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The Defense Logistics Agency

Leveraging Corporate Culture ToImprove Bottom-Line Performance

DoDs ONLY LogisticsCombat Support Agency . . .

Supportingthe Military Services &

Combatant Commanders forOver 40 Years

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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: $7.8BEnergy: $5.9B

Distribution: $1.4B

Other: $1.4B

The DLA Enterprise

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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

CenterFt Belvoir,

VA

DSC

Richmond,

VA -Aviation

DSC

Philadelphia,

PA -Troop

Support

Other Service Areas

Business Units

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FY 04-09

Characteristics:

Light and Agile

Smaller Footprint

Knowledge Based

Integrated Processes

Service Oriented

Collaboration with CustomersProactive

Transformation Plan:

Business Systems Modernization

Strategic Distribution

Competitive Sourcing

Shift to Commercial Practices

What We Want DLA To Be

Tomorrow

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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

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Why Worry about Culture?

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Culture As A Barrier

Culture can be a

major barrier to

theimplementation

of an

organizationsstrategic

objectives

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Ignoring theunderlying cultural

foundations means

that the same oldpatterns will

continue to showup

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PMA, OMB & OPM Integrate

Culture into Performance Goals

Presidents Management Agenda -- Strategic Managementof Human Capital initiative integrates aspects of culture.

Office of Management and Budget (OMB) Scorecard --Government needs toSustain High-Performing Workforcethat 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.

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What is Culture ?

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Culture: A Definition

The shared set of

assumptions, beliefs, values,

and behavioral patterns of agroup that guide that groups

perceptions, judgments, andactions

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is like the operating system of the

organization. It guides what people

think and how they act and feel

Culture

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Culture is not

just an espoused list of valuesdeveloped by a group of

executives

at an offsite

The IDEAL you desire

may be very different from the REALITY you live

Kumbaya

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LEVELS OF CULTUREFROM TANGIBLE TO DEEPLY EMBEDDED

AND UNCONSCIOUSArtifactsconcrete, visible expressions andovert behavior patterns

Norms--behavioral expectations

Conscious, values , beliefs , assumptions and

ideology

Unconscious values , beliefs, assumptions andideology

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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 QuadrantLG-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 desiredculture and have Culture Champions conducting

organization development activities to close gaps.

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DLA adopted a performance-basedculture model/assessment/360-

degree leader feedback tool

containing the desired aspects of

culture necessary to accomplish its

strategic goal of Creating andManaging a Customer-Focused

Corporate Culture

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Denison Culture Model

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Objectively Measuring Culture

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Strategic Direction and Intent - Clear strategic intentionsconvey the organization's purpose, make it clear how everyonecan contribute and "make their mark" in the industry.

This organization has a clear mission that gives meaning anddirection 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 theways that they compete.

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Appointed Agency-/Activity-level Culture

Champions helped publicize the desired aspects of

culture and are helping their leaders to implementsuggested action steps for tangible performance.

Transformation activities include organizational

development and training needs necessary for culture

change.

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Cultures are Not Homogeneous

Functional

or Departmental

Site

Hierarchic

Geographic/Regional

Old/New

Divisional

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Culture and Leadership

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Culture and leadership are

two sides of the same coinand neither can be understood

by itself.

Edgar Schein

Culture and Leadership

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Employees work together in teams

Employees are given a great deal ofautonomy

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 SeniorManagement

Believes

What EmployeesSee

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InvolvementCommitment..Ownership..Responsibility

Building human capability, ownership, and

responsibility

Are our people aligned and engaged?

AdaptabilityPatternsTrends Market Place

Translating the demands of thebusiness environment into action

Are we listening to the marketplace?

MissionDirection..Purpose..Blueprint

Defining a meaningful long-termdirection for the organization

Do we know where we are going?

ConsistencySystemsStructuresProcesses

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

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When it comes to establishingor changing a culture the leader

sets the tone