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Final Report of the Secretary of Defense Corporate Fellows Program 2001 - 2002. 2001 - 2002 Fellows. CAPT Natalie Young-Aranita Cisco Systems , Inc. San Jose, CA Col David Ziegler 3M Company St. Paul, MN LTC June Sellers Merck & Company, Inc. Whitehouse Station, NJ

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Final Report of the

Secretary of Defense

Corporate Fellows Program

2001 - 2002

2001 2002 fellows
2001 - 2002 Fellows
  • CAPT Natalie Young-Aranita Cisco Systems, Inc.

San Jose, CA

  • Col David Ziegler 3M Company

St. Paul, MN

  • LTC June Sellers Merck & Company, Inc.

Whitehouse Station, NJ

  • LtCol Clyde WoltmanUnited Technologies

Hartford, CT

  • LTC Bob StanleySears, Roebuck & Company

Hoffman Estates, IL

  • Lt Col Linda Medler Oracle Corporation

Reston, VA

  • CDR Joe Beadles AMS, Inc.

Fairfax, VA

  • Background
  • Common Observations/Recommendations
  • Individual Experiences (time permitting)
sdcfp background
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
sdcfp organization
SDCFP Organization
  • Two officers from each Service
    • High flag/general officer potential
    • O-6 or O-5
    • Senior Service College credit
  • Eleven months at Sponsoring Company
  • Group Education
  • Permanent Staff
    • SDCFP Director, Admin Asst.
    • Net Assessment for oversight
    • National Defense University for Admin support
sdcfp sponsors
SDCFP Sponsors
  • 01 - Prior
    • ABB, Accenture, Agilent Technologies, AMS, Cisco, DirecTV, Enron, FedEx, Hewlett-Packard, Human Genome Sciences, Lockheed Martin, Loral, McKinsey & Co., McDonnell Douglas, Microsoft, Mobil, Netscape, Oracle, Northrop Grumman, PricewaterhouseCoopers, Raytheon, Sarnoff, Sears, Southern Company, Sun Microsystems
  • 01- 02
    • AMS, Cisco, Merck, Oracle, United Technologies, 3M, Sears
  • 02 – 03
    • Boeing, FedEx, Pfizer, PricewaterhouseCoopers, Raytheon Aerospace, Southern Company, Sun Microsystems
sdcfp results
SDCFP Results
  • Program objectives fulfilled
    • Education, education, education
    • More Sponsors than Fellows available
    • Intra-group experience sharing
  • Unique corporate experiences
    • Strong corporate support
    • Executive/operational level mix
    • Mergers/restructuring
sdcfp products
SDCFP Products
  • Report and Briefingsdirectlyto SecDef, others
    • Business insights relevant to DoD culture/operations
    • Recommended process/organization changes
  • Build a cadre of future leaders who:
    • Understand more than the profession of arms
    • Understand adaptive and innovative business culture
    • Recognize organizational and operational opportunities
    • Understand skills required to implement change
    • Will motivate innovative changes throughout career
  • Background
  • Common Observations/Recommendations
  • Individual Experiences (time permitting)
two different cultures
Corporate America

Market-centric “war” footing

“Bottom Line” urgency drives

change across corporation

Ruthless advocates for business efficiency & the customer

Spontaneous, continuously evolving technology base

Peacetime DOD

Service-centric OT&E footing

“Ambiguous Future” restrains rapid change across Services

Moral advocates for mission effectiveness & the warrior

Structured technology development, change by blocks

Two Different Cultures . . .

. . . With Best Practices to Share

areas of interest
Areas of Interest
  • Organizational Agility
    • Transformational Culture
    • Collaborative Teaming
    • The Power of Change Management
  • Information Technology
    • Exploiting the Web
    • IT Role in Organizational Success
  • Business Processes
    • Leveraging Size for Spend
    • Outsourcing
    • Supply Chain Management
    • Organizing for e-Business Transformation
  • Human Capital
    • Talent and Performance Management
    • Efficient Employee/Customer Support
organizational agility transformational culture
Organizational AgilityTransformational Culture
  • Corporate America uses culture to align the work force
    • “Change” and “continuous improvement” articulated as the norm
    • Individual performance plans linked to efficiency initiatives
    • Internal and external communications foster “buy-in”
  • DoD should:
    • Develop & communicate unified vision, mission, and goals
      • Develop in coordination with Service & Agency Heads
      • Widely disseminate through all command levels
      • Reinforce at every leadership contact with military/civilian workers
    • Identify and leverage ops/business best practices across DoD
      • Form ad hoc teams to identify and benchmark
      • Develop and submit processchanges
organizational agility transformational culture cont
Organizational AgilityTransformational Culture (Cont)
  • DoD should:
    • Reward performance that leads to efficiency
      • Tie pay/promotions/awards to specific accomplishments
        • TSP matching Funds and/or U.S. Savings Bonds
      • Permit organizations to recoup dollars saved for future use
    • “Brand” DoD as an attractive industry partner
      • Allow fair (market) profit that exceeds “hurdle rate”
      • Share Risk--especially R&D
      • Streamline bid/contract processes
      • Adopt industry standards more aggressively
        • Financial Management
        • Auditing
        • Contracting
organizational agility collaborative teaming
Organizational AgilityCollaborative Teaming
  • Corporations balance power of teams with unity of effort
    • Ad hoc teams spontaneously collaborate at all levels
    • Teams increasingly extend outside of corporation
  • DoD should:
    • Encourage cross-Service/Agency relationships to tackle issues
      • Planning, Operations, Procurement
      • Foster greater tolerance for “out of chain” communications
      • Reward success
    • Communicate clear “guide stars” to align teams with vision
    • Develop network infrastructure to link teams and data sources
    • Introduce shared change management disciplines
organizational agility change management
Organizational AgilityChange Management
  • Corporate America driving agility/adaptability through formal change disciplines
    • Not just old initiatives with new face (i.e. TQM)
    • Common language and standardized tools
  • DoD should:
    • Introduce a shared, formal change management discipline
      • Six Sigma or equivalent
      • Dedicated, fully resourced effort required
      • Build momentum with low level demonstration effort
        • Prospective Project - Travel Voucher Program
    • Include change management in Mil/Civ Professional Education
    • Champion and incentivize change--measure results
      • Set organizational level objectives for change
      • Tie individual performance plans/evals to change objectives
information technology it exploiting the web
Information Technology (IT)Exploiting the Web
  • Leading companies run their businesses over the Web
    • Transformational cost efficiency and mission effectiveness
  • DoD should:
    • Use Web for mission transactions, not just information
      • On-line manuals for “plug & play” weapon systems check out
      • On-line HR for self-help administrative processing
      • Internet auctions for purchase of common supplies and equipment
    • Revamp the Virtual Pentagon architecture pilot program
      • Single Pentagon IT infrastructure architecture
      • Begin with e-mail networks, eliminate Service-unique systems
      • Consolidate Pentagon IT under single joint system
    • Focus on new “end game” processes enabled by new IT
      • Then buy IT to support
information technology it exploiting the web cont
Information Technology (IT)Exploiting the Web (Cont)

SECDEF Corporate Fellows Program

  • DoD should:
    • Migrate from client-server architecture
      • Begin with common e-mail system—easiest to do
      • Re-host interactive software applications
        • Demand compliance with NSTISSP No. 11 security requirements
        • Develop more reliable, redundant system architecture
      • Revisit “best of breed” mindset to minimize integration costs
      • Phase out legacy systems as appropriate
      • Incrementally adopt a web-based e-business software suite
      • Pick the “low-hanging fruit”
        • i-Procurement, e-Travel, web-enabled training/education
    • Partner with IT industry to transform into an e-business
      • Institute biometrics, consolidate databases, web-enable apps
information technology it it role in organizational success
Information Technology (IT)ITRole in Organizational Success
  • Corporate America considers IT a “strategic spear”
    • A business enabler, not just automation support
    • Commits a significant portion of capital spending
      • Transforming processes and leveraging technology
  • DoD should:
    • Embrace spiral development for IT
    • Allocate share of “transformation” funding to IT
    • Make “operations” and “technology” equal requirement drivers
      • IT a full partner in operations planning - not an afterthought
      • Ensure better processes requiring IT to compete equally for dollars
      • Give CIO a vote on formal requirements panels at all levels
    • Articulate IT vision and the road map to enable it
      • Consider impact to IT road map when evaluating new weapons
business processes outsourcing
Business Processes Outsourcing
  • Corporate America divesting “non core” competencies
    • Strategic Business Process Outsourcing (BPO) alliances
    • Redirecting Capital & Resources to Core Businesses
  • DoD should:
    • Continue to identify core competencies at all levels
    • Team with industry to provide non-core services
      • Personnel administration
      • Travel management
      • Finance and accounting
      • Education program administration
      • Medical services (non-combat)
      • Information Technology
business processes leveraging size for spend
Business Processes Leveraging Size for Spend
  • Corporate America tackling procurement inefficiencies
    • Only 57% of purchasing optimized (Fortune 100 survey)
    • Pooling purchases
    • Partnering with small number of high-performing suppliers
      • Better support and best price/value
  • DoD should:
    • Fully exploit size to leverage spending for goods and services
      • Establish more DoD-wide contracts
        • Office supplies, CONUS ground transportation, strategic carriers, etc.
      • Expand/better utilize Defense Logistics Agency’s e-Mall portal
    • Transform DLA
      • From manager of supplies to manager of suppliers
business processes leveraging size for spend cont
Business Processes Leveraging Size for Spend (Cont)
  • DoD should:
    • Centralize purchasing authority
      • Defense Logistics Agency or Defense Contract Management Agency
      • Non-standard (i.e., Service unique) purchases if fiscally justifiable
    • Stand up DoD-wide cost-reduction and procurement teams
    • Move to a common, DoD-wide electronic procurement engine
      • Greatly expand on-line auctions
      • DLA (or DCMA)
        • Operates and maintains
        • Trains Services and Agencies
      • Services and Agencies use
business processes supply chain management
Business Processes Supply Chain Management
  • Corporate America cannot “beat” the competition alone
    • Strategic Alliances with their best Supply Chain organizations
    • Supply Chain Management brings better service at lower costs
  • DoD should:
    • Adjust mindset from Logistics to Supply Chain Management
      • Single Point of Contact, e.g., Defense Logistics Agency
      • Exercise aggressive inventory control, reduce redundant inventory
      • Reduce cycle times
      • Partner with key suppliers
    • Adopt a Vendor Compliance Program
      • Standards, certification, and training
      • Enforcement mechanism
      • Cost recovery
business processes organizing e business transformation
Business Processes Organizing e-Business Transformation
  • Corporations view IT as a strategic advantage
    • No longer just a service provider
    • CIO a full business leadership participant
    • IT identifies opportunities
  • DoD should:
    • Designate office responsible for e-Business transformation
    • Give DoD CIO full authority to:
      • Set and enforce DoD-wide standards and protocols
      • Approve Service IT programs (including funding)
      • Develop and implement shared services e-business model
    • Give Service CIO’s funding authority for all IT program aspects
    • Strengthen Business Initiatives Council – SDCFP link
human capital talent performance management
Human Capital Talent & Performance Management
  • Corporations raising personnel performance at all levels
    • Performance management, training and education
  • DoD should:
    • Target “satisfactory” low performers for coaching and mentoring
    • Permit dual tracks for leaders/managers & technical specialists
    • Craft e-Learning partnerships with civilian education institutions
      • DoD-wide programs… not service specific
      • Include “Trades” and certification programs
    • Address “Life after the military…” to enhance retention/recruiting
      • Web-based DoD-wide placement assistance program
        • as model
      • DoD-wide program for non-job related training and certification
human capital efficient employee customer support
Human Capital Efficient Employee/Customer Support
  • Corporations embracing Shared Service Model
    • Reduce redundancy, gain productivity, improve service
  • DoD should:
    • Identify DoD-wide common processes fitting Shared Service Model
      • Human resources, legal, health care, supply chain, IT, Finance
      • Aggressively web-enable
    • Minimize customization of COTS solutions
    • Develop IT solutions that enable process changes
      • Gain full benefit, not just smarter typewriters
  • Background
  • Common Observations/Recommendations
  • Individual Experiences (time permitting)
cisco observations
Cisco Observations

SECDEF Corporate Fellows Program

  • Intense organizational culture
    • CEO/executive leadership/managers proactively build & reinforce
    • Core values driven into all levels; provides focus for company
      • Customer focus and corporate citizenship
  • Change Management
    • Constant, timely internal communications are key
    • Climate built for flexibility, acceptance of frequent changes
  • Leveraging Technology
    • “Cisco Employee Connection”: Intranet an invaluable resource/tool
    • Internet business solutions enable huge productivity gains/efficiencies
  • Employee Performance Management
    • Frequent, scheduled, individual feedback “1:1s” ingrained in calendars
    • Aggressive management of bottom 10% performers
    • Rewards tied to productivity
3m observations
3M Observations

SECDEF Corporate Fellows Program

  • Strong “outsider” CEO successfully leading change
    • Crystal clear goals from former GE executive
    • Razor-sharp accountability
  • “Headlong” implementation of Six Sigma driving results
    • Common language, established channels, measured performance
  • Ad hoc work groups and teams powered by electronic networking
    • Seamless data sharing and resource scheduling
    • Well-developed intranet for business admin and training
  • Relentless corporate pressure to cut costs of business
    • “Hold” business &”Win” cost savings  ”Grow” business with savings
    • DoD: “Hold” budget & “Optimize” mission results within given dollars
3m observations29
3M Observations

SECDEF Corporate Fellows Program

  • Aggressive initiatives to optimize spend for goods & services
    • Improved discipline, pool purchases, dual sources, competition
    • Saved $166M in first year; on target for $500M by 2003
  • Centrally managed “Corporate Identity Strategy and Standards”
    • Careful orchestration of vision, key messages, values and alliances
    • 3M highly respected for its quality, trust and innovation
  • R&D reticent to cater to Govt consumer without commercial payback
    • Why TBD:
      • 3M’s commercial culture?
      • Fall out from past work with Government?
  • Heartwarming response & support for military after 9/11
    • But generally ill-informed on the most basic military concepts

Pratt & Whitney


SECDEF Corporate Fellows Program

  • Corporate Strategy
    • Clear & simply stated; end state and “bridge” articulated
    • Competitive advantages understood
    • Focus on core competencies & outsourcing non-core
    • Growth aspirations linked to extensions of core competencies
    • Leverages operational capability to “change the game”
  • Culture
    • “Lean Thinking” & “ACE” permeate all facets of company
    • “Constant change is a way of life”
    • Willingness to stretch the limit
    • Merged companies drawn into parent philosophy

Pratt & Whitney


SECDEF Corporate Fellows Program

  • Architecture & Processes
    • Empowerment/accountability at lowest levels
    • Supply base consolidation
    • Integrated Program Deployment implementation
  • Execution
    • Education
    • Scorecards
    • UTC coordinated Leadership Councils
    • Corporate Analysis
      • McKinsey & Co. and Dupont
    • Electronic Work Instructions
sears logistics services observations
Sears Logistics Services Observations

Caterpillar Inc.


SECDEF Corporate Fellows Program

  • Sears & SLS undergoing significant change
    • Moving from silos to enterprise-wide approach
    • Robust change management/leadership program
  • Business strategy with quantifiable objectives
    • Customer centric
    • Improve productivity and returns
    • Drive profitable growth
    • Develop diverse high performance team
  • Global Net Exchange System (GNX) - using the internet for auctions
    • Purchase retail items for manufacture and resale
      • Sales Volume in Excess of $240M; more than $40M saved to date
    • Liquidate liability inventory (increased cost recovery)
    • Purchase supplies for home office use and remodeling
    • Partner with Michelin to test collaborative planning and forecasting
sears logistics services observations33
Sears Logistics Services Observations

Caterpillar Inc.


SECDEF Corporate Fellows Program

  • Vendor relations
    • Adopted industry standards
    • Electronic Data Interchange (EDI)
    • Compliance program with standards and charge-backs
      • Cost recoveries in excess of $40 million
  • Information Technologies
    • Wide range of legacy systems
      • Building bridges vice developing new systems
  • Training
    • Continuous process
    • Moving to increased web-based format
    • Cross training associates - improves company wide perspective
  • Supply Chain management
    • Improved efficiencies (especially transportation)
    • Lower/controlled inventories
    • Improved cycle times
oracle observations


Oracle Observations

SECDEF Corporate Fellows Program

  • The $1B Savings Story confirmed by Booz-Allen
    • Eye-watering technology reduced tooth to tail
    • Efficiency up  workforce down  operating margins up
  • Focused to become an e-business
    • Servers and processes consolidation (not just e-mail)
    • Business practices and processes standardization
      • Using proprietary software
    • Reliance on self-service mentality
  • Shared services paradigm enhances productivity
    • e-Travel, HR, education/training, procurement
    • Self-service is “liberating”
  • Transformations successful because of leadership
    • Benevolent Dictator
ams observations
  • A company in the midst of transformation
    • Present business model under review
      • Loose conglomerate of autonomous business units less successful now
      • Greater Corporate involvement
    • New CEO appointed
      • An “outsider”
      • Focus now more on growth through acquisition
  • Branding Problem
    • Corporate image tarnished by high profile law suits
  • Maintaining a technically competent workforce
    • Forming strategic partnerships to augment
ams observations36
  • Increased core markets competition
    • DoD, Federal, and State business space more attractive
    • Leveraging experience, customer familiarity to maintain advantage
  • “Business Joint”
    • Company’s strengths & weaknesses recognized
      • Developing permanent and/or interim partnership to address
  • Leveraging technology ensures company-wide info access
    • Common tools for Project Management
    • Robust “Best Practices” data base – no PM needs to go it alone
  • Consolidation of Common Services
    • Business Unit-specific IT/HR/Admin Support removed