Leadership changes mark cultural shift

We've seen plenty of changes in both government leaders and among the senior ranks of contractors, and more are on the way. Many of the changes mark a generational shift, and the big question is how this will drive innovation and changes in the market.

I think a recent DefenseNews article about how CEO turnover is signaling a culture shift in the market is spot on.

I’ve written around this issue several times, mostly recently when I talked about Tom Jones, the former Northrop Corp. CEO, who died in early January at the age of 93. In that piece, I was comparing the maturing of the defense portion of the market with the maturity of the IT services segment.

We’ve also done a lot of coverage about the comings and goings of CEOs. Many departures have been planned successions; others have been performance-related.

But the reasons for the changes do not matter or change the fact we are seeing a generational shift.

In the past year, we’ve seen new leaders take over at some of the largest companies in the market, including Lockheed Martin, Northrop Grumman, Computer Sciences Corp., CACI International, AT&T, and Accenture. In some cases, it was the very top of the company; in other cases, it was specific to companies' federal businesses.

There are ongoing changes underway at Raytheon, BAE Systems and EADS, now Airbus Group.

One dot I haven’t connected, but that the DefenseNews article by Zachary Fryer-Biggs pointed out, is the simultaneous shift that is happening on Capitol Hill.

It seems that hardly a week goes by that a veteran lawmaker isn’t announcing his intention to run for reelection. This includes Reps. Jim Moran and Frank Wolfe of Virginia.

Roll Call has what they call a casualty list that counts 16 House members retiring and eight senators. Five more members of the House and two senators are resigning before finishing their terms.

The list also includes members of the House running for Senate seats (12), and those running for or elected to other offices (4), as well as two seats that are open because their members died in office.

Many of those leaving the Hill are complaining that the environment is too problematic; again, however, it doesn’t matter why -- just that they are leaving, and that their leaving will drive change in the market.

The big question is what kind of change.

The leaders who came of age during the Cold War are on their way out as Fryer-Biggs points out, which means that some of the "givens" of defense spending may no longer be so.

The new generation of leaders will be shaped by Sept. 11, the global war on terror and the wars in Iraq and Afghanistan.

The response to Sept. 11 was big, muscular and very, very expensive. We are feeling that now. The budget realities of the last couple years will continue. We have only just begun to see the impact on the market.

Efficiency, effectiveness and low-cost will be the primary drivers going forward. Those will be the keys for industry and for policy makers and legislators. It is a curse, but also a blessing.

Necessity drives innovation, so the silver lining to all this will be the opportunity to change how the government operates and how business and government interact.

I can only imagine what lessons about organizational structure, business practices and policies our veterans hold in their heads. We may well be at the cusp of another greatest generation.

I certainly hope so.