Vice President and General Manager
Boeing Integrated Defense Systems
"Business Ethics and Conduct"
Best Practices Forum
June 02, 2005
Thank you Martha. On behalf of Boeing IDS President and CEO Jim Albaugh and the entire Boeing Company, it's a pleasure for me to be here today to speak with you. When you visit the Defense Industry Initiative's home page you find what one might call a mission statement right at the top of the page and why we're here today:
DII is a consortium of U.S. defense industry contractors which subscribes to a set of principles for achieving high standards of business ethics and conduct.
Let me ask, why is this important??? Why is it important that we -- and when I say "we" I don't mean just our companies, but I mean "you and I" -- why is it important that we strive to attain the highest possible standards of business ethics and conduct?
In our industry our end-users are very important people. They are the men and women who stand in defense of our country -- We refer to them as the warfighters. Those of us that have stood among their ranks know that they live by a creed of trust for each other -- trust that they will each do their part to the best of their ability -- that their very lives depend on that trust. In our business we provide defense systems to our warfighters and in doing so we enter into a contract as they have done with each other: a contract of trust.
When a pilot sits in one of our planes, he or she is trusting that everyone who has been involved with that plane, from procurement agents in his own service to a riveter on the line, can give their personal guarantee that he has the best fighter jet available -- that all systems and parts are working accordingly, every specification complied with and every detail checked. He places his life and the lives of those he serves and protects into our hands every time he climbs into one of our aircraft. That's a contract of trust.
If one person were to skimp on the procurement of building materials, or skip over redundancies in the inspection process, or not choose the best person for the job because of politics then we break our contract with the warfighter.
So when we ask "why is ethics important" -- this is why. It is an imperative that all who are involved in providing our warfighters with the best industry has to offer -- that we do our utmost to ensure not only the working order of the plane and the systems onboard that plane, but the safety of the warfighter.
And it is for this that we cannot afford for anything but the deepest commitment to high ethical standards. Trust is the foundation upon which our successes are built -- both in the battlespace and in the business arena. And without an ethical backbone, trust will not be attained or worst yet, eroded and eventually lost. Our contracts will be broken.
So how do we build this foundation? How do we, as leaders, achieve trust? How do we preserve it over time?
The U.S. Secretary of the Navy, Gordon England, has this great story he likes to tell.
Insert: England's mother story: Grew up in Baltimore, single-parent home, ran wild in the streets, mother had one rule -- "You can do anything you want as long as you don't do anything that embarrasses me."
In both my career in the Navy and in the private sector, I've seen very good people lose their way. They lost touch with themselves, affecting their judgment and as a result they made poor decisions. Open any newspaper or watch a 24-hour news channel and there's a story every day about someone who lost their way and made a wrong choice.
Just last week, two former AIG executives, the chairman and the CFO, were in the paper for manipulating results, a Citigroup former executive was accused of taking bribes and filing false tax results, and the corporate fraud trial of the Health South founder continues to make news.
All these people probably started out with the best intentions, and somewhere along the way they made poor choices -- the first time it probably wasn't even a wrong choice, just not the best choice and from there it just got easier and easier to make the wrong decisions.
So why does this happen time and time again?
A fundamental principle for being a good leader is knowing oneself -- knowing your strengths and weaknesses, knowing that you're not always going to be right, and knowing how and when to ask for help. Good leaders surround themselves with good people who provide honest feedback and act as a check and balance in the decision making process -- people to whom authority can be delegated and full responsibility given, creating a contract of trust.
There should always be someone who will give good constructive criticism, a truth teller. It is our responsibility as leaders to create an environment where this is possible.
When you stray from yourself, from who you really are, then people begin to doubt your decisions, your motives -- and trust is put into question. As leaders we need to look for the answers to questions we'd rather not ask, face raw truths about what we've been dealt and make hard decisions always knowing that, no matter how unpopular, there is always a the right answer.
When we say leadership we're not just talking about the people who sit in the corner offices. We're talking about all of our people and all of our partners. We're asking the fundamental questions: What are we doing to better understand our customer requirements? What are we doing to improve our processes? What are we doing to improve ourselves? Is this the right way to approach this situation. That's the way that we define leadership. Setting the standard -- providing a vision that fosters an open exchange among all involved.
This doesn't mean that mistakes make us unethical. It is how we deal with our mistakes that matters. When a handful of Boeing employees made wrong decisions, the impact was felt by all of our employees. It was a difficult time for us but it also gave us a renewed focus on how to avoid these mistakes in the future. We began a recommitment to the core values of our company -- not just talking about ethics and integrity but ensuring a work environment where ethical business conduct and compliance are integral to every aspect of our business. Our employees work together every day across the enterprise to make us a better company; to help create and maintain an environment where ethics is viewed as a cultural trait that does not vary by location, program, team or level in the organization.
And the key to this has been communication.
Great leaders establish an environment for a strong, two-way dialogue to support a culture of openness and trust. Let's face it -- no one wants to be the first person to give the boss bad news if they think it's going to get them fired. If the leadership instead seeks input, listens to what others have to say and then acts -- being decisive when action is called for -- this will engender respect, and set expectations for how we should treat all our colleagues.
Leading in this manner can help to instill a culture of ethical behavior and this is at the heart of what we're all here for and what the Defense Industry Initiative is all about:
"achieving high standards of business ethics and conduct"
... leading, by example, by defining boundaries and operating within them, and by providing the vision for all to see.
In the book "It's Your Ship," by Captain Michael Abrashoff, there is a section on "nurturing the freedom to fail." By establishing guidelines and encouraging problem solving, his approach established ownership, with ownership comes responsibility, and with that a sense of pride -- all built on a foundation of trust. This approach gave his sailors a sense of empowerment, the ability to make decisions and given this environment, almost all people will make the right decision when the opportunity arises.
So if we recognize the importance of ethical behavior in business, establish an environment of trust by setting an example, and empowering those in our organization to establish an ethical work environment -- where does all this get us?
It brings us back to the beginning: our end-user, the warfighter. The warfighter, as well as our employees, suppliers, customers and business partners, must have confidence in our personal judgment to do what's right; to protect their interests and to talk openly and honestly about issues -- the good and the bad. An organization that can create and grow a work environment that is firmly rooted in its values inspires confidence and can ensure sustainable growth over the long-term. That's where this all gets us. It secures a contract of trust and ensures that our focus remains on what's important; the men and women who defend this nation and preserve peace around the world.
And that's why conferences like this one are important. As participants you help to continue the discussion on how to improve the way industry operates -- in an ethical and compliant manner. By working together to set high standards of business conduct, you ensure a strong future for our industry; you help to keep the contract of trust from being broken.
Thank you for allowing me to join you today. Enjoy the rest of the conference.