Conquest’s Third Law and the quiet resistance of institutional reform

Can Defence, and other public agencies, overcome structural inertia to deliver national capability effectively?

First published in The Mandarin

Treasurer Jim Chalmers has made it clear: Australia’s second-term economic agenda hinges on reviving productivity growth.

“The first term was primarily inflation without forgetting productivity; the second term will be primarily productivity without forgetting inflation.”

While productivity is often framed in economic terms, another aspect that sometimes gets overlooked is the institutional systems through which national capability is delivered. 

Nowhere is this more apparent than in large public organisations, such as Defence, which are at the intersection of government responsibility and industry delivery.

Beyond inputs: the system of delivery

The drivers of productivity can be categorised into two broad areas: the quality of available resources and the effectiveness of their application. While government investment in skills, research, and infrastructure is essential, productivity also depends on how well institutions convert inputs into outcomes.

Government agencies should be held to the same standard as firms: accountable for how effectively they organise themselves to deliver. This is particularly critical in sectors such as defence, where national security, public funds, and long-term industrial capabilities intersect.

Robert Conquest’s Third Law states:

“The simplest way to explain the behaviour of any bureaucratic organisation is to assume it is controlled by a cabal of its enemies”. 

This is an exaggerated satire. Yet, those who have experienced working in a large government institution will recognise the unsettling truth in the statement. Bureaucracies often act in ways that seem directly contradictory to their declared objectives, not out of malice or incompetence, but due to an inexplicable resistance for which no one is accountable.

The ongoing challenge of Defence

Defence provides a case study. Despite bipartisan support and strategic urgency, its major capability programs have repeatedly fallen into delay, and more recently, secrecy. 

The recent Major Projects Report from the Australian National Audit Office reveals that Defence has significantly reduced project transparency. There may be good reasons for this, but reduced openness is unlikely to drive improved performance.

For example, the submarine program has some underlying issues, prompting the defence minister to appoint a former defence secretary, Dennis Richardson, to conduct a comprehensive review of the Australian Submarine Agency due to significant concerns about its management of the AUKUS submarine program.

Setting aside the recent US decision to review the program, it has already undergone various iterations. A significant amount of money has been spent, and no new submarines are expected before the 2040s. Each decision may be justifiable when considered individually. However, collectively, they suggest a system that is struggling to align strategy with execution.

The system is self-protective

The Defence Department is staffed by knowledgeable and professional people. The issue isn’t a lack of intelligence, experience, or commitment. Instead, the workforce operates within an institutional system designed to maximise procedural control and minimise risk. Compounding the problem, many personnel in the defence department have dedicated their careers to that system and have been shaped by it. 

Defence, like all large organisations, suffers from the usual suspects that conspire against improved organisational performance: fragmented authority, cultural conservatism, delivery disconnects, and perverse incentives. 

The problems are not new. The 2015 First Principles Review identified many of them. In 2018, the ANAO agreed that Defence had implemented the most important recommendations of the Review. Yet, the issues seem to persist. 

Dynamic conservatism

Organisational philosopher Donald Schon coined the phrase ‘dynamic conservatism’, which he defined as “the tendency of organisations to fight to stay the same”. Essentially, large institutions work to dampen the best efforts at reforming them.

The promises of delivering transformational organisational change consistently underestimate the countervailing force of dynamic conservatism and overstate the ease with which social systems adapt to change.

Reforms are generally embraced in principle, but are often implemented in a diluted form in practice. Organisational reshuffles replace genuine change. The language of reform is adopted, while its consequences are avoided.

The Defence organisation, like many government institutions, is naturally resistant to reform, not because it rejects improvement, but because it is designed to resist change.

What must change

Productivity reform in government must include institutional productivity. That means making systems deliver what they are intended to. In addition to the usual calls for greater transparency, ongoing contestability, and sustained ministerial oversight. The system-level reforms that drive productivity include:

• Designing for learning, not just control. Defence has long aimed to become a learning organisation. It cannot achieve this without reflecting on failure without defensiveness, experimenting, and rapidly adapting to new information or changing conditions. Today, the risk to becoming a learning organisation lies in the illusion of control that data can provide.

• Focusing on empowering middle management. Most reform efforts target senior leaders or structural changes, but genuine behavioural change often depends on the layer in between.

• Aligning governance with organisational tempo. Governance now operates at the speed of data, and there is a need to ensure that governance structures can keep up with the business and operational context. 

• Opening the system. Closed systems reinforce internal orthodoxy. Government departments and agencies need to be more open to outside insights, challenges, and collaboration. This is not a call for the reintroduction of large consultancy firms but rather for direct engagement with entities that have different perspectives. 

An exaggeration becomes a warning

Robert Conquest’s Third Law is not a law, but a caution. It reminds us that large organisations often act against their stated goals, not through ill will, but because of cultural norms that are reinforced by their governance and structure. 

Senior national security leaders have consistently emphasised that Australia’s strategic circumstances require urgency and effectiveness. However, the institutional logic of public administration still favours stability over performance. 

As Schön observed, organisational systems often resist change. Reform efforts fail not because of a lack of insight, but because they underestimate the power of dynamic conservatism — the deep, structural tendency of organisations to absorb change without being altered.

If the government’s productivity agenda is to succeed, it must seriously consider the productivity of public institutions themselves. This means designing reforms not only for technical efficiency but also for institutional adaptability.

Genuine systemic change requires leaders to engage closely with the organisational, cultural, and social architecture of the institution. Conquest’s satire began as an exaggeration, but it has since evolved into a warning.