SECRETARY OF DEFENSE 1000 DEFENSE PENTAGON WASHINGTON, DC 20301-1000 NOV 1 5 2014 MEMORANDUM FOR DEPUTY SECRETARY OF DEFENSE SECRETARIES OF THE MILITARY DEPARTMENTS CHAIRMAN OF THE JOINT CHIEFS OF STAFF UNDER SECRETARIES OF DEFENSE DEPUTY CHIEF MANAGEMENT OFFICER CHIEFS OF THE MILITARY SERVICES CHIEF OF THE NATIONAL GUARD BUREAU DIRECTOR, COST ASSESSMENT AND PROGRAM EVALUATION DIRECTOR, OPERATIONAL TEST AND EVALUATION GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE INSPECTOR GENERAL OF THE DEPARTMENT OF DEFENSE ASSISTANT SECRETARIES OF DEFENSE DEPARTMENT OF DEFENSE CHIEF INFORMATION OFFICER ASSISTANTS TO THE SECRETARY OF DEFENSE DIRECTORS OF THE DEFENSE AGENCIES DIRECTORS OF THE DOD FIELD ACTIVITIES SUBJECT: The Defense Innovation Initiative I am establishing a broad, Department-wide initiative to pursue innovative ways to sustain and advance our military superiority for the 2151 Century and improve business operations throughout the Department. We are entering an era where American dominance in key war?ghting domains is eroding, and we must ?nd new and creative ways to sustain, and in some areas expand, our advantages even as we deal with more limited resources. This will require a focus on new capabilities and becoming more ef?cient in their development and ?elding. At a time of constrained and uncertain budgets, the demand for innovation must be Department?wide and come from the top. Accordingly, I am directing Deputy Secretary of Defense Bob Work to oversee this effort. He will report back to me quarterly on progress we have made, and I will remain actively involved in overseeing all aspects of this effort. We have always lived in an inherently competitive security environment and the past decade has proven no different. While we have been engaged in two large land mass wars over the last thirteen years, potential adversaries have been modernizing their militaries, deveIOping and proliferating disruptive capabilities across the spectrum of con?ict. This represents a clear and growing challenge to our military power. I see no evidence that this trend will change. At the same time, downward ?scal pressure will constrain the way we have traditionally addressed threats to our military superiority and demand a more innovative and agile defense enterprise. We must take the initiative to ensure that we do not lose the military-technological superiority that we have long taken for granted. OSDO13411-14 History is instructive on this 21st Century challenge. The US. changed the security landscape in the 1970s and 1980s with networked precision strike, stealth, and surveillance for conventional forces. We will identify a third offset strategy that puts the competitive advantage ?rmly in the hands of American power projection over the coming decades. We must accelerate innovation throughout the Department in several linked areas: 0 The 21st Century requires us to integrate leadership development practices with emerging opportunities to re-think how we develop managers and leaders. 0 A new long-range research and development planning program will identify, develop, and ?eld breakthrough technologies and systems that sustain and advance the capability of US. military power. 0 A reinvigorated wargaming effort will develop and test alternative ways of achieving our strategic objectives and help us think more clearly about the future security environment. 0 New operational concepts will explore how to employ resources to greater strategic effect and deal with emerging threats in more innovative ways. 0 This effort will include many components, particularly Policy; Acquisition, Technology and Logistics; Intelligence; the Joint Chiefs of Staff; and the Military Departments. 0 Finally, we need to continue to further examine our business practices and ?nd ways to be more ef?cient and effective through external benchmarking and focused internal reviews. All these areas will be overseen, integrated, and managed by an active and engaged governance structure led by Deputy Secretary Work which will include the Department?s senior leaders. Their focus will be to ensure these combined initiatives achieve maximum traction in our system, that institutional barriers are overcome, and that our Department rapidly integrates real concepts and capabilities to improve its effectiveness. America?s continued strategic dominance will rely on innovation and adaptability across our defense enterprise. This will build the foundation for American leadership well into the 21St Century. 1 consider this a catalyzing effort that will spread and grow throughout the entire Department. Thank you. a,