Lessons Learned in Transitioning to Alternate Organizational Models

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Lessons Learned in Transitioning to Alternate
Organizational Models

• Robert E. Fenton
• Adjunct Senior Lecturer in Engineering Management
• The Catholic University of America
• December 15, 2004

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Agenda

• A model for organizational transition
• The nature of an FFRDC
• Some lessons learned on FFRDCs
• Case study New FAA Air Traffic Organization
• Recommendations

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Transitioning to a New Organization The
Eight-Stage Process to Creating Major Change
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The Nature of an FFRDC

• Strengths (1)
• Strategic partnership with sponsor
• Long-term continuity
• Comprehensive knowledge and corporate memory
• Adaptability
• Objective, high-quality research
• Independence (B-2 vignette)

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The Nature of an FFRDC (contd)

• Freedom from conflicts of interest
• Access to sensitive governmental, proprietary
  information
• Quick response capability
• (1) GAO/T-NSIAD-96-117, 03/05/96

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Potential Risks

• Issues over scope of work, appropriate FFRDC
  roles
• Erosion of capability (e.g., system development)
• Possible loss of objectivity if development
  occurs
• Lack of competition poor performance
• Lack of needed values (e.g., competition,
  risk-taking, entrepreneurship)
• Capture by sponsor
• Crucial role of leadership, governing
  institutions
• Congressional restrictions, micromanagement

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Some FFRDC Lessons Learned

• Most FFRDCs based on preserving existing
  capability
• Leadership/personnel are crucial, not structure
• Technical knowledge/management skills
• Integrity
• Washington maturity
• Communications/negotiation skills
• Sources ex-USAF/USN, space, industry academia
  for technical skills

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FFRDC Lessons Learned (contd)

• Understand needs/issues of governing body
• Understand culture of sponsor and Congress
• Agree early on core mission/work, core
  competencies, fee structure and use, expected
  staffing/funding levels and any non-core or
  diversified clients

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Case Study

• The FAA Air Traffic Organization

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The FAA Air Traffic Organization
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The FAA Air Traffic Organization
Administrator Deputy Administrator
Chief Operating Officer (COO)
ATO Transition SR. VICE PRESIDENT
temporary
Support Service Units
Communications VICE PRESIDENT
Operations Planning VICE PRESIDENT
Acquisition Business Services VICE PRESIDENT
Federal Acquisition Exec.
Safety VICE PRESIDENT
Finance SR. VICE PRESIDENT
Operating Service Units
Technical Operations VICE PRESIDENT
System Operations VICE PRESIDENT
Terminal VICE PRESIDENT
En Route Oceanic VICE PRESIDENT
Flight Services VICE PRESIDENT
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The Sense of Urgency - A Burning Platform
If OMB funding estimates for the next few years
are accurate, we face severe funding deficits.
In spite of rising demand, we must control costs
and better manage our finances.
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Transitioning to the Future

• Organize around our customers
• Define products/services from external
  perspective (service model)
• Change our leadership model
• Change personality (stovepipe) to
  organizational management
• Simplify basis of performance for the
  organization
• Develop metrics based on value-based units of
  output

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Transitioning to the Future (contd)

• Baseline our resources
• Understand our basic resource and cost drivers
• Develop a rolling five-year business plan
• Establish forward revenue and cost management
  practices
• Execute the plan
• Drive operating and financial management goals
  from top to bottom

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Accomplishments

1. Business Plan briefings
2. Early-out offering
3. Implemented three Service Areas across nation
4. Air traffic controller hiring plan
5. Chicago OHare agreement on number of arrivals
   per hour
6. FY04 Flight Plan success
7. Developed draft milestones for FY05 Flight Plan

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Lessons Learned from ATO Transition

• Organizational locus is sub-optimized
• Possible alternatives privatized entity,
  Government corporation
• Selection of guiding coalition based on
  continuity of ATC services and desire to change
  ATO service model/culture
• Burning Platform acceptance is crucial to ATO
  organizational change and long-term success
• Change from highly structured, paramilitary FAA
  culture to entrepreneurial, cost/
  customer-focused culture will be very difficult
• Dealing with Congressional dual personality will
  be very difficult

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Recommendations

• Create a mission-based sense of urgency
• Focus early on selection of Guiding Coalition
• Build around an existing capability
• Establish early agreement with Sponsor/Congress
  on core mission, etc.
• Consider pay-for-performance approach akin to
  private sector

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Recommendations (contd)

• Consider mentor/protégé relation with existing
  FFRDC (e.g., RAND, CNA)
• Consider partnership for development akin to
  Aerospace/TRW for ICBM erect permeable wall
• Consider consulting agreement for FFRDC start-up
  with Dr. Donohue (former RAND VP, Project Air
  Force)