Failure to provide adequate resources for the NATO Response Force amounted to "a standing indictment" of NATO, but a rapid deployment force proposed by Britain would be much smaller and more attainable, Hutton said in an address to a Washington-based think tank.
Britain has been pressing for 26 NATO defense ministers to agree at a summit next month to create a small NATO rapid deployment force to defend mainland Europe and free troops for duty in Afghanistan. The proposed force would have 1,500 troops ready for deployment and 1,500 in training.
"If we can't put together a force like that, which is minimal .... I would be pessimistic about the future of our ability to deal with some of the other challenges" NATO faces, Hutton said after a speech to the Center for Strategic and International Studies think tank. "This is basic stuff."
NATO needed a "radical transformation" to adapt to changing threats and succeed in securing Afghanistan, including closer cooperation with other institutions such as the United Nations, European Union and World Bank, Hutton said.
NATO is already fighting extremism in Afghanistan, training security forces in Iraq and battling pirates off the coasts of Somalia, but further changes are needed to prepare for unconventional warfare and cyber threats, Hutton said.
"Today it needs a new and more radical transformation still. An ability to anticipate and respond to new threats," he said.
Hutton said he and U.S. Defense Secretary Robert Gates agreed on Wednesday to jointly study lessons that could be learned from the war in Afghanistan for NATO's future force structure, future conflicts and U.S.-British defense cooperation.
Success in Afghanistan was essential, Hutton said. "We cannot take the risk that Afghanistan becomes again the safe haven and inspiration for terrorism and extremism. President Obama calls this our good war and he is absolutely right."
NATO also needs to retool its acquisition strategies, Hutton said, calling for greater cooperation on the development and procurement of new weapons. The F-35 Joint Strike Fighter being developed by Lockheed Martin Corp was an example for such cooperative efforts, he said.
"We need to do more together when it comes to procurement. We need to plan more together about the sort of capabilities that we'll need in the future," he said. "Europe's been doing this for Europe. The U.S. ... will need to do more of it."
NATO should also scrap excess committees, unnecessary headquarters, and informal defense minister meetings that "achieve nothing but contribute to organizational lethargy."
"We need to build an alliance for change within NATO. Your new administration has the leverage and the vision," he said. "There is an appetite out there for greater efficiency, greater effectiveness and real change."