DEPUTY SECRETARY OF DEFENSE KATHLEEN HICKS: Good morning, everyone. And thank you for that very kind introduction from General Schwartz.

To Mike Donley, the Director of Administration and Management, and your team, thank you for the invitation to participate in this celebratory event, and for everything that you and your team do. 

This launch is really a testament to your vision and your tireless work to bring it to life. 

Congratulations on ushering us into this new phase and achieving an important piece of Secretary Austin's management and defense-reform agenda. I am positive that your impact will be felt for generations in the department.

So it's my pleasure today to discuss the importance of performance improvement, the transformations that we've made in the past two years, and what the Defense Management Institute means for the department.

Since stepping into the role of Deputy Secretary of Defense, defense reform has been a key enabler to my efforts to support Secretary Austin's three priorities of defending the nation, taking care of our people and succeeding through teamwork.

As the 2022 National Defense Strategy makes clear, there is an urgency to our efforts. The global challenges we have require us to innovate and modernize the U.S. military and the supporting elements of the Department of Defense and to do so quickly. Performance improvement is a critical piece of the puzzle.

Our people are our strategic advantage, so we must ensure that all of our people are equipped to fight and win any contest they are called to today and to anticipate and plan far ahead of us.

In the first year of the Biden administration, Secretary Austin and I moved quickly to establish processes and governance structures throughout the defense enterprise to make us more capable of doing both.

We also began phasing our systems that aren't working. We moved to optimize the practices and systems that are working. Our reassessment of processes, systems and practices was broadly scoped. We looked across the entirety of the department and actively thought about the levers that we could pull to spark innovation and new ideas and identify areas of improvement.

It's a task we continue to perform and take seriously. And let me say, it is not an easy one.

(Laughter.)

As you all know, DOD is the world's largest organization, public or private. DOD accounts for more than 3 million military and civilian personnel, from payroll vendors to arsenal and acquisition commands to hospitals and grocery stores, all of these enterprises have to be effectively incented and held accountable. And doing so is a major enterprise in and of itself.

Optimizing how we manage this gigantic enterprise is essential not only for safeguarding taxpayer dollars -- our business systems are tied to our warfighting efforts. Meeting our management goals ensures the department achieves its military goals.

So that is why we cannot ignore or easily escape our immense management challenges. It is incumbent on us, with the life or death mission our service members commit to and entrust us to oversee, to reform ourselves to help them.

As this audience well knows, the management challenges we face at DOD are multifaceted and generational. How will we attract the talent we need to maintain in a competitive workplace? How do we gather quality data so leaders can make sound, well informed decisions? What systems can get information to the right decision-makers in a timely and effective manner?

There are centuries of experience in this room on these questions, but ladies and gentlemen, time is up. We don't have centuries or even a decade to get the right answers. So as I've said, this has been a top priority for Secretary Austin and for me.

What I'd like to do today is outline some of our focus areas for performance improvement, including our efforts to strengthen strategic management, strategic governance, assigning responsibilities for defense reform, transforming our data enterprise, and establishing this institution so our collective efforts can endure.

There are several other major areas that I will not touch on today, especially on attracting and retaining the talent we need for the future. These are at least as important as the items I'll discuss but you'll just have to invite me back to talk about them.

So first, we have to establish clear governance and ensure our decision-making processes are fair and effective and that we're looking at the most important issues in a timely way. Secretary Austin has really prioritized promoting healthy civil-military relations. I've spent a considerable amount of my career at DOD, and from my perspective, the professionalism of our internal department interactions across civilian and military lines are the best I have seen.

The Secretary has routine and decision-oriented mechanisms for engaging his senior team, from the Chairman of the Joint Chiefs of Staff to combatant commanders to secretaries of the military departments and service chiefs.

Following department best practice, I use the Deputy's Management Action Group to advance the Secretary's commitment to innovation and modernization and to ensure our ways and means match our strategy's stated ends.

I also established the Deputy's Workforce Council to elevate our attention to one of the Secretary's highest priorities, taking care of our people. Through the DWC, we are bringing the same disciplined approach to talent management that we bring to other areas, such as weapons systems and budget development.

For each DMAG or DWC, we are deliberate about bringing the right voices to the table, civilian and uniformed personnel alike. Our principal staff assistants are in turn responsible for ensuring they drive key Secretary of Defense priorities through subordinate governance mechanisms.

Second, we also made changes to our organizational structures to implement and monitor reforms. Congress' disillusion of the Chief Management Officer, which took place just before I came back to the Pentagon in 2021, meant that we had to look afresh at how we're organized for business operations.

I'll be honest, it was tough to do that immediately but I believe the department is in the stronger place today for it. With the Secretary's blessing and with a focus on stability and effectiveness, I made a series of organizational decisions, including reestablishing the Director of Administration and Management Secretary Donley. I also strengthened the role and authorities of the Performance Management Officer -- turns out also Secretary Donley, who is our PIO.

(Laughter.)

This is to reflect the high priority that the Secretary and I place on this topic.

Recently, I approved a new Defense Performance Improvement Framework for the department, enacting common definitions and categories for performance improvement and an authoritative reporting mechanism. The PIO, our Comptroller, the Chief Data and A.I. Officer, our CDAO, and the Director of CAPE play critical roles in implementing this framework.

Third, we have taken substantial steps to transform the department into a data-driven organization. That's why we created the role of the CDAO, which is elevating and transforming how we create decision advantage, from the backroom to the battlefield.

This office is responsible for accelerating DOD's adoption of data, analytics, and A.I., and it has had an immediate impact on virtually all of our reform priorities. It's also another prime example of how we are modernizing the department to meet today's management needs.

We also revised the Defense Business Council's charter to address a broader scope of topics, including defense reform, performance improvement, enterprise risk management, oversight of related resourcing decisions, and more.

This expanded scope reinforces our commitment to implementing the Secretary's management and defense reform agendas, which rely heavily on producing the right data and getting it to the right people at the right time.

This is critical. We simply cannot compete on today's global stage without reliable and ready-to-use data to inform our decision making. To do this, we are updating our data capabilities and our performance metrics.

Leveraging the Defense Business Council, we have built a truly strategic management plan focused around the Secretary's priorities and fully aligned with the National Defense Strategy, and we are working now on measuring performance and creating clearer accountability to speed progress, including by using tools such as Pulse.

With the data that Pulse feeds to the executive analytic dashboard, the Secretary and I will gain a far better view into the implementation of the NDS than our predecessors were ever afforded. This dashboard approach will give us data-driven insights into what's working, and what's stuck, and what we can do about it.

That we were able to develop Pulse in just four and a half months is an extraordinary feat. It's an achievement that we should all be very proud of in the department, but it should also set the pace for defense reform moving forward, if we're going to fulfill the Secretary's strategic priorities -- building enduring advantages and improving foundational management capabilities.

Now that we've provided performance goals and measures, we're setting up the capabilities, such as Pulse. Our next step is to implement all those tools across the department.

Let me close by mentioning the fourth major defense reform effort which is launching this Defense Management Institute. DMI is yet another major step forward in transforming the department to meet today's national security challenges, and here's why DMI is so important.

First, when it comes to management and defense reform, I like to believe the department's overarching question is this -- what can we do to improve the department for those who will lead after us? The Defense Management Institute is groundbreaking and a direct answer to this question.

It's groundbreaking because never before has there been an institute dedicated solely to performance improvement. Management reform advantages the entire department, including logistics, acquisition, technology, all of which are central to the department's mission, and it directly supports the warfighter.

At DMI, experts will be carrying out management research and studies to inform decisions at DOD and in Congress. Drawing on a broad community of experts, from academics and thought leaders to management consultants, to current defense leaders and former DOD officials, we'll all be able to look at problems from every angle instead of in silos. That way, we can build best practices informed by many different perspectives from inside and outside of DOD.

Through the institute, we will also build a community of practice for defense management. I'm looking forward to the conferences and roundtables, the panels and published interviews, that bring this expertise to the forefront and make experts' insights readily available to apply to our practices.

DMI will also be foundational for building institutional memory. DMI won't only be looking at historical case studies and histories; it will be creating them in real time for future generations to use, because future generations of the department should not have to start from scratch. This institute will help them solve problems more quickly and efficiently.

I'm especially hopeful that this institute will attract a talent pool of expertise and practitioners dedicated to building a body of scholarship focused on defense performance management. Growing this talent pool will further help us build resilience and readiness for national security challenges we're facing now and far into the future. We need to energize a next generation of defense reformers, and DMI can help us do that.

As you can tell, I'm proud of the progress that the department has made in the past two years on performance improvement to the benefit of our warfighters and to the benefit of the American taxpayer, but there is still much more to do. I'm counting on DMI and the broader defense management community to help ensure that progress will only accelerate in the years to come. It is truly a national security imperative.

So thank you for allowing me to participate in today's historic launch, and I look forward to answering some of your questions about the department's current efforts.

(APPLAUSE)

 GENERAL (ret) NORMAN SCHWARTZ: Madam Secretary, in the time we have left and with your permission, I have a couple or three questions for you. You say that, well, let me put it this way: Your past experience as a civil servant, and especially coming from the department's policy community, informed your perspective on management priorities facing the department. Since becoming the deputy, has your perspective changed that you're now one rung higher in the architecture?

DR. HICKS: Yeah, I don't know that my -- obviously, my perch has changed, so there's perspective grown there, but I don't think fundamentally, my view has changed. I think my time in Policy was pretty unique for Policy. It was very much focused on, you know, can -- looking upstream and connecting ends to downstream ways and means from many different perspectives, and that is fundamentally the role of the COO over the department. So I'm able to draw a lot on that tight connectivity between what we're trying to achieve and how you get the levers of the department to sort of advance toward them.

I think my time as a civil servant, my lengthy experiences, both career and political in the department did really fortify me, maybe, is the words, for the types of challenges that are inevitable. I've seen it all, probably, before. And understanding, again, how to incent change, which is really what this is about- how to get leaders to take on as their own what the goals are.

The big difference is the levers. So as the deputy secretary versus being lower in the system, obviously, there were a lot more levers available to me. And so I think the charge then to me is make sure I'm using those levers as effectively as possible, and time is the most precious resource for the secretary by far, for the secretary and for me, and trying to make sure we're focused really around the key priorities to drive change in those areas, given one at a time.

GEN. SCHWARTZ: Thank you, ma'am. The department has struggled to make progress on audit -- a clean audit. What are the biggest challenges or obstacles to change that you've faced in this regard when attempting to address this and similar conflict management challenges?

DR. HICKS: Yeah. So audit, we knew from the Department of Homeland Security experience, there's probably a decade to get to a clean audit, and as I mentioned in my remarks, you know, largest organization there is. So that's the Department of Defense, so that's a benchmark, I think, for us.

Some of the challenges I think we face first is of a cultural one, which is audit is something people in the, you know, financial community do. It's not, you know, a run-of-the-mill what everyone would be focused on. That is a big cultural change, I think, folks have felt. It's commanders' business, and I make very clear it's commanders' business, and hold folks accountable for that.

But also, you can't expect people to achieve progress on audit without giving them the tools, and one of the biggest challenges, I think, that's unspoken for the department -- and it runs through all -- all of our defense reform issues -- is that our I.T. systems, our business process systems are out-of-date. They are diverse, would be polite --

(Laughter.)

-- and not connected. And I think this is just an example of the kind of, we call it tech debt, but tech debt, installation debt, debt debt, that, you know, living under the Budget Control Act just worsened over the last decade. So we want to go hard at that problem. We are -- we put extra money in F.Y. '22, for instance, against audit- in particular business systems- because that '22 budget was not -- the appropriations didn't go through 'til less than a year ago, we're just kind of coming up on the period where we should see the effect of some of those investments.

And I think what I would conclude with, back to the commanders' business, is what I try to really focus on is, you know, there are things that we know are good for the taxpayer and good for the warfighter. Put audit aside. It's really good if we know where all the Javelins are, and we know how many we have, and we know how fast we can get them somewhere. Guess what? Knowing all that, getting the systems that allow us to know that, that actually is on the path to audit, to a clean audit, right?

So getting folks focused on why they're doing what they're doing, you know, audit as -- for many in the community, not necessarily just a means -- or an end to itself -- excuse me -- but really is about putting in good systems that help the warfighter and help the taxpayer.

GEN. SCHWARTZ: Thank you. The department has faced significant organizational change in the performance improvement space, from DA&M, to DCMO, to CMO and then back again, as you commented in your remarks. How has this impacted the performance improvement agenda? And what do you see as the likely outcome in the years to come?

DR. HICKS: So I think there's several compounding things. There is the changing -- but -- you know, view, of how we should be organized. I think there has been probably too much focus on the wiring diagram. This it typical around defense reform, national security reform. And not enough, again, on how you structure processes, organizations, relationships, and tools for success.

So as I said, it was difficult to walk in right on the heels of the disestablishment. Compounding that, of course, was we were in a period of COVID. You know, it was difficult to sort of get the whole enterprise of the department up and running -- tough transition period, things of that sort.

So that -- there's no doubt that there was a delay, you know, to the agenda that I would have liked us to be launching on, but excellent folks in the system, across the department, and certainly in what was the CMO community and then became variously, mostly DA&M, Comptroller, CAPE, a couple other parts of the department -- CIO, you know, were able to -- to stand in.

Out of that, though, we were given an opportunity to look afresh, as I said, not just at wiring diagrams but how do you set the system up for success? All -- it always stops at the Deputy, and I think any belief that you can orchestrate your way around that is wrong, which is probably a longer conversation, but the goal really was how do you make sure that that COO long after me has the community support, has the key Performance Improvement Officer in a position to really help drive change, and that's where we've been focused. We have more work to do.

And I'll just say I think the coincidence, if you will, of our big drive on data, that is hugely helpful to any endeavor, those processes and levers -- tools I talked about. Hugely helpful for what we want to -- anyone is going to want to do on defense reform.

GEN. SCHWARTZ: In the few minutes we have left, let me maybe ask you a question -- you mentioned that talent management was a 

DR. HICKS: Sure. Yes.

GEN. SCHWARTZ: -- further conversation, but with respect to preparing, how to make yourself a a betterment to the department, for preparing those who are political appointees for their roles, do you see DMI as perhaps having a role in on-boarding and preparing people to better take on their very important roles as they move into their respective chairs?

DR. HICKS: I will say I do think, whether it's political appointees or new career SES or people coming from outside the department or they're just coming from different vantage points, I do think training is a gap that we have in the department right now.

It's something that I'm very focused on with our political appointees, but again, more broadly, with COVID, with cuts, a lot of the management support that folks -- I will just say it like an old-timer -- used to do, they don't happen. You know, I did the four weeks at FEI, the Federal Executive Institute, down in Charlottesville on the path to career SCS. I think it was hugely helpful. I did lots of other OPM training over the years.

I just think the budgets have gone away, the -- largely gone away. I think the pace and the reduction of capacity so that staff really are pressurized, they're not able to take that kind of training that we really assume, on the military side, is a part of how you develop people, we have lost that on the career side. And as you point out, for political appointees who are coming in fresh, they probably didn't -- if they didn't come from the -- a good developmental path, they may not have that management experience. So I do think there's a role that DMI could play in being helpful.

GEN. SCHWARTZ: Ladies and gentlemen, again, it's been a privilege to have the Deputy Secretary here with us this morning to -- both to provide her insights, but most importantly, to demonstrate her conviction for the path that we're on.

So Madam Secretary, again, thank you so much for kicking off the DMI with us this morning.

DR. HICKS: Thank you very much and thanks to Peter and the team. 

(APPLAUSE)