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Secretary of Defense Fellows Program 1997- 1998

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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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slide1
Secretary of Defense

Fellows Program

1997- 1998

sdfp background
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
sdfp organization
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
sdfp objectives
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
sdfp sponsors
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
sdfp results
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
sdfp fellows
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
slide8
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
slide9
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!
slide10
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
andersen consulting observations recommendations
Andersen Consulting Observations/RecommendationsAndersen 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
sdfp fellows12
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
directv
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
directv observations
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
directv observations15
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
directv recommendations
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
sdfp fellows17
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
mobil corporation
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
mobil corporation observations recommendations
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
mobil corporation observations recommendations20
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
mobil corporation observations recommendations21
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
sdfp fellows22
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
northrop grumman essd
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
northrop grumman essd observations recommendations
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
northrop grumman essd observations recommendations25
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
northrop grumman essd recommendations
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
sdfp fellows27
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
slide28
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
slide29
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
slide30
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
slide31
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
sdfp fellows32
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
southern company
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
southern company observations
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
southern company observations35
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
southern company recommendations
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
sdfp common observations recommendations
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
sdfp common observations recommendations38
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
sdfp common observations recommendations39
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
sdfp common observations recommendations40
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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