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2000 Speeches
Harry Stonecipher (Neg#: stoneciphersmall.jpg)

Harry C. Stonecipher

President

Chief Operating Officer

The Boeing Company

"Flower Power and Fire Power: New Directions in Defense Technology"

National Aerospace Systems & Technology Conference

Dayton Convention Center

Dayton, Ohio

May 09, 2000

These are exciting times for anyone who cares about innovation and technology. It will be my pleasure to provide an industry perspective on the new frontiers of knowledge and know-how in the defense and aerospace community.

I will begin with a set of paired elements that may strike you as a little odd at first.

Orchids . . . and ordnance.

Gene guns . . . and machine guns.

Flower power . . . and fire power.

Those are some of the associations that came to me as I was watching a recent television show about the cultivation and propagation of orchids. In the defense industry, we make sea-skimming missiles and we use all kinds of names like the "Phantom Works" and the "Skunk Works." If there is any other industry that is any more exotic and specialized than ours, it is probably the breeding of orchids.

Orchids occupy a place on the evolutionary ladder in the plant world that is comparable to human beings or dolphins in the animal kingdom. They grow from the smallest of seeds into the most sought-after of flowers. In their various forms or genera, they are the ultimate expression of uniqueness.

In recent years, the introduction of new technology has changed the orchid business almost beyond recognition. Technological innovations have combined genetic engineering with space-age environmental control systems. As a result, you can now buy an orchid for thirty or forty dollars that would have cost several thousand dollars a few years ago. And you don't have to know the grower in order to buy it. You can pick up a world-class orchid at Home Depot or your local supermarket.

Technology has speeded up cycle times in the reproduction of orchids and it has led to quantum jumps in quality and predictability. Let me put that another way. In the orchid business, we see a great demonstration of FASTER, BETTER, CHEAPER.

The question for us is: Can we use technology to similar effect in our field?

Can we use technology to shorten the development cycle and speed production? Can we use it to simplify and commercialize procurement? Can we use it to modify and improve existing platforms or systems? Most of all, can we use technology to project power or to fight wars in new and different ways that conserve both human and economic resources?

Given the accelerating pace of scientific and technological progress in today's world, the answer to each of those questions must be a resounding Yes. I will cite some examples of great things that are already happening.

Before doing so, however, I would draw your attention to one way in which the U.S. military-industrial complex - as Eisenhower called it - differs from the horticultural society.

With the introduction of new technology and new distribution channels, commercial growers of orchids and other plants know that they have one choice: change, or die.

The U.S. defense community has another option, which is to put off change, or to procrastinate. To my mind, that means forfeiting responsibility and tacitly agreeing to pay a huge future price . . . to be levied in some future year over the next decade or so. I do not even like to contemplate the deadly consequences that await us . . . if we can't force ourselves to act with the same energy and passion as people in other businesses and professions that are in the throes of change. And this is because . . . believe it or not . . . we are in the throes of change.

The problem here is the perception - and, to a degree, the fact - of overwhelming U.S. defense supremacy. There is no other nation on earth that comes close to matching our military strength. You have to go back to the Roman Empire to find a comparable situation. Success - especially overwhelming, seemingly complete success - is the deadly enemy of innovation and vigilance.

However, the perception of U.S. defense supremacy is one part fact and one part illusion. The part that is fact is our ability to overwhelm any single adversary in the world of nations. The part that is illusion (and it is a very dangerous illusion) is the notion that the security of our country is no longer at risk.

We face a growing multiplicity of threats. This includes the spread of weapons of mass destruction and the proliferation of a new class of longer-range ballistic missiles. General Lyles has pointed out a new "axis of cooperation" among hostile or potentially hostile nations including North Korea, Iran and Pakistan - with the further support of certain Russian entities.

Beyond that, there are the threats posed by terrorist groups or individuals, with growing access to high-grade but low-cost weapons . . . and with cheap and instant communication and information systems that permit the forces of evil as well as the forces for good to operate on a global basis.

Already, our forces are being stretched thin by the multiple roles that the U.S. is playing as an all-purpose Superman in a dangerous and unstable world. In 1999 alone, the Air Force was tasked to provide earthquake relief in Turkey and Taiwan, hurricane relief in Central America, lifeline support to displaced people in Albania, along with drug enforcement assistance in various parts of the world - and all of this was in addition to carrying out major military operations in Kosovo.

The high tempo of operations around the world is taking a toll. Exit surveys show it is the leading cause for the exodus of married personnel with families. For the first time, the Air Force is using paid advertising to stimulate recruitment . . . to make up for lower-than-desired retention rates for enlisted personnel.

Clearly, it behooves us to find new ways of leveraging technology - both to meet a growing array of future threats and to ease the real and present strain on our warfighters in the field.

We do have some good success stories to talk about. Unmanned Aerial Vehicles have done a superb job of providing surveillance in Kosovo and Bosnia. Now we need to go to the next step - and Boeing is working on this right now - of designing and building Unmanned Combat Air Vehicles, or UCAVs, that will do actual warfighting in the suppression of enemy radars and other missions.

Will the introduction of UCAVs present any kind of threat to traditionalists in the fighter pilot community? Well, of course it will. Innovation, by definition, is a destabilizing force. That's why we will need real leaders in the Air Force to champion the use of UCAVs in performing certain missions that have hitherto required putting highly skilled people in very expensive aircraft directly into harm's way. Part of the role of leaders is to motivate people to think and act differently.

No doubt, at some time in the future, we will see remotely piloted vehicles dispatched from a mother ship that attack and destroy manned aircraft in aerial combat. We need to make sure that we are on the winning side of new technologies.

I, for one, am in favor of anything that will bring greater urgency and velocity to the search for new products, or upgrades of existing ones, that are truly innovative. We can find some clues on how to act by studying the history of innovation. Here are some lessons learned.

First, the impulse to create or innovate can be encouraged, or discouraged. To some extent, we can institutionalize or systematize innovation by encouraging bright people to work together in teams with a real diversity of talent.

That is exactly what Edison did with his laboratory in Menlo Park, New Jersey - the world's first great R&D facility, dedicated . . . and I quote . . . "to the rapid and cheap development of invention." As innovative products have always done, products from this laboratory often displayed a profound grasp of many things that were already known, combined with a willingness to strike out in new directions.

The phonograph, for instance, drew on past work on telegraphs, telephones and electric motors. In six years, the invention factory at Menlo Park secured more than 400 patents. The U.S. Patent Office eagerly awaited packages that were wrapped in a certain type of red tape - because that meant a package from Menlo Park. If you talk about "cutting red tape" to get something done in hurry, that is where the expression comes from.

Second, nothing stimulates innovation more than the rapid exchange of information, knowledge and ideas. Faster transmission begets greater discovery.

We see this today in the area of e-commerce. Amazon.com may constitute the greatest innovation in the distribution of the written word since Gutenberg's printing press. Just think of how easy Amazon.com has made it to buy a book. Without leaving your own home, you browse around on their web site, look up reviews and critiques, and then "click" - you make a purchase with no waiting in line and no need to pull out a credit card!

Just think of how far Amazon has gone in reducing transaction costs and how it has shortened the connection between the buyer and the seller of a book, eliminating all kinds of middle men or distributors who added little in the way of value!

Third, and last, there must be clear financial incentives for successful innovations. In the well-turned phrase of Abraham Lincoln, it is necessary to add "the fuel of interest to the fire of genius." Clearly, there has been no lack of financial incentives adding fuel to the fire for high-tech companies in the commercial world. But frankly, there is still a dearth of attractive and compelling financial incentives in defense procurement, despite many positive developments initiated by Dr. Gansler and others.

In a recent front-page article, the Wall Street Journal drew attention to the fact that many of the companies that are leading Information Revolution have turned their backs on military R&D and defense contracting due to poor profit margins and excessive red tape. According to the Journal, three-quarters of country's top 75 or so information-technology companies won't do research for the military. Intel is one of several leading chip-makers that have quit the business of supplying MIL-qualified components to the military market. That is something that should shock every one of us in this room.

To our credit, we have succeeded in institutionalizing innovation in parts of the defense industry. It goes without saying that the Lockheed "Skunk Works" is known around the world as a great center for innovation - the creator of such products as the Blackbird, the U-2, and the F-117.

The Boeing "Phantom Works" is less well known, but I can assure you that it is having a huge impact on our whole business. The Phantom Works captured the X-37 and the UCAV programs and it has played a key role for us in the Joint Strike Fighter program. It has been responsible for shorting production cycle times and lowering costs in existing programs like the C-17 and the Delta II launch vehicle. More than just a laboratory for invention, the Phantom Works acts an agent for change and a champion for innovation throughout The Boeing Company.

Like others in the industry, we are using the Internet, or the company Intranet, in conjunction with other technologies, to do some remarkable things. Our Joint Strike Fighter team, for example, operates as a virtual company - pulling together people and resources in Seattle, St. Louis, Tulsa, and the final assembly site in Palmdale, outside of Los Angeles.

We have put together the major assembly pieces with lasers, which were fully integrated into the three-dimensional engineering database. We assembled the first X-32, which will fly later this year, in just over 52 weeks with 58 people. In just six hours, we attached its one-piece composite wing to the fuselage.

The result: The X-32 is costing 75% less than our original estimates, and there are about 80% fewer defects in the first X-32 than in the equivalent build of the YF-22. That's pretty amazing when you consider the YF-22 is flying but not yet operational, while the X-32 concept demonstrator will soon be going into flight test.

Everywhere you look, businesses are opening up e-commerce portals. I think that what we have just done in the defense and aerospace community is a great example of an industry coming together to make things better for everybody. Just a few weeks ago, a group of the leading companies - Boeing, Lockheed, Raytheon and British Aerospace - joined together in announcing the creation of an Internet trading exchange. Based on the Commerce One MarketSite Portal Solution, and powered by Microsoft software, this exchange will create a secure, electronic marketplace where buyers and sellers around the world can conduct business.

The system will be totally open. Anybody can join in. And the implications are huge. The global market for commercial and military aerospace products totals more than $400 billion, and - due to the critical nature of maintaining fleets of airplanes that are always ready to go - our airline and military customers maintain some of the most massive inventories in the world.

With this new electronic exchange, our customers - and that certainly includes the Air Force - will be able to substantially reduce inventories without sacrificing readiness. You will be able to move from Just-In-Case to Just-In-Time in the stocking of many parts.

An airline that is missing a wheel for an airplane will be able to find and get one quickly - most likely from another airline. We expect our customers will be trading with each other. They will certainly find a much broader, deeper . . . and more responsive . . . supplier base. This can only lead to massive savings in transactions costs that will benefit just about everyone.

The combination of new technology and massive networking capability is also the key to all of the major developments in space-based defense and communications systems.

Let me say a word here about the National Missile Defense program. In the first test last year, we proved, in effect, that we could hit a bullet with a bullet in deep space. We did that by launching a missile that was successful in intercepting and destroying a dummy warhead from an intercontinental ballistic missile. It did this at an altitude of 260 miles above the Pacific Ocean.

Now, after a failure on the second test, we have to prove it again. To my mind - and I hope to all of yours - this program is a critical element in safeguarding our future security against the growing threat of long-range missile attack by rogue nations.

Working together, industry and the services have made real progress in streamlining and commercializing defense acquisition. I hope General Lyles will forgive me if I repeat one of his own jokes. As I heard it told: Not too long ago, if you had looked into the Air Force dictionary for the word "commercial," you would have found a single definition - "a sixty-second pause that will allow you to get a beer during a football game." There is a much different view of commercialization in the Air Force today, even if we are still a long way short of the kind of "civilian / military integration" that many of us desire.

Acquisition reform has meant major reductions in paperwork and oversight, along with a growing sense of partnership between industry and the services. We see that every day across a variety of programs. And certainly, the Evolved Expendable Launch Vehicle program represents an outstanding example of harmonizing military and commercial requirements.

In closing, I will return to some of questions that were posed at the outset: Can we use technology to shorten development cycles, speed production, reduce costs, and improve existing platforms? Can we use technology to ensure our warfighters will have all the resources they need to respond swiftly and accurately to a growing multiplicity of threats?

Absolutely. We have the technology that will permit us to do all of those of those things. Technology can be the enabler.

But we - meaning everyone who shares my view of the growing risks to national security - must be the doers. The need for greater urgency and velocity in upgrading, improving and rethinking defense systems is not readily apparent to everyone . . . not within government, not within the services, and not within industry. Nor is the need here strongly apparent to most of our fellow citizens. It is up to each of us . . . therefore . . . to act as a leader in motivating others to think and act differently.

In doing so, you may even want to exercise some gentle persuasion . . . with $30 gift from Home Depot that shows the connection between flower power and firepower in using technology to transform the given world.