The Department of Defense and the Pentagon are among the entities most affected by the sequestration. Led by Defense Secretary Chuck Hagel, the Pentagon must contend with $500 billion in budget cuts over the next 10 years. Across-the-board cuts are anticipated, and while personnel was exempted by President Obama, that section may also see cuts. Retired Army Col. Douglas Macgregor was quoted as saying, "During World War II, he said, the U.S. military had eight four-star generals and admirals leading a force of more than 15 million personnel. Today, there are 38 four-stars leading an active-duty force of 1.4 million."
Not being invested myself in defense, and also being anti-war, I am somewhat pleased that its spending is being reduced. I can appreciate how national security issues may arise (especially given North Korea's recent posturing). However, the U.S. has long held the most advanced military in the world, and I do not see that changing. A restructuring to reduce costs is needed. I remember seeing a poster in high school: "one day, schools will have all the money they need, and the Air Force will need to hold a bakesale to buy a bomber."
Without knowing many of the details, I would say the DoD is using a "classical" strategy structure for long term planning. This has led to having the unbalanced structure of 38 generals for 1.4 million soldiers. On the battlefield, I can imagine that battalions are very adaptive and visionary, but that dynamic structure does not carry over to the whole organization.
Similarly, I do not believe the DoD takes advantage of the "change at the top" recommendation for handling S curves. While not a business and in competition only with other national militaries, there are reasons for the top level to be reorganizing itself and be on the lookout for things like the sequestration. By having the ranking/seniority system, it is potentially denying itself fresh insight. Making an intelligent, innovative officer wait 20 years before he can be part of the decision-making body may be unwise.
In time, we will see if Secretary Hagel can navigate this slumbering beast into something more "agile and effective," as he hopes.