Final Report of the 199596 SECDEF Fellows Program

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FINAL REPORT of the Secretary of Defense Fellows
Program 1996-97
2
Agenda

• Program Overview- Background- Origin-
  Objectives- Organization- Tasking- Results
• Corporate Experiences
• - Sponsors
• - Observations
• - Recommendations

3
SDFP Background

• Current military- technical revolution-
  Political, economic, social - Shaped by
  information technology change
• Businesses outside DoD successful in- Adapting
  to changing global environment- Exploiting
  information revolution- Structural
  reshaping/reorganizing

4
SDFP Origin

• RMA Senior Steering Group recommended- SECDEF
  Fellows Program- SECDEF Strategic Studies
  Group- Other (Concept Development Center,
  etc..)
• Established by SECDEF memo- October 6, 1994
• DoDD 1322.23- September 2, 1995

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SDFP Objectives

• Build a cadre of future leaders who -
  Appreciate revolutionary changes in
  information and related technologies -
  Understand skills required to address changes-
  Recognize operational/organization opportunities
  - Will motivate Services toward innovative
  change

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SDFP Organization

• Two officers from each Service (USMC one)- High
  flag/general officer potential- O-6 or O-5-
  Senior Service College credit
• Permanent Staff- USD(P)NA oversight- SDSSG
  Director, Deputy, Admin

7
SDFP Tasking

• Ten months at Sponsoring Company
• Group Education- Seminars- Wargames
• Final Report and Briefing- To SECDEF and
  Services- Work performed- Insights gained
  applicable to DOD
  culture/operations- Recommendations for changes
  to DOD operations and organizations

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SDFP Results

• Program objectives fulfilled- Education,
  education, education
• - More sponsors than fellows
• - Inter/intra-group experience sharing
• Unique corporate experiences- Strong corporate
  support - Executive/operational level mix-
  Mergers/restructuring

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SDFP Sponsors

• 95- 96
• - Hewlett-Packard, Lockheed Martin, Loral,
  Oracle, Northrop Grumman
• 96-97- American Management, CNN, CITICORP
  McDonnell Douglas, Microsoft, Sarnoff
• 97-98
• - Andersen Consulting, DirecTV, Mobil,
• Northrop Grumman, Sears, Southern Company

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SDFP Corporate Experiences

• Citicorp/Citibank
• - LtCol Gary Barthold
• CNN- COL Colin Dunn
• Microsoft- CAPT Jim Engler

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Citicorp/Citibank

• Large, Complex, Global Enterprise
• - 90K Employees and 50M Customers
• - 3,200 Sites in 98 Countries
• Innovators in Management and Technology
• Corporate Technology Office
• - Strategic Planning - Risk Management
• - Organization - Operations
• - Information Security - Human Resources
• - Technology Development

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Citicorp/Citibank Observations

• Increasing, Non-Linear Change
• - Uncertainty
• - Continual Strategic Adaptation
• Institutionalized Change
• - No One Predictable Scenario
• - Tradeoff Optimization for Adaptability
• - Adaptability provides Stability

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Citicorp/Citibank Observations

• Top-Down Flexible Planning
• - Corporate Vision
• -- Long-Term Broad Common Direction / End
  State
• - Balanced Scorecard
• -- Near-Term Objectives and Metrics (Max. 6
  Qtrs)
• - Windows on Risk
• -- Tripwires allow Timely Decision Making

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Citicorp/Citibank Observations/Recommendations
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Citicorp/Citibank Observations

• Information is the Core of the Financial
  Industry
• Adaptive, Enabling Information TechnologyInfrastr
  ucture
• - Information Technology as Flexible as
  Operations
• - Technology Fused with Business
• - Integrated Technology Processes

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Citicorp/Citibank Observations/Recommendations

• Common Network Centric Architecture
• - Building Plan for a Responsive Infrastructure
• People
• - Military can not Compete with Compensation,
  Outsourcing
• Vendors
• - Strategic Partnership, Cooperative Solutions,
  Outsourcing
• Information Security
• - Operational Diligence, Continually Raising
  the Bar
• Innovation
• - Technical Solutions are Already Out There
• - Focus on Applying, Integrating, and Providing
  Guidance

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Citicorp/Citibank Observations/Recommendations
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Citicorp/CitibankRecommendations

• Agile, Adaptive, Flexible
• - Planning, Organization, Architecture
• - Shorter Planning and Programming Cycles
• - Accept and Manage Risk

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Citicorp/CitibankRecommendations

• Common Architecture
• - Network Centric - System of Systems
• - Interoperable, Consolidated, Outsource
• - Adaptable, Scaleable
• - Limit Deviations, Cost vs Value Added
• - Directed from the Top, Tighter Fiscal Control
• Technology Fused with Operations
• - Information Technology can not be an
  Afterthought Planned Separately

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Citicorp/CitibankRecommendations
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Citicorp/CitibankBalanced Scorecard

• Financial Performance
• Customer / Franchise Performance
• Strategic Cost Management
• Risk Management
• People Management

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Citicorp/CitibankWindows on Risk

• - Country Risk - Risk Rating
  
• - Counter-Party - Distribution /
  Underwriting
• - Equity / Sub-Debt - Product
  Concentration
• - Limits -
  Industry Concentrations
• - Price Risk - Liquidity
  Risk
• - Global Real Estate - External
  Dependency
• - Control (Audit) Risk - Technology
• - Business Risk Review - Legal

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Citicorp/CitibankWindows on Risk
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MATRIXED ORGANIZATION
CEO
DIRECTION COORDINATION
EXTERNAL AFFAIRS
GLOBAL REL BANKING
GLOBAL CITIBANKING
EMERGING MARKETS
AUDIT
PRIVATE BANK
CARDS
OPERATIONS TECHNOLOGY
RISK MANAGEMENT
FINANCIAL CONTROL
HUMAN RESOURCES
ADDITIONAL STAFF SECTIONS ARE NOT SHOWN
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SDFP Corporate Experiences

• Citicorp/Citibank
• - LtCol Gary Barthold
• CNN- COL Colin Dunn
• Microsoft- CAPT Jim Engler

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Cable News Network
AT CNN, SPEED IS LIFE. --Tom Peters

• Organization

31 Bureaus
Eight News Groups
1130 Affiliates

• News Standards Accuracy, Balance,
  Timeliness

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Cable News Network
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CNN Observations

• Work Culture
• - Intelligent
• - Sense of Urgency
• - Dedicated
• - No Frills
• An Innovation Culture
• - Encouragement to grow, not maintain
• - Room for experimentation, mistakes

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CNN Observations
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CNN Observations

• Paperless, Deskless
• - Internet potential
• - Increased leader contact
• Adapting Technology
• - Buy whats helpful, not whats new.
• - Work culture is the key

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CNN Recommendations

• Change the Culture of the Force
• - Encourage growing, not maintaining
• - Make room for local experimentation, mistakes
• - Knock down traditional idea firewalls

• Expand DoD Internet/Intranet(s) Use
• - Internal functions (boundless)
• - External functions

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SDFP Corporate Experiences

• Citicorp/Citibank
• - LtCol Gary Barthold
• CNN- COL Colin Dunn
• Microsoft- CAPT Jim Engler

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Microsoft

• 20,000 employees / 50 countries and growing
• 8.67 Billion Revenue in FY 96
• 12 Billion in FY 97
• RD 25 Revenue
• Enterprise Customer??
• Equity Compensation Model
• The Future aint what it used to be

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Microsoft Observations

• Bill Gates
• - Vision / Technology / Business
• Executive Committee
• They Love a Good Fight
• - Sun Tzu strategy
• - No quarter given
• - Market domination, not share
• Customer focus

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Microsoft Observations

• Feedback
• - Customers/ Employees
• Partners
• - Strategic Alliances
• Creativity
• - No perks
• - Open communications demanded

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Microsoft Observations

• We eat our own dogfood
• Organized Chaos
• Robust Intranet / Aggressive use of Internet
• Headcount, costs, infrastructure
• Hire the best, or just dont hire

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Microsoft Recommendations

• Make the Network of Networks interoperable
• Leverage C3S technology
• - Communications, coordination, collaboration
• Cut non-warfighting infrastructure
• Partner long-term with leading-edge companies

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Microsoft Recommendations

• Recruit Smart for the 21st Century force
• Exploit advances in Distance Learning
• Purchase Info Tech training and support

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SDFP Corporate Experiences

• American Management Systems
• - CAPT Nan Honey
• McDonnell Douglas Aerospace
• - Lt Col Jim Kowalski
• Sarnoff Corporation
• - Lt Col Kim McKenzie

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American Management Systems (AMS)

• Global business and information
• technology consulting firm
• Business Process Re-engineering
• Change Management
• System Integration
• System Development
• System Implementation

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AMS
Secretary of Defense Fellows Program

• Innovative solutions to its clients by
  partnering with them to achieve breakthrough
  performance through the intelligent use of
  information technology

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AMS Observations
Secretary of Defense Fellows Program

• Business Process Re-engineering (BPR)
• Military Sealift Command
• Change Management/Organizational Development
• Achieving Breakthrough Performance (ABP)
• New Business Unit formation
• Utilities Industry

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AMS Observations
Secretary of Defense Fellows Program

• Strategy and business/financial plan roll out
• Rolling 3 YR plan
• Infrastructure Management
• Hotelling
• People Management
• Inclusive Leadership Committee (ILC)
• ReVisioning Administrative Processes (RAP)

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AMS Recommendations
Secretary of Defense Fellows Program

• Acquisition
• - Limit time
• Culture
• - Focus on work environment
• - Incentivize efficiency/savings
• Organization
• - Info Tech can support any structure
• - Mobile computing and collaborative Info Tech
  at
• individual level

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SDFP Corporate Experiences

• American Management Systems
• - CAPT Nan Honey
• McDonnell Douglas Aerospace
• - Lt Col Jim Kowalski
• Sarnoff Corporation
• - Lt Col Kim McKenzie

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McDonnell Douglas Aerospace

• Footprint
• 8B Revenue, 36,000 Employees, 14 Major US
  Facilities
• US Government 68 of Business
• International Sales 32 and Growing
• 300,000 US Workers Tied to MDA Products
• Culture
• Technological Innovation
• Product Performance
• Fighterland USA

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McDonnell Douglas Aerospace

• Business Development Division
• - Sales Organization
• - Owns Market Planning and Analysis Team
• - Produces Strategic Plan and Operating Plan
• Phantomworks
• - Advanced Systems and Technology
• - Matrixes with Programs and Supporting Units
• Work Experience

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McDonnell Douglas Aerospace
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McDonnell Douglas Observations

• Strategic Planning
• Formal Strategic Planning--PROGRAMMING
• Scenario Based Planning--STRATEGIZING
• System of Systems (SoS)
• Organize Around Mission Areas
• Cross Traditional Boundaries
• Design Products for SoS (Joint Warfare Center)

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McDonnell Douglas Observations
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McDonnell Douglas Observations

• Virtual Company
• Time as Competitive Advantage
• Link Partners, Suppliers, Customers
• Invest in Technology That Gives MDA Advantage
• One Vector Off
• Concentrate Resources on Core Business
• Avoid Intriguing but Unrelated Business
  Opportunities
• Spin-Off Companies/Negotiate Royalties

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McDonnell Douglas Observations
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McDonnell Douglas Recommendations

• Reconsider Planning in PPBS
• PPBS Good at Budgeting--Not Strategy
• Institutionalize Scenario Based Planning at
  Several Levels in DoD
• Examples AF 2025, Army After Next
• Restructure for Mission Areas
• OSD Organized for PPBS--Reductionistic
• Organize Around Holistic Mission Areas
• Example--JROC

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McDonnell Douglas Recommendations
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McDonnell Douglas Recommendations

• Experiment with a Virtual JTF
• Mission Area Focus--i.e., Precision Strike
• Tie Core Competencies Together in Virtual Unit
• Train as a Unit (Real and Simulated)
• One Vector Off Criteria
• Core Competency is Warfighting
• Example
• Organic Maintenance within One Vector
• Depot Maintenance is Not within One Vector

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McDonnell Douglas Recommendations

• Experiment with a Virtual JTF
• Mission Area Focus--i.e., Precision Strike
• Tie Core Competencies Together in Virtual Unit
• Train as a Unit (Real and Simulated)
• One Vector Off Criteria
• Core Competency is Warfighting
• Example
• Organic Maintenance within One Vector
• Depot Maintenance is Not within One Vector

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SDFP Corporate Experiences

• American Management Systems
• - CAPT Nan Honey
• McDonnell Douglas Aerospace
• - Lt Col Jim Kowalski
• Sarnoff Corporation
• - Lt Col Kim McKenzie

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Sarnoff Corporation

• Small, single-site enterprise
• Mission...create technologies that change the
  world
• Core competencies in three major areas
  information, biotechnical, and solid state
• Growth experienced in three phases
• Phase 1 RCA Corporate Research Laboratory
• Phase 2 Spin-off and survival
• Phase 3 Vision of 10-in-10

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Sarnoff CorporationObservations

• Guiding principle of operations--strategic
  adaptation
• Vision centric, top down planning
• Reorganizing principles
• Optimize growth and reward performance
• Preserve organization flatness
• Spin-off non-core competency activities

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Sarnoff CorporationObservations
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Sarnoff CorporationObservations

• Creative Culture--hitech is a state of mind
• Highly efficient matrixed workforce
• Examples of Sarnoff Technologies
• Micromachines/microfluidics
• Data compression and distribution
• Generalized Emulation of Microcircuits
• 3D Emersive Visualization Environment

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Sarnoff CorporationRecommendations

• Organizing Ideas
• Spinning-off with business principles
• Partnership Brokers--both internal and external
• Creative Culture
• Matrixing benefits through exchange programs
• Acquisition and the Hollywood Business Model
• Commercial is more than catalog sales
• Government Agency Teaming approach

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Sarnoff CorporationRecommendations
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Sarnoff CorporationRecommendations
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SDFP Common Observations/Recommendations

• Internets/Intranets
• - Enterprise-wide architectures/protocols
• - Paperless/deskless/virtual
• Strategic Planning/Vision
• - Topdown, not bottom up
• Fiscal Planning
• - 18-36 months max
• Outsourcing
• Personnel
• Infrastructure

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SDFP Common Observations/Recommendations

• Partnerships/Teaming
• Organizations
• - Flexible/dynamic structure
• - Change incentivized
• Culture
• - High employee value
• - Junior level participation
• Innovation
• - Risks taken/mistakes tolerated