Secretary of Defense Corporate Fellows End of Year Briefing
Academic Year 2014-2015
Slide 2
Secretary of Defense Corporate Fellows Agenda People Plans
Cyber Security Government/Industry Relations Understanding Value vs
Cost Program Overview InnovationInnovation Summary / Q&A
Slide 3
Secretary of Defense Corporate Fellows 3 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
DoDI 1322.23 Deputy Chief Management Officer (DCMO) for oversight
& supervision
Slide 4
Secretary of Defense Corporate Fellows 4 SDCFP Background DoD
needs effective access to best executive level business practices
applicable to operations & supp ort Strategic Planning
Organization Change Management Human Resources Information
Technology Supply Chain Outsourcing Infrastructure majority of
Defense Budget Reforms generate savings Savings applicable to
operational shortfalls
Slide 5
Secretary of Defense Corporate Fellows 5 SDCFP Organization Two
or more officers from each Service Flag/general officer potential
O-6 or O-5 Senior Service College credit only Initial 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 2-3 days of group training with corporate execs
at each sponsor Admin DCMO for oversight WHS HRD for support
http://dcmo.defense.gov/corporate-fellows-program
Slide 6
Secretary of Defense Corporate Fellows Corporate Sponsors Prior
Years 3M, ABB Group, Accenture, Agilent Technologies, American
Management Systems, Amgen, Andersen Consulting, Apple, Boeing, Booz
Allen, CACI, Caterpillar, Cisco, Citigroup, CNN, Deutsche Bank,
DirecTV, DuPont, EADS, Enron, ExxonMobil, FedEx, General Dynamics,
Georgia Power, Google, Hewlett-Packard, Honeywell, Human Genome
Sciences, IBM, Insitu, iRobot, JPMorgan Chase, Johnson &
Johnson, Lockheed Martin, Loral, McKinsey, McDonnell Douglas,
Merck, Microsoft, Mobil, Morgan Stanley, Netscape, NCR, Norfolk
Southern, Northrop Grumman, Oracle, Pfizer, Pratt & Whitney,
PricewaterhouseCoopers, Raytheon, SRI/Sarnoff Labs, Sears, Shell
Oil, Sikorsky, Southern Company, SpaceX, SRA International, Sun
Microsystems, Symbol Technologies, Union Pacific, United
Technologies, Vertex Aerospace Current AY (2014-2015) Autodesk,
Booz Allen, CACI, Cisco Systems, Dynamic Aviation, FedEx, General
Dynamics, Georgia Power, JPMorgan Chase, Lockheed Martin, McAfee,
Oracle, Hewlett-Packard, SAP, Sikorsky, Union Pacific Next AY
(2015-2016) Accenture, Alaska Air, Amazon, Boeing, Caterpillar,
Deutsche Bank, EMC, Intel, Merck, Pratt & Whitney, Raytheon,
Shell Oil, SpaceX, SRI 6
Slide 7
Secretary of Defense Corporate Fellows 7 SDCFP Results Program
objectives fulfilled Education 3 DoD, individual officers, Spon
sors 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
Slide 8
Secretary of Defense Corporate Fellows 8 SDCFP Produc ts 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 Briefings directly to 25+ Senior DoD
civilian/military leade rs DEPSECDEF, VCJCS, Service
Secretaries/Chiefs Deputies for Programs, Budgets, Acquisitions,
T&E, Pers, IT, Mgmt Business insights relevant to DoD
culture/operations Recommended process/organization changes
Individual Written Reports
Slide 9
Secretary of Defense Corporate Fellows Fellows and Corporate
Sponsors Information Technology Lt Col Mark Mitchum, ANG Oracle,
Reston, VA Col (S) John Heck, USAFR SAP, Newtown Square, PA CDR
T.J. Kneale, USNAutodesk Inc., San Francisco, CA LtCol Eric Young,
USMC Intel Security, Plano, TX LtCol Ross Monta, USMCHewlett
Packard, Herndon, VA CAPT (S) Brad Rosen, USNCisco Systems, San
Jose, CA Logistics / Finance / Energy COL Ken Williams, USAFedEx,
Memphis, TN Col Eric Obergfell, USAFUnion Pacific Railroad, Omaha,
NE Col Jason Janaros, USAFJ.P. Morgan Chase, New York, NY COL
Marvin Griffin, USAGeorgia Power, Atlanta, GA Defense / Consulting
/ Other CAPT (S) Shane Tallant, USN Lockheed Martin, Fort Worth, TX
Col (S) Kevin Norton, USMCGeneral Dynamics C4 Systems, Phoenix, AZ
LtCol Scott Trail, USMC Sikorsky Aircraft Corp, Shelton, CT Col (S)
Kevin Massie, USAFBooz Allen Hamilton, Washington, DC COL Sharon
Moore, USARNGCACI, Arlington, VA LtCol John Gutierrez, USMC Dynamic
Aviation, Bridgewater, VA 9
Slide 10
Secretary of Defense Corporate Fellows Corporate Sponsor
Locations 10
Slide 11
Secretary of Defense Corporate Fellows Agenda People Plans
Cyber Security Government/Industry Relations Program Overview
Understanding Value vs Cost InnovationInnovation Summary /
Q&A
Slide 12
Secretary of Defense Corporate Fellows Understanding Value vs
Cost Industry View Value Focused Categorize core business: 1) core
functions, 2) core products and services Reinforce areas that add
value; divest in areas that do not Emphasize value over cost;
drives culture and strategy Reducing Cost Focus on strategic goal,
not simply cost Understand value and cost of the people and
processes Mechanisms are automation, skill, and efficiency Response
to Reduced Resources (e.g. Recession) Get smaller; consolidated and
restructured Diversify markets; seeking opportunities outside DoD
Leverage technology to reduce workforce and increase productivity
12 Industry Trends DoD Practices Recommendations Impact
Slide 13
Secretary of Defense Corporate Fellows Understanding Value vs
Cost DoD View Cost Focused Stovepipe core products and services
across all Service branches and OSD Emphasize cost over value;
drives culture and strategy Focused on cutting costs; incentivizes
behaviors (i.e. contract strategies) Reducing Cost Across the board
cuts to personnel, budgets, or both - counterproductive Not
educated or incentivized to understand or promote a value culture
Mechanisms are inefficient (i.e., budgets, personnel, targeting
profit) Response to Reduced Resources (e.g. Sequestration) Staffs
got larger: +15% since sequestration Defense News June 2, 2013
Incentivized to obligate entire budget prior to expiration use or
lose Inefficient outcomes (i.e., increased reporting requirements,
travel, etc.) 13 DoD Practices Industry Trends Recommendations
Impact
Slide 14
Secretary of Defense Corporate Fellows Understanding Value vs
Cost Emphasize a Culture of Value Paradigm shift; will drive
behaviors and long term outcomes Youre either adding value or you
are playing house Understand the cost vs. value of overhead,
people, and processes Stop Growing Use existing structure to
address challenges Prioritize efforts based on impact to the core
mission of the DoD Reward delivery under budget; incentivize
behavior Set a Strategic Goal for Restructuring Focus on becoming
more effective and efficient, not simply cutting costs Measure and
track pace of change Marginalize or remove those that resist change
14 Industry TrendsDoD Practices Recommendations Impact
Slide 15
Secretary of Defense Corporate Fellows Understanding Value vs
Cost DoD Culture which understands value vs. cost More efficient
and effective organization and processes Reduce overhead and costs;
revitalized industrial base 15 Industry Trends DoD Practices
Recommendations Impact
Slide 16
Secretary of Defense Corporate Fellows Agenda People Plans
Cyber Security Government/Industry Relations Program Overview
InnovationInnovation Understanding Value vs Cost Summary /
Q&A
Slide 17
Secretary of Defense Corporate FellowsInnovation Small teams
dedicated to innovation Self-directed Cross-disciplinary
Collaborative High risk tolerance Tightly connected with senior
leadership Innovation strategy based on creating the future Not
reacting to the competitors Two types: Breakthrough (fast) and
Incremental (long and strategic) Primacy of the pace of innovation
Set the conditions for serendipity and allow it to occur 17
Industry Trends DoD Practices Recommendations Impact
Slide 18
Secretary of Defense Corporate FellowsInnovation DoDs Advanced
Capabilities Development Program(s) DARPA, 41 National
Laboratories, Office of Naval Research, AF Research Lab but...
Reactive, requirements based process seeking faster horse Slow,
linear acquisition process; fiscal Valley of Death Prevents
innovations from reaching the warfighter before irrelevance
Burdensome oversight Encourages incremental vice breakthrough
innovation 18 DoD Practices Industry Trends Recommendations
Impact
Slide 19
Secretary of Defense Corporate FellowsInnovation Incentivize
innovation within Industry Use Lowest Price Technically Acceptable
(LPTA) contracting very judiciously Change Weighted Guidelines to
reward past risk in terms of innovation Normalize a DoD/Industry
partnership empowered to accept risk Update Joint Capabilities
Integration & Development System (JCIDS) Change mentality
Forward looking, shaping the next battlefield From : How do we
counter threat? To: How do we redefine conflict? Evolve
requirements collaboratively Strategists, resource sponsors,
acquisition community, warfighters, AND industry Counter the Fast
Follower with Speed Early and often prototypes to correct problems
or fail fast limit sunk cost Develop scaling engine to quickly
transfer and deploy successful technology Quickly field the 80%
solution and continuously improve with rapid refresh cycles 19
Industry TrendsDoD Practices Recommendations Impact
Slide 20
Secretary of Defense Corporate FellowsInnovation Future
oriented JCIDS process which allows for serendipity Eliminates the
response of, Good idea, but I dont have a requirement. Changes
response to, Lets take a look at how that can shape the future.
Rapid pace of innovation becomes strategic advantage Moves faster
than the fast follower can respond Better value proposition than
burdensome oversight and over-classification Better relationship
with industry facilitates technology access and deployment Provides
initial capability to the warfighter quickly Structured to allow
for continuous, rapid, incremental upgrades 20 Industry Trends DoD
Practices Recommendations Impact
Slide 21
Secretary of Defense Corporate Fellows Agenda People Plans
InnovationInnovation Government/Industry Relations Program Overview
Cyber Security Understanding Value vs Cost Summary / Q&A
Slide 22
Secretary of Defense Corporate Fellows Cyber Security High
Profile Vulnerabilities Target, Sony, Home Depot, many other hacks
Insider threat, state sponsors, spear phishing, infrastructure
Cyber Security Approach Look to national standards National
Institute of Standards & Technology (NIST) cyber security
framework Red Teaming (Ethical Hacking of themselves) and Phishing
Balance security with sharing, productivity and (business)
efficiency Threat Posture and Resources Cyber security officers now
in the C suite Full Authority and Control Understanding of
infrastructure enables algorithms to detect breaches. Increased
Resources applied to Critical Vulnerabilities Protect ability to
continue business 22 Industry Trends DoD Practices Recommendations
Impact
Slide 23
Secretary of Defense Corporate Fellows Cyber Security High
Profile Vulnerabilities NSA, CENTCOM Twitter account, 100 Service
Members Targeted by ISIS Network Proliferation (each organization
has multiple) Insider threat, state sponsors, non-state actors
Cyber Security Approach Adopting NIST standards as well as DoD
unique standards Independent Cyber Command Focused on Mission,
Command, IT systems Threat Posture and Resources Defensive posture
with blanket protections of all systems Security Technical
Implementation Guides (STIG) compliance Resources utilized for Full
Protection No differentiation based on Criticality Security First
Figure out how to continue to operate with limitationsif needed 23
DoD Practices Industry Trends Recommendations Impact
Slide 24
Secretary of Defense Corporate Fellows Cyber Security High
Profile Vulnerabilities Expand focus to include infrastructure, as
well as IT systems Prioritize the vulnerabilities Approach to Cyber
Security Partner with industry and Government agencies to develop
universal policy Partner with industry Share information to
neutralize and prosecute threats Expand scope and increase
frequency of training, including social media Threat Posture and
Resources Take Predictive and Offensive actions as well as
defensive actions Cyber security policy makers MUST have Authority
Consolidate physical and cyber security within operations 24
Industry TrendsDoD Practices Recommendations Impact
Slide 25
Secretary of Defense Corporate Fellows Cyber Security Universal
standards & Best Practices shared DoD and Industry Apply
Limited Resources to Critical Vulnerabilities Protect Operational
or Core Business functions. Keep Security First, but Balance with
functionality to conduct IT operations. 25 Industry Trends DoD
Practices Recommendations Impact
Slide 26
Secretary of Defense Corporate Fellows Agenda People Plans
InnovationInnovation Cyber Security Program Overview
Government/Industry Relations Understanding Value vs Cost Summary /
Q&A
Slide 27
Secretary of Defense Corporate Fellows Government/Industry
Relations Industry View Sustainable profit required for industry
diversity, longevity, and innovation Shareholders expect 15%
profit, defense industry averages 10% DoDs war on profit feels real
to industry Industry Incentives and Cultures Drives solution
centered and value oriented culture Honest estimates plan for worst
and prepare to capitalize on the best Develops, empowers, and
depends on people to make the right decisions Moving away from DoD
Industry does not need DoD as much as DoD needs industry
Non-defense commercial investments Lockheed fish farming and energy
production Defense Sector shedding to maintain profit margins
Sikorsky spin off from United Technologies 27 Industry Trends DoD
Practices Recommendations Impact
Slide 28
Secretary of Defense Corporate Fellows Government/Industry
Relations Government View DoD leadership appreciates role of profit
- Better Buying Power 3.0 (BBP 3.0) DoD execution level has not
uniformly embraced leaderships view Profit is a cost, rather than
an incentive to innovate and deliver Government Incentives and
Cultures Adversarial relationship between DoD and industry Cost
accounting does not always understand or measure value No trust of
industry or between DoD organizations Consequences of Current
Government/Industry Relations Fewer and lower quality bids Limited
incentive to invest in research and development Barriers to
leveraging commercial innovations and technology 28 DoD Practices
Industry Trends Recommendations Impact
Slide 29
Secretary of Defense Corporate Fellows Government/Industry
Relations Incentives View profit as necessary and a potential
motivator to create a win-win Remove barriers to commercialization
End demand for (proprietary) cost information Simplify competition
rules reduce protests Cultural Regard industry as a partner, not an
adversary Focus on the solution, not the process Eliminate culture
driven by fear of contract protest or prosecution Performance
Metrics for Acquisition Professionals Tie and Enforce Procurement
Action Lead Time to performance reviews Incentivize acquisition
leaders to take more prudent risks Remove barriers and obstacles to
implementing BBP 3.0 29 Industry TrendsDoD Practices
Recommendations Impact
Slide 30
Secretary of Defense Corporate Fellows Government/Industry
Relations Trusting relationship between industry and DoD Commercial
technology leveraged Faster delivery of effective systems to the
warfighter 30 Industry Trends DoD Practices Recommendations
Impact
Slide 31
Secretary of Defense Corporate Fellows People Plans Agenda
Government/Industry Relations InnovationInnovation Cyber Security
Program Overview Understanding Value vs Cost Summary / Q&A
Slide 32
Secretary of Defense Corporate Fellows People Plans Hiring and
Career Path Seeing a diverse workforce demographically and
critical, creative thinkers Identifying potential leaders and
invests in them early Valuing diverse career paths in and out of
the company or industry Leadership Development Realizing that
empowered individuals, making decisions are key to the future
Partnering with leading universities for training programs Pay and
promotion tied to performance and value added to the company
Employee Engagement Measuring commitment to organizational goals
and motivation to contribute Benchmarking externally and internally
Engaged leadership, meeting face to face with all hands 32 Industry
Trends DoD Practices Recommendations Impact
Slide 33
Secretary of Defense Corporate Fellows People Plans Hiring and
Career Path Demographic diversity, but not diversity of thought or
background Workforce homogenized around process creativity
discouraged Highly defined career path Everyone doesnt need all
checks in the box to be the next CJCS Leadership Development
Process adherence valued over empowerment and judgment Leadership
development internal; viewed as checks in the box Pay and promotion
tied strongly to time in service Employee Engagement Robust
internal training system; available on-line and in resident Climate
Assessments to measure the culture Internal benchmarking 33 DoD
Practices Industry Trends Recommendations Impact
Slide 34
Secretary of Defense Corporate Fellows People Plans Hiring and
Career Path Seek diversity of thought and career path Value diverse
experiences outside the military Optimize the enterprise structure
Who adds value? Where are the shortfalls? Leadership Development
Provide diverse education opportunities both inside and outside DoD
Tie pay and promotion to performance rather than time in service
Instill a culture of problem solving rather than strict process
adherence Employee Engagement Use existing internal training to
instill a culture of creative problem solving Use industry standard
tools for measurement to simplify benchmarking Benchmark externally
& internally 34 Industry TrendsDoD Practices Recommendations
Impact
Slide 35
Secretary of Defense Corporate Fellows People Plans Broader
range of experience to produce diversity of thought Innovative
solutions through cross-industry teams Workforce productivity,
satisfaction, and pride improved 35 Industry Trends DoD Practices
Recommendations Impact
Slide 36
Secretary of Defense Corporate Fellows Agenda
Government/Industry Relations InnovationInnovation Cyber Security
Program Overview Summary / Q&A Understanding Value vs Cost
People Plans
Slide 37
Secretary of Defense Corporate Fellows Summary 37 Understanding
Value vs Cost Emphasize a culture of value Stop growing and reward
efficiency Set a strategic goal or restructuring dont just focus on
cost Innovation Incentivize innovation within industry Normalize
DoD/Industry partnership Update JCIDS to be forward looking,
shaping the next battlefield Counter the fast follower with speed
pace becomes strategic advantage Cyber Security Expand focus to
include infrastructure and prioritize the vulnerabilities Partner
with industry, sharing information and developing universal policy
Be offensive and predictive as well as defensive
Slide 38
Secretary of Defense Corporate Fellows Summary 38
Government/Industry Relations Use profit to motivate industry
creating a win-win scenario Regard industry as a partner, creating
trust outside and inside DoD Incentivize acquisition leaders to
take more prudent risks People Plans Optimize the enterprise
structure based on value and shortfalls Foster a range of
experience, diversity of thought, and problem solving Improve
workforce productivity, satisfaction, and pride