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Future Naval Leaders Conference-- The Revolution in Business Affairs
Remarks as Delivered by Deputy Secretary of Defense John J. Hamre, Marriott Westfields, Chantilly, Virginia, Tuesday, January 18, 2000

I am sorry you had so little time, [Under Secretary of the Navy] Jerry [Hultin], for that introduction. [Laughter]. [You are] far, far too effusive but you’re very kind. I am reminded of what Lyndon Johnson once said. He was introduced with a very lovely introduction and he said, "I only wish my parents were still alive and they could have heard that." He said, "My father would have enjoyed it, my mother would not have believed it." [Laughter.] And I think I’ll say the same.

I am grateful and a bit surprised that you would let the lame duck come to talk to you tonight. I would be less than honest if I didn’t tell you that I’ve noticed a subtle shift in the last five days since I have announced I was leaving. It’s amazing how quickly you die in office [laughter] and all of that rapt attention that you get when you are still the boss seems to dissipate a bit as soon as you say you’re going to leave. And so I say that really more than anything just by way of a warning to myself that if I see half of you get up and leave, that’s not personal. [Laughter.] It’s institutional, and I recognize I am here with you on borrowed time.

And I do thank you, Jerry, for not just including me on the program and inviting me here to be a part of it, but frankly for holding this entire conference. We didn’t do this until you came along, and I think it is so important to have had this. We have spent some time talking at my table this evening that -- and I will try to make this case -- that if anybody is on the front line of defending this country in ten years, it [will depend on] how well you do in the next three or four years. We won’t be able to defend this country very well if you are not successful. And I think we need to talk about that.

I’ve met a lot with business [leaders] and I often find myself on the defensive. It’s too easy, to slip into apologia, "You know, we’re not really as bad as you sometimes think." Of course, we know how bad we really are when it comes to a lot of our business practices, but we tend to think of ourselves and compare ourselves in the context of what these companies do on a day-to-day basis, and we look rather pale in comparison to them.

I don’t know how many of you are familiar with this latest trend in business management called Six Sigma. How many of you have heard of Six Sigma? [Members of audience raise hands.] Oh, a lot of you. Okay. As you know, it really started when Motorola bought it to build a pager that would never break down in its lifetime. And, of course, they did. It’s a remarkable piece of equipment. Whose pager stopped? I mean, these are really remarkably reliable pieces of equipment. And Six Sigma refers to those numbers of items where there is a failure. So if one out of ten million or a hundred million would fail, you are Six Sigma company. It’s extraordinarily high quality, exceptionally high quality.

Most American companies produce somewhere between three Sigmas and two Sigmas in terms of reliability. There are very few companies that produced better than four, and a few are at five. Probably only one or two divisions of companies in America produce at Six Sigmas.

And I use this as an analogy. We tend to be defensive about how we run the [Defense] Department. But in our primary line of work -- which is fighting and winning America’s wars -- we are a six Sigma outfit. I mean, nobody is as good as we are. Nobody. Nobody even comes close. And we’re going to get a lot better over the next five years. The innovation that is underway inside the Department of Defense for our primary work product, fighting wars, is breathtaking. It's spectacular. There are enormously talented people thinking creatively about the problem and we’re bringing the very best minds together to produce the kind of hardware and technology to do that. It is, well, spectacular, and we should all be very proud of that.

Yet I see inside this organization that does not tolerate anything less than world-class standards when it comes to our primary business, fighting wars, living with second Sigma operations when it comes to support activities. I don’t understand this, to be honest. I don’t understand an organization that enshrines and embodies excellence across the board in what it does in its primary output, but then lives with second and third best in what it takes to support it.

That is why you are all here. I know from what Secretary Hultin told me, that [the organizers] went out of the way to find the superstars of the next ten years, to have them come to this conference, to tackle the problem that we have as a Department; and [to ask] why we are living with second-best when it comes to supporting our infrastructure. And I’d be honest with you, we’re on borrowed time, [as far as] how long we can do that.

I hate saying it, but I think the American public is spending just about as much on defense as it wants to. And I don’t think there will be major changes. I think it was a remarkable thing last year when Secretary Cohen and the Chiefs were able to convince the President that it was very good idea to increase our budget by $112 million. It was a great tragedy that we could not get an agreement with the Congress to embody that in a budget resolution last year, so we are still a little bit on borrowed time. We don’t have that in the bank at all. I think we will get it over time, but I think it is likely to be the upper bound. And I will tell you right now -- you don’t know this -- but adding that $112 million did not get us out of the hole. We do not have the capitalization rate it is going to take to have a first-class fighting force across the board in 2010. You all know that.

So, we have to do something about that, and we can’t afford to keep spending money on support activities that are substandard in terms of what they could be, and then take dollars away from the front-end fighting forces to be able to do that. I think that’s where we are right now. And that’s, of course, why you are here.

There isn’t a problem that we have in the Department, not a single problem that we have in the Department, that cannot be fixed by some place in the Department. There is a solution to every problem we have. I’m convinced of that. Our problem is that we can’t find a way to get [those solutions] widely known and institutionalized among people, and again, that's why you are here. You are here, I believe very firmly, to share these ideas about these solutions that have been invented. I state again, we have so many clever people and talented people and dedicated people in this Department. We know how to fix these problems, but we certainly don’t know how to institutionalize them well enough. And that’s what you here for; it’s to not only share with each other what those solutions are, but then to find ways to embed it into the institution, to change the incentives.

You know, over the years, the way you marked progress is how many people you had working for you. The goal in our world has to be how few we can have working for us to get the job done. It’s not how many people we have; it’s not "I don’t get to be a GS-15 if I don’t have 80 people or whatever the number is or magic formula that’s out there to support grade structure." It’s going to have to be very different. We have to enshrine this as a goal for all of us: getting by with much fewer assets and still getting the job done. And that cuts against the bureaucratic grade.

One of the hardest things about these seminars or retreats that you are hosting is to see whether you are all ready for a transformation. I mean after all, you have [reached] this position and you are recognized as being exceptional leaders because you are probably the best bureaucratic turf fighters in town. I mean, that’s after all what we do, we’ve made an art form out of the tug of war.

There are only two sports in the world where you win by backing up [laughter], a tug of war is one of them. And we’re really good at that at the Defense Department. We’re always pulling against each other. The other one is, of course, competitive rowing, where everybody is facing the same direction, backwards in this case, and pulling like crazy in order to get the entire boat and to beat the competition.

And so the real question, I think, in Jerry Hultin’s mind is, "Are we going to get these people who are moving backwards out of one sport and into another? Are we going to get away from tugs of war?" In other words, [is the prevailing view among leaders going to be] "I am powerful because I can make you come to my point of view," or "Are we going to be the fastest boat in the competition because we found ways to pull together?" That is what this conference is all about.

There is going to be an awful lot of ideas which we shall throw out and half of them we don’t. But it would be a crying shame if you didn’t put it on the table for everybody to go about with because that’s how we learn. And most of these ideas have a gem in them that can be used in another application. You will do a disservice if you don’t share that with others around you.

I think there are reasons to be very hopeful. I see some remarkable things going on in this Department, genuine insightful innovation. I spent a day with Admiral [Archie] Clemins [Commander in Chief, U.S. Pacific Fleet] out in Hawaii. Some of the things he was doing are very exciting. He was a rare four-star to do it. You all know that, very rare, because most of those guys don’t get to those positions by worrying about the support establishment. And if there is anybody who is going to make a better Navy in ten years than Arch Clemins? No. That is a signal accomplishment and that’s what we’re asking you all to do.

So, I guess I am looking forward to hearing what comes out of this, Jerry. I think, it is not just for the Navy and the Marine Corps. The ideas that you are going to promote are ones that we will want to take across the Department. But it has to start with you, and this is about war fighting. Let’s not kid ourselves. How well we are going to do in ten years, in 15 years sits squarely on your shoulders, and what you are going to come up with today.

I’ve also learned in this process that this not about inventing new ideas. It is not about inventing new technology. It is really about leadership. It’s about the most basic things that we value in the military -- the ability to motivate and lead men and women into a struggle and to win. That’s the key. That’s again why the organizing precept for this conference was to find the men and women who are already clearly the potential winners and to give them a new assignment so that you can take and be that role model that will help others see what has to happen. And all the children of Israel never crossed the Red Sea by reading theology. They crossed the Red Sea by following a leader, and that’s what it’s going to take for us all to make this work.

Let me close. You don’t need a long speech tonight and, frankly, I didn’t write one, so you heard as much as I have. But I do want to conclude, and I plan on doing this for the ten weeks or so I have left with all of you. I must confess that I am having some difficulty leaving. It’s been the greatest experience of my life, to be with all of you. I know some of you much better than others. Of course, I have an opportunity to work with some of you on a daily basis or on weekly basis and so I’ve been lucky in that sense for some of you. But I must say for everybody, it’s been a real joy.

I think there are two kinds of people in the world. I think there is one group that gets up in the morning, goes to work and looks at that pay stub every two weeks to figure out what new things they can buy, what new pleasures they can seek. And I think there’s another group of people that somehow see their lives in bigger terms than that, living a bigger life that you could live by just trying to remunerate yourself. And that's what I love about this organization, about this Department. It’s filled with people who see themselves in a much bigger way. You could say that the average Americans go home at night and they think about how their net worth advanced during the day.

But most of you will go home to that $80,000 house you paid $270,000 for [laughter] and try to figure out how much longer you can keep the old furnace running before you need to replace it. You'll wonder how you’re going to get the money for braces for your oldest daughter. But at the end of the day when it’s quiet and you think about it, you can say, "Well, at least today I defended the United States of America. I am very proud of that." I am very proud of all of you. And I am going to miss it, and miss it a lot.

I’m not dying, but it feels like that right about now. [Laughter.] But I want you to know that I leave with a great sense of pride. This is really the century for America. Everybody says that the 20th Century was the American Century. It ain’t nothing compared to what it’s going to be in the 21st Century. It’s going to be just spectacular. But the country is going to be safe because all of you and I want to thank you for it.

Thanks very much, Jerry. [Applause.]