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Secretary of Defense Fellows Program 1997- 1998. SDFP 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

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Secretary of Defense

Fellows Program

1997- 1998


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SDFP 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


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SDFP 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 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 Sponsors

  • 96- Prior

    • American Management Systems, CNN, CITICORPHewlett-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


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SDFP 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 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

Secretary of Defense Fellows Program

  • 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

Secretary of Defense Fellows Program

  • 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

Secretary of Defense Fellows Program

  • 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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Andersen Consulting Observations/Recommendations

Andersen Consulting Observations/Recommendations

Secretary of Defense Fellows Program

  • 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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SDFP 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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DIRECTV

  • 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 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 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 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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SDFP 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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Mobil 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 CorporationObservations/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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Mobil CorporationObservations/Recommendations

  • 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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Mobil CorporationObservations/Recommendations

  • 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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SDFP 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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Northrop GrummanESSD

  • 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 Observations/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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Northrop Grumman ESSD Observations/Recommendations

Northrop GrummanESSDObservations/Recommendations

  • “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


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Northrop Grumman ESSD Recommendations

  • 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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SDFP 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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SEARS ROEBUCK & CO.

Secretary of Defense Fellows Program

  • 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

Secretary of Defense Fellows Program

  • 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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SEARS ROEBUCK & CO. Observations/Recommendations

Secretary of Defense Fellows Program

  • 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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SEARS ROEBUCK & CO. Observations/Recommendations

Secretary of Defense Fellows Program

  • 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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SDFP 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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Southern 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 Observations

  • 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 Observations

  • 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 CompanyRecommendations

  • 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 Observations/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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SDFP Common Observations/Recommendations

  • 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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SDFP Common Observations/Recommendations

  • 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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SDFP Common Observations/Recommendations

  • 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


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