welcome to "this week in defense news." i'm vago muradian. how should the united states respond to china's quickly modernizing navy? plus, a top industry executive on the most promising international defense market. but first, the u.s. military's promotion system has long been criticized for being too rigid, automatically advancing too many while at the same time limiting opportunities for innovative leaders. our next guest argues that it's time to change a system that he says breeds mediocrity by taking some cues from multinational civilian organizations while at the same time more actively weeding out bad ones. in an article published by the armed forces journal brigadier

general mark arnold from the 100th training command at fort knox, kentucky argues for a series of commands including scrapping a structure that forces everyone to move up or leave in uniform. general arnold joins us from houston where in his civilian life he is the president and ceo of gse environmental, a multinational manufacturing company. sir, welcome tothe show. >> hello, vag go. pleased to be here today. >> so in 2010, army research institute study found that the main reason that talented folks leave isn't necessarily civilian opportunities but actually frustration with serving with people who keep getting promoted who probably shouldn't be promoted in the first place. you're intimately familiar with both the civilian industry where you have been successful at general electric and a number of other multinational corporations but as well in the united states military. if you were the one reengineering a massive system, and one as massive as the u.s.

military's from motion system, what are the best ways to do that? >> i think one of the key things that we need to do, vago, in the military, and this is not just the u.s. army. i'm talking about across all services is to give people more zane their work. and we can't do that with all service members, but i am talking about specifically high talent, your top 20%ers, your top 10%ers especially, and all services, both active and reserve component. i think another thing that would be absolutely essential in order to retain top talent through the, perhaps, the course of 40 years, would be to have flexibility between the active component and the reserve component. i.e., a continuum of service where service members, perhaps not all, but certainly your high talent, has the flexibility, the ability to go

from drilling reserve component assignments, get their family some stabilization, maybe a larger metro city for four to five years, and go back on active duty again, and serve at perhaps command levels or the next level for promotion. >> right now because, exactly, sir, because the challenge now is that everybody rotates all around the world on a very regular basis, whether or not that's really good for them or whether it's really good for the service. and in terms of the continuum of service, former chief of naval operations vern clark would always talk about giving those kind of off-ramps, giving somebody an opportunity to leave uniform for awhile, take a very interesting civilian assignment and to bring that experience back into the navy. but from a more formalized process how exactly would you work this out? i mean, the entire system is designed to keep rotating folks through jobs. i mean, actually one of the frustrations that you express is you could go through a 20- year car rather and almost automatically be promoted the

entire time. how do you change that fundamental element of it to make it something that is actually tougher as you advance through the ranks? >> i think one of the key things that has to be done, vago, is senior leaders. i'm talking in all services, 06's through 08's, 09's, actually be held responsible for, accountable for assessing, developing, and mentoring top talent. again, not everyone, but your top 20 percenters, sometimes just your top 10 percenters. if we institutionalize a process like that, which in my paper i describe as what ge has used for many years, it can become a very transparent process that's also seen as fair to the greater ranks of all services. likewise, to do that, though, policies will have to change,

regulations will have to change. but it's all within the service's capabilities to make those changes if the senior leaders desire to make them. >> one of the points that you also make is that the services don't do as good of a job of sort of dismissing bad leaders, or especially -- even senior leaders who would get sacked for poor performance. there are those who say, however, the navy that does get rid of a lot of people actually creates other challenges. what's the best way to do that to show accountability but also deliver the cultural change that you want without having negative changes adopted? >> well, some means to do that, vago, are also back in the civilian world that's been used for years, if not decades. we're talk 360 easement we're talking about -- >> 360-degree appraisals. >> 360-degree appraisals where subordinates, people who work for others, have the opportunity to say candidly what they think of their boss,

their leaders. likewise, that doesn't need to be idea against leaders. that can be used as a developmental tool. it shouldn't even be filed in leaders' files. it should be used, however, to make them better leaders. another thing the corporate level does is skip level meetings where a lead ergos down one or two levels below where their peer group is and go into the -- and speak frankly at town hall meetings with the sub order -- the subordinates of leaders who work for them. the ability to do that and give candid feedback is what will displace, meaning probably eliminate, poor leaders. >> right. >> and particularly leaders who are rising on the backs of others, leaders who stifle creativity, and leaders who are just getting -- not taking risks, not doing the right things for the organization.

>> the military system treats almost every single person, particularly in terms of officers, as beg sort of the next chairman or education chief. everybody is very highly educated at the end but the system is also incentivized to retire you in 20 years. are you -- are we getting the value out of the education, or is there a fundamentally different way that we ought to be training people to realize, look this guy is going in to for four years, do his job, and he's not necessarily going to be the next mike mull lynn? >> well, vago, my recommendation is we do not need to rotate all of our leaders. i'm talking ncos and officers as though they are being prepared for general officer, flag officer. i do believe that the military does get full use out of the education that enables its leaders with. the military is probably the

best organization or set of organizations in the world, the u.s. military is, in terms of educating its professionals. there's nothing that corporate america can learn from -- there's nothing that the military is going to learn from corporate america in terms of professional education and advanced civilian education. >> sir, thanks very much for joining us. we really appreciate it. coming up, keeping an

over the past decade. china has been rapidly pods earn sizing the navy -- modernizing the navy as well as the forces that combined with the sweeping territorial claims is worrying nations across the region as well as in washington. as the united states increases its focus on the region understanding china's plans and capabilitiesings become increasingly important. and since 2005, one of america's leading naval experts ron o rock of the congressional research service kept a close eye on china and his plans. in the latest version of the report, china naval modernization implications for u.s. navy capabilities, background and issues for congress came out last month. ron will be expressing his personal views today and not those of his employers. ron, welcome back to the program. >> thank you for having me. >> let's start out. what's driving china's naval modernization program and what are the major elements of it? >> i think experts will tell thaw a central goal of china's military military modernization effort including the naval modernization effort is to

develop military options for resolving if necessary the situation with taiwan. this includes among other things developing what dodd refers to as an antes access or -- antiaccess or aerial denial force that would be capable in china's goal of the -- deterring or delaying or degrading the effectiveness of the intervening outside force such as u.s. military forces in the event of such a scenario. >> push them as far as possible off of its shoreline. >> that's the idea. >> and what are some of the key elements of it? i mean there are just the multiplicity of systems under development right now and a series of new ships. what are the core and most important developments of that? >> that's an important question because quite frequently the spotlight will tend to focus on one thing at a time and then move to another thing. for example there was a strong focus several years ago on china's submarine modernization effort. and then that was followed by a focus on china's antiship ballistic missile effort and most recently by a focus on china's aircraft carrier program. but it's not any one thing.

or just a few things. a key aspect of their modernization effort is how broad based it is and it includes a number of different weapon platforms and also improvements in personnel and maintenance and logistics and -- and training and that sort of thing. so it's a broad based effort that has quite a few elements not just one or two or three. >> and -- while the annual production numbers on the service aren't as great as what you would expect for a giant surge it's actually quite systemic and regular. advancing very, very consistent and persistently. >> i mean the numbers in terms of new platforms that are deployed each year are not necessarily spectacular but it's a steady modernization that has been underway since the 1990s and over time it has accomplished a very significant modernization of their maritime mill fair forces. >> there's the sense in washington that this chinese are ten feet wall but what are the specific weaknesses and limitations they have? >> they're not ten feet tall as a military force and they're

not necessarily even 6'0." they have limitations in the case of their naval forces in the number of areas in terms of antisubmarine warfare and mine war fair. and joint operations and even just combat experience. and actual conflict situations. so -- they're not ten feet tall and they're probably not six feet tall but they're on their way to becoming six feet tall within their own region and also important to remember that even if they're not six feet tall by our standards that doesn't mean their navy in their own eyes isn't capable enough to perform missions that may be of interest to china's leaders. the question is not can our navy beat the chinese navy or can the chinese navy beat the united states? is chinese's navy good enough to do what they want them to do? >> at the same time, it's building its navy and china is also investing heavily in maritime security forces, tell us about those and how important and what kind of

role. >> that's right. for several years there's been a focus on improvements in china's regular navy but they have a number of paramilitary law enforcement aptsies in the maritime realm. things that are one way or another like fishery agencies or might look like the coast guard. not just one or two, they have several agencies and between them, as of last year, they had a reported 300 surface craft. so in addition to things that you might study taking place in china's regular navy per se, there are these other -- ships -- >> quite large. >> in fact, they just launched a brand new one as a 5400-ton ship. that's larger than a u.s. navy frigate. most of them are smaller but there's 300 of them and even though lightly armed they can be effective against an unarmed fishing vessel and very significantly. china is now increasingly using these ships and not the ships in their regular navy to assert and defend their territorial claims and their claims to

fishing rights in the south and east china sea. >> that's actually one of -- would you think could be a key flash point right? given the chinese requirement or chinese vi that even military vessels cannot -- operate in their exclusive economic or territorial zones. >> right the dispute over the territorial claims in the south and east china sea puts china at odds with a number of its neighbors and china has an interpretation of international law regarding what it views as its rights to regulate the activities of foreign military forces operating in its exclusive economic zone. that has the potential for leading to incidents at sea between chinese ships and aircraft and u.s. ships and aircraft. >> already happened. >> already happened on several occasions in 2001 and again in 2009. >> we've got about a minute left. how -- does china's naval build up combined with america's pivot to asia, how should those change u.s. navy's spending pats earns on organization and et cetera? >> this has led to an increase

in the navy's budgets and programs toward an emphasis on higher end warfare as opposed to lower ends kind of contingencies. things like antes submarine warfare and purchasing of destroyers and submarines. and of course aircraft carriers and carrier based aircraft. in general there's an emphasis on higher end warfare that has been i think renewed or strength ld as a result of this. >> and something that's going to be obviously you know a focus area for the coming decades is -- the united states and china comingle in an >> i think it is the current world. absolutely. >> ron, thank you very much for joining us, we really appreciate it. up next a top raytheon executive on growing

with domestic buckets tightening, all defense

companies are turning to international markets for growth including racion that already has a strong global presence. last month we spoke with tom cu lligan the senior vice president and i asked him what specific markets racion is targeting and what products will be most appealing in those markets. >> first and foremost we're not conceding any markets whether it's u.s. or international. even here in europe where things have really taken hit over the last couple of years there's still some really bright spots in the market and spots we benefited in. we manage dodd keep our basic -- to keep our basic sales up even in a flat to down market. but in all honesty, the strength markets right now are middle east and north asia are playly strong but cestuis is picking up as well. -- southeast asia is picking up strong as well. >> are any product lines going to be more attractive than others? i mean for example you have stuff that's across the board to the lot.

what are some of the -- ones that you are really putting your most faith on? >> as you noted we have a wide variety: some 8,000 different programs that we monitor with inside racion and we do cross the entire board and spectrum of different technologies and we do business last year at 81 countries. so we have the -- not only do we have a breadth of products but a breadth of markets. the strong markets anything that has to do with missile defense. you know sort of antiair and antimissile. more and more homeland security based or at least security, and boarder security based. those kind of things are real silver linings going forward and we think things like cubeerer going to pick up -- cyber in the next couple of years are going to pick up. >> something like missile defense or the standard missiles that's a tajable program where you can really project revenue stream or for example patriot or what have you. it gets a lot harder -- how large is that market? >> well, it's probably the

great unknown right now. we're sort of waiting for the big event that's going to drive cyber to the very forefront of national security interests for the united states and the rest of the world. but quite honestly, the cyber market is -- we look at it in this way. we look at it number one we want to protect our own company. and our own resources and our shareholders' value by protecting the company. that's part of the cyber. then we want to protect if products to make sure nobody can penetrate the products to do anything to them and cause problems. and then third is the bigger broader market out there we're looking at. may be both with the governments around the world, and with the commercial industry. and how big that is, we don't know right now. but we've been investing heavily and we think it will be a substantial market. >> every time there's a downturn everybody is looking at greater cooperation and collaboration and more joint ventures and that waxes and wanes. >> right. >> but most folks agree that's the future that we're going into. what are some of the collaborations, joint ventures

and other kind of pan national projects are you guys looking at as a company? >> it's an interesting time and that's a great question because about ten years ago we set up a joint venture with dallas. and it's been -- >> ground breaking venture. >> transatlantic joint venture. thought to be the first of many that would take place. and it turned out to be basically probably the only one that has really taken place and been successful. but we're very proud of that and it has been very successful. but we also now -- as we do business around the world, more and more countries want to -- us to come in and do work. noble work as we call it in those countries. and we're spending a lot of time talking with countries about setting up partnerships or ventures and putting up as much work as we're allowed to under the itar restrictions into the countries. >> that goes across the product lines, were there any particular product lines in particular that -- easier done? >> some are easier than others just because of the technology involved but for the most part we try to look across all the

product lines. >> how are you guys investing to bolster your global competitiveness? because of your ceo, bill swanson, a strong presence at the trade shows, some of the competitors northrop grumman is here. >> we are always looking to bolster the competitiveness and doing business in 81 countries you add to your own production line. it helps the united states and there are costs because we can lower costs to the u.s. government. that's why they're very helpful in us trying to move some of these i thinks. but also -- things. but also it helps us to you know, share our technologies around the world. and help provide for the common defense and there's this interoperability issue in the defense world that has been shown to be critically important. what i'm finding is there's actually more and more interest in u.s. technologyings right now than i think ever before. >> tom thank you very much.

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since becoming chief of naval operations admiral john greenert row focused by putting war fighting first, operating forward and always being ready. with america's asia pivot the navy will be more prominent and must sharpen the skills and readiness. perhaps with a ferocity unseen since world war ii. the navy was bloodied early in that war. some interpret his war piloting focus as sidelining the many noncombat missions the navy performs daily. that's a mistake. for a lodge time navy have proven with their mobility and

flexibility. the ship is also a powerful deterrent and unageingment tool and can respond to human paraphernalia crises and -- humanitarian cry says and serve a potent diplomatic role. that was codified in the 2007 maritime strategy that recognized the importance of hard and soft naval power to prevent conflict. the navy must be ready to fight and beat any -- and decisively beat anybody. in asia the navy will be in high demand as a visible confirmation of america's commitment to its allays and a warning to the enemies, but it's a vast region and it's vital to collective regional deterrence and security. thank you for joining us for "this week in defense news." i'm vago muradian. you can watch this program online at defensenewstv.com or e-mail me at vago@defensenewstv.com.