SECDEF Corporate Fellows Program 1 Final Report of the Secretary of Defense Corporate Fellows Program 2002 - 2003

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SECDEF Corporate Fellows Program

Final Report of the

Secretary of DefenseCorporate Fellows

Program2002 - 2003

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AgendaAgenda

Background

Common Findings/Recommendations

Individual Experiences (time permitting)

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SDCFP BackgroundSDCFP 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

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SDCFP OrganizationSDCFP Organization

Two officers from each Service– High flag/general officer potential– O-6 or O-%– Senior Service College credit

Group Education– Current political/military issues;leading 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

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SDCFP SponsorsSDCFP Sponsors

03 - Prior– 3M, ABB, Accenture, Agilent Technologies, AMS, Boeing, Cisco,

DirecTV, Enron, FedEx, Hewlett-Packard, Human Genome Sciences, Lockheed Martin, Loral, McKinsey & Co., McDonnell Douglas, Merck, Microsoft, Mobil, Netscape, Oracle, Northrop Grumman, PricewaterhouseCoopers, Raytheon, Sarnoff, Sears, Southern Company, Sun Microsystems, United Technologies

02- 03 – Boeing, FedEx, IBM Business Consulting Services, (formerly

PwCC), Pfizer, Raytheon Aerospace, Southern Company, Sun Microsystems

03- 04– Amgen, DuPont, General Dynamics, McKinsey, Microsoft,

Northrop Grumman, Sarnoff

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SDCFP ResultsSDCFP Results

Program objectives fulfilled– Education3

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

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SDCFP ProductsSDCFP Products

Report and Briefings directly to SecDef, others– 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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“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 people--all people--to be more proactive and not reactive, to behave somewhat less like bureaucrats and more like venture capitalists… “

Secretary of Defense Donald RumsfeldRemarks to The National Defense

University31 January 2002

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2002 - 2003 Fellows2002 - 2003 Fellows

Lt Col Eric Best The Boeing CompanySt Louis, MO

LTC David Clark Pfizer, Inc. New York, NY

COL David De Vries IBM Business Consulting ServicesFairfax, VA

LtCol Clyde Frazier, Jr. Southern Company Atlanta, GA

Col David Gerber FedEx CorporationMemphis, TN

CAPT(S) Adam Levitt Sun Microsystems, Inc.San Jose, CA

CAPT(S) Rick Ruehlin Raytheon Aerospace, LLC Jackson, MS

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AgendaAgenda

Background

Common Findings/Recommendations

Individual Experiences (time permitting)

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IntroductionIntroduction

Corporate Fellows and DoD Transformation in 2003

– Transformation is about culture– Private sector leads in adaptation—very dynamic & competitive– Sluggish economy forcing corporate transformation– DoD transformation efforts in right direction

This brief is not about computers and the Internet, however…– Networks drive transformation– IT innovation significantly leads our ability to adapt and exploit it– The private sector leads DoD in adapting to IT

Organizational dynamics + IT = synergistic gain– Organization– Processes– People

Many lessons to share!

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Common FindingsCommon Findings

Organization– Understand the Core– Break Down Stovepipes

Processes– Improve Processes – Share Services– Enforce Enterprise Architectures– Create Value– Reform Financial Management

Personnel– Develop Future Leaders– Attract and Retain– Exploit Organizational Knowledge and Skills

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OrganizationOrganization Understand the CoreUnderstand the Core

Corporate America focuses on core competences– Basis for market leadership and internal efficiency– Non-core activities outsourced through partnerships/alliances

DoD should:– Develop and communicate DoD-wide core competences

Develop warriors, adapt technology, integrate operations – Identify Service distinct capabilities

Tie directly to core competence; relate to mission areas Determine overlaps, redundancy, dependencies Align organizations to produce capabilities efficiently/effectively

– Partner with business for non-core activities Legislation must support mutually beneficial contract arrangements Leaders must use suitable, effective business strategies

The nucleus of our capability

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OrganizationOrganization Break Down StovepipesBreak Down Stovepipes

Corporate America optimizes organizational performance – Open System Modular Organizations (Small/Medium Scale) – Integrated Matrix Structures (Large Scale)

DoD should:– Small/Medium Scale (small unit task force)

Develop modular organizations to improve agility Design open system organizations that plug and play into the Net Small unit joint training and operations

– Large Scale (COCOMS & Services/Agencies) Align & integrate organizations around Joint core competencies Create effective DoD-wide shared services Avoid scale and seam limitations Create incentives for cooperative behavior

Integration is the key!

Army

Navy

Air Force

Marines

Unified Combatant Commands

• Basic Business Unit• Build/Control Budget (“P&L”)• Task organization efficient

DoD “Core” Matrix

DoD Shared Services • Provide the Services• No Service Unique• Enterprise Wide• Web Based

NO

RTH

CO

MS

OU

THC

OM

EU

CO

MP

AC

OM

CE

NTC

OM

SO

CO

MS

TRA

TCO

MTR

AN

SC

OM

JFC

OM

Agencies

Services and Agencies• Hold the People

Unique skill sets• Own the Resources• Train, Equip, Maintain

Real Estate

Logistics & Acquisition

IT Services

Financial Management

Depot Maintenance

Human Resources

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ProcessesProcesses Improve Processes Improve Processes

Corporate world uses large variety, number of tools– Lean, Six Sigma, Right First Time, Process Excellence, etc.– Tailored for incremental and big process change– Used for both admin and line processes

DoD needs two kinds of approaches– Process redesign

Leapfrogs, big, often zero-based– Continual improvement

Incremental, marginal, symptomatic– Institutionalize both

No “Department of Process Improvements” Situation drives timing and balance of each Top leadership support essential for any approach

. . . Get the tools and use them

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ProcessesProcesses Share ServicesShare Services

Corporate America centralizes certain ‘common services’ – Common services become centralized Shared Services– Cuts costs, improves efficiency, eliminates duplication – Companies focus on their “Core Competences”

DoD should:– Adopt Shared Services model from commercial industry – Identify common services to centralize

Common management of more Joint DoD bases Depot Maintenance, Information Technology (IT) HR/Personnel (finance, uniformed medical, etc.) Supply Chain Management (not just logistics) Transportation

– Support concepts; designate a champion– Institutionalize DoD-wide

. . . Centralize towards efficiency!

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Processes Processes Enforce Enterprise ArchitecturesEnforce Enterprise Architectures

Corporate America leverages industry best practices– Process improvement – Enterprise architectures– Uniform standards and enterprise systems

DoD Should:– Focus on end-to-end system architectures (not just Financials)

Integrated Operational (C4ISR) & Back Office systems Implement governance, processes to prioritize investments

– Adopt & enforce industry accepted open standards– Implement DoD-wide self-service, web based solutions

Financial Enterprise Resource Planning (ERP) Supply Chain Management – logistics / supplier portal Human Resources Management System (HRMS)

– Enable mobility with security (e.g. DoD Common Access Card)

Architecture + Standards = Interoperability

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ProcessesProcesses Create Value Create Value

Best businesses deliver maximum value to customer– Adopt culture of eliminating waste and improving quality– Get employees to think like customers

DoD should:– Review unit-level processes for value

Cultural change necessary; train leaders to ask “Why?” Empower lower levels; build cross-organization horizontal relationships

– Implement Lean principles in acquisition process Continue spiral development in high tech programs to reduce risk and time Give life-cycle costs more consideration in procurement decisions Revise funding practices to be responsive in technology push environment

– Adopt business approach to assessing and improving productivity “Show me the numbers” More people, pieces, or process?

Maximize value across the enterprise

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ProcessesProcesses Reform Financial Management Reform Financial Management

Private sector business model fundamentals– Simplified and standardized financial management– Incentives for efficiency and effectiveness

Get DoD from “As Is” to “Should Be”– Establish new structure and guidelines first

Before investing in DoD-wide systems– Adopt applicable private sector practices

Minimize number of financial organizations & reporting systems Change the rules, starting with O&M “Use or Lose” Use total organization financial performance measures Develop more financial leadership from operator ranks

Standards + simplicity = smart spending

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PersonnelPersonnel Develop Future LeadersDevelop Future Leaders

Rapidly evolving markets force corporate leader adaptability– Years ahead in hi-tech evolution, global markets, networks – Leaders are integrators

No similar drivers for DoD– Low bandwidth government, staff processes, recent conflicts – Corporate focus gets short shrift

Still too service-centric Joint still out of pocket, should be mainstream

– Sunk costs tyranny, decades-long acquisition cycles– Face-to-face communications a nice, but slow, expensive luxury– Today’s military leaders are transactional

Morale and execution controllers

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PersonnelPersonnel Develop Future Leaders (cont)Develop Future Leaders (cont)

DoD should: – Cultivate an “Agile Vision”

Blend old and new into Joint CONOPS Technology cycle times now as short as command tenure Drive underlying technology & process flexibility Disassociate people with systems

Systems go obsolete, people don’t

– Exploit 21st Century Communications Agile vision requires fast, complete comms to entire organization

Essential in large, geographically disbursed organizations Provide, train to, expect skillful use of all media Build cultural connections

Global education for trans-cultural competence at all military levels Vital to expeditionary, coalition ops with decreased overseas presence

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PersonnelPersonnel Develop Future Leaders (cont) Develop Future Leaders (cont)

DoD Should:– Identify, document, cultivate, promote integration skills

Lateral leadership in matrixed organizations Connecting people and processes with IT Resolving tensions with win-win solutions, not messy compromises

– Better understand networked organization incentives & discipline– Develop more flexible uniformed career paths

Build “out of the silo” multi-perspective integrators Kill “up or out” mentality Build in more joint tours earlier; more service exchanges Extend high year tenure, promotion zones Make General/Flag Officer selection boards joint

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PersonnelPersonnel Develop Future Leaders (cont) Develop Future Leaders (cont)

Move leadership from Transactional to Transformational– Push personnel, organization, resource decisions down

Executive leadership focuses on vision/bounds, not daily operations– Increase accountability

Demand and expect innovation Extend command tours; measure progress toward long-term vision Perception of mistakes will increase

– Grow pool of leaders with transformation track records Increase speed, adaptability, innovation, business (risk/return)

acumen

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PersonnelPersonnel Attract and RetainAttract and Retain

Corporate America Strives to be the Employer of Choice

DoD should:– Improve pay and promotion

Eliminate pay gaps; refine uniformed “up or out” promotion system– Restructure benefit packages

Portable and customizable– Promote flexible career paths

External career learning experiences– Provide workplace predictability

Longer tour lengths Earlier PCS notification OPTEMPO reduction

“It Takes the Best to Be the Best”

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PersonnelPersonnel Exploit Knowledge & SkillsExploit Knowledge & Skills

Corporate expertise and knowledge come from within– Close integration of business to process and culture– Outside consultants only for fresh ideas/complex studies – Conservation of overhead and general administrative costs

DoD Should:– Increase use of internal resources and experts

Values, strategy, and core business Expertise is value

Improved morale and pride of ownership Less paralysis by analysis – Faster & Cheaper More transformation stakeholders Hone the organization culture

“Just Do It!!”

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SUMMARYSUMMARY

Organization, Processes, People inextricably linked

– Transformation and operations

Improved processes improve operations (i.e. VALUE)

Transformation Leadership must be Involved Leadership

Information Technology is an enabler, not an end state

Maintain awareness of work force needs today and tomorrow

Accelerate and continue DoD transformation initiatives

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SECDEF Corporate Fellows Program World’s largest manufacturer of commercial /military aircraft and satellites

– Employees: 169,000+ in 26 states, 61 countries– Revenue: $58 B (1/3 international, #1 U.S. exporter) – Suppliers: 15,000+ in 81 countries – 1 of 4 large defense-focused companies still standing

Corporate Strategy and Culture– Core businesses develop new products/services, provide growth opportunities– Employees are the competitive advantage– July 2002 re-alignment to improve customer focus

Space & Comm + Aircraft & Missiles Integrated Defense Systems (IDS)– “Think Globally, Be Local”

Assignment: Unmanned Systems– Integration Team, UCAV Program, System Architecture– UAV National Industry Team (UNITE), National Defense Industrial Assn (NDIA)

The Boeing CompanyThe Boeing Company

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SECDEF Corporate Fellows ProgramSECDEF Corporate Fellows Program

The Boeing Company Observations

Company size limits agility in marketplace that values speed/innovation– Growth resulted in widely dispersed and very diverse corporate cultures– Extensive outsourcing allows continued focus on core competencies – Employee involvement and empowerment emphasized

Corporate re-alignment key to customer focus and future growth – Large defense contracts will keep IDS busy the next decade

JSF contract loss limits Boeing as a fighter aircraft builder – IDS brings valuable large-scale system integrator capability under one roof– Internal organizational alignment complex

Unmanned Systems unit leading UCAV market – Spiral development well suited

Incremental capabilities introduction Concepts of Operations (CONOPS) development

– Software key to success of Network-centric operations – International customers key to future profitability of unmanned systems

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The Boeing Company Observations

Big Boeing reinvents itself to stay relevant– Bombers to commercial aircraft to integrator (50/50)

To really change, we must change the way we think– Huge effort to focus on capability not platforms

Major change takes time– 4-year process? (Gary Toyama)

Focus on core– Get rid of non-core; ties directly to LEAN

Strategy and Process are critical

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IBM Business Consulting ServicesIBM Business Consulting Services

New (and emerging) business unit– BCS (Global): +60,000 Professionals in +160 countries– World’s largest consulting and services organization– Comprehensive capability spanning ideas to service

Acquired PricewaterhouseCoopers Consulting - 2 Oct 02 – Largest ever for IBM– IBM - PwCC global operations fully integrated by 1 Jan 03

Assigned to US Public Sector segment; Reports to:– Transition/Integration Leadership & Chief Operations Officer

Plan and execute integration of business cultures/systems by 1 Jan Plan and execute long-term business systems & processes

– Lead Partner for Supply Chain & Operations Solutions – Lead Partner for Federal Defense Industry

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IBM BCS IBM BCS Observations/Observations/Recommendations

Organizational Design: Used Best of Both– IBM back-office processes with PwCC client services matrix– Significant cultural shift and change management challenges for all– Short study time Decision Rapid execution Adapt & Communicate

DoD reduce number of studies for every decision

Multiple Accounting Systems: – New BCS had multiple accounting & payroll systems– Focused on integrating essential processes quickly; long term look for

new system– Significant change management issues and operational constraints

DoD continue Financial Management System initiative– Shorten execution period, now 5 – 10 years– Global corporations have changed in less than a year

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IBM BCS IBM BCS Observations/Observations/RecommendationsRecommendations

Human Resources– Integration and transition resulted in overages and requirements– Somewhat fluid in a matrixed organization

Growth from within similar to Military Experienced consultants brought in

– IBM corporate culture emphasizes slow HR growth Significant analysis and re-use of existing personnel Turbulent downsizing during last decade

– Extensive recruiting and retention program

DoD exercise discipline and speed in sizing – especially HQ– Manage the resulting culture change – Leadership is key

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IBM Business Consulting Services

Observations

Must lead new business strategy and goals

– “Be, Know, Do”.

Change management requires dedicated leadership

– Best with outside ombudsman

Incorporate Enterprise IT with flexibility

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FedEx ExpressFedEx Express

Creator and Leader of Overnight Express Shipment– One of six FedEx-branded operating companies – Model information age company, but capital and labor intense

214,000 employees in 212 countries: 90% of global economy Nearly 600 aircraft, 1000+ facilities

– 2002 revenue: $20.6B (paid first dividend) Culture

– Unity of mission: “Absolutely, Positively” & “The World on Time” Perfect customer service

– People-Service-Profit: No layoffs, hire from within Loyal employees, exceptional diversity

Market Environment– Seasonal, demand-driven, economic bellwether– Main competitor: UPS Top strategic partner/customer: US Mail– 2001-2003 toughest period in FedEx history--very low growth

Assignment: VP, Global Operations Scheduling, Control, Planning

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FedEx ExpressFedEx ExpressObservations/Observations/RecommendationsRecommendations

Still Refining “Operate Independently, Compete Collectively”– Classic joint issue: Service fault lines and confused customers

Former brunt of jokes, US Mail provides ~35% of fleet utilization

DoD: Parochial miscoordination is out, strategic partners are in

Decentralized, Scalable Operations Enabled Rapid Growth– Mass-replicated facilities are locally customized and optimized– Facilities are labs -- innovation spreads rapidly

High operations tempo, low personnel tempo– Well-delimited jobs with short, local, mostly on-the-job training– Nearly perfect dependability

DoD should:– Combine ops, test, and training units: Cheap, flexible, innovative – Growing change is faster, more robust, less risky than deploying change– Decentralized control develops transformational leaders

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Centralized Scheduling and Planning Face Scale Problems– Accretion: Increasing size is a liability as agility and speed decrease

Six months to settle after 9/11 and US Mail contract– System complexity exceeds cognitive abilities of a single person

Optimization impossible Built-in scale limits slow planning, drive accretion -- “IT Sprawl”

– Geography and time seams suboptimize fleet and facilities– Corporate investment in Large Scale Optimization lags FedEx growth

Scheduling systems should lead growth--core competitive issue

DoD should: – Centralization stifles growth and adaptability, promotes accretion– Replacing accreted systems is messy, expensive, absolutely necessary

Adopt open standards, avoid built-in seams & scale limits in new systems– Decentralized strategy is an elusive goal in all planning

What’s our strategic bandwidth?

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Core Problem: No Way to Value DoD Activities– No market, few transactions, little direct competition, no profit

measure – Purchaser is not a direct recipient of DoD combat services

The enemy is Good or bad value? Survey the Taliban?

The Solution?– Restructure defense establishment to build in market mechanisms– Strengthen relative value by defining effects and capabilities

Specify “what,” not “how” Stimulate off-the-shelf value and innovation vs mil-spec perfection

– Vision must integrate COTS, pipeline systems, & CONOPS

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Pfizer Inc.Pfizer Inc.Company OverviewCompany Overview

Research Based, Global Pharmaceutical Company – Corporate HQ: New York City– Employees: ~130 K– Revenues: ~ $50 B – R&D: ~ $7 B

Main business segments:– Health Care (Prescription Drugs)– Animal Health– Consumer Health Care (over-the-counter)– Includes Warner-Lambert and Pharmacia acquisitions

Sales growth routinely more than double that of overall pharmaceutical industry

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Pfizer Inc.Pfizer Inc.ObservationsObservations

Focused on creating value– Value from effort to develop medicines/reduce suffering– Value from effort to enhance health care delivery– Value to investors with business profitability

Protection of intellectual property rights a significant concern– Competition from generic manufacturers

New FDA efforts limit legal actions that protect drug patents Lesser legal IPR protection/enforcement in foreign markets

– US strategic policy greatly affects ability to operate globally

Focused on people– Stable/loyal work force – Advancement and reward policies promote productivity, enhance retention,

enable high-quality recruitment at all levels – Menu for employees to tailor benefit packages to meet their needs

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Pfizer Inc.Pfizer Inc.RecommendationsRecommendations

DoD should:– Improve Pay and Promotion

Remove pay gaps with civilian sector Refine “up or out” promotion

– Refine Benefit Packages to Meet Individual Needs Provide menu of customizable benefits Portability

– Recognize and Promote Flexible Career Paths Longer tour lengths Recognize skills learned outside the organization

– Encourage Workplace Predictability Longer lead on PCS notification OPTEMPO reduction

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Southern CompanySouthern Company

Leading energy producer in Southeastern United States Most admired electric company by Fortune magazine

– Corporate Office: Atlanta, Georgia– Employees: Approx. 25,000– Customers: 4 Million (electricity)– Revenues: $10.2 B

Major Business Lines– Regulated Utilities– Competitive Generation– New Products and Services

Generating Capacity and Service Area– Seventy-four generating stations– Five operating companies in four states – 120,000 square miles

Assignment: Supply Chain Management (SCM) – SCM Leadership Team ~ Strategy and Supervisor meetings– Implementation of best practices and cost-savings initiatives

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Southern CompanySouthern CompanyObservationsObservations

Corporate Strategy and Goals– America’s most trusted energy company– Focus on core competency: Regulated Utilities– Concentrate on service in Southeastern United States– Lead the industry in service and customer satisfaction

Supply Chain Strategy– Supplying value through teamwork– Inventory and warehouse optimization– Contracting: compliance and standardization– Strategic sourcing through strategic alliances– Leverage savings throughout ‘entire supply chain’

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Southern Company Southern Company RecommendationsRecommendations

Streamline Supplier Base and Eliminate Constraints – Create supplier/ contractor registration database– Reduce volume of paperwork for DoD suppliers– Formation of alliances and partnerships

DoD-wide Supply Chain and Logistics Initiatives– Focus on the ‘entire supply chain’– Implement supplier buy-back program– Establish freight management program– Adopt Commercial off-the-Shelf technologies for:

Intra-service visibility of spare parts and supplies Warehouse Management Systems (WMS)

– Outsource non-core DoD functions

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Sun Microsystems, Inc.

Disruptive innovator since 1982– Continuous innovation and reinvention – 35K+ employees; $12.5B+ revenue – Vision: connect everyone and everything

Network services to anyone, anywhere, anytime, on any device– Strategy: Network computing

#1 provider of products, technologies and services Enables the net economy

Assignment: Assistant to VP, Chief Information Officer (CIO)– Active member of CIO staff, Information Management Group– Strategic Planning Group– Leadership Council

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Sun Microsystems Observations

Core Competencies - corporate transformation foundation– Functional reorganization/Reductions in Force– Core business process identification & improvements– Strategic planning – business operating system– Strategic partnering / outsourcing

Performance metrics drive business solutions – Six Sigma / Balanced Scorecards – Data / fact based decision making (right metrics / tools)

Investment in R&D critical to transformation– Innovation/transformational development critical to survival– $1.9 B / YR with no reductions in $ or people

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Sun MicrosystemsObservations/Recommendations

Open standards and interfaces a viable alternative– Compatibility a viable alternative to proprietary systems– Improved security, added flexibility, reduced costs

Flex Office concept offers productive benefits– Mobility– Thin Client computing

Network Based Everything (Web enabled)– Drives availability and improves effectiveness– Productivity tools/applications– Knowledge Management– e-Business – supplier’s portal, System to System, B2B

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Sun MicrosystemsObservations/Recommendations

Adopt open standards/sourcing for DoD IT systems – Architectures and standards

Invest in “Thin Client” technology– Pentagon, ships, aircraft, Mobile Command Centers– Cost savings, global mobility, DoD Common Access Card leveraged– Security improvement

Apply Six Sigma to DoD business processes

Implement IT Strategy – Consolidate portals, servers, applications, ERP systems– Web enable ALL tools and processes– Knowledge Management– All ways connected (mobility / discovery)– Disaster Recovery planning

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SECDEF Corporate Fellows Program Leading provider of aerospace & other technical services

– $534M sales / $3B backlog (93% government)– Maintenance & supply management of 75 aircraft types– Commercial air service support to military operations & training

30-year legacy– Experienced management team and Board of Directors– Highly trained workforce, 5,685 employees in 32 countries– Long standing customer relationships

Stable & high return business model – 100% win rate on prime re-competitions – Focused on growing DoD O&M budget

Assignment: CEO’s office– Company officer level responsibility / corporate-wide access – Business acquisition transition team leader– Enterprise Resource Planning (ERP) system source selection team

Raytheon Aerospace LLC Raytheon Aerospace LLC

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Raytheon Aerospace LLCRaytheon Aerospace LLCObservations / Observations / RecommendationsRecommendations

Highly successful employee safety record– Implemented DuPont Safety Management Program– Corporate-wide application, annual goals for each business unit– Significant reductions, rates 50% better than industry average

Recordable injury rates: 42% Lost work day rates: 29% Workman’s compensation: 27%

DoD continue DuPont/Alcoa type safety programs in DoD– Implement safety tracking metrics and goal levels:

At lowest echelon possible -- unit level Active duty & civil service workforce Motivate unit leaders/supervisors and change worker behavior Achieve higher personnel readiness & lower medical costs

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Raytheon Aerospace LLCRaytheon Aerospace LLCObservations / Observations / RecommendationsRecommendations

Effective process improvement programs, ISO & 6 Sigma– Improved cash flow, interest savings, cost avoidance– Admin processes and line operations

DoD Pick up where TQM/TQL left off– Expand quality programs beyond maintenance & depots

Company strategy: Max customer value, reasonable ROI– Enduring partnerships with employees & customers– Reduce costs, eliminate waste, improve efficiency– Manage & leverage maintenance/inventory data information– Invest company resources, make capital expenditures accordingly

DoD promote longer term contracts & partnerships– Encourage defense contractors to invest, plan, bear risk, improve

service

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Raytheon Aerospace LLCRaytheon Aerospace LLCObservationsObservations / / RecommendationsRecommendations

“Lean business” practices– Low profit margin business, rigorous cash management– Incentives to reduce costs, improve cash flow & productivity

DoD Change appropriation & budget authority rules– Break use-or-lose O&M mentality– Create an incentive for O&M under-runs

Successful growth strategy– Focus on the customer, invest in internal growth when possible– Form alliances when possible, acquire complementary capabilities– Continually review corporate strategy & business plans

DoD promote longer term alliances – Operational (e.g., standing-deployable JTF’s)– Logistical (e.g., industry contracts)– Leverage SDCFP experience through Joint/OSD follow-on tours

Documents

SECDEF Corporate Fellows Program 1 Final Report of the Secretary of Defense Corporate Fellows Program 2002 - 2003