Final Report of the 199596 SECDEF Fellows Program

1
Final Report Secretary of Defense Corporate
Fellowship Program 2004 - 2005
2
Agenda

• Background
• Common Findings/Recommendations
• Individual Experiences (time permitting)

3
SDCFP Background

• SECDEF concerns for future Service leaders
• Open to organizational and operational change
• Recognize opportunities made possible by info
  tech
• Appreciate resulting revolutionary changes
  underway
• Affecting society and business now
• Affecting culture and operations of DoD in future
• Businesses outside DoD successful in
• Adapting to changing global environment
• Exploiting information revolution
• Structural reshaping/reorganizing
• Developing innovative processes

4
SDCFP Organization

• Two officers from each Service
• High flag/general officer potential
• O-6 or O-5
• Senior Service College credit
• Group Education
• Current political/military issuesleading edge
  technologies
• Meetings with senior DoD officials, business
  executives, Members of Congress, the press,
  former sponsors, alumni
• Graduate business school executive education
• Eleven months at Sponsoring Company
• Permanent Staff
• SDCFP Director, Admin Assistant
• Net Assessment for oversight
• National Defense University for Admin support

5
SDCFP Sponsors

• 1995 - 2004
• 3M, ABB, Accenture, Agilent Technologies,
  American Management Systems, Amgen, Boeing,
  Cisco, DirecTV, DuPont, Enron, FedEx, General
  Dynamics, Hewlett-Packard, Human Genome Sciences,
  IBM, Lockheed Martin, Loral, McDonnell Douglas,
  McKinsey Co., Merck, Microsoft, Mobil,
  Netscape, Northrop Grumman, Oracle, Pfizer,
  PricewaterhouseCoopers, Raytheon, Sarnoff, Sears,
  Southern Company, Sun Microsystems, United
  Technologies
• 2004-2005
• 3M, Caterpillar, Cisco, Hewlett-Packard,
  Honeywell, Lockheed Martin, SRA International
• 2005 2006
• FedEx, Insitu Group, Johnson Johnson, Raytheon,
  Southern Company, Sun, Symbol Technologies,
  United Technologies

6
SDCFP Results

• Program objectives fulfilled
• Education
• DoD, Individual officers, Sponsors
• More Sponsors than Fellows available
• Intra-group experience sharing
• Unique corporate experience
• Strong corporate support
• Executive/operational level mix
• Mergers/restructuring

7
SDCFP Products

• 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
• Report and Briefings directly to SecDef, others
• Business insights relevant to DoD
  culture/operations
• Recommended process/organization changes

8
And we must transform not only our own forces,
but also the department that serves them by
encouraging a culture of creativity and
intelligent risk taking. We need to promote a
more entrepreneurial approach to developing
military capabilities, one that encourages
peopleall peopleto be more proactive and not
reactive, to behave somewhat less like
bureaucrats and more like venture
capitalists Secretary of Defense Donald
Rumsfeld Remarks to The National Defense
University 31 January 2002
9
2004 - 2005 Fellows

• Col John Clark Lockheed Martin Corporation
• Dallas, TX
• Col Scott Vander Hamm 3M Company
• St. Paul, MN
• CAPT Mark Rich Honeywell International, Inc.
• Columbia, MD
• LTC(P) Dennis Slagter SRA International, Inc.
• Fairfax, VA
• Col (S) Ed Wilson Cisco Systems, Inc.
• San Jose, CA
• CDR Mike Murphy Hewlett-Packard Company
• Reston, VA
• Lt Col Howard Parker Caterpillar,
  Inc. Peoria, IL

10
Agenda

• Background
• Common Findings/Recommendations
• Individual Experiences (time permitting)

11
Two Distinct Cultures

• Corporate America
• Profit and growth
• Market centric/customer focused
• Cost conscious (profit/loss) culture
• Street/competition drive urgency
• Ruthless advocate for efficiency
• Continuously reinventing tech base

• DoD
• Mission accomplishment
• Service centric
• Spend culture
• Politics/budget/ops drive urgency
• Tenacious advocate for warfighter
• Develop in blocks and spirals

...with Best Practices to Share
12
Framework
Technology
ENABLING TECHNOLOGIES
Over time, the most successful organizations
achieve world-class results across key areas in
an integrated manner
Framework adapted from What Really Works,
Joyce, Nohria Roberson
13
STRATEGY
ORGANIZATION CULTURE
EXECUTION
TALENT
ENABLING TECHNOLOGIES
Where Great Companies Put their Emphasis
Adapted from What Really Works
14
Strategy

• DoD Relevance
• Increasing customer value in the requirements
  process
• Clarifying and focusing the budget cycle
• Anticipating changes in the security environment
• Increasing returns on RD investments
• Recommendations
• Apply marketing methodologies to requirements
  development
• Manage anticipated changes in the security
  environment
• Review and manage core capabilities

15
Strategy
Apply Marketing Methodologies to Requirements
Development

• Observations
• Why Marketing?
• Not selling deciding what to sell to whom
• Define the business, segment the market, ID
  target segment, develop value proposition and
  go-to-market plan
• Requires enables true understanding of the
  customer competition
• Industry tools get at customer value
• Feature/Benefit/Value relationship
• Voice of the Customer, Employee Satisfaction,
  Customer Strategic Review, data analysis tools,
  application methodology
• DoD should
• Apply Marketing methodology to Service
  Requirements processes
• Understand stakeholder relationships,
  interdependencies better
• Increased Requirements specifications fidelity
• Increase Requirements process value
• Promote transparency between Services

16
Strategy
Manage Anticipated Changes in the Security
Environment

• Observations
• Corporate mindset to be alert for market
  transitions
• Change usually begins on the edges
• Stable investment streams important
• Industry moving to outcome based research
  investment process
• Interdependent vice individual projects
  prioritized
• Business outcome driven effects based
  decision-making
• Industries with similar decision criteria
  benchmarked
• DoD should
• Accommodate DoDs broader focus, different time
  horizon
• Increase Return on (R D) Investment (ROI)
• Stay committed to stabilize long-term RD
  funding
• Apply Marketing processes to ACTD process
• Apply Six Sigma tools methodology to RD
  investment decision processes
• Benchmark industry leaders

17
Strategy
Review Manage Core Capabilities

• Observations
• Corporations constantly adjust to changing
  environment
• Leverage transition periods for competitive
  advantage
• In-house, outsource, or out-task decisions
• Core or context (relative to business) gap
  evaluation
• Mission critical or non-mission critical
  evaluation
• DoD should
• Review Command/Service/Agency capabilities
• Assess processes - core vs context
• Apply Build/Partner/Acquire decision to
  core/context evaluation
• Build to close gaps in core mission critical
  capabilities
• Acquire (outsource) non-core where capability
  exists affordably
• Partner (out-task) where gaps are common or
  cost-prohibitive

18
STRATEGY
ORGANIZATION CULTURE
EXECUTION
TALENT
ENABLING TECHNOLOGIES
Where Great Companies Put their Emphasis
Adapted from What Really Works
19
Execution

• DoD Relevance
• Flawless execution mission success
• Supporting troops, meeting needs of combatant
  commanders
• Quest for excellence in all areas
• Eliminating waste frees dollars for critical
  priorities
• Recommendations
• - Improve Information and Supply Chain Management
• Adjust Acquisition Reform
• Implement process improvement methodology

20
Execution
Improve Info and Supply Chain Management

• Observations
• Ops, Info Management, Supply Chain Management
  converging
• IT no longer a support tool
• Information is the business
• Supply Chain Management vital to operational
  success
• DoD should
• Push convergence - Navy N6 (C4I)/N7(Requirements)
  good example
• Strengthen DoD CIOs role
• DoD-wide IT architecture stds that encompass
  entire operational scope
• Continue Supply Chain improvement implementation
• Cross service collaboration of best practices

21
Execution
Adjust Acquisition Reform

• Observations
• Corporate America believes Acquisition Reform on
  track, but
• Pendulum has swung too far in some areas
• DoD should
• Make Quality Assurance part of the contract not
  assumed
• Mandate First Article Inspections and physical
  configuration audits
• Both sides determine what is good enough
• Larger role for DCMA in Tier II/III risk
  management and quality control
• Better quality from Subs/Suppliers to Primes
• Require subcontractor, supplier management plan
  from Prime
• Continue to foster closer partnerships with
  industry

22
Execution
Implement Process Improvement Methodology

• Observations
• Corporations adapt to change in disciplined
  manner
• Common language, common metrics
• 4-6 year commitment required for organizational
  DNA change
• Top level support imperative
• Change driven by change agent teams
• Annual budget savings of 23
• DoD should
• Develop / implement a formal process improvement
  methodology
• Dedicated fully resourced effort
• Eliminate inefficiencies and improve process
  quality
• Teach in leadership training and at all levels of
  PME

23
STRATEGY
ORGANIZATION CULTURE
EXECUTION
TALENT
ENABLING TECHNOLOGIES
Where Great Companies Put their Emphasis
Adapted from What Really Works
24
Talent

• DoD Relevance
• DoD OPTEMPO can stress service-level manning
• DoD must compete for talent with private industry
• DoDs NSPS applies some of private industrys
  best practices
• Private Industry focus on execution is the
  bottom line
• Recommendations
• Increase leader stability and continuity
• Continue focus on leader development
• Develop management skills as a core competency

25
Talent
Increase Leader Stability and Continuity

• Observations
• CEOs emphasize importance of senior leader
  commitment to change
• Leader continuity is key to winning business
  strategies of
• Agility and adapting to market place changes
• Creating a culture for change and transformation
• Constantly communicating organizations values
  and vision
• DoD Should
• Increase tour lengths for key leaders (military
  civilian)
• Recognize and reward all players on the team
  (line staff) equally
• Drive performance improvement for GS ranks
• Institutionalize incentives for top performers
• Improve or out

26
Talent
Continue Focus on Leader Development

• Observations
• Emerging focus in Industry
• Industry lacks up or out pressures
• Industry constrained by individual mobility
  options
• Team based and collaborative across boundaries
• Often involves mentoring by senior leadership
  (imprints subordinates)
• DoD should
• Partner with Industry for leadership exchanges at
  junior officer levels
• Leverage early successes from NSPS across the
  Services quickly
• Develop short-duration leader training programs
• Continue leader development training investment
  even during GWOT

We needed to excite the talented middle in our
ranks 3M Executive
27
Talent
Management (not just leadership) a Core Competency

• Observations
• Corporations emphasize both leadership
  management
• Flawless execution is the key to achieving
  bottom line growth
• Metrics, process improvement, instrumentation are
  best practices
• DoD emphasizes leadership over management
  skillsrightly but balance may help
• DoD should
• Recognize that both skill sets are complementary
• Incorporate executive MBA training into existing
  education programs
• Outsource management training
• Build a bench of management excellence outside of
  acquisition field

Whats important? How well your machine works
and how well you relate to others Lockheed
Executive
28
STRATEGY
ORGANIZATION CULTURE
EXECUTION
TALENT
ENABLING TECHNOLOGIES
Where Great Companies Put their Emphasis
Adapted from What Really Works
29
Organization Culture

• DoD Relevance
• Importance of strong core values
• Simplify ability to eliminate redundant
  organizations
• Keep raising the bar reward achievement with
  praise pay
• Harness innovation as catalyst for transformation
  efforts
• Recommendations
• Continue strong emphasis on core values
• Institutionalize disciplined change management
• Drive cost conscious vs. spend culture

30
Organization Culture
Continue Strong Emphasis on Core Values

• Observations
• Pervasive commitment to doing the right thing for
  customers
• Ethical standards, honesty, trust, quality
• Dedicated members in our Nations defense
• Strong commitment to corporate citizenshipgloball
  y
• DoD should
• Continue strong support to Services for core
  value efforts
• Invest in DoDs success, as well as our Nation,
  by exporting core values
• Increase visibility to public sector

Theres never a right way to do something
wrong. SRA Intl Executive
31
Organization Culture
Institutionalize Disciplined Change Management

• Observations
• Successful corporations adapt to change
• Disciplined part of enterprise processes
• Constantly learning at all levels of the
  organization
• Understand remaining static is not an option due
  to competition
• Successful change management requires
• People, process, technologyin this order
• Leadership commitment ability to communicate
  vision strategy
• New approaches anchored in the corporations
  culture
• DoD should
• Leverage common Process Improvement methodologies
• Continue broad-based improvement actions
• Eliminate regulation, policy, organizational,
  etc., obstacles
• Identify and measure key performance metrics

32
Organization Culture
Drive Cost Conscious vs. Spend Culture

• Observations
• Corporations focus on cost reduction
• Process improvement methodology (Lean, Six Sigma)
  
• Lower costs, increased productivity
• Performance-based compensation
• Tied to increased profits
• 10-60 of total, depending on pay grade
• DoD should
• Incentivize commanders at all levels to control
  costs
• Allow unit savings to be used locally - mission,
  QoL, etc.
• Unit working capital funds appear a ready-made
  solution
• Goal-based approach most successful
• Strategically aligned, clearly communicated,
  routinely reported
• Include cost savings In performance appraisals
• Focus on Total Cost of Ownership (TCO) when
  assessing alternatives

33
STRATEGY
ORGANIZATION CULTURE
EXECUTION
TALENT
ENABLING TECHNOLOGIES
Where Great Companies Put their Emphasis
Adapted from What Really Works
34
Enabling Technologies

• DoD Relevance
• Large, diverse enterprises require the right
  tools
• IT tools changing work environment, individual
  expectations
• Interface with industry/allies requires
  interoperable IT/other tools
• Recommendations
• Leverage emerging work-support technologies
• Use standard, electronic organizational processes
• Optimize facilities for the future environment

35
Enabling Technologies
Leverage Emerging Work-Support Technologies

• Observations
• Advanced IT accelerating virtual collaboration,
  matrixed teams
• International diversity key to success, yet
  remains challenging
• High technology corporations cultivating a
  culture of empowerment
• Complete network access driving strong work ethic
  (50-80 hrs/wk)
• DoD should
• Use mobile/wireless technologies to increase
  productivity
• Adopt telecommuting guidance, virtual
  collaboration tool standards
• Continue transformation to Internet-based
  solutions

36
Enabling Technologies
Use Standard, Electronic Organizational Processes

• Observations
• Several high tech corporations have made
  transition to paperless
• Strong productivity gains by developing paperless
  processes
• Not just duplicating paper forms on-line
• Broad application to operational and support
  organizations
• Travel planning, reservations, vouchers, etc.
• Human Resource activities (job openings,
  performance ratings)
• Meeting scheduling, agendas, conduct, follow-up
• DoD should
• Implement paperless processes wherever possible
• Implement virtual, collaborative processes
• Process first, then technology solution

If it isnt on the web, people dont take it
seriously Cisco Sr. Director
37
Enabling Technologies
Optimize Facilities for the Future Environment

• Observations
• Fusion of wireless voice, data, video
  collaborative workspaces
• Drives more careful facilities management
• Creative workspaces can increase productivity,
  generate savings
• Small mobile team concepts
• DoD should
• Ensure facilities planning includes entire
  requirements spectrum
• Present and future especially communications
  and power
• Implement flexible workspace utilization modes
• Small team staff and back office organizations
• Acquisition offices, PME, headquarters staff,
  etc.

38
Enabling Technologies
Specific Technological Opportunities

• Advanced Video Conferencing Technology
• Natural Language Processing
• Radio Frequency Identification (RFID)
• Internet Protocols
• Voice Over IP (VOIP)
• Blackberry wireless VOIP
• Identity Management
• Hyperspectral imagery
• Storage Area Networking (SAN)
• Broadband into the home
• Instant Messaging / Chat
• Virtual Modeling and Simulation
• ePaper
• Multi-layer film Laser protection
• Electronic Dashboard (for metrics measuring)

39
Summary of Recommendations

• Strategy
• Apply marketing methodologies to requirements
  development
• Manage anticipated changes in the security
  environment
• Review and manage core capabilities
• Execution
• Improve Information and Supply Chain Management
• Adjust Acquisition Reform
• Implement process improvement methodology
• Talent
• Increase leader stability and continuity
• Continue focus on leader development
• Management (not just leadership) is a core
  competency

40
Summary of Recommendations

• Organization Culture
• Continue strong emphasis on core values
• Institutionalize disciplined change management
• Drive cost conscious vs. spend culture
• Enabling Technologies
• Leverage emerging work-support technologies
• Use standard, electronic organizational processes
• Optimize facilities for the future environment

41
Agenda

• Background
• Common Findings/Recommendations
• Individual Experiences (time permitting)

42
Lockheed Martin Corporation

• World's largest defense contractor
• 132K employees (85K scientists and engineers)
• 35.5B 2004 sales, 73B backlog, 2.9B cash
• Main business segments
• Aeronautics, Electronic Systems, Space Systems,
  Integrated Systems and Solutions, and Information
  Technology Services
• Corporate Strategy Disciplined growth to
  increase shareholder value
• Operational performance and customer satisfaction
  as top priorities
• Consistent financial performance including strong
  cash flow
• Focus on profitable growth in core markets (DOD,
  Homeland Security, IT)
• Assignment President, Missiles and Fire Control
  business area
• Strategic plans and PAC-3 program office

43
Observations (LM)

• LM employees Dedicated members in our nations
  defense
• Strategy Clearly stated focused on customer
  value
• IRD, Shared Vision, Lab insertion
• Execution Flawless operational execution
• Executive leadership Council, rigorous metrics,
  cost consciousness,
• Lean/Six Sigma
• Culture Performance based, firm commitments,
  ethical
• Structure Matrix org -- Fast, flexible, and
  flat
• People recruit, retain, reward, and develop
  leaders
• Intern program, development programs, pay linked
  to performance
• Innovation 30 IRD invested in new tech --
  passion for invention
•  

44
Recommendations (LM)

• Ensure sufficient funds for Contract RD through
  labs, DARPA
• Review core competencies and reduce duplication
  and redundancy
• Continue to aggressively pursue outsourcing
  opportunities
• Implement a formal process for process
  improvement
• Management skills are as important as leadership
  skills
• Incorporate executive MBA training in our PME
• Encourage commanders to save resources and
  manpower
• Provide incentives to save and measure on
  performance reports
• Transform from a spend culture to a cost
  conscious culture
• Institute a formal mentorship program for
  scientists and engineers
• Focus on stabilizing key leadership positions to
  drive transformation

45
DOD Acquisition

• Program stability is key to delivering a
  successful program
• Acquisition reform receives high marks but need
  to add
• Physical Configuration Audits and First Article
  Inspections
• Improve communication w/ industry while
  protecting proprietary data
• Knowledge Transfer major issue with ageing
  workforce
• Supplier base demands a great deal of LMs
  attention
• COTS, parts obsolescence, quality controls create
  supplier issues
• Make subcontractor and supplier management plan
  part of bid
• Benchmark DCMAs risk assessment for LMMFC
  programs
•  

46
3M Company

• Innovative Diversified Technology company
• Revenues 20.1B (61 international)
• 67K employees (51 international)
• Operations in 60 countries products sold in
  200
• Seven businesses 40 units
• Health Care
• Industrial
• Display and Graphics
• Consumer and Office
• Electro and Communications
• Safety, Security, and Protection Services
• Transportation
• Corporate Strategy
• Delivering solid, consistent profit growth,
  driven by organic
• top-line growth and continuous improvements in
  operational efficiency
• Assignment - Six Sigma Operations
• Black Belt, Master Black Belt, Design for Six
  Sigma Champion

47
Observations (3M)

• Six Sigma driving results in cost, cash, growth
• Common language, established channels, measured
  performance
• Aggressive business initiatives optimize
  processes
• Six Sigma
• e-Productivity
• Global Sourcing
• Global Business Processes
• 3M Acceleration
• 1.7B combined Operating Income impact of five
  initiatives since inception
• Entrepreneurial Leadership
• Utilizing Six Sigma and leadership development
  opportunities
• Performance management focus
• Stretch assignments
• Top management engagement in growth

48
Recommendations (3M)

• Deploy a DoD process improvement discipline
  similar to Six Sigma
• Top level support
• Beware superficially applied, under-resourced
  quality programs
• Common language, common metrics
• Leverage DoD size in back room processes
• Incorporate Radio Frequency Identification (RFID)
  technology
• Where 100 accountability is critical
• Medical, Personal Reliability Program (PRP),
  logistics, intel
• Partner with the services to provide
  comprehensive DOD solution to protecting
  cockpits, tanks, and vehicles with multi-layer
  film to protect eyes from outside lasers
• Consider synergy of establishing joint labs,
  acquisition offices, joint requirements offices,
  joint research and development organizations

49
Honeywell International Inc.

• Fortune 100 Company
• 25B sales, 31B market capitalization
• 108K employees in nearly 100 countries
• Business segments
• Aerospace
• Automation and Control Solutions
• Transportation Systems
• Specialty Materials
• Corporate Strategy Five Initiatives to drive
  success
• Growth, Productivity, Cash, People, Enablers
  (DigitalWorks 6?)
• Principal interrelated key processes
• Strategic Planning Process (STRAP) for direction
• Annual Operating Plan (AOP) for budget
• Management Resource Review (MRR) for people
• Assignment - Honeywell Technology Solutions, Inc
  (HTSI)
• Aerospace Sector, Aerospace Electronic Systems
• Business Development Military Segment

50
Observations (Honeywell)

• History and heritage
• AlliedSignal Honeywell merger
• New CEO in 2002 brought Five Initiatives
• Globalization
• Expanding overseas, going where the customers are
• Functionalization
• Engineering, HR, IT, Program Management, Supply
  Chain
• Marketing Transformation
• Deeper understanding of customers competitors
• HTSI
• Focusing on growth
• Organizational realignment
• Government Services division of a product-centric
  company
• Return on Investment (ROI) vs. Return on Sales
  (ROS)

51
Observations (Honeywell)

• Honeywell (AlliedSignal) leader of Six Sigma
• Senior leadership buy-in
• Across entire business (organization)
• Dedicated resources
• Best people in Six Sigma billets
• Efforts linked to critical needs
• 6? includes Six Sigma, Lean, Design for Six
  Sigma
• Functionalization key to flattening the
  organization
• Key issues for Honeywell / HTSI
• Driving profitable growth
• Changing environment
• Integrating the sectors, segments and businesses
• Cross-Honeywell strategy, product pull-through,
  joint initiatives
• Mindset
• Conservative approach
• Prime or sub dilemma

52
SRA International

• A Fortune 100 Best Company to Work For
• Winner for last 6 years 4,100 employees
  nation-wide
• 2004 Revenues 615M / 2005 Projected 850M
• Growth from 2003 to 2004 49
• Company founded by a McNamara Whiz Kid (USAF
  Colonel)
• Corporate Strategy
• Provide IT Services Solutions to Federal
  Government only
• 65 DoD/DHS 35 Civil Government
• Hire employees for a career
• Innovation in C3I and Data/Text mining
• Assignment
• Defense Sector x 3 months (Business Unit /
  Project Level)
• Civil Sector x 5 months (Sector / Senior VP
  level)

53
Observations (SRA)

• Corporate Strategy working thru
• Selective acquisitions based on values not
  just of value
• Internal investments in explosive external
  growth
• Development of horizontal expertise to increase
  agility
• Persistent and insistent adherence to SRA
  Culture Values
• Corporate Execution focused on
• Genuine desire to add value for the
  customerethically
• Reaching for higher purpose goals (national
  interests)
• Caring for their people who provide the
  services
• Evidence?
• 80 win rate on new contracts 90 on
  re-competes
• Less than 12 personnel turn-over rate
• Demonstrated willingness to invest to
  maintain customer
• satisfaction
• Employee incentives found at all levels of the
  company

54
Recommendations (SRA)

• Transformation
• Change is occurring and will continue in DoD
• Rapid change requires incentives
• Effective change requires focus
• Industry focuses on
• Helping DoD identify its requirements and
  solutions
• Incentives for their people
• Being agile and responsive
• Investment in internal growth and processes
• What can or should DoD learn from industry?
• Investments in people Incentives for people
  Rapid Transformation

55
Cisco Systems Inc.

• Global leader in Internet innovation, equipment,
  services
• Revenue 23B profit 15B ( 6.8B cash)
• Market Capitalization 132B (21 WRT top 11
  competitors combined)
• 35K employees worldwide (657K profit/employee)
• Primary business segments
• Core - routers switches
• Advanced Technologies - Voice over Internet
  Protocol (VOIP), optical, wireless, etc
• Service Provider - tech support, manufacturing,
  training, etc
• Corporate Vision - Changing the way we work,
  live, play and learn
• Unprecedented value opportunity - Cisco
  synonymous with productivity
• Customer partner status - technology business
  success trust
• Network evolution leader - End-to-End ? Net of
  Nets ? Intelligent Network
• Expand, grow Advanced Technologies - 4 new
  business areas ? 2B, 8 ? 1B
• Drive quality, security, systems, processes into
  culture
• Assignment IT/Infrastructure Business Practices
• Program management improvements
• Strategic planning initiatives

56
Observations (Cisco)

• Strategy Pioneer use of Internet for all
  business activities
• Generate 95 of sales via www.cisco.com website
  (40K/minute)
• Showcase internal IT Internet solutions ? revenue
  generation
• Execution Build, acquire, partner
• Leader in business acquisition ? 90 companies in
  last 10 yrs
• 1,000 new employees/month over 3 yr period in
  late 90s
• Organization Empowerment via virtual
  collaboration, matrixed teams
• International diversity key to success remains
  challenging
• Reward success (top 20)
• Aggressively manage poor performance (bottom 5)
• Actively build consensus (recurring 11s) use
  360 degree feedback sessions
• Culture Intense organizational commitment to
  Cisco Culture
• Customer success, innovation, stretch goals,
  integrity, corporate citizenship
• Complete network access drives strong work ethic
  (50-80 hrs/wk typical)

57
Recommendations (Cisco)

• Continue transformation to Internet-based
  business solutions
• Leverage corporate investment in robust IT
  foundation lessons learned
• Virtual collaboration holds potential for rapid
  change at all levels
• Drive towards increased info accessibility/availab
  ility
• Balance with info security
• Strengthen (potentially elevate) CIO role within
  DoD organization
• Enable stronger partnerships with tech industry
  leaders
• Provide focal point for spending authority,
  interoperability, standardization
• Potential to leverage lower cost, overseas
  solutions
• Balance with procurement regulations, security,
  Congressional oversight
• Assess benefit of proactively identifying/separati
  ng low performers
• Build strong incentives for higher performance
• Additional tool to manage reductions in force
  when required

58
Hewlett-Packard Company

• Worlds leading consumer and small/med business
  IT company
• 80B Sales (11 on Fortune 500)
• 152K employees worldwide
• Business segments
• Imaging Printing
• Personal Computing
• Enterprise Systems
• HP Services
• Corporate strategy - Increase value through
  growth innovation
• Reliable innovation at a price our customers
  can afford,
• delivered with an experience that sets us apart.
  
• We deliver high tech, low cost and best customer
  experience
• Assignment - VP Federal Sales

59
Observations (HP)

• Much of the HP Way remains intact
• Left to themselves, employees will do the right
  thing
• Departure of CEO Fiorina had cultural overtones
• Similar to US Services
• Size, worldwide reach, team diversity
• Challenges
• Employee integration
• Team building
• Communication and horizontal integration
• Acquisition of Compaq
• Resembles integration of US Services in joint
  environment
• CNO has had this discussion with HP CEO

60
Observations (HP)

• Commitment to doing the right thing for the
  customer is pervasive
• Historically, no aggressive lobbying or direct
  attacks
• Share of direct business with DoD relatively
  small
• Plan for public sector growth being debated
  internally
• Strong commitment to global citizenship
• More than traditional philanthropy (not just
  writing checks)
• New CEO is much more hands-on, operationally
  oriented
• Well-received by analyst community and by
  employees

61
Caterpillar Inc.

• Worlds largest heavy equipment producer
• Construction equipment
• Mining equipment
• Natural gas engines
• Industrial gas turbines
• Diesel engines
• Heart of Illinois - Peoria
• 30.25B sales 2.03B profits
• 77K employees (38K U. S.) 198 dealers
  worldwide
• Main business segments Machinery, Engines,
  Financial Products
• Professional corporate culture
• Steeped in Midwestern values grows own leaders
• Positive work environment - trust, quality,
  community involvement
• Ethical standards and honesty in dealing with
  customers
• Assignment
• CAT Logistics VP, Human Resources Division
• Strategic projects in leadership training,
  recruitment, employment, retention
• Operations Area next

62
Observations (CAT)

• Cat employees - dedicated, innovative and
  professional.
• Relationship with company characterized as
  Partnership Very Patriotic
• Strategy - articulated top down executed bottom
  up
• Focused on 3Ps
• Profitable growth, Performance through Six Sigma
  and People
• Execution Operational excellence in all areas
• Involved senior leadership
• Professional corporate culture
• Positive work environment-trust, quality,
  community involvement
• Ethical standards and honesty in dealing with
  each other and customers
• Structure - Matrix org w/ 26 business units
• People
• Diversity focused getting right people on the
  bus is corporate critical success factor
•  

63
Recommendations (CAT)

• Deploy Six Sigma or similar process improvement
  methodology for elimination of inefficiencies and
  process quality improvements
• Conducted top to bottom force structure review
  to ensure we are getting right people with rights
  skills to meet future challenges
• Conduct comprehensive pay study to close pay gap
  with civilian sector
• Restructure benefit packages
• Adapt Shared Services Model focus on core
  functions/enablers
• Conduct study to assess implementing Behavior
  Based Safety Methodology

64

• Backup

65
Execution
Key Roles Six Sigma Organizations
Service Chief
Unified Commanders
DOD / Joint Director
Six SigmaDirector
Six Sigma Director
Six Sigma Operations
MAJCOM CC
CFACC/CFLCC/CFMCC
BB
BB
Base CC
Corps CC
Wing CC
NAF CC
MBB
BB
BB
MBB
MEF/CC CAG/CC
BB
Post CC
BB
GB
GB
GB
GB
KEY
Functional Leader
Functional Leader