Best Practives in Leadership Development & Organization Change 28

Exhibit 10.2: Potential Opinion Leaders’ Roles in Culture Change 257
Exhibit 10.3: Survey Results 258
Exhibit 10.4: Significant Correlations Between Specific Critical
Behavior Items and Three Performance Metrics 259
BIBLIOGRAPHY 260
ABOUT THE CONTRIBUTORS 260
OVERVIEW
What’s beyond “white water?” That was the term used to characterize the com-
petitive challenges faced by companies a decade ago. Today, the rapids are shal-
lower, the holes deeper, the boulders bigger, and the current faster. Not only is
winning in this environment harder, but losing puts a company at greater risk
of making a spectacular crash. This was never more clear than in the defense
industry, where the end of the cold war challenged defense contractors to win in
fewer contract opportunities (for fewer dollars) . . . or leave the scene. The
industry consolidation of the 1990s made the white water froth.“Win or die”
wasn’t a saying—it was a reality.
For a company like Lockheed Martin Tactical Aircraft Systems (LMTAS), that
meant winning competitive contracts in world markets for F-16 fighter jet sales
against some of the best competition worldwide. As if that wasn’t enough, in
1997 the defense department announced that LMTAS was one of the two final-
ists in competition for what was expected to be the last manned fighter jet con-
tract the U.S. government would give—a $200 billion dollar contract with
a thirty-year life . . . and it was going to be a winner-take-all contract. This was
the Joint Strike Fighter (JSF) contract competition, and the competition was not
only winner-take-all, but loser-leave-the-stage. For LMTAS, losing this contract
would put a horizon on the company’s very existence—even if it won F-16 sales
in world markets, F-16 sales were not a growth business, as the JSF would even-
tually become the product of choice on world markets.
This case study reports how Dain Hancock, president of LMTAS, recognized
and responded to those challenges by gaining rapid support for change in what
for decades had been a fiercely rigid organization. His leadership not only posi-

tioned the company to win worldwide F-16 sales, but more important, to
win the JSF contract—assuring the survival and prosperity of the company long
into the twenty-first century.
We’ll use the metaphor of a fulcrum and lever to describe the strategy that
Hancock eventually used. His first challenge was to shape the fulcrum—to give
relevance and focus to necessary behavior change. He needed to make a clear,
succinct, and compelling business case for behavior change. That case needed
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to articulate the behaviors that were critical to business survival—and it had to
do so in a way that defied contradiction.
As we will see, the fulcrum was not enough. Although Hancock did all the
right things to demonstrate the absolute relevance of behavior change, nothing
happened. What he still lacked was a lever. The lever is what extends the influ-
ence of a handful of senior leaders throughout to organization to influence day-
to-day behavior change. In the algebra of organizations, leaders represent the
numerator while all others combined form the denominator. In this configura-
tion, change can look like a mathematical impossibility. Discouraged leaders
can wonder what a relative few vision-bearers can do to drive change in an
organization that outnumbers them a thousand to one—or more.
The senior leaders at Lockheed Martin produced no real change until two
things occurred. First, they articulated a concrete role for both formal and infor-
mal leaders (as teachers and as partners, respectively) in influencing change.
This turned out to be an important change lever. And second, they implemented
a method for holding themselves accountable. Only when senior leaders clari-
fied their accountability in tangible ways and grasped these two levers did they
gain traction against overwhelming organizational inertia and begin to produce
real change. Note that by holding themselves measurably accountable for results
and implementing these two change levers, they accelerated changes that often

take the better part of a decade to occur in large companies. Evidence reported
in this case shows their impact within three years, and, what is important, this
success was among the factors that enabled LMTAS to win the largest contract
in their industry’s history—and to remain a force in the aeronautics industry.
BACKGROUND
When Dain Hancock was named company president in 1995, it appeared he
was assuming the catbird seat. The company had a large worldwide sales back-
log for F-16s. In the previous two years, they had dramatically reduced costs at
the same time that base production was decreasing, a first in the industry. The
major customers were enthusiastic about the company’s record of quality
improvements, and—perhaps most important—the facility had proven itself to
be a remarkable “cash cow” for Lockheed Martin.
But looks can be deceiving. As the former vice president of the company’s
largest product line, Hancock was aware of a far different reality: the volumi-
nous business backlog was shrinking rapidly, with a three-year lead time for
new orders and no F-16 production scheduled on the books after 1999. The
factory was still limping along with 1970s vintage manufacturing technology—
not surprising, since the plant had suffered from a lack of capital investment
for several years. During the tenuous early 1990s in the defense industry, the
LOCKHEED MARTIN
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previous owners’ corporate strategy had become “milk the backlog and spend
as little as possible.” In addition, the workforce was aging, with most of the
younger engineers having fallen victim to mass layoffs earlier in the 1990s and
with no new hiring at the facility for almost eight years. In short, the business
horizon looked bleak.
A RAY OF HOPE?
The major product line for the company—the F-16 Fighter Jet—was also begin-
ning to age. Consolidation and post-Cold-War contraction of the industry left

little room for aging products. For this company, the message of the market-
place was clear: win the next major fighter program . . . or die. Shortly before
Hancock assumed the president’s office, a competition was announced for the
Joint Strike Fighter—a major program with pre-purchase commitments from
the U.S. Air Force, Marines, and Navy, as well as the U.K.’s Royal Air Force and
Navy. Securities analysts hailed the announcement as a harbinger of which of
the key companies in this industry would survive into the twenty-first century.
Hancock knew that if the company failed to win this competition, all he would
preside over was, at best, becoming a subcontractor to the winning company
or, at worst, the organization’s demise. Since the contest was announced as
winner-take-all, the latter seemed like the more likely outcome.
As Hancock considered what it would take to develop a bold new product
against world-class competitors, he quickly concluded that the company’s
12,000 employees faced another tough tradeoff: change or lose. Past mindsets
would run up against aggressive affordability goals and the necessity of creat-
ing the complex product for a wide range of domestic and international cus-
tomers through long-distance partnerships with a host of other companies. It
was clear that old ways of thinking and doing business would not suffice.
In the coming months, the president and his senior staff would try to sell a
message to the workforce that changing the culture was a survival-level issue.
In a straight-talking address, Hancock told the workforce, “It may not be clear to
many folks, but our company damn near died last year . . . and the primary rea-
son was our culture! We have been so inwardly focused and have inhibited new
ideas to the point that we were headed down and out.”
A blunt statement by Darleen Druyan, the Air Force’s acquisition chief,
helped Hancock put a sharp point on his message. After thousands of F-16
purchases, it might have been easy for the Fort Worth crew to assume the Air
Force was in their corner. Druyan made it clear that even the Air Force
wondered about whether Lockheed Martin could compete in this new kind of
program when she said, “This competition is not about an airplane. It’s about

a management team.”
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A CULTURE OF RESISTANCE
Hancock knew the culture well. He had worked his way up through the ranks
under various owners of the facility. Over time he had watched as good ideas,
whether incremental or monumental, were smothered while birthing. As pres-
ident, he found his schedule filled with appointments with passionate agents
of change who used him as a sort of bodyguard to keep from being taken out
by those who were threatened by their ideas.
For example, Hancock initiated a Six Sigma—or “lean manufacturing”—effort
to help drive major improvement in manufacturing processes, which had
changed little since the mid-1970s. He also hoped to show the JSF decision mak-
ers by this effort that Lockheed Martin could rival their competitor, Boeing, in
innovative management practices that would lead to world-class quality, on-
time delivery, and low cost production. The Six Sigma effort was a critical way
of demonstrating that capability.
And yet, a year into the effort there was little to show beyond a few color-
ful displays and a couple of pilot projects. Although the uninitiated would
think that the president’s approval would be sufficient aid and comfort to sus-
tain a strategically critical program like this one, the culture had perfected a
strategy to deal with just such contingencies: slow rolling. When authority
was lacking to kill something outright, lower-level managers found ways to
deliver death in the same way an alligator kills its prey: it embraces it—after
a fashion. In fact, it drags it under water and slowly rolls it, over and over,
until it drowns. Managers at Lockheed Martin responded to Six Sigma the
same way. They openly applauded the new ideas, dragged them back to their
departments, then starved them of attention, hoping senior leaders would
eventually lose interest in the failed initiative and move onto the next program

du jour.
In spite of Hancock’s endorsement, little initiative was taken to implement
Six-Sigma ideas. Most managers gave only lip service to Six-Sigma goals. If they
did assign staff to special projects, it was not their best and brightest, but rather
their “surplus.” And breakthrough recommendations arising from training ses-
sions gathered dust in in-boxes while the “real work” got done.
Month by month, the senior staff would write articles for the company
newsletter, speak at the beginning of another training session, or gather all the
managers and deliver another speech about the importance of the effort. In
short, Hancock and his staff would find some way to apply brute force to
breathe a little more life into the program.
Through this and dozens of other experiences, Hancock became con-
vinced that for every innovative effort he fought to rescue, there were a
hundred promising ideas that must be dying before they left the drawing
board.
LOCKHEED MARTIN
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SHAPING THE FULCRUM BY DEFINING CRITICAL BEHAVIORS
Hancock began attacking the problem of changing this culture like any good
engineer. He clearly defined the kinds of behaviors that would cut away
the webs of resistance that were choking innovation. We (the authors)
were engaged by Hancock as consultants and advisors. Over a period
of months, with our help, he and his senior staff went through a process of
interviewing employees, documenting stories, and writing papers that helped
them see how their culture affected their ability to meet their business
challenges.
Our goal was to identify critical behaviors. These, in our view, were the two
or three behaviors that would first, have an obvious positive impact on busi-
ness performance; and second, produce a domino effect by influencing many

other behaviors to change. We reasoned that the typical approach to culture
change—long lists of abstract values or dozens of desirable behaviors—would
lead to failure. Hancock’s objective was to pick a critical few that could clearly
be shown to drive business performance—and focus all of leadership’s energy
on those. The trick was to pick the right few.
After conducting focus group interviews with over six hundred employees,
the senior staff began to discern patterns in the success and failure stories they
heard. They began to see that a handful of negative behaviors were at the
nexus of every painful story of stifled change and choked creativity. In addi-
tion, in the areas of the company where innovation thrived, a few key behav-
iors were universally present. For example, interviews with the few Six Sigma
“pockets of excellence” turned up a few behaviors that always differentiated
these areas from the rest of the organization. Most of these behaviors were
crucial conversations that enabled Six Sigma progress when they were han-
dled well, or stalled it when they were either avoided or handled poorly (see
Exhibit 10.1).
Through this study process, senior leaders came to conclude that candid and
open communication about specific high stakes subjects was a critical behav-
ior. They concluded that if they could positively influence the quality of these
crucial conversations, these conversations would have a “pulling effect” on
other, nonproductive behaviors. Thus, open communication about these crucial
topics became a major part of the fulcrum of the change effort.
In addition to open communication, two other critical behaviors emerged from
this process. The first was called personal engagement and referred to “taking
personal action to unblock obstacles that prevented effective performance.” The
third was called sense of urgency, and, as implied, was about “acting when
the need existed rather than ignoring issues that needed to be addressed or esca-
lating those issues to others who would have to address them.”
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