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The only thoughts I would add for consideration concern your view on incremental change.

Looking at technological change broadly, in general, it has been accelerating since the industrial revolution first started around 1800-ish. It began with wind and oar powered vessels, a method literally used for--not just centuries--but millenia. The same on land. The horse dominated land mobility for millenia. The epitome of "status quo."

Then came steam power, and in just a century, human civilization had transformed. Paralleling this was the mastery of electricity. 1900 was remarkably different from 1800. The next century saw the dawn of flight, which went from frame and fabric to outer space. The internal combustion engine fully replaced steam, and the horse. World War II brought about enormous advances in less than a decade from the resources poured into the efforts. Electronics, jets and rocketry, nuclear power, and more just between 1939 and 1945.

Then came the Cold War. Our opponent was known, and we were engaged in the conflict for over 40 years. Each could learn what the other was developing, and plan accordingly. Incremental change was fine in most cases, unless it was discovered your opponent had made some astounding breakthrough. Witness the space race once the Soviets launched Sputnik. What got poured into NASA was not "incremental." As a predominant land power, the Soviets did not invest much into their navy until Admiral Gorshkov came along. Once his designs started rolling out, and after initially being baffled at how they were to be employed, we could then plan appropriate counters, and measure out the modernization of our fleet. From a military standpoint, this was a remarkably stable period of over four decades facing, matching, and surpassing an opponent whose abilities were generally known and understood.

When that ended, we were adrift. Without the Soviets, who was our enemy? What incremental changes, against whom? While China resolved to make itself a naval power in 1996, its rise was not overly spectacular in the beginning. Meanwhile, September 11th happened, and we had found our new main opponent, and they were not a naval power. Money got channeled to the Army, and Air Force. Even if the Navy could truly and clearly predict the future, it was relegated to supporting the other services in this newest war. The Peace Dividend was over, but the resulting new money flow did not prioritize the Navy. China's rise was "vague and distant." Terrorism was clear and immediate.

The pace of technological change keeps accelerating. Millenia of horse and sail. Centuries of steam and automobiles. Decades of aviation and space. A few years between computer advances. Incremental change is good, but the intervals between the increments is becoming smaller and smaller in many key fields. Our current military acquisition system is still tied to the Cold War it was built under. The pace was comparatively more leisurely then. There are advocates of reform. "Streamlining" (with the resulting risk) is almost mandatory now to keep up. This was one of the foundations behind Rumsfeld's Transformation. He recognized the need to alter how we deal with the increasing speed at which new things appear, and how quickly we incorporate those into "the system." When practiced, the risks--with frequent failures--of that way of incorporation became painfully obvious from the financial angle, and were a huge turn-off. But, if we are not wishing to fight modern Chinese warships and weapons with a surface fleet designed back in the Cold War to be employed against a different enemy, then we are going to have to figure out how to keep up with the modern tempo of tech development, and do it really soon.