Secretary of Defense Fellows Program 1 Secretary of Defense Fellows Program 1997- 1998.

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Secretary of Defense Fellows Program

Secretary of DefenseFellows Program

1997- 1998

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SDFP BackgroundSDFP Background

Infrastructure 2/3 of Defense Budget– Business practices reform generates savings– Savings applicable to shortfalls

Businesses outside DoD successful in:– Adapting to changing global environment– Exploiting information revolution– Structural reshaping/reorganizing– Developing innovative processes

DoD needs effective access to best business practices


SDFP OrganizationSDFP Organization

Permanent Staff- SDSSG Director, Deputy, Admin Staff

Two officers from each Service (USMC one)- High flag/general officer potential

- O-6 or O-5

- Senior Service College credit

Ten months at Sponsoring Company Group Education

- Seminars

- Wargames

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SDFP ObjectivesSDFP Objectives

Final Report and Briefing to SecDef/Services– Business insights relevant to DoD culture/operations– Recommended process/organization changes

Build a cadre of future leaders who:– Understand more than the profession of arms – Understand adaptive and innovative business culture– Recognize organizational and operational opportunities– Understand skills required to implement change– Will motivate innovative changes throughout career

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SDFP SponsorsSDFP Sponsors

96- Prior– American Management Systems, CNN, CITICORP

Hewlett-Packard, Lockheed Martin, Loral, McDonnell Douglas, Microsoft, Oracle, Northrop Grumman, Sarnoff Labs

97- 98– Andersen Consulting, DIRECTV, Mobil,

Northrop Grumman, Sears, Southern Company

98- 99– Boeing, Caterpillar, Cisco Systems, Netscape,

Coopers & Lybrand, Raytheon Systems


SDFP ResultsSDFP Results

Program objectives fulfilled- Education, education, education

- More sponsors than fellows

- Inter/intra-group experience sharing

Unique corporate experiences

- Strong corporate support

- Executive/operational level mix

- Mergers/restructuring

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SDFP FellowsSDFP Fellows

CAPT Mark Adrick Andersen Consulting

Col Mike Marro DIRECTV COL Larry Matthews Mobil Corporation Col(Sel) Janet Therianos Northrop Grumman Col(Sel) Andy Frick Sears Roebuck CAPT Linda Nagel Southern Company

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Andersen Consulting

Global Consulting Firm– 46 countries; over 53K Employees – 1997 growth 20+%; revenue $6.6B

Organization– Core Competencies

• Strategy• Process• Change Management• Technology

– 16 Global Market Units• Aligned with specific industries (e.g. Communications)

– Cross-functional/ Industry Solution Centers


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Andersen Consulting

Business integration approach– People + Process + Technology = Capability

• Changes in one factor affects all others

– Focus on aligning capability with strategy

Change Management– It’s a Journey

• What is the destination?

• Are we ready to embark?

• Chart the course

• Reassess along the way- change course if needed

• Identify potential obstacles; manage the journey

– “Rule of the Road” #1: Change is Painful!


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Andersen Consulting Observations/Recommendations

Infrastructure– Extensive intranet/ Mobile Computing

• World-wide access- work anywhere• Flexibility minimizes lost productivity

– Virtualization• All admin/personnel mgt... functions “Paperless”

– Knowledge Xchange• 6000+ databases• Access to firm’s knowledge capital• Provides forum for communities of practice


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– Develop a clear technology vision/strategy

– Ensure organization has requisite skills or • Partner/Outsource

– Common standards/ protocols• A must for eCommerce

– Emerging tech support solutions • eCommerce

– Electronic procurement

• Business training simulation tools– Human performance improvement

• Networked collaboration– Workplace-of-Future



Technology Integration

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DIRECTVDIRECTV

Fastest growing consumer electronics product in history – 3.5+ Million subscribers in 3.5 years– >1200 employees; 1997 revenue $1.1B

Direct Broadcast Satellite television– 175+ channels, all digital, 24h x 7d operations– Three geosynchronos satellites

Information Technology Department– Critical Business Systems

Data Center construction Billing operations

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DIRECTV ObservationsDIRECTV Observations

“Virtual” business -- Mostly outsourced– Customer service– Hardware/retail sales– Billing/remittance

Outsourcing– Rationale:

Have agility Gain capability Avoid costs

– Don’t outsource core competencies– Understand risks

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DIRECTV ObservationsDIRECTV Observations

Y2K Problem– Business & government behind– Planning focus too narrow

Best case (things will work) assumed v. worst case

– Systems-level effects Electric power & utilities Embedded processors Rail systems Global financial system Local, state & Federal governments

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DIRECTV RecommendationsDIRECTV Recommendations

Have realistic expectations for outsourcing– Know what you need & want– Contract carefully -- Be vigilant– Be prepared to pay -- Outsourcing is not cheap

Y2K Problem– Begin scenario based planning– Look at macro systems level impacts– Assume worst case scenarios

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Mobil CorporationMobil Corporation

Global petroleum company– 125 countries; 43K employees– 1997 revenue $3.3B

Core competencies– Exploration/production– Marketing/refining– Chemicals

Major issues– Low margins/increased competition– Environment/geo-political risks– Diminishing technical skills– Aging US-centric workforce

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Mobil CorporationMobil CorporationObservations/RecommendationsObservations/Recommendations

Standard Managed Info Tech Environment – Common operating systems– Standardized hardware/software– Organizations share “best practice” processes

and improvements– Single point for problem resolution– Platform for growth– Significant cost reduction

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Knowledge Management – Maximizes return on intellectual capital– Levels

Deriving value from knowledge (mining) Generating new knowledge (creation) Continuous learning (updating)

– Key components People networks Supporting computer technologies

– Why Limited resources Experts leveraged

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Outsourcing– No “Silver Bullet”– Enhance core competencies -- Don’t replace– Commitment and buy-in is key– Fully understand

Current status -- Don’t outsource a “mess” Current in-house costs Does vendor provide more effective service

– Know when to say “No!”– Do what is best for organization

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Northrop Grumman ESSDESSD

One of five NG major divisions– Formerly Westinghouse Defense & Electronics

Electronic Sensors & Systems Division – 11,000 employees– 200 key programs; 3500 contracts

Radar expertise forte Corporate “Crown Jewel”

– Cutting edge technology– Key components of advanced weapon systems

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Northrop Grumman ESSD ESSD Observations/RecommendationsObservations/Recommendations

Post acquisition restructuring goals– Eliminate excess infrastructure – More efficient use of resources– Capitalize on embedded resources and

disciplines “Homeroom” model for achieving goals

– Centralized base of operations for personnel Develops functional skills/tools/services/processes Administers training, career development Manages talent pool

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“Homeroom” Benefits– Standardized processes– Leveraged use of tools– Effective use of personnel– No added overhead

DoD application– Joint warfighting CINC development– Benefits

Develop/track future commanders DoD-wide view of talent Centralized quality control/standardized processes Common joint commander perspective

Northrop Grumman ESSD Observations/Recommendations

Northrop Grumman ESSD ESSD Observations/RecommendationsObservations/Recommendations

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Northrop Grumman ESSD ESSD RecommendationsRecommendations

Acquisition Reform– Progress -- Huge thumbs up– Market Pricing next step

Move from Contract Cost Pricing Cost Pricing = rigorous, detailed accounting After development, Pre-production, LRIP

Market Pricing = Commercial Practice Saves $$$

Eliminates excessive infrastructure Government and industry

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SEARS ROEBUCK & CO.

Large, complex, full service retailer– 3,200+ stores; 300K associates nationwide– 60+M households

Retail Industry Leader– Customer database management innovator

Sears Logistics Group– Tailored logistics solutions– Paradigm: Flow -- Don’t store– Total logistics chain visibility– Sears horizontal strengths leveraged


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SEARS ROEBUCK & CO. Observations/Recommendations

Build a winning culture– Employee ownership the key!

Relate pay/benefits to business strategy– Goal sharing/performance bonuses

Admit mistakes & handle quickly– Reputation built on trust & integrity

Foster climate of innovation– Manage for long term w/ short term goals


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Strategic vision– Top-down adaptive planning

• Clear concise guidance

– Multiple, interwoven plans– Balanced objectives– Information systems the “glue”

Focus on meeting changing customer needs


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People– Military cannot compete w/ compensation– New paradigm needed

Vendors– Strategic partnerships, cooperative solutions– Expand outsourcing

• Non-core capabilities

Technology– Apply, integrate -- Don’t chase


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Southern CompanySouthern Company

Vertically integrated holding company– Five Southeast US electric utility companies

Largest US electricity producer; most profitable

– Diversified, unregulated companies (e.g. gas)– 29,000 employees

Preparation for re-regulation & competition– Acquiring generating capacity/commercial

customers throughout US.– Global presence in six countries

#4 in worldwide generating capacity

– Marketing and trading energy as a commodity

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Southern Company Southern Company ObservationsObservations

Massive, top-down driven culture change– Shift from managing assets to satisfying

customers– Attempting to quantify impact on revenue from

increasing customer satisfaction Streamlining business planning

– Tighten link of company goals to budget process– Five year budget, three year emphasis

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Southern Company Southern Company ObservationsObservations

High emphasis on shared goals tied to pay– Tighten link of company goals to individual

performance, evaluation and compensation Link improvement in customer satisfaction to pay via

incentives

Implied contract with employees re-written– No longer “job for life” – Must be flexible

job description location hours

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Southern CompanySouthern CompanyRecommendationsRecommendations

Reward TEAMWORK, not just individual performance

“Family of performers,” not “family for life” Review processes, don’t just automate “Shared services” for common processes

– Travel, personnel, C4I– Don’t duplicate management at both Services

and DoD level Outsource very carefully

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SDFP Common SDFP Common Observations/RecommendationsObservations/Recommendations

Y2K Problem– Primes OK; Subs and Overseas way behind– Legal liability a growing roadblock– Major disruptions likely; contingencies required

R & D– Critical to longevity– $$$ fenced

Innovation– Risks taken– Failed experiments expected

Not career threatening

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Change management plan a must– Determine actual processes first– Educate and empower employees in changes– Multi-year process; leadership continuity critical

Incentives– An absolute for change– Fear not enough; benefits must be shared

Internal Organization– Flexible/dynamic structure– Collaboration/Teaming

Info tech the enabler

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Information Technology– Lease to maintain state of the art– Enterprise-wide architectures/protocols a must– Enabler for common admin function processes– Paperless/deskless/virtual when sensible

Strategic Planning/Vision– Topdown, not bottom up

Fiscal Planning– 18-36 months max

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Outsourcing– Determine core business key - don’t outsource

Demographic imperatives– Workforce shortage– Industry increasingly forced to educate– Growing competition with military for skills

Partnerships/Teaming– Trust, sharing -- Not adversarial

Culture– High employee value compensated

Secretary of Defense Fellows Program 1 Secretary of Defense Fellows Program 1997- 1998.

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Transcript of Secretary of Defense Fellows Program 1 Secretary of Defense Fellows Program 1997- 1998.