1. The Defense Logistics Agency Leveraging Corporate Culture To Improve Bottom-Line Performance DoD’s ONLY Logistics Combat Support Agency... Supporting the Military Services & Combatant Commanders for Over 40 Years

2. Scope of Business ●#78 Fortune 500 - Above Lockheed Martin ●Tops in Top 50 Distribution Warehouses ●1312 Weapon Systems Supported ●132.3M Annual Net Barrels Fuel Sold ●$13.5B Annual Reutilizations/Disposals ●23.3M Annual Receipts & Issues ●22 Distribution Depots ●4,000 Contracts/Day ●30,000 Requisitions/Day People ●21,000 Civilians ●488 Active Duty Military ●618 Reserve Military ●Located in 48 States/28 Countries Foreign Military Sales ●Sales: $719M annually ●Shipments: 670M annually ●Supporting 24 Nations FY02 Sales/Services: $21.5B FY03 Sales/Services: $24B (est) ●Supply: $18.7B Annually ●Land/Maritime/Missiles: $2.3B ●Aviation: $2.7B ●Troop Support: $7.8B ●Energy: $5.9B ●Distribution: $1.4B ●Other: $1.4B The DLA Enterprise

3. Defense Logistics Agency Defense Reutilization & Marketing Service Defense Automation & Production Service Defense National Stockpile Center Defense Logistics Information Service DLA Pacific DLA Europe DSC Columbus, OH - Maritime/ Land/ Missiles CORPORATE STAFF Defense Distribution Center, New Cumberland, PA Energy Support Center Ft Belvoir, VA DSC Richmond, VA - Aviation DSC Philadelphia, PA - Troop Support Other Service Areas Business Units

4. FY 04-09 Characteristics: Light and Agile Smaller Footprint Knowledge Based Integrated Processes Service Oriented Collaboration with Customers Proactive Transformation Plan: Business Systems Modernization Strategic Distribution Competitive Sourcing Shift to Commercial Practices What We Want DLA To Be Tomorrow…

5. Business Systems Modernization Incorporating Commercial and Best Practices Via Commercial off-the-Shelf (COTS) Based Tools Replacing 30-year old Legacy Information System with State of the Art Technologies Major Reengineering Effort … From Functionally Stove-Piped Segments to Cross-Cutting Enterprise-Wide Processes Projected FY 04-09 Savings = $399M

6. Why Worry about Culture?

7. Culture As A Barrier Culture can be a major barrier to the implementation of an organization’s strategic objectives

8. Ignoring the underlying cultural foundations means that the same old patterns will continue to show up

9. PMA, OMB & OPM Integrate Culture into Performance Goals President’s Management Agenda -- Strategic Management of Human Capital initiative integrates aspects of culture. Office of Management and Budget (OMB) Scorecard -- Government needs to Sustain High-Performing Workforce that is Continually Improving Productivity. Office of Personnel Management (OPM) Scorecard -- Performance Goals:  Agency Fosters a Climate that Values Diversity.  A Culture of Learning and Growth Exists.  Strategic Awareness.

10. What is Culture ?

11. Culture: A Definition The shared set of assumptions, beliefs, values, and behavioral patterns of a group that guide that group’s perceptions, judgments, and actions

12. is like the operating system of the organization. It guides what people think and how they act and feelCulture

13. Culture is not just an espoused list of values developed by a group of executives at an offsite just an espoused list of values developed by a group of executives at an offsite The IDEAL you desire may be very different from the REALITY you live The IDEAL you desire may be very different from the REALITY you live Kumbaya

14. LEVELS OF CULTURE FROM TANGIBLE TO DEEPLY EMBEDDED AND UNCONSCIOUS  Artifacts—concrete, visible expressions and overt behavior patterns  Norms--behavioral expectations  Conscious, values, beliefs, assumptions and ideology  Unconscious values, beliefs, assumptions and ideology

15. How DLA is Addressing Culture First, we ensured Strategic Alignment:  Strategic Plan Goal 3: Create and Manage a Customer-Focused Corporate Culture  Balanced Scorecard: Learning and Growth Quadrant LG-2: Create and Manage a Customer-Focused Culture LG-2A: Leadership Assessment: Modeling the Desired Culture LG-2B: Employee Perceptions of the DLA Culture Second, we identified the desired aspect of corporate culture necessary to accomplish strategic goal (customer-focused). Finally, we assessed the current culture based on the desired culture and have “Culture Champions” conducting organization development activities to close gaps.

16. DLA adopted a performance-based culture model/assessment/360- degree leader feedback tool containing the desired aspects of culture necessary to accomplish its strategic goal of Creating and Managing a Customer-Focused Corporate Culture

17. Denison Culture Model

18. Objectively Measuring Culture

19.  Strategic Direction and Intent - Clear strategic intentions convey the organization's purpose, make it clear how everyone can contribute and "make their mark" in the industry.  This organization has a clear mission that gives meaning and direction to our work.  This organization has a long-term purpose and direction.  The strategic direction of this organization is unclear to me.  This organization has a clear strategy for the future.  Our organization's strategy is leading other firms to change the ways that they compete.

20.  Appointed Agency-/Activity-level “Culture Champions” helped publicize the desired aspects of culture and are helping their leaders to implement suggested action steps for tangible performance.  Transformation activities include organizational development and training needs necessary for culture change.

21. Cultures are Not Homogeneous Functional or Departmental Site Hierarchic Geographic/Regional Old/New Divisional

22. Culture and Leadership

23. “Culture and leadership are two sides of the same coin and neither can be understood by itself.” Edgar Schein Culture and Leadership

24.  Employees work together in teams  Employees are given a great deal of autonomy  Risk taking and creativity are encouraged  There is an atmosphere of trust  Change is embraced  Employee empowerment is high  Organization is customer-focused  Social relationships are encouraged  Procedures are flexible and informal What Senior Management Believes What Employees See

25. Involvement Commitment..Ownership..Responsibility Building human capability, ownership, and responsibility “Are our people aligned and engaged?“ Adaptability Patterns…Trends… Market Place Translating the demands of the business environment into action “Are we listening to the marketplace?” Mission Direction..Purpose..Blueprint Defining a meaningful long-term direction for the organization “Do we know where we are going?” Consistency Systems…Structures…Processes… Defining the values and systems that are the basis of a strong culture “Does our system create leverage?” Denison Leadership Model Every Leader Needs to Have Skills in These Four Areas! These Four Concepts are Used to Define Leadership Skills

26. When it comes to establishing or changing a culture the leader sets the tone When it comes to establishing or changing a culture the leader sets the tone