The Defense Logistics Agency

Leveraging Corporate Culture To Improve Bottom-Line Performance

DoD’s ONLY Logistics Combat Support Agency . .

. Supporting the Military Services & Combatant Commanders

for Over 40 Years

Scope of Business

●#78 Fortune 500 - Above Lockheed Martin●Tops in Top 50 Distribution Warehouses●1312 Weapon Systems Supported●132.3M Annual Net Barrels Fuel Sold●$13.5B Annual Reutilizations/Disposals●23.3M Annual Receipts & Issues●22 Distribution Depots●4,000 Contracts/Day●30,000 Requisitions/Day

People

●21,000 Civilians●488 Active Duty Military●618 Reserve Military●Located in 48 States/28 Countries

Foreign Military Sales

●Sales: $719M annually●Shipments: 670M annually●Supporting 24 Nations

FY02 Sales/Services: $21.5B FY03 Sales/Services: $24B (est)

●Supply: $18.7B Annually●Land/Maritime/Missiles: $2.3B●Aviation: $2.7B●Troop Support: $7.8B●Energy: $5.9B●Distribution: $1.4B ●Other: $1.4B

The DLA Enterprise

Defense Logistics Agency

Defense Reutilization & Marketing

Service

Defense Automation

& Production

Service

Defense National Stockpile

Center

Defense Logistics

Information Service

DLA

Pacific

DLA

Europe

DSC Columbus,

OH - Maritime/

Land/ Missiles

CORPORATE STAFF

Defense Distribution

Center, New

Cumberland,PA

Energy Support Center

Ft Belvoir, VA

DSC Richmond,

VA -Aviation

DSC Philadelphia,

PA -Troop

Support

Other Service Areas

Business Units

FY 04-09 Characteristics: Light and Agile Smaller Footprint Knowledge Based Integrated Processes Service Oriented Collaboration with Customers Proactive

Transformation Plan: Business Systems Modernization Strategic DistributionCompetitive SourcingShift to Commercial Practices

What We Want DLA To Be Tomorrow…

Business Systems Modernization

• Incorporating Commercial and Best Practices Via Commercial off-the-Shelf (COTS) Based Tools

• Replacing 30-year old Legacy Information System with State of the Art Technologies

• Major Reengineering Effort … From Functionally Stove-Piped Segments to Cross-Cutting Enterprise-Wide Processes

Projected FY 04-09 Savings = $399M

Why Worry about Culture?

Culture As A Barrier

Culture can be a major barrier to the implementation of an organization’s strategic objectives

Ignoring the underlying cultural foundations means that the same old patterns will continue to show up

PMA, OMB & OPM Integrate Culture into Performance Goals

• President’s Management Agenda -- Strategic Management of Human Capital initiative integrates aspects of culture.

• Office of Management and Budget (OMB) Scorecard -- Government needs to Sustain High-Performing Workforce that is Continually Improving Productivity.

• Office of Personnel Management (OPM) Scorecard -- Performance Goals:

Agency Fosters a Climate that Values Diversity.

A Culture of Learning and Growth Exists. Strategic Awareness.

What is Culture ?

Culture: A DefinitionThe shared set of assumptions, beliefs, values, and behavioral patterns of a group that guide that group’s perceptions, judgments, and actions

is like the operating system of the organization. It guides what people think and how they act and feel

Culture Culture

Culture is notCulture is notjust an espoused list of values developed by a group of

executives at an offsite

just an espoused list of values developed by a group of

executives at an offsite

The IDEAL you desire

may be very different from the REALITY you live

The IDEAL you desire

may be very different from the REALITY you live

Kumbaya

LEVELS OF CULTUREFROM TANGIBLE TO DEEPLY EMBEDDED

AND UNCONSCIOUS

Artifacts—concreteArtifacts—concrete,, visible expressions and visible expressions and overt behavior patternsovert behavior patterns

Norms--behavioral expectationsNorms--behavioral expectations

Conscious, values , beliefs , assumptions and Conscious, values , beliefs , assumptions and ideologyideology

Unconscious values , beliefs, assumptions and Unconscious values , beliefs, assumptions and ideologyideology

How DLA is Addressing Culture

• First, we ensured Strategic Alignment:Strategic Plan Goal 3: Create and Manage a Customer-Focused

Corporate CultureBalanced Scorecard: Learning and Growth Quadrant

LG-2: Create and Manage a Customer-Focused Culture

LG-2A: Leadership Assessment: Modeling the Desired Culture

LG-2B: Employee Perceptions of the DLA Culture• Second, we identified the desired aspect of corporate culture

necessary to accomplish strategic goal (customer-focused).• Finally, we assessed the current culture based on the desired

culture and have “Culture Champions” conducting organization development activities to close gaps.

DLA adopted a performance-based culture model/assessment/360-

degree leader feedback tool containing the desired aspects of

culture necessary to accomplish its strategic goal of Creating and

Managing a Customer-Focused Corporate Culture

Denison Culture Model

Objectively Measuring Culture

Strategic Direction and Intent - Clear strategic intentions convey the organization's purpose, make it clear how everyone can contribute and "make their mark" in the industry.

This organization has a clear mission that gives meaning and direction to our work.

This organization has a long-term purpose and direction. The strategic direction of this organization is unclear to me. This organization has a clear strategy for the future. Our organization's strategy is leading other firms to change the

ways that they compete.

Appointed Agency-/Activity-level “Culture Champions” helped publicize the desired aspects of culture and are helping their leaders to implement suggested action steps for tangible performance.

Transformation activities include organizational development and training needs necessary for culture change.

Cultures are Not Homogeneous

Functional or Departmental

Site

Hierarchic

Geographic/RegionalGeographic/Regional

Old/NewDivisional

Culture and Leadership

“Culture and leadership are two sides of the same coin and neither can be understood by itself.”

Edgar Schein

Culture and Leadership

Employees work together in teams Employees are given a great deal of

autonomy Risk taking and creativity are encouraged There is an atmosphere of trust Change is embraced Employee empowerment is high Organization is customer-focused Social relationships are encouraged Procedures are flexible and informal

What Senior Management

Believes

What Employees See

InvolvementCommitment..Ownership..Responsibility

Building human capability, ownership, and responsibility

“Are our people aligned and engaged?“  

Adaptability Patterns…

Trends… Market PlaceTranslating the demands of the

business environment into action

“Are we listening to the marketplace?”

MissionDirection..Purpose..Blueprint

Defining a meaningful long-term direction for the organization

“Do we know where we are going?”

ConsistencySystems…Structures…Processes…

Defining the values and systems that are the basis of a strong culture

“Does our system create leverage?”

Denison Leadership Model

Every Leader Needs to Have Skills in These Four Areas!

These Four Concepts are Used to Define Leadership Skills

When it comes to establishing

or changing a culture the leader sets the tone

When it comes to establishing

or changing a culture the leader sets the tone