Organizational Collaboration

1
Final Report Secretary of Defense Corporate
Fellowship Program 2005 - 2006
2
2005-2006 Fellows

• CAPT Kate Gregory Southern Company/Georgia Power
• Atlanta, GA
• Col Tom Feldhausen Raytheon Network Centric
  Systems
• McKinney, TX
• LTC Dan Matchette Symbol Technologies, Inc.
• Holtsville, NY
• CAPT Gary Peterson FedEx Express
• Memphis, TN
• Col Ian Dickinson Sun Microsystems, Inc.
• Menlo Park, CA
• Col (S) Rich Murphy Johnson Johnson
• Skillman, NJ
• Col Ray LHeureux Sikorsky Aircraft Stra
  tford, CT
• COL Roy Fox The Insitu Group, Inc.
• Bingen, WA

3
Agenda

• Background
• Common Findings/Recommendations
• Individual Experiences (if required)

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

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

6
SDCFP Organization

• Two officers from each Service
• High flag/general officer potential
• O-6 or O-5
• Senior Service College credit
• Group Education
• Current political/military issuesleading 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

7
SDCFP Sponsors

• 04 - Prior
• 3M, ABB, Accenture, Agilent Technologies,
  American Management Systems, Amgen, Boeing,
  Caterpillar, Cisco, DirecTV, DuPont, Enron,
  FedEx, Hewlett-Packard, Honeywell, General
  Dynamics, Human Genome Sciences, IBM, Lockheed
  Martin, Loral, McKinsey Co., McDonnell Douglas,
  Merck, Microsoft, Mobil, Netscape, Oracle,
  Northrop Grumman, Pfizer, Pratt Whitney,
  PricewaterhouseCoopers, Raytheon, Sarnoff, Sears,
  Southern Company, SRA International, Sun
  Microsystems, Vertex Aerospace
• 05 - 06
• FedEx, Insitu Group, Johnson Johnson, Raytheon,
  Sikorsky, Southern Company, Sun, Symbol
  Technologies
• 06-07
• Caterpillar, Deutsche Bank, DuPont, General
  Dynamics, IBM, McDonalds, McKinsey, Microsoft,
  Pfizer

8
SDCFP Results

• Program objectives fulfilled
• Education3
• DoD, individual officers, Sponsors
• More Sponsors than Fellows available
• Intra-group experience sharing
• Group visits with sponsor CEOs and senior
  leadership
• Unique corporate experience
• Strong corporate support
• Executive/operational level duty mix
• Mergers/restructuring
• Unexpected challenges, valuable insights

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 to DepSec, 40
  others
• Business insights relevant to DoD
  culture/operations
• Recommended process/organization changes

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
• Secretary of Defense Donald Rumsfeld
• Remarks to The National Defense University
• 31 January 2002

11
Agenda

• Background
• Common Findings/Recommendations
• Individual Experiences (if required)

12
Take-Aways for DoD
Continuous Improvement Collaboration
Information Technology

• Alignment
• Incentives
• Workforce

Innovation
13
Alignment

• Alignment critical to Strategy Tactics
  Metrics
• Fundamental theory difficult to implement
• Industry execution consistent with DOD
• Implementation challenges
• Organization functional diversity, scale and
  complexity
• External, uncontrollable forces can become
  forcing functions
• Great strategy does not always equal great
  results
• Tools and metrics are hard to do well
• Complex organizations often have external drivers
• Alignment disconnect can send mixed/wrong message
  to workforce
• Keep it simple
• Make goals local, relevant, personal
• Ensure some incentives are tied to local (v.
  corporate) goals

14
Incentives

• NSPS and pay for performance
• Positives outweigh negatives, but
• Pay bands reduce perception of advancement/achieve
  ment opportunity
• Re-split a band to recognize advancement
• Milestones must be created in bands (proficiency,
  competency, experience)
• Employee growth must be self initiated
• Total performance
• 80 Performance Management (PM) - 20 incentives
• Workforce relations, goal formation,
  communication, feedback crucial
• Incentives wont overcome poor PM

15
Incentives

• Purpose of incentives
• Maintain culture
• Decentralization at JJ, humanitarian awards at
  FedEx, etc
• Align with strategy through cascading goals
• Critical Few/Management by Objectives at FedEx
• Vision, Goals, Metrics, Initiatives at Symbol
  Technologies
• Objectives, Goals, Strategy, Metrics at JJ
• Sun Microsystems Playbook
• Discretionary effort
• Compliant employee performs at 65 level of
  effort
• FedEx uses incentives to achieve 65

16
Incentives

• Corporate systems comparable with DoD
• Full range of theory-based motivational factors
• Self-actualization, appealing to a higher cause
• A citizen wherever we serve is Southern Company
  version of patriotism in DoD
• Achievement, responsibility, work content,
  affiliation
• Purple Promise is FedEx version of leading in
  combat in DoD
• Recognition
• Bravo Zulu and Five Star is FedEx version of
  Achievement Medals
• Prevent incentives from becoming an entitlement

17
If DoD had a Corporate Style Bonus System

• Bonus pay based on seniority, span of control and
  time
• Annual bonus
• base pay FO/SES 80 O6/05/GS-13/15 40
  04/GS-12 15
• Additional long-term bonus 3-yr performance
  goals met
• If quality goals arent met, then zero bonus
• How to link incentives to goals that are not
  profit based?

Annual Bonus GO/FO/SES Joint Goals
40 Service Goals
40 Individual Performance 10 Self-Developmen
t 10
O6/05/GS13-15 10 50 20
20
O-4/GS-12 0 10 50 40
18
Workforce
A successful union is a monument to a failure in
leadership - Industry CEO

• Corporate focus on customer rather than nurturing
  workforce
• Success at one results in success in the other
• Incentivization to receive the most out of labor
• Dysfunctional matrix organizations
• Stove-piped organizations within company
• Efforts to manage collaboratively impeded
• Low morale
• Not always the right person assigned W/I
  stovepipe
• Empowerment outside functional lines
• Non-unionized workforce
• Lower costs, increased productivity?
• Global competitiveness

19
Continuous Improvement

• Corporate America performance pressures similar
  to DoD
• Competition
• Reduced budgets
• Downsizing
• Industry using Process Improvement to fight
  pressures
• Methodologies real proven 20 yrs of results
• 2 average annual cost savings efficiency
• DoD 500B budget _at_ 2 10B or more potential
  annual savings
• Successful recipe for Process Improvement
• Leadership (CEO) fully involved, middle mgmt held
  accountable
• Empower employees, communicate success, shift
  manpower
• Assessments to share best practices, determine
  state of business
• Employed across the organization, beyond
  manufacturing

20
Continuous Improvement

• Challenges to Process Improvement
• Motivation
• Industry has competition
• DoD needs burning platform
• Resistance to change
• Six Sigma Lean - customer focused
• DoD - focused
• Leadership required to remove barriers provide
  resources

21
Continuous Improvement

• Recommendations
• Good start in DoD need to increase deployment
• Air Force - SmartOps 21
• Navy - Sea Enterprise
• Army - Lean Six Sigma
• Think long-term
• Dont demand/expect results overnight
• Implementation is not one size fits all
• Careful of impact to force
• Top leadership support critical to avoid flavor
  of the month
• Leverage external/internal expertise until right
  of force is trained
• Use every educational opportunity to teach
  Process Improvement

22
Organizational Collaboration

• Large, complex corporations value decentralized,
  matrix organizations
• Structure themselves accordingly
• Effective collaboration tools, processes, and
  procedures are critical
• Goal to leverage intellectual capital and best
  of breed solutions
• Benefit in reduced cost and improved performance

• Create organization
• Deploy processes/tools
• Incentivize collaboration

Raytheon JJ FedEx
Inherent Organizational Barriers to Collaboration
Low High

• Encourage
• Collaboration

• Deploy processes/tools
• Incentivize Collaboration

Insitu Sikorsky
Southern Sun Symbol
Low High
Level of Collaboration
23
Organizational Collaboration

• Currently in DoD
• Matrixed joint organizations
• Strong ability to shape warfighting
• Limited influence over acquisition/business
  activities
• Collaboration processes/tools highly complex,
  difficult to use
• Limited tangible incentives to collaborate
• Services dominate through resource control

24
Information Technology

• Problem IT costs DoD too much for suboptimal
  results
• Each DoD site/org/command has own network
• Proliferation of applications -- Little
  standardization
• Unnecessary security vulnerabilities
• Wasteful duplication increases costs
• Poorly utilized personnel
• Recommendation Single DoD network
• Billions potential annual savings
• Tens of thousands in potential manpower savings
• Security, productivity, effectiveness, efficiency
  improved
• Characteristics of future state
• Regional data centers (CONUS/PAC/EUR) with
  back-up sites
• Web-centric thin clients with universal access
• Align on Global Information Grid (GIG) Service
  Oriented Architecture
• First step - joint pilot program--build out from
  there to minimize risk

25
Innovation Small Company Case Study

• Growth of an idea
• Building a portfolio of intellectual property
  achievements
• Creating opportunity
• Financing
• Friends family
• Angel investors
• Venture Capital (VC) investors
• Government grants (small business, research,
  etc.)
• Leadership - taking the next step
• Processes and procedures
• Quality management systems
• Infrastructure development
• Changed business model/market focus
• Global War On Terror
• Urgent military needs

26
Innovation Small Company Case Study

• Small companies
• Strengths
• Willingness to assume risk agility,
  responsiveness, adaptability low cost solutions
• Weaknesses
• Lack of government business development,
  contracting, legal experience/expertise
• Typical paths to DoD
• Strategic alliances and teaming agreements
• Acquisitions and Mergers
• May be important to transformation meeting
  urgent needs
• DoD opportunities
• Nurture promising companies/technologies -- VC
  type funding
• Take advantage of Off the Shelf solutions for
  urgent emerging needs
• DARPA like agency focusing on near term technical
  solutions
• Coordinate synchronize individual Services
  rapid equipping of organizations
• Easier on-ramps for small companies
• Business development, legal, contracting, export
  compliance, etc.

27
Q A
28
Agenda

• Background
• Common Findings/Recommendations
• Individual Experiences (if required)

29
Southern Company/Georgia Power

• Super-Regional Energy Company
• Regulated infrastructure competitive generation
  industries
• Five regional electrical utility companies
• Wholesale energy
• Gas
• Wireless communications
• Energy management
• Fortune 500 178 - CY 04 revenue 11.4B, 1.47B
  earnings
• Consistent JD Powers, ASCI, others Customer
  Service winner
• Strategy
• Lead industry in service and customer
  satisfaction
• Continue top quartile returns, continued dividend
  growth
• Long term Earnings per Share 5
• Increase competitive generation to 300M by CY07
• Live Southern Style core values - Trust,
  Performance, Commitment
• Assignment - Georgia Power Company (GPC)
• Lead teams to evaluate Distribution Engineering
  process/organization

30
Observations (Georgia Power)

• Strategy Provide superior customer service as
  efficiently as possible
• Maintain high service reliability
• Keep customer costs low
• Tactics
• Maintain community involvement at grass roots
  level
• Focus on ever better core business performance
• Organization
• Hybrid line-matrix organization
• Decentralized non-Metro Atlanta operations
• Matrixed Metro ops, personnel and some financial
  functions
• Highly paternalistic generous personnel
  policies loyal workforce
• Challenges
• How does a company grow in a regulated, saturated
  market?
• How does a labor fuel intensive company reduce
  costs?

31
Observations (Georgia Power)

• Balancing centralization/functionalization with
  decentralization
• Cost savings, higher performance v. reduced
  customer service, workforce trust
• Relationship-based management v. matrixed
  organization
• Fostering transformation in a traditional utility
  organization
• Lack of drivers - little cost pressure or stiff
  competitive focus
• Lack of opportunity - no new product development
  market expansion focus
• Risk averse Customers/stock holders expect
  consistent, steady performance
• Especially post Enron
• Creating a performance focused culture
• Corporate culture strongly encourages consensus,
  loyalty,networking
• Average attrition 2.5
• External, uncontrollable events often drive
  company financial performance
• Organizational or individual performance
  results obscured

32
Raytheon Corporation

• Leading U.S. defense contractor
• 80K employees world-wide
• 2004 sales - 20.2B
• Business units
• Missiles Intelligence Information
• Integrated Defense Network Centric Systems
• Space Airborne Raytheon Aircraft Co.
• Technical Services
• Corporate Strategy
• Grow position in core defense markets
• Use the Strategic Business Areas to leverage
  domain knowledge
• Return Beechcraft and Hawker brands to a
  pre-eminent position
• Be a customer focused company
• Assignment Network Centric Systems

33
Observations (Raytheon NCS)

• Engineering dominated company
• Focused on high tech solutions
• Successful integration following multiple
  acquisitions
• Hughes, E-Systems, Texas Instruments defense
  business
• Working to compete as Tier 1 defense contractor
• Decentralized business model
• Sales profit targets being met
• Attempts to gain efficiency only partially
  successful
• Strong process focus
• Highly detailed with continuous improvement focus
• Raytheon Six Sigma yielding success
• Attitude and personal commitment to continuous
  improvement
• Less focus on metrics
• Strong buy-in at senior management and functional
  levels
• But limited buy-in throughout workforce

34
Recommendations (Raytheon NCS)

• Acquisition reform viewed positively improvement
  still required
• Inadequate tools to deal with rapid pace of
  technology change
• Lead System Integrator contract structure
  inhibits efficiency
• Virtually all DoD oversight requirements remain
• Responsibility for integration transferred to
  industry
• Expansion of FAR Part 15 commercial product
  definition
• Enhanced applicability, but use limited
• Lack of understanding
• Concern over lack of oversight mechanisms
• Recommendation - Establish DoD/Industry
  contracting forum
• Identify new contracting strategies
• Ensure value-added oversight while maximizing
  cost/schedule efficiency

35
Symbol Technologies, Inc.

• Enterprise Mobility Capture, Manage, Move Data
  at Point of Transaction
• 1.7 B revenue in FY04, 5300 associates, 54
  countries
• Hardware and software
• Mobile Computers, RFID, (Barcode) Scanning
  Technology to capture data
• Wireless Networks securely move information to
  the host system
• Available in real time for decision makers,
  managers, other systems
• Corporate Strategy - the Mobile Workforce
• Growth in world markets, specifically to out-pace
  US growth
• Channel Centric partner ecosystem
• Targeting specific markets
• Highly ethical corporate culture
• High level of RD
• Assignment Corporate Marketing and Radio
  Frequency Identification
• RFID and Government marketing team
• RFID product development
• Federal Sales teams

36
Observations/Recommendations (Symbol)

• Very technically skilled
• Great deal of emphasis on Intellectual Property
  and patents
• Almost 10 of revenue spent on RD
• Associates dedicated to the company and to doing
  well, however
• The GM Affect resonates
• Clear sense employees must look after themselves,
  the company cant be relied on
• Stable, Top Level Leadership Critical
• Too many re-orgs, executive changes, and lay-offs
  create
• Negative energy ripples and abets the GM Affect
• Stability and openness is an absolute requirement
• Corporate culture very hard to change
• Requires years of coordinated and repetitive
  messaging from a stable leadership team
• Wall Street isnt fair, get over it and deal with
  it
• Perception is reality if youre not careful
• Symbol fundamentally gets integrating Ops,
  Engineering, Sales, Marketing

37
Observations/Recommendations (Symbol)

• Six Sigma its a good methodology, use it
• Not another TQM spin-off
• Can be used on any project or process
• Ten months, 1.2 M in costs, 2.2 M in savings
• Time to take charge of DoD business systems and
  IT
• Consolidate ALL DoD e-mail servers to one
• Create a single DoD portal consolidate most
  other web servers worldwide
• Consolidate all directory and access services
  CAC is not always the right answer
• Consolidate all application servers and file and
  data storage into a single entity
• Convert all applications to use web/XML/Java/SOAP
  languages for service access
• Thin client is right for many DoD environments,
  especially tactical and classified
• Create a mobile agnostic access workforce
  everywhere, not just tactically
• Security is important, but its just an
  application
• OK to customize, Commercial Off the Shelf is not
  always the right answer

38
FedEx Express

• FedEx Corporation
• Operating Companies Express, Ground, Freight,
  Custom Critical, Kinkos
• Support Companies Trade Networks, Services,
  Supply Chain Services
• Strategy
• Operate Independently, Compete Cooperatively,
  Manage Collaboratively
• The Purple Promise
• Assignment FedEx Express
• Global Operations Center
• Cross functional communication analysis
• Facilitated Integrated Process Improvement Team
• Global Operations, Scheduling, Control, and
  Planning
• Project Manager for continuity of operations
  contingency planning

39
Observations (FedEx Express)

• Challenges
• Grow internationally while improving lane balance
• Control costs domestically for increased margins
• Trend is toward deferred service with lower
  margins
• Compete with UPSs single, large, efficient
  network
• Seamless customer brand access yet operate
  independently
• FedEx is good but not mistake-proof
• Pilots are unionized and it is a somewhat
  difficult relationship
• European penetration failure and subsequent small
  footprint
• Third Party Logistics has a reduced focus (far
  less than UPS)
• Superior focus
• Only as good as tonights sort
• Record Service Quality Indices (SQI) and earnings
• US Postal Service contract revenue stabilized
  and earnings growth

40
Recommendations (FedEx Express)

• Leadership Culture and Leader Supporting Process
  (LSP)
• Case study for DoD - creating flexible, adaptive,
  innovative environment
• Integrates with and is not suppressed by
  management processes
• People-Service-ProfitPeople really do come
  first and it works
• Integrate LSP with Business Transformation Agency
  (BTA) strategy
• FedEx operate independently strategy similar to
  DoD Services
• Case study for creating cross operational command
  info visibility
• FedEx Services a model for BTA as a manage
  collaboratively vehicle
• Express lane imbalance and domestic Ground
  service improvement
• Opportunity for improved DOD logistic efficiency
  and visibility
• USPS contract is a successful pilot program for
  DOD to study

41
FedEx Express Final Observation

• TQM philosophy without time-consuming techniques
• Relentless customer focus and matching metrics
• Quality built-in with good data access and
  uncomplicated reports
• Participative culture and fearless workplace
• Root cause seeking analysis and continuous
  improvement mentality
• No Six-Sigma, no LEAN, just quality as a
  way-of-working
• Leadership-based success built on learning TQM in
  1980s/90s with non-value added elements removed
  (kept the wheat and removed the chaff)
• What remains is a no-nonsense leadership culture
  that is fast and adaptable, supported by strong
  company identity, excellent information access,
  emphasis on learning, freedom of action (no
  fear), and employee participation

42
Sun Microsystems, Inc.

• Internet Infrastructure major player (hardware
  behind the internet)
• FY05 revenue 11.1B loss 107M ( 7.2B cash)
• Market Capitalization 14.2B
• 40K employees worldwide
• Primary business segments
• Core network infrastructure (network computing
  products, services)
• Service Provider - tech support, client
  solutions, software subscription
• Corporate Vision - Everyone and everything
  participating on the network
• Vision and mission is a crusade as much as a
  business
• Take pride in being contrary to the IT provider
  mainstream
• Focus on innovation
• Heavy spend on RD despite post-dot.com revenue
  struggle
• Now poised to turn the corner with key hardware
  offerings on several levels
• Proof, in some ways, lies in stock price response
  
• Assignment IT/Chief Technology Office
• Managed strategic outsourcing of application
  development and maintenance
• Member of technical team evaluating new
  technologies

43
Observations (Sun)

• Strategy - Connect everyone and everything to the
  network
• Thin client computing model provides mobility and
  security
• iWork model saved Sun 319M over 5 years 6.4M
  in FY06 real estate alone
• Mobile workforce fits with corporate culture
• Execution - Earn customer base through
  performance not by capture
• 11 words Make Money, Grow, Re-enlist Champions,
  Leverage our Partners, Simplify our Business
• Acquire intellectual property that fits
  (SeeBeyond, Tarantella, StorageTek)
• Organization - One integrated company, non-core
  effort outsourced
• Unafraid of using partners to handle extensive
  support roles, even in IT
• Rapidly integrate acquired companies and re-brand
  products
• Culture - Contrarian Minds - innovate without
  dependence on mainstream
• Take pride in going against popular thought
• Integrity a key aspect of how Sun sees itself
• Corporate culture does not require extensive
  face-to-face

44
Recommendations (Sun)

• Pilot and expand use of mobility computing model
• Use current efforts to determine soundness of
  approach
• Deployment possibilities
• BRAC move flexibility
• Use crawl, walk, run methodology
• Allow DoD to break from constant patch-and-update
  spiral
• Carefully plan approach toward eliminating touch
  admin at the client
• Regain support personnel rechanneled to systems
  administration
• Outsource strategically, not locally
• If the model makes sense, use it widely
• Ensure capability to scale up or down
• Maintain flexibility to deal with market effects
  on providers

45
Johnson Johnson

• Worlds Most Broadly Based Manufacturer of Health
  Care Products
• Revenues exceeding 47B
• 113K employees
• Operations in 57 countries products sold in
  200 countries
• Three Major Market Segments 210 Family of
  Companies
• Pharmaceutical (22.1B) - 4 in the world
• Medical Devices Diagnostics (16.9B) - 1 in
  the world
• Consumer Products (8.3B) - 8 in the world
• Corporate Strategy
• Leverage Leadership, Credo, and Decentralization
  to double company by 2010
• Assignment Consumer Research, Development,
  Engineering
• Process Excellence - Mentor is a Master Black
  Belt
• Develop a Communications Plan w/Six Sigma Process
  (Certification)
• Value-stream map Global Product Release Process
  w/ Lean Manufacturing
• Develop Global Dashboard/Scorecard for RDE
  Benchmark w/Regions

46
Observations (JJ)

• JJ Credo Culture
• Responsibilities to 1 Patients, 2 Employees,
  3 Community, 4 Shareholders
• Strategy, Vision, Moral Compass, Statement of
  Heritage all in one!
• Credo-based Decisions Tylenol Scare
  Preservation of Reputation Brand
• Credo Survey every year leadership serious about
  making change
• Decentralization
• Management responsibility placed at level closest
  to the customer
• Challenge to centralize where it makes sense
  (i.e.. Pay, IM, HRfunctions)
• Support decentralization where it brings value to
  the company
• Process Excellence (PE) - culture of continuous
  improvement
• Formalized PE in 2003 PE Leadership Team, CFO is
  PE Leadership Team (PELT) head
• Fused into all levels Leadership, Mid-level
  Leaders, Employees
• Major pillars Six Sigma, Design Excellence
  Lean
• Standardized Training, Certification,
  Leadership involvement
• Align Employee Tasks to Company Goals Through
  OGSM Roadmaps
• OGSM Objectives, Goals, Strategy, Measures
  each company different

47
Recommendations (JJ)

• Deploy a DoD process improvement program
• Top-level buy-in, Mid-level leaders held
  accountable, Workers empowered
• Beware superficially applied, under-resourced
  quality programs, TQM
• Standardized Training, Common Language, Common
  Tools Metrics
• Encourage culture of continuous improvement,
  waste elimination testimonials
• Operations Efficiencies (Global Operations
  Position)
• Centralize where gained efficiencies are smart
  reallocate resources
• Technology (Collaboration) Leverage multiple
  technologies
• Asset Management Maximize excess capacity of
  resources
• Supply Efficiencies Leverage economies of scale
• Collaboration (major focus for JJ with
  decentralized environment)
• LINK technology ties people/resources across
  flat/decentralized organization
• Communities of Practice Leverage best practices,
  Web sites
• Organizational Structure (Matrix)
• Allows flexible reallocation of resources to most
  pressing issues
• Personnel will usually have many
  bossesfunctional mission

48
Sikorsky Aircraft

• A Fortune 500 Best Company to Work For (UTC)
• 8000 employees worldwide
• 2005 Revenues 2.5B Operating Income 213M
• Stratford, CT - main facility
• Shelton, CT - overhaul and repair
• West Palm Beach, FL test facility
• Field reps worldwide
• Acquisitions
• Schweitzer
• Keystone
• Helicopter Support Inc.
• Derco
• Helitech

49
Sikorsky Aircraft

• Corporate Strategy 2008 Vision
• Double revenues with best in class metrics
• Double aircraft programs in production
• Double global aircraft aftermarket solutions
  business
• Operate to Achieving Corporate Excellence (ACE)
  gold standard
• Implemented lean business processes
• Establish a strong US political presence - UTC
  Corporate led
• Recognized as the element of choice in systems
  of systems
• Develop the next generation of vertical lift
• Fly the President in the VH-92
• Assignment
• World-wide Customer Support for Military
  Logistics
• Canadian Maritime Helicopter Program (CH-148
  Cyclone)

50
Observations ( Sikorsky)

• Industry Analysis
• 4000 new build helicopters by 2013 estimated
  revenue 73B.
• World wide competitors
• Sikorsky has slight edge (CH-53K)
• Must stay viable to realize fair share of
  market
• Corporate Execution focus
• Genuine desire to add value for the
  customerdelight the customer
• Keep core competencies of the company
  in-houseoutsource the rest
• Caring for their people who provide the
  services
• Lean Manufacturing processes
• Performance Based Logistics/ In-service support

51
Observations (Sikorsky)

• Where is the Ramp up?
• 200 new build helicopters by 2008 plus 57
  equivalents in OR
• Currently lacks the recourses to meet the
  demand
• Hire to meet workload
• Reallocate space to support new builds
• Too focused on processes, not enough on
  personnel
• Low morale throughout the L4 and below labor
  grades
• More employee incentive programs
• Relevancy of ACE and 6S
• Matrix organization is dysfunctional
• Restructure dotted line mentality
• In service support / Fleet management
• New ground for Sikorsky
• Old methods being applied
• Must sell the concept with proof

52
The Insitu Group, Inc.

• Small High Tech Start Up
• Innovative design, development, production of
  miniature robotic aircraft
• Tools for Intelligence, Surveillance, and
  Reconnaissance (ISR)
• 130 employees and growing daily doubled in CY05
• Revenue
• CY05 28M (projected 14M tripled over CY04)
• CY06 estimate 48 - 60M
• Washington State Tech Fast 50 recipient National
  Tech Fast 500 recipient
• Corporate Strategy
• Promote growth and long-term viability evolve
  improved product
• Provide option for investors to get Return On
  Investment (ROI)
• Create opportunities to grow/maintain/create
  barriers to entry
• Technology investment and business development
• Assignment Chief of Staff and Director,
  Constraint Task Forces

53
Observations (Insitu)

• Innovation is their essence major investment in
  recruiting and hiring
• Employees are driven, motivated, proudno one
  watches the clock
• Leadership is comparable to best I have seen in
  22 yrs of service
• Caring, disciplined, focused, competent
• Employees are members of the organization, they
  dont just work here
• Part of the team
• Similar to military organization
• Start Ups can be key in revitalizing poor rural
  area
• Generating new congressional support
• Dynamic environment
• Working hard to capitalize on successes
• Scaling operations to meet demandwith the
  associated growing pains
• In the middle of the 3rd round of investment
  funding
• Preparing for future business options, e.g.
  reevaluating Boeing alliance

54
Recommendations (Insitu)

• Disruptive Technology minimizing the
  Acquisition Community Virus
• How can DOD effectively and efficiently absorb
  new technology?
• Faster, better, less expensively
• How can DOD learn to take advantage of disruptive
  technologies?
• Address current and projected requirements
• How can DOD take advantage of the benefits of
  small tech start-ups?
• Agility
• Responsiveness
• Innovation
• Lower costs
• Less adverse to risk
• etc
• Strategic partnerships -- getting start-ups in
  the game

55
DoD Matrix

• Unified Combatant Commands
• Basic Business Unit
• Build/Control Budget (PL)
• Task organization efficient

Real Estate Logistics Acquisition IT
Services Financial Management Depot
Maintenance Human Resources
Army
Navy
Air Force
Marines
Agencies

• Services and Agencies
• Hold the People
• Unique skill sets
• Own the Resources
• Train, Equip, Maintain

• DoD Shared Services
• Provide the Services
• No Service Unique
• Enterprise Wide
• Web Based