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Key Elements of Capabilities-Based Planning and Analysis

DEFINITION OF CAPABILITIES-BASED PLANNING

There is no official government definition of capabilities-based planning, but this committee uses the following definition (which was cited in the context of the committee’s tasking): “Capabilities-based planning (CBP) is planning, under uncertainty, to provide capabilities suitable for a wide range of modern-day challenges and circumstances while working within an economic framework that necessitates choice.”1

While individual interpretations vary, capabilities-based planning (CBP) is substantially different from recent Department of Defense (DOD) “threat-based or requirements-based” analysis that was focused on point (or individual) scenarios. Indeed, the shortcoming in the earlier analysis was more the point scenarios than use of threats (obviously, planning should consider a range of specific

1  

Paul K. Davis. 2002. Analytic Architecture for Capabilities-Based Planning, Mission-System Analysis, and Transformation, National Defense Research Institute, RAND, Santa Monica, Calif., p. xi. Explanatory note: Current capabilities-based planning is very different from what became standard practice in the DOD over the past 20 years, but in some respects it harkens back to principles espoused in the 1960s (see, e.g., Charles J. Hitch and Roland N. McKean, 1965, The Economics of Defense in the Nuclear Age, Holiday House, New York, N.Y.). In other respects, current capabilities-based planning is different from the classic ideas of that era. For example, in the 1960s, sharp lines were drawn separating declaratory policy, programming, and operations. Today, efforts are being made to integrate them coherently. In addition, jointness was much less developed then than it is today. And, certainly, at that time analytical methods and computers did not permit either broad exploratory analysis or high-resolution detailed analysis of the sort that is possible today.



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Naval Analytical Capabilities: Improving Capabilities-Based Planning 2 Key Elements of Capabilities-Based Planning and Analysis DEFINITION OF CAPABILITIES-BASED PLANNING There is no official government definition of capabilities-based planning, but this committee uses the following definition (which was cited in the context of the committee’s tasking): “Capabilities-based planning (CBP) is planning, under uncertainty, to provide capabilities suitable for a wide range of modern-day challenges and circumstances while working within an economic framework that necessitates choice.”1 While individual interpretations vary, capabilities-based planning (CBP) is substantially different from recent Department of Defense (DOD) “threat-based or requirements-based” analysis that was focused on point (or individual) scenarios. Indeed, the shortcoming in the earlier analysis was more the point scenarios than use of threats (obviously, planning should consider a range of specific 1   Paul K. Davis. 2002. Analytic Architecture for Capabilities-Based Planning, Mission-System Analysis, and Transformation, National Defense Research Institute, RAND, Santa Monica, Calif., p. xi. Explanatory note: Current capabilities-based planning is very different from what became standard practice in the DOD over the past 20 years, but in some respects it harkens back to principles espoused in the 1960s (see, e.g., Charles J. Hitch and Roland N. McKean, 1965, The Economics of Defense in the Nuclear Age, Holiday House, New York, N.Y.). In other respects, current capabilities-based planning is different from the classic ideas of that era. For example, in the 1960s, sharp lines were drawn separating declaratory policy, programming, and operations. Today, efforts are being made to integrate them coherently. In addition, jointness was much less developed then than it is today. And, certainly, at that time analytical methods and computers did not permit either broad exploratory analysis or high-resolution detailed analysis of the sort that is possible today.

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Naval Analytical Capabilities: Improving Capabilities-Based Planning threats). The primary distinctions between these types of analysis are in the manner of dealing with uncertainty, in the reckoning of risk, and in the way of making choices. The core idea of the CBP approach is to confront—rather than discount—uncertainty, to express risk in meaningful terms, and to weigh costs and benefits simultaneously. The objective is to put premium value on portfolios of assets (including organizations and skill sets) that best satisfy joint needs and offer flexibility, adaptability, and robustness to hedge risk across a wide range of possible futures. This chapter addresses the basic steps in conducting capabilities-based analysis, focusing on characteristics or success criteria, and contrasts the capabilities-based approach with the DOD’s recent, more narrow, legacy methods of planning. The idea is to move away from the legacy approach, by which myriad organizations in isolation drill down on a very narrow set of scenarios with nontransparent assumptions, often for the purpose of platform or program advocacy—thus presenting top-level leadership with the problem of reconciling different results and recommendations. The goal of CBP is to harness the power of an organization to identify and analyze broad choices, provide sharp-edged implications, make clear the key assumptions and fragility of those judgments, and meaningfully express risk in the context of an unknowable future. BASIC APPROACH FOR CAPABILITIES-BASED PLANNING Figure 2.1 illustrates the key elements of capabilities-based planning. The CBP process starts with a formulation of what must be accomplished in order to meet strategic objectives and then proceeds to the development of a range of solutions to meet those objectives. Next, potential solutions are evaluated in a broadly framed security environment using multiple scenarios and, perhaps more importantly, parametric exploration of numerous cases within each scenario. In confronting uncertainty and vigorously exploring risk-mitigation options, CBP analysts should be searching for assets that flexibly satisfy needs across a range of situations. In comparison, the legacy approach of point scenarios often had the effect, in Service analyses, of doing the following: Protecting force structure and end-strength and replacing major platforms and systems rather than addressing demands associated with the DOD’s strategic guidance and objectives; Vigorously advocating a particular programmatic solution (typically platform- or system-based) instead of presenting leadership with a range of viable options and their associated cost and benefit implications; and Evaluating alternatives on the basis of a single threat or a small number of “most stressing” threats with modest, single-point variations off the baseline (often employing the assumption that “less stressing” equates with less impor-

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Naval Analytical Capabilities: Improving Capabilities-Based Planning FIGURE 2.1 Key ideas in capabilities-based planning. tant), rather than addressing various risk implications of potential solutions across a wide range of possible circumstances. Instead of the effects of the legacy approach listed above, the following is needed: Planning should focus on developing and acquiring needed capabilities, with needs for end-strength and platforms emerging as conclusions of analysis; In choosing how to achieve needed capabilities, creative options should be constructed that exploit joint opportunities, new technology, and a competition of concepts; and Options should be evaluated across a broad range of scenarios and circumstances so as to assure that the resulting capabilities are flexible, adaptive, and robust. In the sections below, the key ideas in capabilities-based planning are discussed in more detail. Operational Challenges from the Strategy Capabilities-based analysis is conducted to provide well-articulated choices to leadership. The choices need to be distinct, viable, and bounded by economic

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Naval Analytical Capabilities: Improving Capabilities-Based Planning constraints.2 These choices should be geared to satisfying the demands of the national and the DOD strategy and associated joint needs. Assessing joint needs involves initial direction from top-level decision makers on leadership priorities, objectives, mission assignments to combatant commanders, and risk tolerance. However, this direction on priorities and objectives should be supported by in-depth analysis that assesses capabilities, needs, and improvement options in the various mission areas essential to meeting the decision maker’s objectives. With such analysis, areas of weakness or need can be identified, and priorities and objectives can be refined and even dramatically changed as analytic insights dictate. In the DOD, the proper role of the Services and agencies is not to drive demand, but to provide innovative, competitive solutions to address leadership priorities and objectives—and, as noted above, to inform changes in leadership priorities as appropriate. In principle, the Secretary of Defense should provide broad strategic planning guidance sufficiently early in the biennial planning/programming/budgeting cycle to help frame the construction of a set of capabilities that would balance or distribute risk consistent with his objectives and priorities. In the absence of analysis to identify DOD needs, the Service leadership should engage with the staff to identify outcome-oriented capabilities (what must be accomplished) keyed to strategic objectives. This process involves comprehensively and somewhat exhaustively considering the potential operational challenges that the U.S. military may face in the future. The key is to address an adequate range of potential challenges—both from adversaries who “think like us” and, even more importantly, from those who do not. In the formulation of these analyses to assess capabilities and identify needs, jointness should be a foundational concept from the start; it should not need to be “forced in” late in the process by the DOD leadership. The needs and capabilities analysis should consider other Services’ capabilities and explore trade-offs across Service assets—admittedly a difficult task for individual Services to accomplish in isolation. But even the most basic level of capabilities-based planning and analysis implies an ability of each Service to integrate its internal analytic processes with those in joint organizations. At a minimum, this would involve using joint-approved planning scenarios as a baseline for Service analyses, both as a common starting point and as an effective way to focus on parametric exploration rather than on the creation of a Service-specific base case (discussed below). Ideally, Service analyses should contribute substantially to the corporate (DOD) 2   A long-standing debate exists between those who claim that strategy should come first and those who claim that the budget comes first. Realistically, in good planning the two are always established together: one cannot do everything, regardless of how unconstrained a budget may be, but one also cannot have satisfactory capabilities without an adequate budget.

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Naval Analytical Capabilities: Improving Capabilities-Based Planning identification and formulation of joint needs and the competitive evaluation of solutions to those needs. Needs formulation at the Service level can also be derived from combatant commanders’ integrated priorities lists, joint experimentation, and, to some extent, joint-led studies. The value of joint-led studies has, in the past, been diminished by a consensus-based approach, a focus on a carefully scoped and scripted baseline, and an avoidance of evaluating areas of excess, or at least sufficiency. Initially the idea is not to capture each need exactly right, but to consider carefully the implications of our current strategy as well as the impact of a change in that strategy. This vision of defining strategic-level needs contrasts significantly with the legacy tendency to equate needs with the continued replacement of platforms or systems. In the legacy approach of recent years, up-front leadership guidance tended to be fiscally unrealistic, vague, too late in the cycle, and insufficiently focused on areas in which the organization chould tolerate more, rather than less, risk. At the working level, corporate guidance was typically referenced on briefing slides but essentially ignored in the formulation of options. In addition, in some past planning studies, needs and requirements were framed or adapted to support solutions geared to independent (stovepipe) interests. Options in the Context of Uncertainty Once needs are formulated, the next step is to evaluate potential solutions in a security context that acknowledges and attempts to cope with the inherent unpredictability of the future. To deal with uncertainty, the capabilities-based planning methodology calls for using multiple, fundamentally different scenarios3 and examining myriad cases within each scenario—a technique referred to as parametric exploration.4 One of the many reasons for considering a wide range of circumstances and assumptions is that the baseline assumptions used in planning are often an ex- 3   In the transformation efforts of the DOD, significant emphasis has been placed on needing analysis to support four different types of threats: irregular, catastrophic, disruptive, and traditional. The examples of capabilities-based planning in this report tend to emphasize broadening the range of scenarios and assumptions, although they may not cover the full spectrum envisioned by some leaders of DOD transformation efforts. In other instances, CBP depends less on “scenarios” than on a more straightforward, engineering-like analysis characterized by parameterization of the major variables. An example of this comes naturally in characterizing capabilities for ballistic missile defense, among other missions. 4   For a more detailed discussion of parametric exploration and other concepts addressed in this chapter, see Paul K. Davis, 2002, Analytic Architecture for Capabilities-Based Planning, Mission-System Analysis, and Transformation, National Defense Research Institute, RAND, Santa Monica, Calif.

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Naval Analytical Capabilities: Improving Capabilities-Based Planning pression of system specifications, which may or may not be realizable, rather than a best estimate. This problem is common in realms in which adequate realistic testing is not feasible. In some domains, however, the Navy or the joint community has extensive databases of observed performance in exercises that provide insights into real capabilities and deficiencies that need to be addressed. These insights should inform the parametric exploration that is at the heart of CBP. The parametric exploration approach dealing with multiple types of uncertainty is much different from that typically used during the Cold War. During that time, the Soviet Union and a few major regional threats (e.g., North Korea) clearly presented the most stressing adversaries. In addition, it was assumed that conflicts would be depicted in conventional warfare scenarios, and there was a tendency for planners to assume that they knew far more than they did about the circumstances of a conflict if it should occur. The result was not only a Soviet and major regional contingency focus, but also a focus on stereotyped wars. Smaller threats typically were ones thought to be less important that could be handled with the forces and weapons developed to counter the Soviets or major regional contingency threats. Other-than-usual versions of the Soviet scenarios were often just not given adequate attention. Threats were largely viewed as symmetrical, and lent themselves to force-on-force modeling. Force-on-force modeling rewarded incremental, “cost-effective” improvements in range, lethality, probability of kill, and force structure. Today, adversaries are choosing strategies that do not play to our strengths and that may not even be countered effectively by conventional tactics and forces (as reflected in the increased use of special forces and the importance of international police cooperation in counterterrorism). The global war on terror has produced an adversary that seeks to attack the economic or political element of national power with a force that has a diffuse command structure, no headquarters, no territory, no tanks, and no combat aircraft. And, of course, as of September 2004, the United States was dealing with insurgencies in Afghanistan and Iraq. Overall, then, the range of threats is now considerable. Better methods and tools are needed for analyzing diverse circumstances both within traditional conflicts and in the range of nontraditional conflicts. Proven analytic tools for assessing potential responses to these emerging nontraditional threats are scarce at best. The challenge is how to “cover the space” (i.e., address all of the scenarios) with the desired parametric analysis. As discussed in Chapter 3, if the analysis is based on running large, complex models, prospects for adequately covering the space are not good. A wiser approach is to use a combination of low-resolution and high-resolution models, and games as appropriate, to cover the space adequately. This approach permits gathering significantly more information on the importance of different assumptions and variables than is possible by running a few cases on large, complex models. To be sure, some regions of the space will

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Naval Analytical Capabilities: Improving Capabilities-Based Planning demand different concepts of operation. Developing these concepts of operation requires help from expert warfighters. However, most of the parametric work can be accomplished by analysts using relatively low resolution models, with in-depth analysis in a few places as needed. The Evaluation Process As shown in Figure 2.2, capabilities-based analysis consists of both policy-level analysis (big-picture reasoning, macro-level trade-offs under uncertainty) and increasingly detailed analysis such as that from systems engineering or engagement-level modeling. A hierarchy of tools and analytic techniques is needed to support the analysis, although the analysis extends well beyond the use of models. The challenge is to synthesize results from detailed analyses and extensive parametric exploration into viable trade-off options and insightful implications for resource-allocation decision makers. This process involves extensive, postmodel analytic processing—a relative rarity in deadline-driven analytic shops today. This analytical evaluation approach involves being fluent in the details of Navy capabilities and also viewing Navy assets in the context of joint/DOD needs and programs. CBP means addressing DOD-wide (not just stovepipe-level) FIGURE 2.2 Family-of-models approach.

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Naval Analytical Capabilities: Improving Capabilities-Based Planning excesses as well as gaps and looking at benefits and costs of the various alternatives simultaneously. Without the ability to accept the need to distribute risks across different areas and thereby reduce capabilities in some areas of traditional investment (such as in conventional assets geared to a serious major foreign competitor), it would be difficult to invest in “leap ahead” capabilities that cover a wider solution space. A key part of capabilities-based planning is to identify and analyze key risks so as to inform leadership decisions on resource allocation. In the recent legacy process, risk judgments were typically made at lower levels, where there is often a nontransparent inclination to buy down risk (at great expense) in some areas while ignoring other types of risk. Capabilities-based planning aims to provide more meaningful information and to better inform strategic-level decision making. There are multiple dimensions of risk judgments. Each type of risk consideration reflects an attempt to step back from the defense program and to view the program as a nonadvocate with a top-level perspective would view it. This approach is antithetical to the defend-the-program legacy process sometimes employed by the Services for the purpose of program advocacy. Four main areas of risk particularly pertinent in the context of weapons systems and force structure are as follows:5 Strategic risk In what areas do the Services’ programs diverge from the DOD’s strategy and the Secretary of Defense’s priorities? If developments in the security environment indicate that incorrect assumptions were made about a threat, to what extent are the capabilities of our planned force adaptable to meeting new threats? Can the defense program be substantially changed in time to meet an unexpected need? Current versus future risk Is our current and near-term investment crowding out critical science and technology investments needed to address more advanced future threats? Program-schedule risk Which individual programs will slip, overrun, or both? What is the potential impact? Technical risk Will individual platforms and systems provide the intended or needed capability? 5   These four areas of risk (with different subsets of questions) also apply to manpower, training, logistics, and other functional areas essential for deployed forces to be able to successfully carry out missions assigned to combatant commanders.

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Naval Analytical Capabilities: Improving Capabilities-Based Planning The risk-assessment process requires an extensive feedback loop between staff and leadership. Early analysis should feed leadership-level judgments on risk-tolerance levels, key objectives, and priorities. Leadership risk judgments in turn should be communicated at the start of the process and, as more knowledge is gained, they should direct or redirect the organization’s broader analytic activities. This direction should indicate, at the macro level, those areas of need in which the leadership expects the organization to attenuate risk as well as those areas in which the organization can divest resources or hold steady (and accept any perceived increased risk). Service-level direction should refine, elaborate, and make more meaningful the Secretary of Defense’s DOD-level guidance and should not be a statement of Service priorities unrelated to corporate guidance. As discussed above, the organization should be providing continuous feedback to the leadership on whether the initially stated risk-tolerance levels need to be slightly or even radically changed to be achievable. In summation, the key elements and criteria associated with the capabilities-based approach of confronting uncertainty, expressing risk in meaningful terms, exploring a wide range of possible solutions, and supporting leadership decision making are shown in Figure 2.3. FIGURE 2.3 Key elements, criteria, and characteristics for carrying out capabilities-based planning. NOTE: CONOPS, concept of operations.