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If you want a surprise in the way people change when placed in an environment that supports creativity and cooperation, you'd be hard pressed to find a better example than what happened to Arnold Engineering and Development Center (AEDC). Even though AEDC is a government facility, issues of relevance to any business come through loud and clear. So, we are telling the AEDC story as if AEDC were in fact a for-profit, private sector business. This lets us translate military and government-style operations into business equivalents that have more meaning for most of us.
By sketching the AEDC story in business-oriented terms, we've converted it into an allegory rather than the complex and detailed process it had to be to succeed. So, forgive us as we cite our Literary License to let us omit a host of laws and military procedures which dictated how AEDC, the Air Force, and related personnel had to operate, and which all parties involved faithfully followed.
Whatever civilian conception there might be about rigidity or lack of complexity in a CEO who is "a military man," a visit with Colonel Bill Rutley shows that his job isn't all that much different from that of CEOs in aerospace companies. We had heard from others that Col. Bill has been wooed by the private sector, with no success to date despite the large financial incentive for him. By the time we finished chatting with Col. Bill, we wanted to buy stock in whatever company finally succeeds in recruiting him.
As an organization that had done outstanding seminal work for decades, but to many were questioning in 1991, AEDC was not especially productive or cooperative enough for the challenge that they now faced. In over 22 months of DesignShop process work, they went from feeling like victims of reduced Department of Defense funding, to helping create the game. By the time we saw them in action at the Wharton DesignShop event, they had transformed almost beyond recognition.
AEDC is located close to the middle of nowhere-near the town of Tullahoma, Tennessee. In Tullahoma-in fact, in the entire area known as Middle Tennessee-getting a job at AEDC is the biggest game in town.
Founded soon after World War II, AEDC was so thoroughly modeled after German aircraft test facilities that initial designs even included a rathskeller. It has 40-year-old facilities, some of which are on a 24-hour-a-day duty cycle, 7 days a week, 365 days per year. Says one engineer: "We have electric motors and other equipment from World War II Germany still operating that are more than half a century old. We just rebuild them and rework them."
At AEDC, the employees test solid and liquid fueled rocket motors. They test the Peace Keeper, Minute Man, and Trident missiles. They operate wind tunnels, hyperballistic ranges, impact ranges, and arc heaters for ablation testing. They do environmental space simulation and wind tunnel design. They also do flight dynamics testing of aircraft at subsonic, transonic, and supersonic speeds.
They wrestle with the usual Environmental Pollution Agency issues of being an industrial-type plant using PCBs and cleaning fluids-ethyl chloride-plus the dangerous potentials of solid rocket fuels, the joys of corrosive, toxic, hypergolic liquid fuels, and the explosive uncertainty of what is tactfully called "uncontrolled combustion." Production, reliability, and aging equipment are problems.
Not just the equipment is old, cantankerous, and volatile at AEDC. The base is still staffed by many of the original workers. The first employee, a chauffeur for General Arnold, only recently retired and still appears at parties. By now, though, there are second and third generation employees. Entire families work at AEDC-one spouse working on the government side and the other on the contractor side. Of the approximately 3,400 people on the base, less than 300 are Air Force military and civilian personnel. The other 3,100 are local civilians on contract, which represents the majority of the working population of Tullahoma's 16,000-plus population.
Far from being a happy family, in 1991 the place was rife with disputes that rivaled the Hatfields and the McCoys for acrimony. A union/management battle was raging that included acts of vandalism. Even when things ran calmly, fragmentation problems were endemic, and cooperation and communication lacking. Things came together only on the commander's desk. Even within the Air Force, once it got out of the commander's office it was "mine" and "yours." There is a name for this type of complete compartmentalization: stovepiping. People ignored the work of the person at the next desk and the impact that their decision was going to have on the project that the person next door was working on.
In 1991, with peace breaking out all over the world and war business dropping off, the U.S. Congress said that the game for AEDC was going to face amputation through drastic cutbacks-a 30% to 40% budget cut.
Not that things had been in such great shape before that news arrived.
The base and all its varietal problems was about to be transferred to its new Commander: Colonel William Rutley.
With multiple advanced engineering and business degrees, he had started out flying as an F-4 crewmember back in the Vietnam days and had grown into a specialist in project management, orchestrating complex teams for operations, planning, research, development, and production of complex weapon systems. Most recently, he had been the Director of the F-16 International Program where he headed developing, delivering, and supporting airplanes to seventeen countries plus the United Nations.
Col. Bill elaborated on the situation. "The F-16 work was wild and wonderful. Some of the program participants are normally very hostile to each other, like the Greeks and Turks, the Egyptians and Israelis, and the Japanese and Koreans. We had to work very hard at understanding cultures and figuring ways to get people together into a common place to get things done. So it was quite fascinating."
The brass decided that a guy who had done just fine dealing with centuries-long enmities like Greece and Turkey, or Japan and Korea, was the right one to handle difficulties at Arnold.
John Poparad, Program Director of OAO Corporation, observes: "You will never meet another guy like Col. Rutley. He is an outstanding leader. He runs a very disciplined military organization. Rutley was an equal opportunity order-giver; he didn't care if you were contractor, civilian, or military."
Col. Bill quickly evaluated the situation:
When I arrived there, I was briefed by everyone in the place. A lot of Total Quality Management and other good things were happening.
But there was a general belief in a continued downsizing into less activity and fewer people. An analysis revealed we were on a downhill slide. Either we had to accept this as inevitable and for the public good-the public having decided they wanted less of us. Then perhaps that would be how we would go-a way to fade away gracefully.
The other alternative was to offer a higher level of good to our customers and the nation. It was also obvious that our activities were too scattered, and there was really not enough identity-building being done.
Col. Bill had substantial personal control of AEDC-more than the typical corporate CEO. He could operate autonomously as long as he got things done, and he answered only to one person in the Air Force, a four-star general. He could ignore anyone else if he wanted to. He didn't.
His challenge to AEDC was "What will the situation be at AEDC after the year 2000?" Col. Bill recalls the reluctant response:
We had dialogue on that. First, they said, we are too busy. It's hard to take time off from doing the work to pay attention to this question.
I said that we were going to have to decide what we were going to be in forty years. We were going to have a tough time doing that while at the same time we were trying to serve our customers every day. But we were going to do it.
Second, we did not have anything that resembled a change agent. I said I wanted to bring in someone who didn't know us, but who could understand us and partner with us.
Until now AEDC's change agents had been consultants who came in once per year and did surveys. That was of very little value and the changes were minor. As part of my Master's degree, I had done work on organizational change. I realized that intensity and long-term involvement were critical.
I had longitudinal data on the impact of brief consulting visits, and had said to my base commander, "You need to stop this. You are wasting time and money. You look at the written comments on each survey, the drop-off in the surveys, the indicators. You are hurting the organization more than helping it when other people are not involved or committed. Get a consultant to come in and do it right or not at all." They were only spending $25,000 per year. This consultant comes in and does a couple of seminars with a few people and then we sent out a survey. I suggested they just stop it, and they did. It would be better to spend $100,000 and get some intensity. I said they should just figure out what they want to be and go get that done-make a commitment.
But Col. Bill found that there was one type of short-term consulting work that had achieved interesting results prior to his arrival. In January 1991, based on a personal recommendation, an AEDC group had gone down to Orlando to an MG Taylor management center and spent three days creating a strategic plan.
The plan got all kinds of accolades. It looked like a neat plan. I asked what they had done with it, and they said "absolutely zero."
Col. Bill's predecessor had said to the staff, "Now, here's the plan. Let's go get it done." But, there was no follow-up. To Col. Bill, it was clear why the plan had not produced results:
First of all, AEDC didn't change anything when they came back. They tried to stuff a square peg in a round hole. If we're going to do something like this we needed to change the whole organization by constant association with a certain level of intensity.
I went through a complete study of the whole DesignShop process. I came back and said, "I think this has value." It was a combination I had never seen before. I had seen consultants who were good in areas, but I had never seen anyone who could assemble the architecture, light, music, sound, models, learning, iteration, food - everything. They have taken Drucker's ideas and a number of other folks' ideas on similar things and gotten them to coalesce. They are very good at that. I had never seen anyone assemble all that in that way.
I felt it had utility, but we would need a long-term commitment from our organization. We had to have a series of engagements over a full two years. We laid out a series of DesignShops every ninety days and started a broad base of participation.
One of the folks at AEDC said, "Why can't we do this ourselves?" I said that my reading and experience tells me that would be an exercise in frustration. The facilitator is a professional change agent. If you are a facilitator working from the inside, you are no longer a change agent. You really need someone from the outside.
Another said "They don't know us." I said that was the very reason I wanted them. I did not want them to know us. I wanted them to start out with a blank sheet of paper, and what they knew about renewal and transformation, and as we work with them together as partners we will both have more that will emerge. It worked beautifully.
MG Taylor was brought in to help AEDC transform. When they led participants through the center's first DesignShop session, there was no team, just factions. All the stakeholders were present-the customers, union members, labor leaders, management, contract civilians, Air Force-and it was not a happy crowd.
Some employees were apprehensive, thinking that closing or downsizing AEDC was a certainty. These folks walked in the door to the first DesignShop event with the certain belief that they were going to downsize. If the seminar or conference or workshop they were attending could offer any assistance, many felt, it was going to help them decide where to make the cuts and, perhaps, how to do them as humanely as possible. Maybe it would help those present be the ones to hang on to their jobs. By their own description, they were frozen "in the defensive crouch position."
Doug Cantrell, who in 1991 was staff manager for a bogglingly complex range of technical support services at AEDC, had been wrestling with the lack of vision in his daily work. He now saw the same problem among the incoming DesignShop participants. Charged with defining and instituting Total Quality Management (TQM), Doug said:
I saw there were things we were doing that did not make any sense. I was not sure what the real objectives were in the TQM effort. It was as if we were implementing some kind of program, but the object was to implement the program, not to get the results.
Going into the DesignShop session, everyone knew there wasn't enough business to keep AEDC going. We were thinking, "How in the world will we preserve the organization and institution?" There is often not a lot of vision beyond protecting the organization itself. People are thinking, "How do we protect the organization, hold on to the bodies, and budget?" Not, "What is the service we are expected to perform? What is it we are doing now, and what is it we are going to need to do out here in the future?"
Others coming into the DesignShop thought no problems existed and that holding yet another meeting was a waste of time. One participant relates: "We were brought in, and people's attitude the first day was: We were ordered to be here, and we will sit through it." But that was all.
Customers and prospective customers were there, too, just as nervous and uncomfortable as everyone else. There were the government entities, such as the Air Force, and commercial folk such as Boeing, General Electric, Pratt & Whitney-all the big aircraft and rocket engine builders sitting in the same room with their competition. In the beginning, they sat in little clumps-all the GE guys together, all the Pratt & Whitney guys together-with lots of distance between them and the competition. Col. Bill described the scene:
The commercial customers wanted to go off and have personal breakouts so they could talk about this. It made them nervous-the adversarial issues and vulnerability. Pratt & Whitney was having a tough time trying to put things out on the table. When we originally had suggested that GE was going to show up, they really hit the ceiling."
Every time a touchy issue was raised-and there were lots of touchy issues-the room would erupt into a mass of little football huddles. Union guys whispered to union guys. Contractor management whispered with other contractor management guys.
John Poparad explained: "On the Meyers/Briggs inventory of cognitive types, 98% of the people at AEDC are Sensory-Thinking types: action-oriented individuals. They love to go from data to decision with little thinking in between: 'Don't slow me down because I have things to do.'"
Colonel Bill puts it even more bluntly:
In the Air Force, it is even worse. We are trained to attack. If there is a problem, kill it. Instead of looking at things from seven angles, the attitude is to blow it away and not think about it.
You have to fight that, and it frustrates people, especially some of the young officers. They come up and say, "Let's make a decision. Tell us what you want us to do, and we will go do it."
I tell them that I will not tell them what to do. The fact is I don't know the answers to all the problems, and that is why we are here. I tell them I will sit with them and work it out, but I will not tell them the answers. They want the old command and control-'Hop To lt, Major.' Most of the guys who did business that way are not here any more. I do not know all of the answers. I am not sure I know the right questions. I am still forming the problem.
They get frustrated and will ask why they have to talk about something they talked about yesterday. The facilitator will tell them, "You talked about it for one hour yesterday, and you have to go back to it." They don't want to define the problem; they want to decide what the solution is. Having a decision done and made is where humans are comfortable. That is where they want to go, whether or not it is appropriate.
The discomfort attending Scan-the fog of uncertainty, the ambiguity and paradoxes-causes anxiety that makes people yearn for a decision, any decision, as long as it puts an end to that uncomfortable feeling. John Poparad describes how people repeatedly drove toward premature closure:
During the DesignShop process, people would drive to decisions, and Rutley would get up and say, "No." This was much to the frustration of the group. Rutley said his purpose was to keep us uncomfortable, because in that way we could have a chance to make changes. As long as we were comfortable doing things the old way, we would not change.
And then, to make it worse, there were the AEDC staffers assigned to work during the event. Yes, MG Taylor brought an experienced team with them, but the support team for DesignShop sessions normally includes personnel from the sponsoring organization.
Michael .Kaufman, a specialist in the Deming Management Method, "Learning How to Learn" models, and the MG Taylor DesignShop process, was part of the MG Taylor staff who worked with AEDC from the start. Michael recounts the experience:
There were horror stories from the beginning. Fifteen to twenty AEDC people were told-ordered-to come to be knowledge worker staff with us. None of them really wanted to be there. They hated the whole thing.
You can ask Frances Gillard, who later became a permanent staffer of AEDC's management facility offering DesignShop capability on a daily basis. She remembers hearing about me: that I was a big ogre-a terrible person to work with.
The whole DesignShop experience was so contrary to the past experience of the people at AEDC. The fact that we asked them to stay beyond five o'clock in the evening was a problem. The facilitation team works until midnight or whatever is required for success. At 5:01 it was too much for them.
None of these people seemed to realize that they were all in the AEDC boat together-and that the boat was sinking. Granted, there were some people who thought that "your end of the boat is sinking," but that was as far as it got. The only common experience they were having so far was, with the exception of Colonel Rutley, no one wanted to be there.
DesignShop events begin with two statements: one from the sponsor, one from the facilitator. Before the facilitator explains how the session will proceed, the sponsor-the hosting manager-explains what the group will focus on and why that is important. Col. Bill's plan for his message was to show them the abyss.
Like Covey, of The 7 Habits of Highly Effective People fame, I get a lot of things from movies. I was watching Wall Street, an interesting film about the junk bond traders. At the end of the film, the young guy had gotten into trouble and is about to be arrested for insider trading. A senior partner came into his office and told him there comes a time in your life when you walk to the edge of the abyss and stare in and nothing stares back. At that moment your character is defined, and this is what keeps you out of the abyss. That has stayed with me for a long time.
A force like that is a catalyst for change. I used that as a metaphor and said we had to walk this organization to the edge of the abyss and stare in. Especially those who think they are really nowhere near the edge of the abyss. At AEDC they thought they were doing pretty good. They knew there was this downsizing, but that did not look like an abyss. You are going to shed 25 people this year and 50 next. They are small numbers, and you don't add them up. But we look down into the black hole and define our character and what we want to beI like that.
I told them, "We are getting a signal from the customer and taxpayers that they don't want more of what we have been doing."
Dr. Keith Kushman, Chief of Plans and Requirements for AEDC, put it dryly: "It was unfortunate that it took being brought to our knees because of budget restraints to get our attention."
Says John Poparad: "Rutley is a guy who doesn't mess around."
The AEDC DesignShop event followed the sequence of Scan/Focus/Act. It's not hard to see that the Scan phase, tailored to the needs of AEDC, was desperately needed. They needed to learn what was going on in the outside environment and how their organization related to it. They needed to build the base of a common experience if they were going to be able to talk to each other, to trust each other, to work cooperatively for the good of AEDC, to jointly understand their past, to create a unified vision of the future.
Everyone learned surprising things during Scan. Ralph Graham, a strategic manager who works with Keith Kushman, talks about just how out of touch they were:
We couldn't even add up our assets. At that time we thought we had $3 billion in assets, and it was actually $6 billion.
Matt said to us, "If I had this industrial plant out here with these highly skilled people, I would not be in a crouch mode. I would be going out there and grabbing me something. It's out there, guys."
But it wasn't a message that people could hear easily. At this point, they couldn't see $6 billion in assets, and they couldn't see what Matt was pointing to "out there."
Jon Foley, working as part of the MG Taylor faciliation team, recalls when the perception of what was "out there" started to change:
At some point, there was an exercise with eight teams all working different assignments. Each team had an assignment to Backcast a successful alliance with an organization outside AEDC, such as Boeing. Their job was to describe why the alliance was a win-win situation, what obstacles had been encountered and how they were overcome, and what the historical development had been of this successful working relationship. They all entered this assignment and for the first half hour all you could hear was, "Man, this isn't real! What are we doing here wasting our time?"
About two hours into the assignment, we were hearing, "You know, these alliances have possibilities." By the time they were through with the assignment, they were engaged in the process, and they were so excited.
A shift was starting to take place, and the momentum kept building. Col. Bill:
We did an Inventions workshop where they take a pile of junk and have to make a fairly complicated invention. I love to watch their ingenuity. It blows them away every time. At first they are appalled.
First, you have the Type A's. Then you have the Tinkerers: they have already figured out how to attack the sucker, and they are ready to roll. We maliciously put the teams together to make the maximum chaos. I have never seen a team not engage. Some of them engage at a more trivial level than others or find ways to work around the instructions-which is innovative itself.
Basically, it is a great barrier breaker. It teaches them to play and the ability to use play is a constructive way to learn. When they walk out wondering why in the world they did that, they realize that it was really fun and they really did enjoy themselves, but they do not really realize what they learned. You would not realize unless you sit down and ask yourself why it is important. Some of them will come back and say later that they understand and suggest doing it again. It is great.
What is really cute is to stand there before and after the DesignShop and watch the participants. They will try to walk past the toys. Sooner or later they have to go play. You watch them-they start to play with the stuff. You can watch them work with the puzzles. They have the little rake and the sand, and they will sit there for half an hour doing that. They will make different things, stick their hands up the dinosaur's butt and make a little puppet. These are people who make fairly crucial decisions about the national defense. The fact is they are getting outside of the box. They are being kids again. The important part of being a kid is the ability to explore and extend.
You have to be an extraordinarily strong individual to keep the DesignShop process away from you for three days. I have seen people keep it away for one time, but the second time they will not make it. It just does not allow it. I love the way it produces chaos and keeps people off balance. It teaches our folks to not always anticipate a very rigid agenda. Not that they don't get stuck.
The first time you don't do anything. You get a piece of paper that says you will be there for three days, and don't bring a briefcase. It drives them nuts. They are not used to books and background papers-the military especially. I have seen workshops with a huge book, and there is no way you have read that. This creates chaos, and this is the way the world really is. Everything else is just constraining the real world.
I think the fact that in the very first day you get people off center and put them into groups is wonderful. It is a marvelous way to break barriers. It is hard to keep the barriers up when you are sitting on the floor or on a bench together with the VP of Pratt & Whitney. The barriers fell. I actually believed those barriers would not fall, but it happened within a relatively short period of time-within my time span at AEDC.
The DesignShop session turned to focus on the problem. Should AEDC fade gracefully away, or somehow reinvent itself? People were now capable of focusing on the issue in a way that simply hadn't been possible when they first walked in the door. They had moved past both the denial that AEDC had problems and the fear-based focus on saving their own jobs.
Eventually, we said there was a choice. AEDC was an over six-billion dollar investment. We could close down and let the work go out to the commercial world and NASA-throwing away the enormous assets of AEDC-or we could offer a value-added alternative that is better than the other alternatives.
We started to ask, is death of the base the pre-determined end? We decided the only answer that was rational to us was to create a higher order path. We looked at the original charter and asked, "Why was AEDC created over forty years ago?"
What they had to do was discover themselves, their mission, and a reason for being. It turned out to be a voyage of rediscovery. The answer was there in the charter, and also in the memories of the original employees who first created AEDC.
General Hap Arnold had come back after World War II vowing that the United States would never again be caught behind the technological curve as it had with German air superiority. He had been faced with fighting an air war in Germany in which the Messerschmidt 262, a jet engine-driven aircraft, and the rocket-driven 163 aircraft began to attack his bombers. He did not have the technological advantage. He had the quantitative advantage, but it was an unpleasant situation to have to deal with. His feeling was that never again should the U.S. be in a position where the technology of the opposition was greater than ours.
A team of aerospace notables such as Theodore von Karmen from Jet Propulsion Lab joined Arnold to return to Europe to look at the German facilities. The story is told that their recommendation to establish a special U.S. center was written in the airplane flying back home across the Atlantic. The base, named after General Arnold, was created by two special Acts of Congress to serve as a national economic and technological asset in fulfillment of Arnold's goal, contributing to the security of the nation.
Through time, the vision had faded. Col. Bill explains:
Over the decades, the base's work had become narrower and narrower, until it was pretty much only doing Air Force work. But, we said, that was not what it was created for! It was created for national defense work. AEDC was created as a center of excellence and as a national facility. A national facility, not just an Air Force facility.
Coming out of World War II, the generation of aeronautical technology and national defense had been essentially the same thing; almost everything came out of the fighting. But over time, commercial and military aviation got going on parallel but separate tracks. Aeronautical technology was no longer solely a military province. And although administered by the Air Force, AEDC was supposed to be an independent entity.
According to Ralph Graham, "The DesignShop experience broke our paradigm-that we were part of the Air Force-and broke our paradigm that we were locked into doing only military testing. It changed to-we are self-sufficient. We can test military and commercial systems and must take action."
Keith Kushman explained, "We had to take action, become vision-driven. We had lost the vision. We restored it. It was compelling enough to cause us to want to go that way. I have to give a lot of credit to Matt as a facilitator, for shifting our attitude of how you live your life as a government employee at AEDC."
In a remarkably short time-"It worked much more rapidly than I expected," said Col. Bill-they had unified behind a common vision of the future. It went far beyond just providing a vision: "The original DesignShop sessions resulted in overall strategies, individual strategies, tactics, and the feedback of an interactive system."
But the problem of implementing the vision of an independent AEDC serving the national interest looked flatly impossible. There were still an enormous number of tactical problems that stood between the vision and AEDC's current situation as a government organization. Col. Bill:
We had to show American and international organizations that we could change and bring value to AEDC. We had to figure out what a real cost is and what a real business looks like. We had to prove that we could operate in a way that makes everybody a part, and not just be an Air Force operation.
The solution didn't come, though, without a lot of iteration on the problem. We went around and around. You don't get yourself jammed in a corner without there being multiple sides to the box.
Doug Cantrell, the quality expert, vividly remembers going around and around on this particular problem:
During early discussions and for a long time after, I noticed the question would be brought up about whether we could move into commercial testing. The next thing someone would say would be "constraints-we discourage commercial testing because of regulatory constraints. We are required to add outrageous surcharges to our prices for commercial companies."
Matt would say, "Well, what if that weren't the law?" and it was as if he had not said it. The conversation would go on, and later the subject would come up again.
It was as if they could not hear the question. It was as if we had equated social systems to physical systems. As if someone was proposing the law of gravity be changed. It never happens, so why think about it?
That is why the breaking of barriers and habits is so important. You have to break down the barriers, break the forms. You have to unleash your creativity by breaking down the forms you are used to.
The federal law, this fact of nature, had been a condition of life for AEDC from the beginning. Under the law, a government organization like AEDC was told how to schedule and charge customers. Military customers were to receive priority scheduling and bargain basement pricing. If the customer was another government agency or a commercial organization, their schedule could always be disrupted to accommodate the military customer. For a commercial customer, almost prohibitive rates were charged-twice the rates charged to a military customer.
How would it be possible to work with commercial companies if AEDC couldn't operate in a business-like manner? Col. Bill knew the extent of the problem:
We knew we had to figure a way to charge and work with commercial customers. We were not competitively priced, and the commercial customers were just not going to come. At NASA, a commercial customer can be charged either nothing or $1000 an hour to use a wind tunnel facility. This makes no sense at all.
Boeing told us that, say, if they needed to get into the wind tunnel on 17 April and be there for two weeks, that is what must happen. Hundreds of millions of dollars hang in the balance. NASA, as a provider of wind tunnel services, will say they might be able to fit Boeing in during April. On the other hand, it might be September. NASA is research-oriented, while AEDC is more production test-oriented. An organization like Boeing cannot stand the uncertainty. For basic aerodynamic research, Boeing could use NASA; for design decisions driving production, Boeing needed AEDC.
Under the law existing at the time, standard commercial practices-like giving someone a place on the schedule and then keeping the promised date, or charging all customers the same price-were not possible. Commercial customers were being charged so much that AEDC was non-competitive. In order to work with commercial customers fairly, either this federal law would have to be changedor AEDC would somehow need to move into a realm where this law didn't apply.
In a sense, AEDC was already in a realm of its own. Col. Bill elaborated: "AEDC was unique. It had been created by two specific laws. What was needed was a modification of the original 1949 arrangement. We wanted a fundamental change in how AEDC viewed itself as an asset and in how we priced our services. The old pricing rules were not letting AEDC fulfill its mission as a center for excellence and as a truly national facility."
There was only one problem with pursuing this change-it was illegal for AEDC itself to take steps to modify its own legal charter, its own pricing structure. AEDC and the Air Force officers who run the base cannot go to Congress to request changes, even if the changes were believed to be in the taxpayer's interest and for the good of the country. "Don't even think about it. We're all going to jail if you even think about it," the lawyers said.
But by now, the people thinking about AEDC were no longer just those within AEDC proper. All the stakeholders were participating in the DesignShop-existing military customers, potential commercial customers, suppliers, civilians-people who wanted to keep AEDC alive-people for whom it was not forbidden to think or act or talk to Congress about laws affecting AEDC. These folks held a one-day DesignShop session to figure out what kind of change was necessary in the AEDC charter, and launched the effort to get it made.
Watching from the sidelines, Col. Bill observed the reaction to the proposed changes for AEDC in pursuit of the higher-order good:
If you stay on the high road, people will cooperate. They will say, "Let me see. Do I want to see a $650 million propulsion test facility sit idle, go down the drain? Or should we sell time for whatever we can get, even if it means charging this commercial guy less than we have been? Why charge the commercial customer this artificially high price? Here is a guy who, if we give him reasonable pricing, will come in and spend $150 million per year with AEDC, plus pay to put in equipment test cells which could then also be used by others. Is it better for the American taxpayer to let the facility sit idle with its overhead being paid out every day?
Less than six months from the DesignShop session, an equitable pricing and access bill was signed into public law.
Col. Bill acted on his perception that intensity was needed to drive change. They created a "management center" at AEDC, an environment for DesignShop activities and other collaborative events. At this new Gossick Leadership Center, AEDC conducted scores of DesignShop sessions and other events-seventy in the first year of operations.
Colonel Bill describes the expansion:
The tactical action backed with strategy got more and more people involved in the Center at every level, down to where the work actually took place. We started to use the "management center" approach for everything down to negotiations-for everything. We took an incredible risk that could have blown up in our faces. In every case, we walked to the edge of the abyss and then walked away and found a better approach. It worked.
John Poparad was closely involved with using the DesignShop process and Management Center for a range of critical business issues at AEDC:
A lot of work starts in the DesignShop event and goes into work sessions afterward. Major alliances, strategic plans, big decisions-those are created in the DesignShop evemt and then followed up in work sessions.
The list of benefits that have come out of DesignShop events goes on and on: radically reduced testing times; early approval of the 777 engine for intercontinental flight, based on setting a world record for running an engine in a tunnel continuously for 52 hours; new, validation testing of icing on turbine engines; simulation of flight testing of engines on the aircraft in the wind tunnel.
Boeing, at one time, was looking very seriously at building their own wind tunnel. We had a DesignShop session to prepare to meet with the Boeing people. In our subsequent meeting they were surprised that we knew something about their business. They eventually decided, for various reasons, not to build a wind tunnel; now they are a commercial customer and an alliance partner.
Pratt & Whitney decided to take a chance with us, again through DesignShop activity. They test their engines here and had come to several DesignShop events. They decided to take the risk of developing the commercial 4084 engine series at AEDC. They signed an alliance with AEDC to do all of the development work-outside of that done in their own good test facilities-for this engine, and for the 4000 engine family at AEDC. You are talking about up to twenty years of work.
Col. Bill summarizes the bottom line:
I do not believe that AEDC would be where it is today-facing the future with a better understanding, using that understanding to change strategy and tactics-without the DesignShop process. I would hope that if the DesignShop process did not exist, I would have done other things to try to help that, but this was beyond belief.
The process as it has evolved in the last four years-and I think it will continue to evolve-gives the freedom to put people at ease and to let down the barriers, build trust, and expect trust to be there. Nothing has a guarantee. The bottom line is-it works.
The bottom line for AEDC is $750 million dollars in business added for the next twenty years. A loss of government funds was compensated by a gain in commercial funds.
There are the tens of millions of dollars that came from commercial contractors for facilities, such as the $10 million from Pratt & Whitney for the big propulsion test cell used to test the GE, Rolls Royce, and Pratt & Whitney engines for the Boeing 777. These engines could not be tested without specific hardware. Pratt & Whitney paid $10 million of their own money to put that hardware in there, at no cost to the American taxpayer. Rolls Royce and GE have used it, and paid Pratt some to cover their costs. The net result is that the U.S. government gets it free.
That kind of alliance and partnership were really pioneered at AEDC. We can do these things together if we change.
Other partnerships have also developed. Boeing said they were not in the technology development business, but in product development and production. Technology development is what AEDC was built to do. We started to work as a team.
We got other results from change and working together. Like having the Navy come on board, not just to do their testing but as a full partner.
We got rid of the NASA versus AEDC hostility. There were things we sent people to NASA to do because they had time and were better suited to do it at that point. And they were sending people to us. We also made NASA a partner because AEDC is production-oriented; NASA is laboratory-oriented. It was helpful to all of the customers-both military and civilian-not to be in the middle of hostility anymore. NASA and AEDC are natural partners.
Where is AEDC today as a result of this work? Col. Bill:
AEDC is not even close to where they were four years ago. I used to have a chemistry teacher who would come in with a beaker of very, very heavy liquid and throw one crystal in there, and crystals would be shooting up all over the place and in a matter of seconds the thing would go solid. That is what it is like at AEDC. You get fifty people here, plus ten there, five here and it spreads rapidly. AEDC, in a very short period of time, was engulfed by a very different way of thinking and feeling. And the culture of AEDC suddenly took a leap forward into the 21st century.
Using this process, I have seen people change dramatically in how they do business and react to situations. I don't think they are aware that they have changed. I have watched people who were extremely rigid become much more flexible, perceptive-more effective leaders.
I have watched some people change tremendously-people who had been in the civil service for a lot of years at one place-they changed a great deal in just twenty-two months. Their productivity is up; they felt better about things; they became proactive; they had a much more dynamic, rich view of what was going on. Our rate of innovation was clearly up. We were getting inundated with good ideas.
John Poparad's work had been strongly affected by the frictions and the endemic stovepiping:
I believe that Rutley used the DesignShop methods to work on the stovepiping problem. Matt did a vision/empowering thing where everyone knew what everyone else was up to, because of what was happening in the DesignShop sessions. He held them accountable. By going through the DesignShop process, you got to know each other. If I have worked with someone for three days in a DesignShop event and am now sitting next to him at a desk, it is harder to ignore him than it used to be. It's not so easy to 'slip it to' the person you've been working with in a DesignShop event. Now people could call each other up and talk, and call each other by first name.
Col. Bill evaluates the degree of change:
The stovepiping is still there to some degree. We had to really drive home the "Team AEDC" concept as the higher-order good.
I saw some amusing things. You can tell a lot by watching the number and types of complaints people make. The vice commander came to me about a year after we instituted the complaint system and said, "I don't know if we are doing this right, but the complaint system has gone dead."
It turned out that a lot of the trivial things people had been complaining about still hadn't been fixed. But with the DesignShop process, we found something that worked. They were engaged in something they felt was important. They were involved. There was activity and suddenly minor things-like a pothole, the grass, or a light bulb-were not important. Complaints just dropped off the face of the earth. I would still get a complaint here and there as I walked around getting input. But 3,500 people and only one or two complaints...this was a major change and a major signal.
I really love people and put them first above all else. That is what I care about. I feel my job is to turn them loose.
Within less than twenty-two months, all I had to do was work the environment, focus on people, help them grow, and stand back and unbelievable things happened. That is true. Unbelievable things happened. I wish I could take credit for some of the things they did-like going off and forming these alliances, not taking "no" for an answer, and creating a law. They did all of that themselves. I merely created an environment that allowed that to take place.
DesignShop techniques weren't the only management tool Col. Bill brought to bear. He continued the Total Quality Management, Covey's 7 Habits of Highly Effective People, and expanded the selection even further. Col. Bill:
Our toolkit contained many tools to meet the overall requirement for change and renewal of the organization. We used Covey, which we thought was underpinning the foundational things. We used reengineering- good stuff but with limits. Juran's stuff is excellent. Lots of TQM was productive.
All these tools were synergistic-none replacing the others and in some cases dovetailing and overlapping. I would argue that the success was all of it together.
The fact is that not any single tool will do everything. Although for this process, if I had to drop every other tool but one, the DesignShop process would be the one I would keep. I would dump all of the rest. I can reengineer through it. I can drive the TQM through it. I can drive the Juran, drive education, cultural evolution-all those things through the DesignShop process.
We consciously drove all our management methods using the DesignShop process. People began to see the connections. They would say they understood how this would help them in their quality circles. Covey gave me some personal growth and principles that I can operate with whether I am in quality circles, working with reengineering or TQM, or in a DesignShop activity, or am on my immediate work team. All of that seems to gather together into a nice synergistic system.
Now the challenge to the Leadership Center is to figure out what's next for AEDC in using the DesignShop processes. They overdid it and got through the first five years' work in two years. Everyone thought it was going to be a long two years. It was incredible. I wanted to stay another year. I hated leaving the place.
However difficult it may have been to hammer home the Team AEDC concept back at the beginning, Team AEDC came together during Col. Bill's stay. By the time of the Wharton DesignShop event, he had moved on to the F-15 program, but AEDC is still strong, seamless, and flourishing. The dynamics were obvious when watching the participants from AEDC at the Wharton DesignShop session.
Individually, AEDC folks were among the most active, effective, and insightful at the Wharton event. The contrast between AEDCers and first-time attendees was most obvious during the first and second days. Even comparing them to the management consultants and business school professors who participated, the AEDC personnel walked in the door more mentally "in shape," more creative, mentally nimble, and accustomed to using a larger and more sophisticated mental toolkit.
Later, when participants broke into groups to focus on each company's individual challenge, AEDC teamwork had the kind of passion, energy, and intelligence that made them a brainstorming DreamTeam. A facilitator pointed out two participants, both working intensely on AEDC problem solving. One was the new contractor who had just won a bid for some AEDC work; he was learning how to become a part of AEDC. Sitting beside him-and working just as enthusiastically-was the previous contractor who had lost the bid and was being replaced. He was still a member of Team AEDC, still committed to its success.
Now, as the next exercises of the Scan started, the AEDCers were distributed throughout the workgroups, sharing their mental skills and knowledge of collaborative work with the rest of the participants.
1. Diagram, list, or describe your impressions and questions after reading the AEDC story. Describe the key elements involved in the success of the transformation process.
2. Sometimes we need to make clear what we know and what we know we don't know. Imagine employing the key elements you just described in your business or other personal situation. Now, for each element, what do you know about delivering it, and what do you know that you don't know. One DesignShop axiom reads: Discovering that you don't know something is the first step to knowing it. You may wish to refer back to previous challenges to increase your list. Recall that in each challenge you were asked to record any questions that you had. These questions help define things that you know you don't know.
3. Develop some ideas for tackling your areas of potential learning. Chances are these areas can be chunked into groups or systems that will reinforce and relate to one another as you proceed.