projects in other areas too. Brendan Murphy is an Associate at Strategize Blue ( www.strategizeblue.com ). He works under Dr. Zunaira Munir, the internationally acclaimed expert and keynote speaker on Blue Ocean Strategy
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