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
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.
Enter Colonel Rutley
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
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
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
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
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
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.
AEDC's First DesignShop Event:
Welcome to the Abyss
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
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
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
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
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
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
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,
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
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.
AEDC Decides to Live
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
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
Through time, the vision had faded. Col. Bill
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."
Creative Problem Solving: Getting Out of
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.
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
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
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
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.
DesignShop Sessions on a Daily Basis
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.
Results at AEDC
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.
More AEDC Results: The Mystery of the Missing
Where is AEDC today as a result of this work?
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
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 and Other Management
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.