3
The Change Process

Changing the defense manufacturing culture will require an iterative process. The process must start at the top and be driven by a vision of how manufacturing will be conducted. The process must be repeated at each level of the organizations involved. The leadership of the change process must be accepted at the top of the Department of Defense (DoD)—by the Secretary and Deputy Secretary—and supported by other leaders throughout the defense community, including the military service secretaries and particularly the Congress. Unfortunately, the change process, like ''quality," is difficult to describe in writing, but the following paragraphs should convey some sense of the process.

Industrial experience suggests that cultural change requires repetitive cycles, at successively lower levels in the organization. Each cycle consists of six generic steps:

  1. Preparation

  2. Commitment

  3. Deployment

  4. Action

  5. Reinforcement

  6. Results Measurement and Feedback

These characteristic phases must, in turn, be adapted to each successive layer throughout the defense manufacturing community—government, as well as prime contractors and suppliers.



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Breaking the Mold: Forging a Common Defense Manufacturing Vision 3 The Change Process Changing the defense manufacturing culture will require an iterative process. The process must start at the top and be driven by a vision of how manufacturing will be conducted. The process must be repeated at each level of the organizations involved. The leadership of the change process must be accepted at the top of the Department of Defense (DoD)—by the Secretary and Deputy Secretary—and supported by other leaders throughout the defense community, including the military service secretaries and particularly the Congress. Unfortunately, the change process, like ''quality," is difficult to describe in writing, but the following paragraphs should convey some sense of the process. Industrial experience suggests that cultural change requires repetitive cycles, at successively lower levels in the organization. Each cycle consists of six generic steps: Preparation Commitment Deployment Action Reinforcement Results Measurement and Feedback These characteristic phases must, in turn, be adapted to each successive layer throughout the defense manufacturing community—government, as well as prime contractors and suppliers.

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Breaking the Mold: Forging a Common Defense Manufacturing Vision STEP 1: PREPARATION Preparation is the first step in the change process. In companies that achieve this kind of sweeping cultural change, the drive for change radiates from the top. Typically, the Chief Executive Officer (CEO) gathers his close colleagues to flesh out the nature of the change and the process: the vision. At General Electric (GE), Jack Welch drove the change process from his position as chairman and CEO; at Motorola, the process was driven by President Robert Galvin. A vision for the change process is a prerequisite for the beginning of the process itself. Therefore, the defense community leadership needs to describe a vision of the future defense manufacturing culture. During subsequent change cycles, leaders at each successive level must likewise determine a representative version of the overall vision applicable to their own activities. This normally involves two important substeps: gaining pro-found knowledge of how the current system works to understand the changes possible and the leverage points for effecting change; and formulating a vision of how the system should look. To a substantial degree, both of these substeps have been covered by other reports that describe what needs to be achieved in the defense acquisition community (See Appendix B.); they also are the subject of various training programs. This shared vision of how the defense community's manufacturing systems can be vastly improved has been lacking in past attempts to change. Given the many interests and organizations represented in the defense manufacturing enterprise, development of the vision for change is necessarily a group process. A senior level group should be formed to create a shared vision of how defense procurement should be conducted. The group should include the Secretary of Defense, the Deputy Secretary of Defense, the Under Secretary of Defense for Acquisition, the Chairman of the Joint Chiefs of Staff, military service secretaries, the chairmen of the Congressional Armed Services Committees, the Director of the Office of Management and Budget (OMB), and a few chief executive officers (CEOs) from industry. A working cadre also should be formed to investigate cultural change in other organizations and to adapt the lessons learned to defense needs. Such a group should be broadly representative of the elements of DoD's manufacturing community: DoD career civil servants, military officers, defense contractors and suppliers, and congressional staff. Its members should be those individuals likely to emerge as senior executives in the course of implementation of the change process—the "young Turks." The group would be managed by the Deputy Secretary, serving the role of CEO throughout the change process, and the Under Secretary for Acquisition, who would serve as Chief Operating Officer (COO). Under their leadership, this group should study examples of manufacturing culture changes,

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Breaking the Mold: Forging a Common Defense Manufacturing Vision within and outside of DoD, establish the DoD "strawman" vision, and design the implementation plan for debate and change by the senior decision makers of the defense community. The vision must be relevant to community leaders. This requires that the leaders themselves create the vision, but implies a major effort by staff to gather and analyze information that will reveal the possibilities. Commercial companies have prepared the necessary vision in various ways. At Xerox, competitive benchmarking plays a critical role in determining areas for improvement and developing continuously tougher improvement goals. At General Electric, the "Best Practices" program focuses on management practices used by highly successful companies, including AMP, Chaparral Steel, Hewlett-Packard, Ford, and Xerox. For DoD, public data resources are sufficient to generate both broad understanding of how much better defense manufacturing could be and to establish meaningful improvement goals. (See Appendix C, Suggested Reading.) STEP 2: COMMITMENT Once senior managers have formulated the vision (for DoD, a contracting firm, or a supplier organization), committed to its achievement, and taken responsibility for leadership of the change process, the vision must be articulated to the rest of the organization, and a plan developed for implementation throughout the community. This step demonstrates commitment of the leadership and builds conviction that change is required among managers and workers in the services, suppliers, research and development (R&D) organizations, and the Office of the Secretary of Defense (OSD). Articulating the vision and achieving this conviction throughout the community may generate the creativity and enthusiasm needed for a successful change process. Each successive level of the organization must develop its own vision statement appropriate to that level's mission, but consistent with the broader vision generated at higher levels. Ideas for change should begin to emerge; leverage points begin to be identified. It is crucial during this stage for the leaders to encourage a wide variety of ideas, take the initiative to spur communication, champion the need for change, and generally build enthusiasm to gain buy-in among the diverse members of the defense manufacturing community. For this process to succeed, leaders at each successive level must be empowered with the flexibility, within broad guidelines, to initiate activities to meet the vision. Such flexibility certainly will require the cooperation of DoD and Congressional leaders. Such a process is frustratingly inclusive, non-directive, and slow, but it gets results. The change process at Ford provides a good illustration of the need for commitment. When Ford was first beginning to change in the early 1980s,

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Breaking the Mold: Forging a Common Defense Manufacturing Vision the concept of employee involvement became a central part of the new corporate vision. The job of speaking on behalf of the change process and explaining the concept of employee involvement—and the business and political rationales behind them—was undertaken by Peter Pestillo, Ford's vice-president for labor relations, and Don Ephlin, vice president of the United Automobile Workers' Ford Department. Given their high visibility and credibility among Ford's workforce, they played a critical leadership role in educating Ford employees and building commitment to the new Ford vision.1 STEP 3: DEPLOYMENT With some hope for change, energy and enthusiasm can become substantial. Based on the refined vision, senior managers can determine the initial target areas for changes in policy, procedures, and structure. Leaders at various levels will implement those targeted changes. Likely areas for attention include: (1) defining performance measurement tools for effective assessment of techniques that work well and those that do not; (2) wide-spread training in necessary skills, such as problem solving, teamwork, communication, and program assessment; (3) identification of formal legal constraints to change; (4) clarification of reward systems that provide incentives for use of new skills and reinforce actions; and (5) identification of specific high visibility initiatives that can generate fairly quick results and reinforce the commitment to change. It is especially important to develop a means of measuring progress toward vision goals. Boeing provides some good examples in many of these areas. For instance, assigning managers and workers to solve small, manageable problems—''low-hanging fruit"—can give people a quick sense of the possibilities for effective change. However, Boeing learned the importance of emphasizing the long-term nature of its continuous quality improvement effort, so its employees would not settle for low-hanging fruit. Structured training programs were put in place, top management made quality improvement the first priority for middle management, and even some "sacred cows"—practices that are generally considered unchangeable—were scrutinized and discarded.2 These and other initiatives have demonstrated clearly to workers and managers alike that cultural change at Boeing is a long-term proposition. The reallocation and commitment of appropriate resources is a critical part of the change process. Given the current DoD environment, additions to financial budgets are not likely; rather, people will do new tasks, or do old tasks differently, so that the low-value-added activities of the old system are dropped or reengineered, and efficiency improves. Managers must be aware that the mission of the organization is sometimes best served by

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Breaking the Mold: Forging a Common Defense Manufacturing Vision dropping old tasks, which proves commitment to change to the organization at large. The key for managers is to ensure that essential activities are not neglected, even as more effective alternatives are proposed and tried. STEP 4: ACTION Next comes broad-based implementation of the ideas and plans formed to this point. Initial actions are monitored and results measured to gauge success and modify continued actions. Progress will be slow at first, but as actions are taken, the effects of those actions on procedures and relationships lower in the organization will be evident. Bottlenecks will emerge as the pace of change varies throughout the organization. DoD senior leaders and their counterparts elsewhere in government must appreciate the slow pace of improvement, but expect momentum to build as the change process persists. Perhaps most importantly, winners and losers will emerge, as both individuals and organizations are more or less successful in adapting to the changed environment. Effectiveness at leading the change process is likely to be a good indication of the readiness of leaders to assume greater responsibility. The scale of action taken by Jack Welch at GE helps illustrate the extent of change necessary in defense acquisition. From 1981 to 1989, GE shed $9 billion in assets and spent $18 billion on acquisitions, in a company with about $60 billion in sales. GE has dismantled executive power, drastically cut corporate staff, and created programs to empower and involve everybody in the organization. In the process, 100,000 jobs were eliminated. Using a number of management techniques, known as "Work Outs," "Best Practices," and "Process Mapping," GE has begun to build a new culture that maximizes employee participation, breaks down the barriers between management and labor, and uses good ideas, whatever the source. Despite the benefits to date and the extensive use of these techniques, Welch admits that it will take a decade before the new culture is firmly established.3 STEP 5: REINFORCEMENT Once success is achieved, a number of actions are necessary to foster further success. The individuals responsible must be rewarded. Based on typical experience in industry, such rewards need not be monetary, but may take the form of recognition through awards, increased responsibility or flexibility, additional training, and other steps. In general, the reward system must be seen to work throughout the organization to reinforce individual motivation. At Milliken, for instance, all manufacturing sites have abandoned individual incentives in favor of team-based incentives, which

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Breaking the Mold: Forging a Common Defense Manufacturing Vision was particularly difficult in an industry based on piece rates. The shift to teams has increased employee satisfaction, and team leaders are responsible for providing individual recognition through letters of recognition, awards, and similar means.4 Communication is essential. Leaders must continue to make their support known. Successful initiatives must be publicized and, to the extent possible, reasons for their success noted, published, and replicated. STEP 6: RESULTS MEASUREMENT AND FEEDBACK As plans are achieved, it is essential for the total change process to be monitored to identify further initiatives and possibilities for success. Appropriate performance measures are important; the degree of success can be measured and challenges for additional improvement can be defined. Managers at Milliken have learned that if it cannot be measured, it is not worth doing.5 This feedback loop must function continually throughout the organization at the local level (as described in Step 4), but it also must encompass the broad objectives of the change process and affect the initiatives of the senior leadership. It is easy for change to move off track, derailed by interest groups who cannot adapt fast enough, or simply by well-intentioned initiatives that fail. At Xerox, major change was delayed for years by the bureaucracy at corporate headquarters in Rochester. Only after David Kearns became president and took a personal leadership role in forcing change was the logjam broken and the change process really invigorated.6 Similarly, the senior DoD leadership, including the military service secretaries, must stay abreast of any serious failures and take steps to overcome or minimize their impacts. Again, the communication and leadership role of the senior managers cannot be overemphasized. DoD leadership must be tolerant of the time taken to achieve meaningful cultural change, yet press continually for progress. Industrial experience has shown that skilled facilitators may be necessary to help the process along, particularly through the first several iterations. For instance, GE uses consultants and university professors to facilitate many of its "Work Outs." SUMMARY In reading these six steps to cultural change, many will say that they are too elementary, too simple, just "Management 101". They are correct. The committee is, in fact, recommending a return to very basic, simple management principles—principles that DoD does not now follow in manufacturing weapon systems. But DoD is not alone. Many U.S. corporations

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Breaking the Mold: Forging a Common Defense Manufacturing Vision discovered how far they had diverged from basic management principles when they lost markets to Japanese competitors. Those companies are struggling-some successfully, some not—to return to basics, and to improve continually as a result. DoD, at senior levels, has yet to start. The committee argues that better management will provide major help to DoD in meeting existing goals. Many DoD executives have practiced these "basics" in prior positions, and believe these basics are required. "Management 101" this is—but only because Management 101 is needed. NOTES 1.   Badore, N. L., 1992. Involvement and Empowerment: The Modern Paradigm for Management Success. P. 4 in Compton, W. D. and Heim, J. A., eds., Foundations of World-Class Manufacturing. Washington, D.C.: National Academy Press. 2.   Gissing, B., executive vice president for operations, Boeing Commercial Airplane Group. October 24, 1991. Speech presented to the American Production and Inventory Control Society. 3.   Stewart, T. A. 1991. GE Keeps Those Ideas Coming, Fortune, August 12, pp. 41–49. 4.   American Productivity and Quality Center Letter. 1990. Roger Milliken Outlines Baldridge-Winning Philosophy. 10(6): December. pp. 4–7. 5.   Ibid., p. 7. 6.   Jacobson, G. and Hillkirk, J. 1986. Xerox: American Samurai. New York: Macmillan. pp. 179–184.