Across the Western world, defense budgets are undergoing substantial and far-reaching cuts. In most countries, the approach taken to effect these cuts has been to reduce the capabilities of armed forces: fewer military personnel, fewer weapons systems, and delayed modernization. But another approach, increasing productivity in defense, could achieve the substantial savings needed while also protecting combat power.

The pressure on national budgets is severe, and it is unlikely to lessen over the next decade. Armed forces will likely continue to be required to reduce budgets even while demands on their combat readiness remain high. But there are ways to reduce spending while maintaining or even increasing combat readiness—ways that are in keeping with the traditional military values of ingenuity and pragmatism.