Final Report Secretary of Defense Corporate Fellowship Program 2007 - 2008

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2. 2 2007-2008 Fellows COL Willie Melendez, USA Lockheed Martin Corporation Orlando, FL COL Joe Moore, USA SRA International, Inc. Fairfax, VA CDR Bill Brougham, USN Oracle, Corporation Reston, VA CDR Brent George, USN CACI International, Inc. Arlington, VA Col Murf Clark, USAF Cisco Systems, Inc. San Jose, CA Col Alan Lake, USAF Amgen, Inc. Thousand Oaks, CA Col (S) Roger Witek, USAF The Boeing Company  St. Charles, MO LtCol Jeff Colwell, USMC 3M Company St. Paul, MN LtCol Rey Masinsin, USMC Time Warner, Inc. New York, NY

3. 3 Agenda Background Common Findings/Recommendations Discussion / Q&A Individual Experiences (FYI) (Background slides only when required) Some brief background on the program for those who have never received a brief before. Followed by the most important part, the officer’s recommendations. Individual experiences are an up-date of our mid-term brief and we usually don’t have time to get there.(Background slides only when required) Some brief background on the program for those who have never received a brief before. Followed by the most important part, the officer’s recommendations. Individual experiences are an up-date of our mid-term brief and we usually don’t have time to get there.

4. 4 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 SECDEF was Secretary Perry, although AF Secretary Jim Roche will tell you that he was the godfather of the program that put the bug in everyone’s ear. Perry’s concern was that career officers didn’t know what they didn’t know. Especially officers who had been operational their whole careers and had very little, if any interaction with the commercial world. While certainly not perfect, the business world was better and faster in adopting new technologies, especially IT, and new organizations and processes. And more open to change. This program differs from previously existing Service Training with Industry programs in several respects: Officers are more senior and the focus is on senior level leadership/management. How the generals and admirals of industry get their companies to adopt new processes and organizations. How they get them to change. Officers are from all branches/operational specialties, not just from the support side. Technology is of interest, but secondary to leadership and change management. SECDEF was Secretary Perry, although AF Secretary Jim Roche will tell you that he was the godfather of the program that put the bug in everyone’s ear. Perry’s concern was that career officers didn’t know what they didn’t know. Especially officers who had been operational their whole careers and had very little, if any interaction with the commercial world. While certainly not perfect, the business world was better and faster in adopting new technologies, especially IT, and new organizations and processes. And more open to change. This program differs from previously existing Service Training with Industry programs in several respects: Officers are more senior and the focus is on senior level leadership/management. How the generals and admirals of industry get their companies to adopt new processes and organizations. How they get them to change. Officers are from all branches/operational specialties, not just from the support side. Technology is of interest, but secondary to leadership and change management.

5. 5 SDCFP Background DoD needs effective access to best executive level business practices applicable to operations & support Strategic Planning Organization Change Management Human Resources Information Technology Supply Chain Outsourcing Infrastructure approximately 2/3 of Defense Budget Reforms generate savings Savings applicable to operational shortfalls THE SECDEF FELLOWS PROGRAM BEGAN WITH A TWO-FOLD REALIZATION AT HIGH LEVELS WITHIN DOD THAT: WE WERE ENTERING AN ERA OF REVOLUTIONARY CHANGE IN BOTH THE OPERATIONS AND BUSINESS OF THE MILITARY, FUELED BY THE POSSIBILITIES OF INFORMATION AGE TECHNOLOGY. THE CIVILIAN SECTOR WAS SUCCESSFULLY ADAPTING TO AND EXPLOITING THE INFORMATION REVOLUTION BY RESHAPING THEMSELVES MORE RAPIDLY THAN DOD THE SECDEF FELLOWS PROGRAM BEGAN WITH A TWO-FOLD REALIZATION AT HIGH LEVELS WITHIN DOD THAT: WE WERE ENTERING AN ERA OF REVOLUTIONARY CHANGE IN BOTH THE OPERATIONS AND BUSINESS OF THE MILITARY, FUELED BY THE POSSIBILITIES OF INFORMATION AGE TECHNOLOGY. THE CIVILIAN SECTOR WAS SUCCESSFULLY ADAPTING TO AND EXPLOITING THE INFORMATION REVOLUTION BY RESHAPING THEMSELVES MORE RAPIDLY THAN DOD

6. 6 SDCFP Organization Two or more officers from each Service High flag/general officer potential O- 6 or O- 5 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 Net Assessment for oversight National Defense University for Admin support www.ndu.edu/sdcfp/sdcfhom.html

7. 7 SDCFP Sponsors 07 - Prior 3M, ABB, Accenture, Agilent Technologies, American Management Systems, Amgen, Boeing, Caterpillar, Cisco, CNN, Deutsche Bank DirecTV, DuPont, Enron, FedEx, General Dynamics, Hewlett-Packard, Honeywell, Human Genome Sciences, IBM, Insitu Group, Johnson & Johnson, Lockheed Martin, Loral, McKinsey & Co., McDonnell Douglas, Merck, Microsoft, Mobil, Netscape, Oracle, Northrop Grumman, Pfizer, Pratt & Whitney, PricewaterhouseCoopers, Raytheon, Sarnoff, Sears, Sikorsky, Southern Company, SRA International, Sun Microsystems, Symbol Technologies, Vertex Aerospace 07-08 3M, CACI International, Amgen, Boeing, Cisco, Time Warner, Lockheed Martin, Oracle, SRA International 08-09 Booz Allen, FedEx, Johnson & Johnson, Northrop Grumman, Raytheon, Sarnoff, Southern Company, Sun Microsystems, United Technologies Sponsoring companies where we’ve been before, where we are this year and where we’re going next, beginning this summer. A broad range of business areas, each company a leader in its field. Only one defense contractor per year. Sponsoring companies where we’ve been before, where we are this year and where we’re going next, beginning this summer. A broad range of business areas, each company a leader in its field. Only one defense contractor per year.

8. 8 SDCFP Results Program objectives fulfilled Education DoD, individual officers, Sponsors More Sponsors than Fellows available Intra-group experience sharing Group visits with sponsor CEO’s and senior leadership Unique corporate experience Strong corporate support Executive/operational level duty mix Mergers/restructuring Unexpected challenges, valuable insights

9. 9 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 SecDef/DepSec, VCJCS, Service Secretaries & Chiefs, 30+ others Business insights relevant to DoD culture/operations Recommended process/organization changes The short-term product – today’s briefing. Given to the senior officials of OSD and the Services that are in positions to take the ideas and act on them. Starting this year inputs to the Business Initiatives Council also. We found that the feedback during these briefings provides a lot of education to the briefers as well. The realities of DoD. The problems faced by leaders trying to implement these or similar recommendations. The long term product and, in Mr. Marshall’s view the real benefit of the program. Better officers who will make better decisions throughout the remainder of their careers and act as agents of change. The short-term product – today’s briefing. Given to the senior officials of OSD and the Services that are in positions to take the ideas and act on them. Starting this year inputs to the Business Initiatives Council also. We found that the feedback during these briefings provides a lot of education to the briefers as well. The realities of DoD. The problems faced by leaders trying to implement these or similar recommendations. The long term product and, in Mr. Marshall’s view the real benefit of the program. Better officers who will make better decisions throughout the remainder of their careers and act as agents of change.

10. 10  “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…” SecDef Remarks National Defense University 31 January 2002

11. 11 Agenda Background Common Findings/Recommendations Discussion / Q&A Individual Experiences (FYI)

12. 12 Common Findings/Recommendations Imminent Talent Drought Lead System Integrator (LSI) Lean Six Sigma Continual Process Improvement (CPI) DoD Consolidation & Integration Leveraging Enterprise Architecture (EA) Web-Based Collaboration Rise of Social Computing Globalization and Strategic Messaging

13. 13 Imminent Talent Drought Issue Industry and DOD facing a watershed — talent pipeline drying up Discussion Dearth of critical skills Market and environmental factors Aging workforce Foreign nationals Recommendations Develop and stay disciplined in core competencies Fashion agreement for skill-sets to mobilize industry and nation Build partnerships and forge alliances Expand opportunities for leaders Model industry’s succession planning Invest early in people and technology

14. 14 Lead System Integrator (LSI) Issue Legislation to halt LSI starting Oct 2010? Congress wants DoD to take control & management back What are the thresholds? Who’s grand-fathered? Can DoD acquisition core be rebuilt to go it alone? Discussion The good, the bad, and the ugly Deepwater, Future Combat Systems, Ground-based Midcourse Defense, DD(X) Compelling arguments for Lead, Large, Mission, or Prime “SI” Business Ecosystem and Integrative Program Management Recommendations Learn from mistakes and partner; It’s not “Us or Them”! Analyze/testify/lobby for DoD’s true in-house LSI capabilities Defense Acquisition University teaches “Enterprise” integration at basic level Understand essential elements of Prime “SI” Value Proposition Open system standards, risk reduction, secure info management, better system performance, program velocity, tech-insertions, non-std business models Senate passed bill to halt LSI in 2011, House passed bill to halt it in 2010 as an emotional decision over the publicity of failures and over some incomplete info. Services can petition for programs to remain LSI, much like Nunn-McCurdy. Defense Acquisition Performance Assessment (DAPA) recommends to spend $300 million a year to rebuild acquisition community—how many years? Deepwater – Cnx’d Coast Guard ships—cost increase of 50%, part of LSI of C-130s, helos, and ships. Future Combat Systems – The reported 99B to 160B increase for the 2003-2014 program did not include the scope increase. Today, CPI is 99.3% and SPI 99.0%. And 100% milestone completion to date. Ground-based Midcourse Defense – Deployed initial “hit-to-kill” capability 5 years early DDX – Northrop led LSI with Raytheon and BAI with emphasis on common hull form and technology development. The Navy will use the advanced technology and networking capabilities from DD(X) and CG(X) in the development of the Littoral Combat Ship with the objective being a survivable, Littoral Combat Ship – Commercial ferries got riddled with Navy ship building stds In each business ecosystem (mimic biology), keystone firms punch above their weight and synchronizes. Synergizes BEST of government & industry to produce system of systems. Keystone firms streamline transactions and bring all contractors into closer relationships with customer community. Epitome of systems engineering & integration and supply chain management. Some contractors will argue to get rid of the middleman, but who will be motivated not to go to court over language in ICDs, etc? Greatly reduces overhead and are constantly streamlining for efficiencies. DoD organizations can’t flex manpower as well as industry, will argue more for organizational survival. An integrative design approach reduces cycle-time by 2.5 years and delivers the product to market first with a constant presence of an integration team. PSI maintains open systems architecture and controls standards, tests early and often on subsystems and prototypes to reduce risk, establishes secure collaborative environments to facilitate information dissemination across all partners, use common components and commercial products for efficient performance, harnesses synergies of best in govt and industry for system of system to develop faster, drive timely tech-insertions from commercial sector for win-win situation, works against conventional corporate business models. Senate passed bill to halt LSI in 2011, House passed bill to halt it in 2010 as an emotional decision over the publicity of failures and over some incomplete info. Services can petition for programs to remain LSI, much like Nunn-McCurdy. Defense Acquisition Performance Assessment (DAPA) recommends to spend $300 million a year to rebuild acquisition community—how many years? Deepwater – Cnx’d Coast Guard ships—cost increase of 50%, part of LSI of C-130s, helos, and ships. Future Combat Systems – The reported 99B to 160B increase for the 2003-2014 program did not include the scope increase. Today, CPI is 99.3% and SPI 99.0%. And 100% milestone completion to date. Ground-based Midcourse Defense – Deployed initial “hit-to-kill” capability 5 years early DDX – Northrop led LSI with Raytheon and BAI with emphasis on common hull form and technology development. The Navy will use the advanced technology and networking capabilities from DD(X) and CG(X) in the development of the Littoral Combat Ship with the objective being a survivable, Littoral Combat Ship – Commercial ferries got riddled with Navy ship building stds In each business ecosystem (mimic biology), keystone firms punch above their weight and synchronizes. Synergizes BEST of government & industry to produce system of systems. Keystone firms streamline transactions and bring all contractors into closer relationships with customer community. Epitome of systems engineering & integration and supply chain management. Some contractors will argue to get rid of the middleman, but who will be motivated not to go to court over language in ICDs, etc? Greatly reduces overhead and are constantly streamlining for efficiencies. DoD organizations can’t flex manpower as well as industry, will argue more for organizational survival. An integrative design approach reduces cycle-time by 2.5 years and delivers the product to market first with a constant presence of an integration team. PSI maintains open systems architecture and controls standards, tests early and often on subsystems and prototypes to reduce risk, establishes secure collaborative environments to facilitate information dissemination across all partners, use common components and commercial products for efficient performance, harnesses synergies of best in govt and industry for system of system to develop faster, drive timely tech-insertions from commercial sector for win-win situation, works against conventional corporate business models.

15. 15 Lean Six Sigma Issue How to drive Lean Six Sigma (LSS) across DoD Discussion LSS has a Proven Track Record Path to Success with LSS Deploy ? Integrate ? Sustain ? Institutionalize Recommendations Good start in DoD; need to increase deployment Sustain the momentum Use every opportunity to train and educate members on LSS Create full time positions Exploit/publicize/reward success Vast opportunities for DoD in the “transactional” environment Top leadership support and active involvement is critical Why Lean Six Sigma? A proactive methodology of achieving excellence in business processes A data and fact-driven approach versus a predominantly intuitive approach Provides common approach to problem solving throughout the corporation, with suppliers, and customers Provides leadership development throughout all disciplines within the corporation Goal: Sales growth, increased productivity, higher earnings Proven Track Record 20+ yrs of success across industry (manufacturing, retail, and services) 2% average annual cost savings + efficiencies DoD $585B budget @ 2% = $11.7B or more potential annual savings + added efficiencies Path to Successful CPI: Deploy ? Integrate ? Sustain ? Institutionalize Top Down Push: Leadership (CEO) fully involved Full-time trained employees (Black Belts, Master Black Belts etc.) –Usually about 1% Agreed upon measurement system to capture “savings” Communicate and replicate successes Employed across the organization, beyond manufacturing 4-6 year timeframe needed to embed in organizational DNA Why Lean Six Sigma? A proactive methodology of achieving excellence in business processes A data and fact-driven approach versus a predominantly intuitive approach Provides common approach to problem solving throughout the corporation, with suppliers, and customers Provides leadership development throughout all disciplines within the corporation Goal: Sales growth, increased productivity, higher earnings Proven Track Record 20+ yrs of success across industry (manufacturing, retail, and services) 2% average annual cost savings + efficiencies DoD $585B budget @ 2% = $11.7B or more potential annual savings + added efficiencies Path to Successful CPI: Deploy ? Integrate ? Sustain ? Institutionalize Top Down Push: Leadership (CEO) fully involved Full-time trained employees (Black Belts, Master Black Belts etc.) –Usually about 1% Agreed upon measurement system to capture “savings” Communicate and replicate successes Employed across the organization, beyond manufacturing 4-6 year timeframe needed to embed in organizational DNA

16. 16 Continual Process Improvement (CPI) Issue Recognize Corporate America and DoD have CPI challenges Discussion DoD following Corporate America’s CPI effort All services vested and motivated to save money Need to watch out and learn from corporate challenges Corporate “bumps in the road” Not just about training numbers of Green/Black Belts More about selecting change agents CPI is the “mission”; LSS a tool in the CPI toolbox Other tools: Accelerated Change, Catalyst, Business Process Reengineering … Many companies utilizing all tools in CPI effort Problematic to name CPI effort after a CPI tool When new tools show up, could cause “TQM flashback” Some companies backing down on 100% LSS use… thwarts innovation DoD and Corporate America still split on CPI naming Recommendations: Train as many as possible Top performers (future Commanding Officers) as change agents Caution against naming CPI effort after a CPI tool Build CPI architecture with many tools Industry is evolving; DoD needs to keep up

17. 17 DoD Consolidation & Integration Issue DoD Consolidation / Integration / Facility Closure Discussion Service / Agency Typically an internal focus Minimal partnering outside borders Assets Consolidation or disposal? Need for cost effective & timely disposal / dissemination BRAC Consolidation Cycle continuity Offices pop-up then disappear Who maintains knowledge of best methods? Corporate Knowledge / Tribal Knowledge loss People are key asset Attrition How to capture Knowledge? Integrating Acquisitions Core industry competency Resulting whole needs to be greater than individual entities Accelerated Return on Investment (ROI) Maximize revenue generation in minimal time Corporations minimize downtime Issue DOD consolidation Occurring through consolidation / integration / closure of Military and government agency units/activities One Example: Consolidation of multiple AF entities to form the AF Cyber Command How best to accomplish, but make it expedient Also occurring through BRAC downsizing on 5-year cycle Discussion Service / Agencies are expected to handle their consolidations internally (don’t like others playing in their sandbox Do not see much in the way of partnering going on cross-service or agency to reduce cost and associated manpower Assets Consolidation or disposal (destruction or selling) of land, buildings, organizations, facilities & reduction in tangible assets Need to accomplish in a cost effective and timely fashion What to do with assets? I know we have DRMO, but many times these assets could be put to use with DoD by other agencies/services. How best to disseminate the availability DoD wide? BRAC Consolidation Cycle continuity Each 5-year cycle, one sees the stand up of offices in each service / agency to work on BRAC issues then offices go away as the scare or decision has passed Need to have one entity with corporate knowledge for DoD and other government agencies on consolidations, integrations, downsizing, BRAC shutdowns Same WRT consolidations – who provides continuity with best methods, seems to be a new experience with each organization going through it Corporate Knowledge / Tribal Knowledge Loss People make or break the success and determine how well a consolidation will occur Build up for a consolidation, then loss of these same people after it occurs, they are the ones with corporate knowledge Attrition within these organizations How to retain personnel, but use them DoD-wide? Need to retain that knowledge through personnel or knowledge capture As we always see, those who are successful leave for better jobs and the less skilled bottom feeders stay behind Integrating Acquisitions We have been to at least 3 company days where acquisitions or consolidations were a corporate competency These corporations are very good at consolidation to maximize their ROI However, these consolidation of companies resulted in much larger single enterprises Need to have the abilities and skills to manage these larger entities Goal is to make the new division as productive as possible as soon as possible for maximum revenue generation Same should apply to military and DoD consolidationIssue DOD consolidation Occurring through consolidation / integration / closure of Military and government agency units/activities One Example: Consolidation of multiple AF entities to form the AF Cyber Command How best to accomplish, but make it expedient Also occurring through BRAC downsizing on 5-year cycle Discussion Service / Agencies are expected to handle their consolidations internally (don’t like others playing in their sandbox Do not see much in the way of partnering going on cross-service or agency to reduce cost and associated manpower Assets Consolidation or disposal (destruction or selling) of land, buildings, organizations, facilities & reduction in tangible assets Need to accomplish in a cost effective and timely fashion What to do with assets? I know we have DRMO, but many times these assets could be put to use with DoD by other agencies/services. How best to disseminate the availability DoD wide? BRAC Consolidation Cycle continuity Each 5-year cycle, one sees the stand up of offices in each service / agency to work on BRAC issues then offices go away as the scare or decision has passed Need to have one entity with corporate knowledge for DoD and other government agencies on consolidations, integrations, downsizing, BRAC shutdowns Same WRT consolidations – who provides continuity with best methods, seems to be a new experience with each organization going through it Corporate Knowledge / Tribal Knowledge Loss People make or break the success and determine how well a consolidation will occur Build up for a consolidation, then loss of these same people after it occurs, they are the ones with corporate knowledge Attrition within these organizations How to retain personnel, but use them DoD-wide? Need to retain that knowledge through personnel or knowledge capture As we always see, those who are successful leave for better jobs and the less skilled bottom feeders stay behind Integrating Acquisitions We have been to at least 3 company days where acquisitions or consolidations were a corporate competency These corporations are very good at consolidation to maximize their ROI However, these consolidation of companies resulted in much larger single enterprises Need to have the abilities and skills to manage these larger entities Goal is to make the new division as productive as possible as soon as possible for maximum revenue generation Same should apply to military and DoD consolidation

18. 18 Consolidation & Integration (cont) Recommendations Develop core competency in consolidation / integration Build partnerships / forge alliances with industry consolidators Model leading industry’s acquisition models Make Service / Agency independent Address culture / identity issues Create Knowledge Management repository / processes Recommendations Need an office whose core competency is consolidation and downsizing Get smart people with M&A experience, non-affiliated with any service or agency, and have them consult out within DoD Internships with industry Learn from industry, especially those who are very good at it Take the best of industry’s acquisition models, checklists, processes – modify for the DoD and move forward Culture will be an issue – each service is particular to how they like things Need to blend into joint activities that cross service boundaries Walter Reed AMC and NNMC Bethesda is a good example, soon to be called Walter Reed NMC in Bethesda Need to have separate activities for personnel to keep service affiliations that don’t affect integrations of facilities and activities Need Knowledge Management Repository / Processes that will be personnel independent Leverage the best ideas of industry for how to capture data and knowledge and make it actionable Detailed primer on how to consolidate and integrate Checklists and processes Lessons learned on good and bad attempts in the pastRecommendations Need an office whose core competency is consolidation and downsizing Get smart people with M&A experience, non-affiliated with any service or agency, and have them consult out within DoD Internships with industry Learn from industry, especially those who are very good at it Take the best of industry’s acquisition models, checklists, processes – modify for the DoD and move forward Culture will be an issue – each service is particular to how they like things Need to blend into joint activities that cross service boundaries Walter Reed AMC and NNMC Bethesda is a good example, soon to be called Walter Reed NMC in Bethesda Need to have separate activities for personnel to keep service affiliations that don’t affect integrations of facilities and activities Need Knowledge Management Repository / Processes that will be personnel independent Leverage the best ideas of industry for how to capture data and knowledge and make it actionable Detailed primer on how to consolidate and integrate Checklists and processes Lessons learned on good and bad attempts in the past

19. 19 Leveraging Enterprise Architecture (EA) Issue How to use better use Information Technology (IT) to execute a more efficient Joint Battlespace and DoD “Back Office” Discussion Opportunities for DoD and Private Sector Partnership Enabling a DoD voice in focusing Private Sector investment >$2B/yr R&D for Oracle alone Leveraging best practices “Partnership Success Stories” and “Insight” events Inefficient licensed solutions across DoD customers Utilization of actionable metrics not just a DoD challenge

20. 20 Leveraging EA (cont) Recommendations Implement “good enough” ideas across Services more rapidly Avoid delays and increased costs by not trying to be perfect for all Pick an acceptable Best/Proven Practice first Then rapidly roll successes across DoD/Government, Then continue to roll out planned enhancements Align budget authority with policy decisions Good ideas left on the table and often delayed Individual programs execute short term needs with poor ROI downstream Huge and GROWING cost for unused licensed software Exposure to improperly used unlicensed software Netcentric licensing Better leverage private sector business cycle Service/agency independent, mutually beneficial, efficiencies Be smarter buyers Embrace enduring partnerships with industry More return on DoD investments and more industry interest in DoD

21. 21 Issue How to better leverage intellectual capital of the force? Discussion Web-based social networking for collaboration Mechanism for unleashing the flow of valuable information I want knowledge I want it now I want to communicate with people possessing that knowledge I want to share my knowledge I can help you avoid the same mistakes I made I might be an expert and not even know it He needs to know what I know, but he doesn’t know I exist Web-Based Collaboration

22. 22 Discussion: “The field” no longer “over there” It’s here (it’s everywhere), with everyone else on the network Collaboration provides broad, informal peer review for ideas Blogs can proliferate inside firewalls Diggers, taggers create a dynamic information exchange Challenges exposed earlier; overcome sooner Information seeks you – not the other way around Tagging/widgets Shared content Information, decisions developed w/ simultaneous input and review Family members, family groups share the best ideas Use of video The “field” consumes information “on demand” Recommendation Deploy a joint or interagency web-based platform for collaboration Emulate industry leaders Web-Based Collaboration (cont)

23. 23 Rise of Social Computing Issue Utility of Web 2.0 and Social Computing for DoD Discussion Digital communication Creates new channels and medium for content Social Media Reaches the mainstream Communication forms are naturally collaborative Interactive platforms focused on sharing Collective intelligence Transforms communications into content Technology-powered communications accelerate information velocity Recommendations Continue to integrate/leverage social media tools, interfaces, strategies Across both operational and business domains Workforce increasingly comfortable with technologies and expect them Early implementation inside firewalls to address security

24. 24 Globalization & Strategic Messaging Issue Influence of Globalization & the Information Age on Strategic Messaging – how DoD presents itself International dialog Discussion Demographic shifts and new modes of communication Balkanized American society/culture Individualized info-age experiences dilute the common experience Information ubiquity allows/requires choice and diversity International corporations losing national identities IT and transportation defy borders Unrestricted high-speed Info exchange enables off-shore recruiting Ubiquitous Information Voice, Video, Data - all on-demand & mobile Corporate Lessons Learned; Business Case for Green, etc Humanitarian Efforts Internal and External comms “don’t pick your bad guys” Corporate Lessons Learned; Business Case for Green, etc Humanitarian Efforts Internal and External comms “don’t pick your bad guys”

25. 25 Audience for Strategic Messaging changing Social Networking on a global scale - corporate and personal (Generation Y) Allegiance to non-national entities growing Balkanization + Identification with transnational groups = diluted nationalism Divided global interests (corporate, economic, environmental, cultural, personal) Less change in nations with relatively low literacy rates & internet penetration Greater change in most developed nations creating an imbalance Vow to be “dominant” seen as naivety/hubris Hegemonic rhetoric less appealing; at best unrealistic, at worst self-defeating Reinforces negative perception of U.S. as global bully Recruiting campaign for insurgents Counterproductive Internally - Generation Y wants to serve U.S. and the World Widespread belief in cooperation/collaboration Appeals to Purely National Goals & Patriotism Less Effective Globalization & Strategic Messaging (cont)

26. 26 Corporate Examples and Lessons Learned Corporate Communications (Internal & External) “on message” Strategic Partnering effective Global Outreach to world community “Borrowing” interests/allegiances/perspectives Compete in private; cooperate in public; collaborate for advantage Recommendations Leverage audience’s multiple allegiances and global concerns Engage and form partnerships with rivals/competitors On the train, not under it Uncouple rhetoric of “Dominance” from notion of National Security Think dominant, be dominant, but speak cooperation, collaboration, partnering Biggest, loudest dog not always the most secure TR - “Speak softly, but carry a big stick” Globalization & Strategic Messaging (cont)

27. 27 Agenda Background Common Findings/Recommendations Discussion / Q&A Individual Experiences (FYI)

28. 28 Agenda Background Common Findings/Recommendations Discussion / Q&A Individual Experiences (FYI)

29. 29 The Boeing Company World’s largest manufacturer of commercial/military aircraft, satellites, and networked systems 2007 Financials Revenue: $66.4B Earnings: $4.1B Backlog: $327B 37% international #1 U.S. exporter to 90 countries Employees: 154K employees in 49 states, 70 countries Suppliers: Over 22K worldwide Business Units: Commercial Airplanes Integrated Defense Systems (IDS) Phantom Works Boeing Capital Corporation Assignment Weapons Division of IDS in St Charles, MO Small Diameter Bomb (SDB) and Focused Lethality Munitions (FLM) Outstanding support, internal/external access, off-site

30. 30 Boeing Observations Arrogant reputation not experienced Values & Ethics Cost Estimation Export Licenses & Tech Asst Agreements Four Corporate Initiatives key to Growth and Productivity LEAN+ Front office continuous process improvement; waste elimination Developing Process Excellence ID and repeat best practices; Boeing Production System Global Sourcing to leverage purchasing power of “big” Boeing Drives “commonality” of stock parts amongst many programs Internal Services Productivity to reduce IT, finance, legal redundancy Matrix-ing engineering functionalities Knowledge Sharing/Transfer…Initiative Database Management Strategic to Tactical Alignment…Vision Support Plan Visibility Management Model vs. Lists

31. 31 Boeing Observations/Recommendations Program Management Best Practices Communication Customer is #1 Not always right; may not be user Organization Empower Authority, Responsibility, Accountability Business Offer and Plan Expectation vs contractual words Execution & Control Manage by Weekly Earned Value Management (EVM) Risk, Issue, Opportunity Management Desired mitigation costs more Independent Reviews Takes leadership courage to ask for help

32. 32 Boeing Observations/Recommendations Acquisition “little-a” Operational Need & Champion - Remember the Warfighter Cost/Schedule//Performance - Disciplined Systems Engineering Competition and Help Teams - Source Selection schemes matter Commercial Suppliers - Helping subcontractors to improve Incentives & Dis-incentives – Don’t abuse Management Reserves Leadership & Credibility - Need good military & contractor PM’s Choose wisely! Acquisition “Big-A” Lead Systems Integrators gone by 2010? Control abdicated a long time ago Disciplined best practices vs. personnel “rotational” development Protests are services’ issues Source Selections will never be perfect

33. 33 Lockheed Martin Corporation Global Defense and Aerospace Contractor Revenue: $40B in 2007 Employees: 140K 70K scientists and engineers; 25K IT professionals Main Business Segments Aeronautics Electronic Systems Space Systems Integrated Systems and Solutions Information &Technology Services Corporate Strategy: Grow Top Line Operational Performance and Customer Satisfaction Top Priorities Protect Core Competencies Increase International Sales Pursue Adjacent Markets and White Space Assignment: Missiles and Fire Control Business Area Business Strategy and Development; Human Resources

34. 34 Lockheed Martin Observations Level 5 Leadership - Lincoln and Socrates vs. Patton or Caesar First Who…Then What Track, Develop, Retain World-class Workforce Intern, Development, Exchange & Interchange program Confront brutal facts Strategy for Success - Growth, Reputation, Innovation & People Hedgehog Concept - Best in the World at…. Enterprise Leadership Council “Matrixed” Organization -- Lean, Flexible, and Flat Culture of Discipline Disciplined / Rigorous Processes & Metrics--Performance/Values Based Technology Accelerators Innovation vs. Technology Vis-à-vis Transformation Investment Commensurate with a Technology Leader and Integrator  

35. 35 Lockheed Martin Recommendations Stay disciplined in core competencies Innovation vs. technology Evolutions vs. revolutions Fashion agreement for skill-sets Mobilize industry Expand business opportunities for leaders Permanent / Rotational SECDEF Fellows Mentorship Program Model industry’s succession planning A company that is “Built to Last” Choosing tomorrow’s leaders Invest early in people and technology DOD must ensure sufficient contract R&D funds are available through DARPA and Government laboratories in partnership with industry. DSB must harness the best of future possibilities and recommend strategic thrusts. Long term investment in R&D is vital to maintaining our technological superiority and we cannot rely on industry to fill the void without adequate financial incentive. DOD should review the core competencies and strive to reduce unnecessary duplication and redundancy. For example, each service conducts EW reprogramming. A Joint reprogramming Center could potentially reduce overhead costs, make more efficient use of laboratories, reduce number or redirect activities of engineers, and provide a coherent product to Warfighter. DOD should continue to aggressively pursue opportunities for outsourcing that provide lower cost to the government. DOD should decide what is mission essential and perhaps we would save money by outsourcing intelligently. Most successful companies use Lean Six Sigma or a similar methodology to drive process improvement with documented savings in the billions of dollars. Consider designating a center of excellence for Process improvement. Incorporate MBA training within existing PME. Place emphasis on budget, finance, change management, process improvement tools, human capital management. Officers must understand contracts if we continue to outsource. Transform DOD from a spend culture to a cost conscious culture. Establish a method, such as a working capital fund, to provide an incentive to save money. A portion of the savings may be used for QOL for instance. The best corporations link pay to performance and responsibility. The best corporations provide the best training and education to the top 10% and they actively work to improve or remove those in the bottom 10%. Need to combat the demographic trend and ensure we have adequate scientists and engineers. As older engineers retire, we need to ensure knowledge transfer takes place to capture the experiences of those retiring. frequent changes in leadership are detrimental to affecting change successful. DOD must ensure sufficient contract R&D funds are available through DARPA and Government laboratories in partnership with industry. DSB must harness the best of future possibilities and recommend strategic thrusts. Long term investment in R&D is vital to maintaining our technological superiority and we cannot rely on industry to fill the void without adequate financial incentive. DOD should review the core competencies and strive to reduce unnecessary duplication and redundancy. For example, each service conducts EW reprogramming. A Joint reprogramming Center could potentially reduce overhead costs, make more efficient use of laboratories, reduce number or redirect activities of engineers, and provide a coherent product to Warfighter. DOD should continue to aggressively pursue opportunities for outsourcing that provide lower cost to the government. DOD should decide what is mission essential and perhaps we would save money by outsourcing intelligently. Most successful companies use Lean Six Sigma or a similar methodology to drive process improvement with documented savings in the billions of dollars. Consider designating a center of excellence for Process improvement. Incorporate MBA training within existing PME. Place emphasis on budget, finance, change management, process improvement tools, human capital management. Officers must understand contracts if we continue to outsource. Transform DOD from a spend culture to a cost conscious culture. Establish a method, such as a working capital fund, to provide an incentive to save money. A portion of the savings may be used for QOL for instance. The best corporations link pay to performance and responsibility. The best corporations provide the best training and education to the top 10% and they actively work to improve or remove those in the bottom 10%. Need to combat the demographic trend and ensure we have adequate scientists and engineers. As older engineers retire, we need to ensure knowledge transfer takes place to capture the experiences of those retiring. frequent changes in leadership are detrimental to affecting change successful.

36. 36 3M Company Innovative Diversified Technology Company Revenue in 2007: $24.5B (63% international) Employees: 73K (55% international) Operations in 60+ countries; sales in 200+ Six Businesses; 35 units Industrial & Transportation - $7.3 Health Care - $4.0B Display and Graphics – $3.9B Consumer and Office - $3.4B Safety, Security, and Protection Services - $3.1B Electro and Communications - $2.8B Corporate Strategy: Grow Current Core Business Complimentary Acquisitions Build New Businesses International Growth Assignment: Lean Six Sigma Operations

37. 37 3M Observations Not just Post-it® Notes and Scotch® Tape Abrasives, Adhesives, Films Dental and Health Care products and solutions Business results are the defining measure Entitlement Thinking How good can you be? Government contracting hard when not core competency

38. 38 3M Recommendations Lean Six Sigma Delivers Proven Results Top-down push … initially Not a fad Full time job for employees with “belts” Opportunities for DoD in the “transactional” environment Decisions are Data Driven Must be able to pull the data Robust data systems Performance Based Evaluations Annual goals and periodic reviews 360° feedback Merit based compensation Don’t forget the commercial marketplace

39. 39 SRA International, Inc. Global provider of technology products, solutions, services Revenue: $1.2B+ in 2007 90% as prime contractor Employees: 6,200+ worldwide and growing Business units Defense Civil Global Health C3I Deeply embedded culture Focused on creating value for customers Corporate trademark – “Honesty and Service” Undergoing significant leadership changes Assignment: Special Asst to the Civil Sector Director and VP

40. 40 SRA Observations Committed to innovation: “The best idea wins” Open communication promoted up & down Environment of wide range participation created Disciplined and lean “business capture” process 2012 Targets: $5B revenue; 10% Return on Sales (ROI) growth Dedicated to employee development & retention Fortune Magazine “100 Best Company to Work For” Growing organically & through acquisition Challenges to the corporate culture Maturation of the federal IT market space Business Week “Hot Growth Company” Customer valued Hires are strategic

41. 41 SRA Recommendations Be open to jettison the “tried and true” If a better solution emerges Focus on the message rather than the messenger Currency versus experience The voice of the customer Broaden Merit-based compensation Clear expectations & trust The value of “at risk” compensation Capture and publicize great ideas Knowledge management requires cultural change Train and expand the workforce for contracting DOD must ensure sufficient contract R&D funds are available through DARPA and Government laboratories in partnership with industry. DSB must harness the best of future possibilities and recommend strategic thrusts. Long term investment in R&D is vital to maintaining our technological superiority and we cannot rely on industry to fill the void without adequate financial incentive. DOD should review the core competencies and strive to reduce unnecessary duplication and redundancy. For example, each service conducts EW reprogramming. A Joint reprogramming Center could potentially reduce overhead costs, make more efficient use of laboratories, reduce number or redirect activities of engineers, and provide a coherent product to Warfighter. DOD should continue to aggressively pursue opportunities for outsourcing that provide lower cost to the government. DOD should decide what is mission essential and perhaps we would save money by outsourcing intelligently. Most successful companies use Lean Six Sigma or a similar methodology to drive process improvement with documented savings in the billions of dollars. Consider designating a center of excellence for Process improvement. Incorporate MBA training within existing PME. Place emphasis on budget, finance, change management, process improvement tools, human capital management. Officers must understand contracts if we continue to outsource. Transform DOD from a spend culture to a cost conscious culture. Establish a method, such as a working capital fund, to provide an incentive to save money. A portion of the savings may be used for QOL for instance. The best corporations link pay to performance and responsibility. The best corporations provide the best training and education to the top 10% and they actively work to improve or remove those in the bottom 10%. Need to combat the demographic trend and ensure we have adequate scientists and engineers. As older engineers retire, we need to ensure knowledge transfer takes place to capture the experiences of those retiring. frequent changes in leadership are detrimental to affecting change successful. DOD must ensure sufficient contract R&D funds are available through DARPA and Government laboratories in partnership with industry. DSB must harness the best of future possibilities and recommend strategic thrusts. Long term investment in R&D is vital to maintaining our technological superiority and we cannot rely on industry to fill the void without adequate financial incentive. DOD should review the core competencies and strive to reduce unnecessary duplication and redundancy. For example, each service conducts EW reprogramming. A Joint reprogramming Center could potentially reduce overhead costs, make more efficient use of laboratories, reduce number or redirect activities of engineers, and provide a coherent product to Warfighter. DOD should continue to aggressively pursue opportunities for outsourcing that provide lower cost to the government. DOD should decide what is mission essential and perhaps we would save money by outsourcing intelligently. Most successful companies use Lean Six Sigma or a similar methodology to drive process improvement with documented savings in the billions of dollars. Consider designating a center of excellence for Process improvement. Incorporate MBA training within existing PME. Place emphasis on budget, finance, change management, process improvement tools, human capital management. Officers must understand contracts if we continue to outsource. Transform DOD from a spend culture to a cost conscious culture. Establish a method, such as a working capital fund, to provide an incentive to save money. A portion of the savings may be used for QOL for instance. The best corporations link pay to performance and responsibility. The best corporations provide the best training and education to the top 10% and they actively work to improve or remove those in the bottom 10%. Need to combat the demographic trend and ensure we have adequate scientists and engineers. As older engineers retire, we need to ensure knowledge transfer takes place to capture the experiences of those retiring. frequent changes in leadership are detrimental to affecting change successful.

42. 42 Athena - CACI U.S. based, national security solutions & professional services firm Privately held equity investment Veritas Capital Revenues: $110M in 2007 Employees: 550 200 subject matter experts 95% TS/SCI clearances or higher Core competencies: Human intelligence Counterintelligence Counterterrorism All-source analysis Strategic policy development Bought by CACI in November 2007 National Solutions Group Worldwide, information technology (IT) solutions & enterprise services provider Computer simulation technology Publicly traded Revenues: $1.9B in 2007 Employees: 11,000+ 65% Secret clearances or higher Core competencies: Homeland security Information assurance Systems integration Network services Intelligence solutions Knowledge management Modeling and simulation Engineering and logistics Business transformation/management

43. 43 Focused on strategic growth 2012 Goal: $5B company Acquire high margin businesses Win re-competes Growing systems integrator role Moving into non-IT professional services arenas Continuing strategic accretive acquisitions Acquired 39 companies in 15 years Focused on lessons learned to improve integration of acquisitions Increase speed of integrations to minimize time until return on investment Customer focused Account Management across business groups Quality of service surveys through independent Excellence+ program Best Value Employee Focused Education Portal Competitive benefits Bonuses CACI Observations

44. 44 People are a company’s “core strength” Reputation & integrity is paramount in professional services arena Best source of business intelligence Keep the employees satisfied Education & training opportunities Benefits Merit & goals-based bonuses Grow business base & core competencies Leverage acquisitions Understand their competencies and how they fit Maintain entrepreneurial spirit Agile & responsive business development cycle Lean out the “Bid & Proposal” (solicitation response) process Flatten out the decision chain Remain customer focused Open communication Best solution to customer Account focused, not business group CACI Observations/ Recommendations

45. 45 Cisco Systems Worldwide Leader in Networking and Services for the Internet Revenue: $34.9B in 2007 (Net Income $7.3B) Employees: 63,000+ in 78 countries Growth through Acquisitions (125; four in last five months) Globalization, Growth, Talent, and Innovation India & China investments Vision: “Changing the way we work , live, play, and learn” “Consumer Computing Needs are Infinite” With miniscule incremental cost Assignment IT—Acquisition Integration IT—Unified Communications Global Defense Group Opening Share Price adjusted for splits $.06 3rd Generation Fiber Optic 10 Trillion bits per second (1900 CDs/second or 150 simultaneous telephone calls)Opening Share Price adjusted for splits $.06 3rd Generation Fiber Optic 10 Trillion bits per second (1900 CDs/second or 150 simultaneous telephone calls)

46. 46 Cisco Observations Optimism about Globalization and Emerging Markets Wholly Positive View of Geopolitical Trends Expanding Competitive Areas to include Unified Communications Focus on “Quad Play” (data, voice, and video w/mobility) Connected Everywhere Regardless of Device Interaction versus Transaction Economies Collaboration replacing Command Leadership DoD compares favorably Collaboration has limits Innovation: Build, Buy, Partner, Collaborate Growth brings Challenges Core Business Thriving

47. 47 Cisco Recommendations Globalization view balanced between security & reality “Borderless” corporations Opportunities and challenges Pure competitors may not survive Partnering and collaboration enhance stability Leverage the Net for more than Net-Centric Warfare Top Talent needed in high tech future Where to find it? How to Compete for it? IT is worth the investment, but… Business case is not always easy to make NEVER for technology’s sake alone (no technology religion) Cyber Warriors can work from anywhere…and should New, more dynamic views of Training and Education COTS and acquisition reform DOD must ensure sufficient contract R&D funds are available through DARPA and Government laboratories in partnership with industry. DSB must harness the best of future possibilities and recommend strategic thrusts. Long term investment in R&D is vital to maintaining our technological superiority and we cannot rely on industry to fill the void without adequate financial incentive. DOD should review the core competencies and strive to reduce unnecessary duplication and redundancy. For example, each service conducts EW reprogramming. A Joint reprogramming Center could potentially reduce overhead costs, make more efficient use of laboratories, reduce number or redirect activities of engineers, and provide a coherent product to Warfighter. DOD should continue to aggressively pursue opportunities for outsourcing that provide lower cost to the government. DOD should decide what is mission essential and perhaps we would save money by outsourcing intelligently. Most successful companies use Lean Six Sigma or a similar methodology to drive process improvement with documented savings in the billions of dollars. Consider designating a center of excellence for Process improvement. Incorporate MBA training within existing PME. Place emphasis on budget, finance, change management, process improvement tools, human capital management. Officers must understand contracts if we continue to outsource. Transform DOD from a spend culture to a cost conscious culture. Establish a method, such as a working capital fund, to provide an incentive to save money. A portion of the savings may be used for QOL for instance. The best corporations link pay to performance and responsibility. The best corporations provide the best training and education to the top 10% and they actively work to improve or remove those in the bottom 10%. Need to combat the demographic trend and ensure we have adequate scientists and engineers. As older engineers retire, we need to ensure knowledge transfer takes place to capture the experiences of those retiring. frequent changes in leadership are detrimental to affecting change successful. DOD must ensure sufficient contract R&D funds are available through DARPA and Government laboratories in partnership with industry. DSB must harness the best of future possibilities and recommend strategic thrusts. Long term investment in R&D is vital to maintaining our technological superiority and we cannot rely on industry to fill the void without adequate financial incentive. DOD should review the core competencies and strive to reduce unnecessary duplication and redundancy. For example, each service conducts EW reprogramming. A Joint reprogramming Center could potentially reduce overhead costs, make more efficient use of laboratories, reduce number or redirect activities of engineers, and provide a coherent product to Warfighter. DOD should continue to aggressively pursue opportunities for outsourcing that provide lower cost to the government. DOD should decide what is mission essential and perhaps we would save money by outsourcing intelligently. Most successful companies use Lean Six Sigma or a similar methodology to drive process improvement with documented savings in the billions of dollars. Consider designating a center of excellence for Process improvement. Incorporate MBA training within existing PME. Place emphasis on budget, finance, change management, process improvement tools, human capital management. Officers must understand contracts if we continue to outsource. Transform DOD from a spend culture to a cost conscious culture. Establish a method, such as a working capital fund, to provide an incentive to save money. A portion of the savings may be used for QOL for instance. The best corporations link pay to performance and responsibility. The best corporations provide the best training and education to the top 10% and they actively work to improve or remove those in the bottom 10%. Need to combat the demographic trend and ensure we have adequate scientists and engineers. As older engineers retire, we need to ensure knowledge transfer takes place to capture the experiences of those retiring. frequent changes in leadership are detrimental to affecting change successful.

48. 48 Amgen, Inc. World's Largest Bio-pharma Company Revenue: $14.3B in 2007 Employees: 18K in 52 countries R&D Investment: $3.2B in 2007 Discover, develop, manufacture protein-based medicines Drugs that unleash body's own powerful therapeutic responses Corporate Goals Deliver financially Deliver the best pipeline Compete successfully Ensure supply and better manage risk Develop people Assignment Ongoing Change Program Continuous improvement at 80% cost savings Assisting R&D Outsourcing Strategy for Development

49. 49 Amgen Observations Work culture Great ‘people culture’ Fortune Magazine “100 best companies to work for” Extremely long hours Tues – Thurs; short hours on Mon & Fri All employees have a laptop and work at home at night Teams work in “silos” Formalities slow speed of progress New members “announced” Phone calls scheduled Cross-matrix creates large unavailability chunks Global country alignment out of date Growth too fast; 75% of positions already outsourced Global Medical Director alignment different than business management side A company in trouble Stock Tumble: $75 to $46 in 12 months Need to take drastic measures 1,800+ jobs (13%) eliminated across the board (except in science area) Operating expenses and expenditures cut Complete review of all processes to streamline Operations Partnership on joint ventures to reduce costs and risk It’s Not Over Yet…More Trouble on the Horizon The Food and Drug Administration toughened safety warnings on blockbuster anemia drugs, in a move that looked unlikely to help drug makers in their quest to liberalize Medicare payments for the medicines. Two Amgen Inc. drugs, Aranesp and Epogen, along with Johnson & Johnson's Procrit, brought in $7.3 billion of revenue last year. But that was before safety concerns arose over their use by cancer and kidney patients to treat anemia, a shortage of red blood cells that can cause fatigue and other symptoms. In July, the Centers for Medicare and Medicaid Services said it wouldn't pay for the drugs in cancer patients whose hemoglobin -- a measure of red blood cells -- was above 10 grams per deciliter. Yesterday, the FDA warned that the medicines have been linked to tumor growth and shortened survival in cancer patients -- and increased rates of death and heart problems in kidney patients -- when used to boost hemoglobin above 12 grams per deciliter. Recent research shows the risks of death and heart attacks rise considerably when an anemia drug gives too big a boost to hemoglobin, which brings oxygen to the body's tissues. In cancer patients undergoing chemotherapy, the FDA is now advising doctors not to use the drugs to boost hemoglobin above 12, while in kidney patients it set a range of 10 to 12. Amgen and J&J seized on the new product label in their quest to get Medicare to reverse its restrictive reimbursement decision, which has cut into sales of the drugs. Both companies said they were petitioning Medicare to change its stance -- citing, in part, the new label as proof the FDA finds more-liberal use safe and gives doctors more discretion regarding the proper doses for individual patients. It’s not over yet… Amgen reported last month that it is involved in discussions with the FDA to update the labeling for Aranesp (darbepoetin alfa) and Epogen (epoetin alfa) to reflect the recent data (DID, Dec. 10, 2007). The FDA said it plans to hold an advisory committee meeting in the next few months on the use of ESAs in patients with chemotherapy-induced anemia. The latest results reinforce other data on which the FDA based its most recent update to ESA labeling, which included strengthened warnings about ESA use in cancer patients (DID, Nov. 9, 2007). Studies have shown more rapid tumor growth or shortened survival with ESA treatment in patients with breast, nonsmall cell lung, lymphoid, cervical, and head and neck cancers, the FDA said. The Food and Drug Administration toughened safety warnings on blockbuster anemia drugs, in a move that looked unlikely to help drug makers in their quest to liberalize Medicare payments for the medicines. Two Amgen Inc. drugs, Aranesp and Epogen, along with Johnson & Johnson's Procrit, brought in $7.3 billion of revenue last year. But that was before safety concerns arose over their use by cancer and kidney patients to treat anemia, a shortage of red blood cells that can cause fatigue and other symptoms. In July, the Centers for Medicare and Medicaid Services said it wouldn't pay for the drugs in cancer patients whose hemoglobin -- a measure of red blood cells -- was above 10 grams per deciliter. Yesterday, the FDA warned that the medicines have been linked to tumor growth and shortened survival in cancer patients -- and increased rates of death and heart problems in kidney patients -- when used to boost hemoglobin above 12 grams per deciliter. Recent research shows the risks of death and heart attacks rise considerably when an anemia drug gives too big a boost to hemoglobin, which brings oxygen to the body's tissues. In cancer patients undergoing chemotherapy, the FDA is now advising doctors not to use the drugs to boost hemoglobin above 12, while in kidney patients it set a range of 10 to 12. Amgen and J&J seized on the new product label in their quest to get Medicare to reverse its restrictive reimbursement decision, which has cut into sales of the drugs. Both companies said they were petitioning Medicare to change its stance -- citing, in part, the new label as proof the FDA finds more-liberal use safe and gives doctors more discretion regarding the proper doses for individual patients. It’s not over yet… Amgen reported last month that it is involved in discussions with the FDA to update the labeling for Aranesp (darbepoetin alfa) and Epogen (epoetin alfa) to reflect the recent data (DID, Dec. 10, 2007). The FDA said it plans to hold an advisory committee meeting in the next few months on the use of ESAs in patients with chemotherapy-induced anemia. The latest results reinforce other data on which the FDA based its most recent update to ESA labeling, which included strengthened warnings about ESA use in cancer patients (DID, Nov. 9, 2007). Studies have shown more rapid tumor growth or shortened survival with ESA treatment in patients with breast, nonsmall cell lung, lymphoid, cervical, and head and neck cancers, the FDA said.

50. 50 Amgen Observation/Recommendations Business World Craves DoD-style Leadership Create an Ongoing Change Program Equivalent in DoD Common language and methodologies for problem solving Institutionalize focus on continuous improvement Focus on increasing efficiency and effectiveness in everything Sustain U.S. Military competitive advantage Stay ahead of global threat environment More than just an office for Six Sigma or Lean management The Ongoing Change Program was established to provide Amgen employees with a common set of problem-solving tools and methodologies to enable us to continuously improve the way we do business. This is not change for the sake of change, but a way to continuously improve to sustain our competitive advantage and goal to be the best human therapeutics company. The Ongoing Change Program was established to provide Amgen employees with a common set of problem-solving tools and methodologies to enable us to continuously improve the way we do business. This is not change for the sake of change, but a way to continuously improve to sustain our competitive advantage and goal to be the best human therapeutics company.

51. 51 Oracle Corporation Executing a rapid transformation Employees: 74K + in 145 Countries Revenue: ~$18B in FY07 47% Americas; 35% Europe, Middle East & Africa; 18% Asia Pacific Used by 90 of Fortune 100 companies Becoming an end-to-end enterprise solution provider No longer just a database company 39 acquisitions in 37 months “Oracle's business is information - how to manage, use, share, protect it” Simplify: Speed information delivery with integrated systems and a single database Standardize: Reduce cost/maintenance with open, easily available components Automate: Improve operational efficiency with technology and best practices” Assignment Public Sector License Sales/Business Development North America (Federal, Civil, State & Local governments, Healthcare)

52. 52 Oracle Observations Continual top-down strategic positioning If an opportunity exists, then develop or buy a solution Aligned behavior amid churn Quarter-by-quarter growth Open standards seen as a business enabler Uncertainty … Where is Oracle going next? Customer base is uncertain about acquisition integration What is “Fusion Middleware”? No definitive answer Opportunities for DoD and Private Sector Partnership Enable a DoD voice in focusing >$2B/yr R&D investment Leverage “Partner Success Stories” and “Insight” events Many individually licensed solutions across DoD customers

53. 53 Oracle Recommendations Continue Executing national security mission as the unifying action driver Developing personnel skills – tactical/strategic, technical/leadership Explore new ways to… Execute many Big Bang strategic initiatives Don’t Boil the Ocean Rapidly roll successes across DoD and government Decouple requirements definition from the real pace of technology Often out of phase Embrace enduring partnerships with industry More return on DoD investments; more industry interest in DoD Utilize actionable metrics Consistent data sources

54. 54 Time Warner Leading media & entertainment company Employees: 96,000 Revenue: $44B ($7.3B net income) Seven business units Digital products reinforce brands Competitive advantage through collaboration and Joint Ventures CNNMoney.com a collaboration between two business units Turner Broadcasting (CNN) and Time, Inc (Fortune/Money/Fortune magazines) Delivers premium destination for business and personal finance information #1 business and financial information portal Highest unique visitors, page views and total use minutes Breaking news and in-depth original content to decision makers and influencers Suite of interactive tools Assignment: CNNMoney with rotation through Time Warner units in NYC Turner Broadcasting (broadcast & digital media) Time, Inc (print & digital media) AOL (web services)

55. 55 CNNMoney.com Observations Users customize their online experience thanks to Web 2.0 Transition websites from silos to interlinked computing platforms Tools such as blogs, social networking, wikis, web interface Participatory elements provided over “read-only” websites Allows users to do more than just retrieve information Ordinary users: publishers, movie producers, song writers, story tellers Social media is a profound and pervasive internet innovation Sharing what users know and feel online build conversations/communities Content packaged/delivered based on user demand, device, delivery Customer responsiveness the “killer app” of the future The Attention Economy Due to information explosion, users no longer read - they skim Rapid growth of information causes scarcity of attention Winners will use data aggregation and personalization to deliver value Web widgets, Real Simple Syndication, Mashups, iGoogle, myYahoo

56. 56 CNNMoney.com Observations Online Video Surge Adoption of broadband Push by content producers to promote Viewers contribute to viral and social nature of online videos 57% share video links 75% receive and play video links Mobile Web…the next big thing Big in Asia and Europe… but slow boil in the U.S. Issue is usability iPhone’s revolutionary user interface paves the way Explosion of location aware services, information/commercial portals

57. 57 CNNMoney.com Recommendations Explosion of data in battlefield & combat systems Web 2.0 tools/gadgets are ubiquitous parts of everyday life Ready made solutions for DoD C2 and combat systems Aggregate and streamline data to increase relevance and context DoD’s video management and distribution needs Emerging online video technologies can be COTS solutions Data compression, embedded players, encoding algorithms Quest for consumer attention a moving target Web companies must continually innovate, reposition, partner Improved data capture, analytics, and knowledge management Better informed business decisions Digital ecosystem with other firms = shared costs, greater value People matter Relevant, timely, and meaningful content essential Recruiting and retaining editorial and management