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DPI Client Interview
Walt Havenstein, President
Information and Electronic Warfare Systems
BAE SYSTEMS North America

	Walt Havenstein, President Information and Electronic Warfare Systems BAE SYSTEMS North America

The most technologically sophisticated fighter plane ever built, the F/A-22 Raptor, is now rolling off the production line. This " stealth" aircraft gives U.S. fighter pilots unprecedented offensive and defensive capabilities. Offensively, it is the first fighter to provide pilots with "first look, first shot, first kill" -- a combination that ensures air dominance and survivability. It also has an exceptionally acute sensing system that warns of potential threats, enabling the pilot to take defensive actions. Its unique self-protection system is being designed and built by a Nashua, New Hampshire-based company called Information and Electronic Warfare Systems. The business unit accounts for nearly a third of BAE SYSTEMS North America’s $3.7 billion in annual sales.

IEWS, as it is called, is headed by Walt Havenstein, a former Marine and President of the business unit. IEWS develops and manufactures systems such as electronic jammers and acoustic countermeasures, radar warning receivers, laser warning systems, space electronics, and other sensor-based systems that give air, land, and sea forces a distinct advantage in combat situations. It is these products that, as the company's motto pledges, "Protect Those Who Protect Us."

When Havenstein became President several years ago, he joined a company with undisputed technological proficiency. Yet he sensed that the company, with its many different businesses, lacked focus and that this could be causing resources to be spread too thin. To resolve this strategic uncertainty he decided to take his key managers through DPI's Strategic Thinking Process.

"The whole purpose of Strategic Thinking for us was really to facilitate understanding of our strategy. Our company environment had many products with a common technology base, but they weren't focused into particular lines of business, nor was there any prioritization across them.

"The company is fifty-one years old. It evolved over those years into 'stove pipes' both operationally and strategically. The Strategic Thinking Process helped align everybody's understanding of the markets we serve, our unique and relative strengths and weaknesses in those markets, and then to come to a realization as to where our focus should be going forward. Ultimately it helped us to simplify what was a very, very complex operating environment.

"That understanding assured that when I set the strategic course of the enterprise, it would be understood why we were going in that direction. There may not have been total agreement but there was understanding. I'm not a believer in consensus management in the sense that everybody has to be happy. But I certainly expect feedback and expect people to have their own opinions."

DPI Partner George Spiva facilitated the process at IEWS. In describing the need for a skilled objective facilitator, Havenstein says, "The facilitator, for one thing, keeps the process from being dominated by the most senior people. You've got to be careful about that. I equate it to the story about a Marine general's visit to a military base. He's just arrived and as his jeep is approaching headquarters, he notices a fire hydrant near the flagpole. He says offhandedly, 'Gee, that's a funny place for a fire hydrant.' The next morning he looks out the window and there are twenty Marines out there moving the hydrant, and that's not what he intended at all. So you have to be careful not to overwhelm the process. The facilitator is there to assure that every voice is heard. We operate under the theory that everybody's opinion is valid. That gives you valid information to create the understanding. George kept the process pure."

"The Strategic Thinking Process helped align everybody’s understanding."

As the top management team proceeded through the Strategic Thinking process, participants were able to systematically examine every aspect of the business -- products, markets, technologies, competitors, strengths, and weaknesses. This self-analysis enabled the individuals in the group to gain a deep understanding of how the company was generating and deploying resources, and how the configuration had evolved over many years. Armed with this knowledge, they were then able to look to the future, and determine the Driving Force and Business Concept that would make the most of those resources, taking them to the next level of technological and financial performance.

As they looked at the various Driving Force choices, three possibilities rose to the top -- Market, Product, and Technology/Know-how. Under the first scenario, they would serve a wide range of needs of their market, however they chose to define it, broadening the scope of products they would offer to its clientele across several military and commercial markets. In the Product-driven mode, they would produce a specific set of products, each a direct genetic extension of the last, thus limiting their product scope. The third, however, won out in the end.

"We played out the different scenarios," says Havenstein. "We kept asking the hard questions, looking at our history, and more importantly at our 'future strategic sandbox,' as George would call it. How did we want to expand our role in the future sandbox? It became pretty evident, and our people quickly understood, that the real Driving Force behind the enterprise is the Technology base -- our Know-How. Once we completed the process, I don't think the other Driving Forces were even an option. What drove us to that decision was not only our legacy, but the realization that in the market we serve our technology is really what differentiates us. It's a unique strength, not a relative strength. It enables us to avoid a 'me-too' scenario in the future. By being Technology/Know-How driven, we know we will bring something different to our customers than what we see in the rest of the marketplace."

From that understanding, the process participants constructed a concise Business Concept that would guide their future decisions on products, customers, markets and resource allocation.

"Our Business Concept is formed around what we believe is our world class understanding of electromagnetic phenomenology and signal processing," Havenstein explains.

The resulting Strategic Filter led IEWS to completely review its business portfolio, deciding on areas of the business that would be emphasized and de-emphasized. They divested a business that was focused on commercial electronics and reduced investments in certain components that were clearly "less emphasis" areas of the enterprise.

"We stopped investing in some commercial activities, and even some military product lines," Havenstein explains. "They just didn't play to our technological strengths. We also made an organizational change. We elevated our advanced systems and technology organization up to the senior leadership ranks of the enterprise, under a chief technology officer. The chief technology officer is a direct report to me and he's responsible for advancing the technology that is critical to enabling and discriminating each of our lines of business -- often common technologies that can be used for different products and purposes across several business areas."

These decisions have allowed the company to redeploy resources to more effectively nurture the development of its core technologies and the advanced new products they make possible.

Indeed, this singular focus has enabled IEWS to gain a clear lead in the technological sandbox in which they participate. One significant outcome is that IEWS was selected as the supplier of electronic warfare systems for two of the highest-tech warplanes ever built.

"We were selected as a supplier to the F/A-22 Raptor Fighter and the Joint Strike Fighter, the F-35," Havenstein states. "So we are the electronic warfare systems provider for the world's most advanced fighters. We were chosen as the supplier for both teams competing to build the F-35. The fact that we were selected by both teams was clearly based on our unique technology.

"That's the kind of strategic situation you want to create -- where you are clearly leading. We want our customers to understand that when they want solutions in information-based warfare, electronic warfare and electronic protection, when they need sophisticated solutions to sophisticated problems, then we're the people they should come to see."

A Culture of Strategic Thinking

Walt Havenstein had used the Strategic Thinking Process before joining BAE SYSTEMS -- experiences that had shown him how unified thinking can maximize an organization's effectiveness as a world class competitor. As a result, he has come to view Strategic Thinking as an essential element of managing a company.

"I'm a three-time participant in the DPI process," Havenstein explains. "We used it at two other companies before I came to BAE SYSTEMS and now we're using it here. I'm a believer in the Strategic Thinking approach. I'm a believer in having a common sense vocabulary, and I think the results are evident.

"It gives people a sense of direction. In a short time, our strategy and Strategic Thinking itself have been institutionalized across the enterprise. That makes our job in managing and leading the business much easier. There is less debate throughout the year as to the important priorities for the company. That's all settled early on in the Strategic Thinking Process, so you're not constantly asked to make strategic decisions. Provided there aren't significant changes, the business tends to flow pretty smoothly. I think that's the most important thing. Everyone gains a clear understanding of where the business is going. That, in turn, impacts the level of precision you can achieve in allocating discretionary resources.

"That’s the kind of strategic situation you want to create – where you are clearly leading."

"As for Critical Issues that arise from the process, we just tee them up as items that we assign action and closure to, and then we look at them regularly as a leadership team to ensure we're making progress on them. This fundamentally lays out the framework from which we establish our goals and objectives at the top of the company. We have what we call our Top Ten List. We establish the top ten objectives for the enterprise, and each one of my direct reports has a similar list for their part of the business. We spend a lot of time getting those aligned, and they're all driven as a result of Strategic Thinking."

Because the business environment is dynamic, each year the IEWS team goes through a "strategy refresher," using the process to reassess its strategic situation. The conclusions reached in those sessions then provide the basis for the year's planning. If, in the course of the year, a major change takes place in their environment, a segment of the process is used to determine if any adjustments should take place.

Havenstein explains, "We use the Strategic Thinking Process annually in advance of our normal strategic planning to allow me to issue what I call 'commander's guidance' to the business area leaders. We have seven lines of business managed by vice presidents, as well as the functional vice presidents across the enterprise. So, as we go into strategic planning, I issue commander's guidance that says, 'Here's what I expect to see in the strategic plan.'

"If we then have what we refer to as a 'strategic inflection point' either caused by technology or caused by changes in market conditions -- September 11^th is a good example -- then we run what I call a "mini" Phase 5 and re-look at all the critical Strategic Thinking elements. 'What is happening in the marketplace? What is happening relative to our customers? What is happening relative to our competition? What is happening relative to our Driving Force? What has happened in terms of our relative and unique strengths and weaknesses? Are there any changes in emphasis that we need to make? Should there be any change in the Strategic Filter?'

"It just gives you a ready template for quick assessments of strategic inflections. There are strategic initiatives that come out of these sessions but, by and large in the last three years at IEWS, we haven't had to make big rudder changes. I think our last annual Strategic Thinking session resulted in probably an 80 percent solution. We tend to work on the other 20 percent across the course of the year, as we deal with the different levels of strategic issues."

To assure that Strategic Thinking is perpetuated throughout the organization, Havenstein has introduced the key concepts for promising managers coming up through the ranks. The segment is part of a 'management boot camp' called the North American Leadership Development Program.

Havenstein says the NALDP program "typically involves people who are five to ten years into their careers. It's an eighteen-month program for selected people -- high potential managers, future leaders. We've just started a pilot program this year. Among other things it will involve understanding the concept of Strategic Thinking -- getting exposed to the vocabulary, going through a couple of exercises. We want to expose them to this so that when they do get involved in the process as they assume more senior leadership roles, they'll recognize the need for, and methodology of, Strategic Thinking.

"We've also rolled down the idea of Strategic Thinking to all the directors at IEWS, so we probably have about 125 people that have been exposed to the full process or at least introduced to the vocabulary and ideas around Strategic Thinking.

"It's important that when we talk Driving Force, everyone understands the relevance of a Driving Force. When we talk more or less emphasis, people need to understand what more or less emphasis means. When we talk Strategic Filters, everybody understands the value of the Strategic Filter and how it manifests itself at the different levels within the business unit. And when we talk about the Business Concept, there is a common understanding of the Business Concept. What you see is that, everywhere in the organization, people become familiar with the vocabulary. They start to express themselves in terms which contribute to a common understanding."

A high level of focus throughout the organization has also led to excellent performance. Says Havenstein, "The business is growing. The last two years have been record years for getting orders. This year will be another record setting year -- and that's the bottom line."

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