Shared Services Group
"The Value Proposition -- Key to Business Success"
National Center for American Indian Enterprise Development
National Reservation Economic Summit (RES2004)
Las Vegas, Nevada
February 10, 2004
I'm pleased to be here today as a member of Boeing senior leadership and a supporter of RES2004. It's a particular honor to be the keynote speaker. As a proud member of the Pala band of Mission Indians and former tribal chairman, I fully recognize the challenges and also the opportunities you face as Indians in this great nation in which we all have the good fortune to live.
This morning I'd like to talk about two key elements. First, I'd like to give you a sense of what we're about at The Boeing Company and our primary reason for being here today. Second is something that is very important to all of us; in fact it's fundamental to our success in the business environment -- which is what this conference is all about -- and that's the value proposition.
First let me tell you about The Boeing Company. Most people know The Boeing Company as a Commercial Airplane enterprise. Certainly in my former roles, most recently in my previous job, Homeland Security, when I went back to Washington, D.C., to talk about our products and services to the members of the Department of Homeland Security, the members of the Department of Defense or Congress, they'd talk about Boeing and what a great commercial airplane company we have.
But our company is much more. Over half the enterprise is associated with products that are not associated with commercial airplanes -- that's called Integrated Defense Systems. It's important to recognize that we offer many opportunities well beyond those things that go on in Seattle. So I'd like you to think about where you can provide goods and services to those other programs, and I want to help bring that about.
Last year alone, we gave out contracts to Native American companies of a little over $140 million. In our whole small disadvantaged business enterprise within Boeing, we give out contracts of about $4 billion a year. My part of the business alone puts out about a billion dollars to small, minority- and woman-owned businesses.
The $140 million dollars is but a small piece of the $4 billion activity. My motivation and my heritage tell me we have the opportunity to grow that significantly, and we're looking for those of you who products and services to help us meet our customer requirements step forward and help.
We have 1,300 qualified Native American owned firms that are Boeing suppliers. They are involved in programs that include AWACS, F-15, Logistics, Information Technology, C-17, Apache Longbow, Space Shuttle, and 737, just to name a few. We have Mentor-Protege programs with Native American firms. We are very pleased and proud to support those programs, as they are an important part of the value we bring to the economic development of small firms.
There is an opportunity for you to meet a number of Boeing people who are here at this summit. I want them to talk to you, so seek them out. They are a key part of the $4 billion dollars worth of contracts that we put out in this small disadvantaged business enterprise. We believe they play a key part in helping you help us.
Now let me talk about the key element of business success, the value proposition.
As the president of an enterprise that has about $7 billion dollars worth of the roughly $50 billion Boeing is involved in, I get calls every day from people saying, "Rick, I want to provide something to Boeing" or "Rick, I'd like to do business with Shared Services Group." One of the key questions that I ask them is, "Help me understand your value proposition."
Let me explain what I'm responsible for at Boeing to give you some sense of why I ask the question.
In Boeing, I head an organization called Shared Services. We have some 16,000 employees and our customer is The Boeing Company. We're about delivering value every day, not to the outside world but to the inside world. We deliver information technology services. We deliver employee services and payroll. We handle transportation. We provide supply chain services. We are responsible for facilities. We are responsible for all those things in a company the size of Boeing -- 150,000 employees -- that many take for granted.
But we don't take our customers for granted, and that's an important part of the value proposition that we bring to Boeing.
Since Shared Services was created a little over a half a dozen years ago, we've saved $1.4 billion dollars in cost. Last year alone we saved $100 million dollars. That $100 million dollars goes directly to the bottom line; it's like having a billion dollar contract with an outside firm.
The reason I walked through that is that we in Shared Services have to ask ourselves every day what value proposition we are delivering to The Boeing Company, because if we don't continue to give value, we cease to exist.
That's an important message for all of us: even in a large enterprise like Boeing we have to worry about delivering value. We have to recognize who our customers are. We have to understand their expectations of us. More important, we have to understand how they measure those expectations. We have to understand how we're doing against the expectations and we have to understand what we're doing to improve each and every day.
I've got nearly 900 managers in my organization. Those are the questions they all need to be able to answer if they are going to be successful in continually delivering value.
That said, every day we make decisions about whether we are going to keep things in-house or outsource. For instance, we outsource 72% of the roughly $1.5 billion dollars of activities in the information technology area. That tells you that someone outside Boeing is getting 72% of a billion and a half dollars worth of business. One of our Mentor-Proteges is directly involved in some of those activities.
So when you come to us, tell us the value you're offering to The Boeing Company, the value you're trying to provide.
It's great to have energy. It's great to have enthusiasm. It's great to have the Native American heritage. It's great to have the right heart, and the right soul, and the right ideas, and the right mind. But more important, we ask you to think about how you can help us achieve our goals.
And if you think in those terms, I am confident that your companies will always be in the business of providing value and providing a revenue stream back to your constituents, whether you have two people in a brand-new startup or a business that's operating at 40 or 50 or 100 million dollars a day.
Our primary focus is on our shareholders. We've got to deliver a return that is better than the cost of capital or our shareholders will invest their money elsewhere.
So when you talk with the Boeing people on Thursday, think about asking them these questions:
What's the value you're looking for?
Where is it that you may have a relationship with a supplier where, because we have a different infrastructure, we may be more nimble or be able respond more quickly?
One of our Mentor-Proteges actually set up their activities right next door to the Boeing facility. Why? Because that way they understand what we as their customer are looking for and what is important to us. They are able then to respond quickly and add value.
And that's how we make decisions about whether to buy internally or whether to buy externally. Fundamental to our strategy as we continue down this pathway is taking the best of industry and bringing it into Boeing, because that's how we're able to develop programs like Future Combat Systems, programs like the F/A-18, programs like 7E7, all these large-scale products. It's all based on a great supply base.
And as I said earlier, we'd like to have more Native Americans helping us do our job of delivering value to our customers and delivering returns to our shareholders.
I'd like to compliment all of those who have taken the time to put together RES2004. I've had an opportunity to speak as a panel member at a number of these sessions and it's great to see the enrollment and participation build to this large audience today. I hope that RES2004 is delivering value to you, as you look at your opportunities and we have the opportunity to answer your questions about how you can help your business be successful.
Native Americans bring a great heritage, they bring a great tradition, they bring a great sense of national pride. We look forward to the opportunity to continue to help you expand your business to help meet our needs.