Arlington, Virginia

Wednesday, April 3, 2002

Mr. Lawrence: Welcome to The Business of Government Hour.   I'm Paul Lawrence, a partner at PricewaterhouseCoopers and the co-chair of The Endowment for The Business of Government.  We created The Endowment in 1998 to encourage discussion and research about new approaches to improving government effectiveness.  Find out more about The Endowment by visiting us on the web at endowment.pwcglobal.com.

The Business of Government Hourfeatures a conversation about management with a government executive who is changing the way government does business.  Our conversation this morning is with Major General James Jackson, Commanding General, U.S. Army, Military District of Washington.  

Good morning, General Jackson.

Gen. Jackson: Good morning, Paul.

Mr. Lawrence: And joining us in our conversation is another PwC partner, Brian Dickson. 

Good morning, Brian.

Mr. Dickson: Good morning, Paul.

Mr. Lawrence: Well, General Jackson, although most of our listeners have probably witnessed the ceremonies and events that MDW orchestrates, could you give us a sense of its roles and the responsibilities?

Gen. Jackson: I have three major missions.  The first one deals with something we saw during 9/11, which is to respond to any crises or disaster or any kind of special security operation inside what we call the National Capital Region, which is just roughly a big goose-egg in and around Washington, D.C., Arlington, and the surrounding territory. 

The second one deals with providing base operations support for five different installations that work for me, ranging as far away as Fort Hamilton, New York up in Brooklyn, and as far down south as A.P. Hill, Virginia. 

And then the last one is the thing that most listeners might be most familiar with is the official ceremonial part of our business and public events which we conduct on an annual basis.

Mr. Lawrence: How large is your MDW team?

Gen. Jackson: I have a staff that is several hundred.  And then of course the command across the board ranges -- is approximately around 7,000 people, split between military and civilian.

Mr. Lawrence: And what type of skills will these people have?  You described such a range of activities.  I'm curious.

Gen. Jackson: Well, I pretty much run the gambit of all skills.  For example, I have operators whose job it is is to plan and control operations.   Much of what you saw during 9/11 -- those people were involved with that.  I have personnel people to keep track of people, both civilian and military, and take care of them.

I have a ceremonial staff that provides oversight and guidance as far as the events we do at both the White House, and then of course anything we do for the Department of Defense in and around the city.  I have logistics personnel who deal with that part of the business.  I have personnel who look at the garrison functions, or the functions that take place on a day-to-day basis on all those five installations.

And so I pretty much run the gambit.   I've got lawyers to take care of the contractual issues and some what we call the Uniform Code of Military Justice, the legal part of our business.  And of course, I've got Arlington National Cemetery and people like that.   So it pretty much runs the gambit.    

Mr. Dickson: Can you talk a little bit about what it's like to be a commanding general?

Gen. Jackson: I guess the first thing you say, it's great.  It's good to be in charge.  Most of us spend our lifetime in this business wanting to command and to be in positions where we pretty much are the senior authority in an organization.   Of course, we temper that with understanding we all work for somebody.  So we're not necessarily always the end to the food chain.

The job is a good one.   It's fun to be part of everything that an organization does.  And so, kind of as a CEO kind of person, I have my fingers pretty much spread across a little bit of everything that goes on in the command.   While I won't be the most knowledgeable on any specific subject, I might be able to argue that I know a little bit about everything.  And my job is to find out or know where the experts are who can give me that detailed information at the right time.

Mr. Lawrence: General, can you tell us a little bit about your career in the Army, some of your highlights that have brought you to this point?

Gen. Jackson: Sure.   I come from a military family.   My father served 33 years, World War II, Korea.  And so he was -- I guess I grew up in a military family.  And I respond to people who ask me where's my hometown, that I really don't have one.  I've been all over the country. 

I've served 30 years.   Started out after graduation out of college serving in the 82^ndAirborne Division, and then continued to multiple assignments with some Special Ops units and some -- with the Airborne forces, primarily in the light infantry side, which just means we do mostly walking or jumping and that kind of thing.

And through a variety of different command and staff positions, that has ultimately brought me to here.   I've served overseas in Korea twice, across the United States in multiple different locations.   I was checking the other day, by chance, and reminded myself that in 20 years of marriage with my wife, we've moved 13 times.  So we tend to move a lot.  And I have in the meantime been able to raise three daughters that are great kids.

Mr. Lawrence: Normally, we ask what drew you to public service, but I think you answered that by virtue of your family.  But I'm wondering what kept you in public service.  I can't help but imagine you had other opportunities throughout your career.

Gen. Jackson: I'm not so sure that public service itself is what I focus or I see the military as, to be quite honest.  But the fact that I stayed in the military I think is an important one.   And the fact that dealing with people tends to be something that is interesting and exciting.  

I had it explained to me years ago that you can be in charge of things -- equipment -- and you'll see the same thing pretty much every day.  When you work with people, you are always surprised, because people do so many different things.

And I have found working with people to be a really exciting part of the job.  And so as a leader, my job is to interface with people.   So that's what I do all day long, and that's what's been bringing me back to achieve a 30-year career.

Mr. Lawrence: Which jobs in your career have given you the most interesting challenges?

Gen. Jackson: Well, I'll be honest and say any time I've been in command, be it from the company level, which is about an organization of 150, up to regimental size, which is several thousand, and then into the job I'm at now, which is multiple thousand -- any time you're in charge of something, you draw more satisfaction from the business.  

But I would tell you also that any time I've dealt with soldiers in the role of -- be it jumping out of airplanes or any kind of operations we've done, it has brought me great satisfaction, because of the things that they do and the way they operate, and the kinds of people they are.

And all you've got to do is turn on the TV any night and see the kinds of things that are going on in Afghanistan today and kind of recognize that.  These young kids are just great, and 18, 22 years old.  And the real challenge is be careful what you ask them to do, because they're going to do it.  And you need to be right. 

Mr. Lawrence: What were the positions or the events that trained you to be in command?

Gen. Jackson: Well, I think it's something that you gain by exposure and experience over time.   Obviously, you know, you go through your formative years in college, you've got four years there.   And then you start in the Army as a young second lieutenant, and you start to learn.   You're a dry sponge, soaking up everything that comes across your path. 

And you also learn by contact with other people.  I would say that I am a composite of everybody I've ever worked for or worked with.   I see things that they do that I like, and I steal them and I try and emulate those some way.   And so I am a real composite.   I couldn't really articulate any single thing that's mine; someone else's that I've taken on and decided that I think that's the right way to go about doing business.

Mr. Lawrence: Was the learning taking place at a technical level or a management level, a general management level?

Gen. Jackson: I think both.   There is a tremendous technical side to our business that most Americans who have no Service experience probably have trouble comprehending.  Many Americans, their only connection to the military is what they see on television or what they see in the movies.  And I would tell you that the complexity of the operations, just as an example, the things going on in Afghanistan are surprising.

I mean, most people would find them to be daunting when you stop and think about trying to build an event that involves multiple things to try and happen all at the same time or very close together.  And they're all mutually supportive.  It gets to be a very technically demanding business.

From a management perspective, you're growing every day.  If you aren't improving and growing and learning in everything you do, then you have no business being where you are.  And I think any major CEO or CEO of any organization would tell you the same thing: he's learning every day.

Mr. Lawrence: Let me ask you about leadership.  In your opinion, what are the top qualities of a good leader?

Gen. Jackson: Well, I think that's a very broad question.  And I could give you a litany of answers.  But I guess I would come back to things that have always stuck with me.   And first of all, as a leader, I've always carried with me -- I've got two major responsibilities.   One is to get my job done, and the other is to take care of the people who work for me, who are going to be accomplishing that work for me.  And if you think about those two things in the way you deal with people, you really can't go wrong. 

And I guess the third thing I would tell you, I label the trait, the character trait of the ability to adapt to change as being the most significant.  And that's -- even how you adapt from one job to another, how you adapt when you're working for one boss and all of a sudden you get a new boss -- how do you adapt between being in a command position versus a staff position?

And how do you adapt to just change in your environment?  9/11 brought some changes to the way we live in this country.   The question is, how do we adapt to deal with that change?  Good leaders, great leaders can do that.

Mr. Lawrence: That's a good stopping point.  Come back with us after the break as we continue our conversation with General Jackson of the Military District of Washington. 

In our next segment, we'll ask him about the events of 9/11 and how they have affected his team and the challenges it's presented. 

This is The Business of Government Hour.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour.   I'm Paul Lawrence, a partner with PricewaterhouseCoopers.  And today's conversation is with Major General James Jackson, Commanding General, U.S. Army, Military District of Washington. 

And joining us in our conversation is another PwC partner, Brian Dickson.

Mr. Dickson: General Jackson, can you talk to us a little bit about what you were doing on the morning of September 11^th, and how your day progressed in the immediate aftermath of the tragedy of that day?

Gen. Jackson: Sure.   Actually, we were in a staff meeting, so I was sitting at the head of the table with my entire staff.   And my aide brought in a note to me, and indicated that an airplane had run into one of the Twin Towers in New York City, to which I read and discounted it as some wayward pilot who couldn't fly very well. 

So we continued with the meeting.   And then, shortly after, he came in again and said there had been a second plane, to which we indicated, or it was quickly obvious to us that coincidence didn't happen this way.   So we cancelled the meeting and went and started watching the TV to see what had happened.

Shortly thereafter, someone came into the office and indicated there was a rather large smoke plume coming up from across the river, which is where the Pentagon is.  So we walked outside the building and took a look, and sure enough recognized that this was something bad that had just happened over there.

We went back inside, talked about it a little bit, and then decided that we would change clothes, get into our go-to-business suits, the BDUs, battle dress uniform, fatigues, and take a ride over to the Pentagon.  And that pretty much started the day.  And we stayed at the Pentagon probably until about 10:00, 11:00 that night, went back to the office, got some sleep real quick, went home, got cleaned up, and went back to work about 3:00 in the morning.

Mr. Dickson: Can you describe the scene that you found upon arrival at the Pentagon? 

Gen. Jackson: Yeah, sure.   Well, obviously, we got there, and it was somewhat chaotic.  And there was a lot of people moving about.  There were obviously some people who were trying to apply some coherency to the situation.  And they were pretty much gathering up a bunch of volunteers to assist in handling any casualties if they found them. 

As we assessed the situation and linked up with the fire chief, who we were told was going to be the incident commander, I asked him what he needed and what we could do to help.   And his first response was: "I need some manpower."  Well, as it so happens, that's one of the things we can provide, and so we made some phone calls.   And within an hour, we had brought some troops down. 

The initial operations on the site was to apply some degree of coherency to what's going on, and the troops came in to backfill the volunteers.  The volunteers weren't dressed properly, and their organization was rather loose, as you might imagine.  Bringing in soldiers as part of organizations, I can line them up very quickly; I've got a chain of command I can deal with and I can control them better.  

And it allowed us to allow the volunteers to go home, see family members, call family members and then to basically get back to work doing the things that they are required to do.   An interesting note is that none of the military functions that go on in the Pentagon stopped.   And so we freed those people up to go back to doing what they're supposed to do, and allowed us to do the work we were supposed to do.  And basically was providing support to the fire chief, who was the incident commander at the site.

Mr. Dickson: Does your organization -- are you still involved in recovery efforts at this point?

Gen. Jackson: No, not as such.   The recovery operations have stopped.  As you know, the building's being repaired and fixed, and I'm being told they're ahead of schedule.  The only thing we're still doing is we have collected some personal effects, both from the building itself as we cleared it, and also stuff that has been identified as personal effects from the individual remains that were retrieved from the site.   And our job, the organization that works for me, is to identify those, catalogue them, and then make them available to family members in the event they wish to identify them and claim them.   And that process is still going on, just because it's a very painstaking and detailed process.   And we expect it to conclude somewhere this summer.

Mr. Dickson: In the aftermath of September 11^th, how have you adjusted your priorities and your organization to meet the new challenges that the country faces?

Gen. Jackson: Well, the most significant that we're dealing with right now is the added security that we've established on all our installations.  In fact, we started drifting towards that back in August, with the attempt to get back to controlling access to our installations, because they do house a lot of people, and some sensitive assets that need to be protected.

So we were well on our way.   And so, since September 11^th, we have just continued on that, and remained at the high level of alert that we're at. 

The other thing that I would offer is more of a broad-brush approach.  And that is to deal with change in itself.  Obviously, since 9/11, lots of things have changed.   And so as those things change, they cause other changes.  And we have to deal with those on a day-to-day basis.

And those kinds of things are happening.  Not just the security on bases, but other things that we've become more attuned to.   You know, cyber security.   We're talking about reviewing all our contingency plans, taking a look at them, seeing if we can improve some of our communications capabilities, and the other things that we might be able to do to make our response to something like this or something similar to this in the future, go better.  And so that eats up a lot of our time.

Mr. Dickson: What type of planning or preparation pre-September 11^th had you done for events like that? 

Gen. Jackson: Well, obviously, we've got some plans.  I mean, we go out and write some and we prepare them.  But we can't write a plan for every eventuality.   As a matter of fact, someone asked me after this if we had a plan.  I said: "Yeah, we had a plan.  But we didn't have a plan that talked about what we did if a plane flew into the Pentagon." 

The interesting thing is we didn't need a plan for that.  We took the plan we had, we modified it, and that's what senior people get paid to do, is to deal with those kinds of changes.  And we executed the modified plan.  And it worked exceptionally well.

Mr. Lawrence: Let me follow that up with another question about working together.  You talked about working with the Arlington Fire Department.    I know that the FBI and FEMA were involved.  I wonder, you know, what the lessons are working across organizations like that?

Gen. Jackson: We had a great relationship with all the people and all the organizations that came in and worked at the Pentagon.  I think the biggest lesson was that the system that's in place across the country, the Incident Command System that they have, the Federal Response Plan that is in place, is a good one.

In this case, inside the United States, the military does not take the lead.  Even though that was military land in the Pentagon, the guy in charge of the operation was in fact the fire chief out of Arlington.   And that's where I reported, and I worked for him, basically.

I asked him what he wanted me to do.   And if he asked, and if there was something I could do for him, we provided it.   It was a very collegial, cooperative kind of environment, and it works great.

As the fire chief slid out of that command role, because the fire was out and the structural damage to the building had been taken care of, the crime scene part came up, and then the FBI took over.  No problem.   I then start working for the FBI, doing the things they want me to do.

Once the FBI was done with the building, they turned it back over to us, and then we continued to do the things we had to do until we were complete, and then we gave it back to the Pentagon folks.

The value of the working across the interdepartmental and interagency work that we did was manifested by our relationship that we have established over time, because we live in the city, we work in the city, we know these people.  We talk to them, we review our plans together, and we have a relationship.

That relationship is built on trust and on capability.  We understand what each of us brings to the fray, and what things we should be able to do.   And we don't look at doing someone else's job, we do what we can do best.  And in this case, it worked out exceptionally well.   The people that we worked with on 9/11 were just wonderful folks, and great leaders and great people in their communities.

The interesting thing is the relationships that we built have just increased in significance, in that we still talk to each other, go see each other, and spend time together.   And that's what makes things work, is that interrelationships that we've built.

Mr. Lawrence: You've talked about the value of relationships.  You obviously didn't begin building those relationships on the morning of 9/11.   What were you doing before to build relationships with those groups?

Gen. Jackson: Well, interestingly, the Inaugural that we had for President Bush brought us all together, because of the significant event in Washington, D.C. and the kinds of stuff that happens there, the security aspects, the volume of people that come in, and the military participation, and the fact that we help prepare and plan the whole -- the inaugural, at least the parade portion and some of the rest of the stuff that is done.

We have to sit down and talk.   And you go through a lengthy process of building a plan, executing it on a tabletop or on a floor, and then rehearsing it.  And so throughout that event, over a period of several weeks, we become very close, and we get to understand. 

So I know pretty much or have met every police senior member throughout the District, and certainly in the surrounding counties.  Some fire chiefs, I've known.  We train periodically with their own search-and-rescue people, because I have a search-and-rescue element.  And they train together.

And so that's where we build those relationships.    

Mr. Lawrence: That's a good stopping point.  Stick with us as we continue our discussion about management with General Jackson of the Military District of Washington.  

When we come back, we'll ask him about the challenges of managing Arlington Cemetery. 

This is The Business of Government Hour.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner in PricewaterhouseCoopers.  And today's conversation is with Major General James Jackson, Commanding General, U.S. Army, Military District of Washington.

And joining us in our conversation is another PwC partner, Brian Dickson. 

Well, General Jackson, one of the things that I've always been most impressed about MDW is Arlington National Cemetery.  Could you describe the management challenges one faces in operating a cemetery, or operating the cemetery?

Gen. Jackson: The biggest challenge with Arlington is space.  We're fast running out of space. Where it sits geographically, it's bounded by a variety of different things.  And so we're concerned that at some point in time, we'll just run out of ground.

We're building plans to be able to take us well into this century, beyond 2050, and a little bit further than that to be able to do the things we have to do.  But there's going to have to be some other innovative ways to deal with it.  And that's why we're building things like columbariums for cremation and so forth.

The other aspect is that we run anywhere from about 28 funerals a day, and average about 24.   But we can go as high as up to 28.   And we inter both Army and of course all the other services.  Regardless of which service is participating, I could have elements of my own participating, depending on the level of the funeral.  Depending on the individual veteran, there are certain honors that are rendered based upon what level that individual worked.   And so we go through a fairly lengthy process to figure all that out so that we render proper honors for all of them.

But as you might expect, Arlington has a lot of emotion tied to it.  And we deal with that as best we can, because we have families that are deserving of our attention at this point in time in their lives.   As far as they're concerned, that's the most important thing that's happened at that point in time in their lives.   And we deal with that.

Overall, things operate very smoothly.   One thing I would pass on to all your listeners is that as a veteran, if you're out there, you need to make sure that your paperwork and stuff is available and properly set aside so when the time comes, your family is properly prepared.  And there is a degree of paperwork associated with everything we do.   And if you don't have that available, you can make things a little bit more difficult.  

And there are ways to deal with that.   All you've got to do is pick up the phone and call, and people can be happy to provide that information to you either through the veterans' services, or, of course, you can Arlington itself.

Mr. Lawrence:   From personal experience, as well as talking to people who have been involved at a ceremony at Arlington National Cemetery, the response is all very, very positive.   And so my question to you is how does it run so well?  How does everything, with 20 or 28 ceremonies, how does it all work so well?

Gen. Jackson:   Well, we've had lots of time to perfect that.  In all honesty, we have had lots of time.  And over time, the experience causes people to be able to find ways to make it better.   Additionally, I would tell you that the young people and all the folks that we have working down there are focused keenly on that one event.  And they take it very seriously.

The soldiers who participate in Arlington will tell you to a man that they are very proud to be able to provide that service to veterans who have served their country, and now they're paying their last respects.  And so every time I've witnessed a funeral, I've never seen anything but a tremendous sense of dedication and desire on the part of everybody to render those honors properly.  And it ranges from the very top down to the

lowest-ranking individual, to include family members who receive some honors.

Mr. Dickson: General, I know from my work with the Army that you personally, and also the Military District of Washington, has taken a leading role in developing innovative ways to managing your post infrastructure, including moving out into some innovative approaches in the area of privatization.  Could you talk about what you're doing in this area?

Gen. Jackson:   Basically, it's a fairly simplistic approach, but it's complicated as you get into details.   The simplistic part is that the U.S. Army is good at many things.  But some things we're not as good at as the private industry.   And so the desire is to -- let's go get the experts to do the things that they're good at, and let's let us go back to doing the things we're good at.

And so running installations and providing utilities to an installation is not something you learn about in the Army.   And maybe we ought to go out and find those experts.  And so that's what we're doing.  We're trying to bring them in -- all with the stated goal of being more efficient and effective with the dollars that the taxpayers give us.

Another example would be the Residential Community Initiative, which is RCI, in short.   But it's just a fancy way of finding out how we can build new houses, or improve the maintenance on the existing housing that we have on our installations. 

For example, the house I live in is 100 years old.  Everything you do to that house is now historically based.  And so it costs us money to be able to do that, and it costs more money than you might on a younger house.

But how do we go about fixing all this old infrastructure that in some cases we can't tear down because of the preservation and the historical requirements?  And so we took at look at that, and the Army decided the best way to do that is to partner with private firms who build houses.   And we pay for them by using the housing allowance that we receive -- if you own a house and you're living off the installation, you forfeit that when you move into government quarters.

Well, in this case, we won't forfeit it any more.  We will take that money and pay the private contractor who has built the house.   And they're contracting to do this, or building this partnership for long term.  The one up at Fort Meade is a company called Piscern Real Estate, and they're tied in for 50 years right now.

So they see -- the novel approach here is, here's an American business that is not necessarily concerned with instantaneous gratification or profit.  He is building his program to make money over 50 years.   And he's partnering with the military to do that.

And so we are going to get newer houses, better-maintained houses while he gets a

long-term return on his investment, which is kind of novel.

Mr. Lawrence: You said it was a simple concept, yet it was hard to do.  What's the hard-to-do part about?

Gen. Jackson: Well, the hard part is because it's new.  No one's done this before.  And so you're kind of groping as you go, trying to figure out how to do it.   As you break new ground, it just causes new things to occur, and things that you haven't thought of necessarily.

There were some hurdles.   There's legal hurdles; there's some political concerns.  And there's also just the issue of how do we go about maintaining a relationship for 50 years with a private entity?  You know, when was the last time the military built a partnership, a literal partnership, with a commercial entity?  And so that's the difficult part, putting together the product or the process so that it produces the product you want and at the quality you want to give our people the kind of living standards that they deserve.  

Mr. Lawrence: What are your special authorities as the commanding general of MDW?

Gen. Jackson: First of all, one of the extra functions I have is to function as the general court martial convening authority for all of the elements in and around the National Capital Region.   What that basically means is when there's an infraction or some kind of  legal problem, I'm the decisionmaker as to whether we take that to a court martial or we process it with another way.

So I will deal with all the military who work in the Pentagon and throughout the area from, again, as close as Fort Meade, Fort Belvoir and all the other agencies who, while they may not work for me, they will still fall under my jurisdiction for this.

The last time we counted, it's over 90 different organizations.  The other interesting part that falls to me is we have elements of Navy, Marine Corps, Air Force and Coast Guard that also work in the Capital Region that have jobs similar to mine.  And so what we do is we constantly interface with them so that we all know what each other's doing to try and facilitate the jobs.

Because again, in a crisis situation, we might very well need their assets to assist us, and so we work together.

Additionally, in the area of joint ceremonies, either at the White House or dealing with the Department of Defense, my organization takes the lead and all the others follow what we do.   And they'll take instructions from us.

Mr. Dickson: As the commanding general for the Military District of Washington, you have jurisdiction over both Army soldiers and a large number of civilians.  What are the significant cultural differences between these two groups?

Gen. Jackson:   You know, that's an interesting question, because before I came here, I  might have answered it a lot differently than I will today.   I will tell you today that I find very little difference between good workers, be they civilian or military.   I mean, good workers, good employees do things well, regardless of what clothing they wear and what their background is.  They just want to strive to do well, and they'll do well. 

Now, there's those that aren't so good, and then there's lots of differences with those.   But I have not-so-good that wear uniforms sometimes, too.  So, again, there's a commonality there that I don't really think transcends culture here.  So I would offer that in my job, that the people I've worked with, both civilian and military, I've found to be very capable, able, dedicated.  And they desire to do a great job.  And therefore, there's really no difference between either one of them.  And I'm blessed.   I've got good folks who work for me, and those problems don't seem to take up much of my time.

Mr. Lawrence: That's a good stopping point.  Rejoin us after the break as we continue our discussion with General Jackson of the Military District of Washington. 

This is The Business of Government Hour.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers.  And today's conversation is with Major General James Jackson, commanding general, U.S. Army, Military District of Washington. 

Joining us in our conversation is another PwC partner, Brian Dickson.

Mr. Dickson: General Jackson, I'm aware that the Military District of Washington is also playing a leading role in helping the Army improve its technology infrastructure and to develop more standard approaches to using information technology.   Can you talk a little bit about your efforts in this area? 

Gen. Jackson: The Pentagon has decided to take the lead, and to develop a program to do all those things you mentioned.  Our part is to kind of  be the test bed, or be a laboratory to take some of their ideas and actually put them into place and see how they work.  We're a relatively small command as Army commands go.   And so we can do that with a fairly small overhead, and we can see if it works.

The whole purpose behind it is to try and make our organizations more effective, more efficient by using not only common business practices, but also technology, by re-engineering the current technologies to give us the ability to get to information that is important and critical for us to make better decisions.   And we're doing things like remoting our servicing capability for our computers.  We have that capability now to basically reach into a computer and fix a software problem without ever having to send a service member down to touch the machine.  It can be done from a remote site.

Looking at consolidating our information techniques, our ability to store information in a database so that it makes it available for more people to get to, so that you, one, know that information is available so you can go retrieve it quickly and make it go.  And it's just a matter of trying to take all these tools and make them available to the decisionmakers.

Mr. Dickson: People who are technologists often talk about the introduction of technology changes organizations.   And in many ways, they say that when they get rid of the middle managers, they flatten the structure because they're able to do the kind of things you just described.   And I'm curious.   Can you imagine that happening to the Army?  It somehow seems counterintuitive to think that a structure that has lasted so long in history would change.

Gen. Jackson: I guess what I have learned over my 30 years is don't ever say never, because you'll probably be bit after a while.   I think those kinds of changes are worth looking at and exploring.  I think the Army has got ways to improve itself, and this may be one of them.   My only caution would be we need to look at it and address it.  And if we think it's going to work, then we move ahead.

And certainly our civilian and military leaders are taking a look at these things.   I know General Shinseki is working hard to do what he's calling the transformation business, to transform the Army into a different organization that can better meet the nation's needs.  

You know, if you don't change, to adapt, or adapt to the environment you're dealing in, sooner or later, you're going to become inconsequential or superfluous, and you'll go away.

Mr. Lawrence: What might be some of those differences?  Does that mean different way that the members of the Army do their jobs, would it mean different type jobs?  What?

Gen. Jackson: I think both those, certainly.  Obviously, there's many different ways to accomplish the same role.   And we should be looking for ways that are more efficient and more effective all the time.   Some jobs will go away.  

We've got new jobs today that weren't around 30 years ago when I came in the Army.   One of the little vignettes I tell my people is just the PCs, the personal computers that we're dealing with today, there weren't in the Army 30 years ago.  And today, when I'm standing in front of a big group, I ask them: "Is there anyone here who does not have a PC on your desk?"   And no hands go up.

That has affected the way we move information.  I mean, e-mail has taken away the old buck slip, the handwritten note.  Very rarely do we do that anymore.  Now, I do some because it carries a little bit of added weight sometimes.   But the point is the routine way of transferring information now has become the computer.

Just take a look at your own organizations and ask yourself what happens when the computer goes down?  What if the system breaks?  You find out you're all of a sudden got lots of spare time on your hands.   Because a tool has been taken away that you've become very accustomed to.  And so that has changed.  And that's just one example, which is not necessarily a big one, but it's been one example that has reached out and touched almost everybody in the military.

Mr. Lawrence: There's still talk about the coming wave of retirements of individuals in government.   Is this a challenge to MDW?

Gen. Jackson:  I don't think so.   You know, we have been having people retire in the military for many, many years.   In fact, it comes to all of us sooner or later.  And we have procedures in place to deal with that.  We have incentives, and we retain the people that we want to retain and that want to stay with us.  And we have a program to do that.  I think it's just the way we do business, and it's one of the things that we deal with every day.  

Mr. Dickson: Sir, is MDW heavily involved in recruiting and the retention of soldiers?   And what are you folks doing to try to improve recruitment and retention?

Gen. Jackson: Overall, recruiting has been a good story for the Army, although I personally -- my command -- does not get involved in recruiting initial entry soldiers, the first-time people coming in.

But my understanding is the Army is doing well across the board.   And in the area of retaining soldiers, my command does do that, and we're doing very well.   At this point in time, we're about 117 percent of our stated goals up to this point in time.

And we have a variety of different ways we deal with that in the way of incentives.   Some monetary incentives; college education that can be provided through the GI bill; training choices.   And the one that seems to pop up most readily in our command is the option to re-enlist, to stay where you're at.   And about half of our re-enlistments that are retention of soldiers comes in that category, which means people are pretty much happy with what they're doing, and they're going to stay with us, or try to stay with us longer.

And so right now, that's all going pretty well for us.

Mr. Dickson: Do you focus a lot on improving or maintaining a high quality of life for the soldiers as a means for ensuring high retention rates?  And what kinds of things are you doing in that area? style="font-WEIGHT: normal">

Gen. Jackson:  We are doing things to affect the lifestyle of the soldiers.  We've got some programs in place called wellness, and a wellness program that is designed to look at how you treat the whole family as opposed to just the soldier.  We need to recognize that if the soldier's going home upset, or has a family life that's not doing too well, he's not going to be very good on duty.

Mr. Lawrence: What advice would you give a young person interested in the military?  

Gen. Jackson: I would ask him to stay in school, learn all you can, be as good a student as you can.   Remember that you're going to go through high school, like most of us, once.  Get as much as you can out of that.  And then if you have a desire to come to the Army, get yourself in good physical shape, keep yourself as morally straight as you possibly can, and step forward.  But be prepared for challenges, and be prepared to face some things new in your life.   And the Army will in fact bring those things out.

But we look forward to bringing on every young able-bodied American citizen who wants to serve.   And I think there's a value added to every life that comes in and participates with us, because there's things we can do for them that probably are fairly unique.

Mr. Lawrence: I've heard about two programs.   Perhaps you could tell me more about them, Twilight Tattoo and Spirit of America.  

Gen. Jackson: Well, Twilight Tattoo is our summer program that occurs out on the White House Ellipse.   We do it every Wednesday at 7:00.   We're going to start April 17^th, and we'll go to mid-July.  And it's about an hour, hour and a half, or a little over an hour show.  And it's intended to basically provide the viewer a snapshot of what the Army has done over time, and some of the assets that are available within MDW.   But it's an historically based show that talks a little bit about the Army over the years.   And then it also gives them an opportunity to see some of the more visible assets that are available to me and that we put on the show. 

Some music.   It's all built around music.   We try to build it with some of the more contemporary music, which is rather difficult for an old person like me.   But I've got folks who help me with that.  And so the intent is to reach out to young people and to make it both an enjoyable but an informative event.

Spirit of America is really a large musical show that is done up in the MCI Arena.  We'll be doing that 26 through 29 September.   And what it amounts to, it's a patriotic version of any kind of a show that you might see.   And it's again designed around the Army, and what kinds of things we've done or meant to the country, and what the country means to the Army.  And it's put on by all our soldiers.  I mean, there's no professional actors there.  These are our people who are taught how to do this.  

And we write the show from scratch, and then put it on.  And we were going to do it last year.  But as you know, with the 9/11 events, it was decided that we would cancel that event.   And so we're going to come back this year, and hope that the public comes out and spends an evening with us or an afternoon with us, and hope they learn something, and also hope they enjoy themselves.

Mr. Lawrence: Well, those certainly sound interesting, but I'm afraid we're out of time.  

Brian and I want to thank you very much, General Jackson, for being with us this morning.

Gen. Jackson:  My pleasure.   Thank you.

Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with Major General James Jackson, commanding general, U.S. Army, Military District of Washington. 

Be sure and visit us at the web at endowment.pwcglobal.com.  There you can learn more about our programs, and get a transcript of today's interesting conversation.  Once again, that's endowment.pwcglobal.com.

This is Paul Lawrence.   See you next week.

Arlington, Virginia

Friday, April 14, 2000

Mr. Lawrence: Welcome to The Business of Government Hour, conversations with government leaders. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of the PricewaterhouseCoopers Endowment for the Business of Government. The Endowment was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the Endowment by visiting us on the Web at www.endowment.pwcglobal.com.

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our guest tonight is Dick Calder, deputy director for administration of the Central Intelligence Agency. Welcome, Dick.

Mr. Calder: Good to be here tonight, Paul.

Mr. Lawrence: And joining me in our conversation is Ian Littman. Ian is a partner at PricewaterhouseCoopers and also the co-chair of the Endowment for the Business of Government. Welcome, Ian.

Mr. Littman: Great to be here.

Mr. Lawrence: Well, Dick, in this first segment why don't we begin by finding out more about the Central Intelligence Agency? The public clearly knows the brand, and we've read the books about it, but I don't think many of us know how the Agency is organized. Could you begin by talking about the organization?

Mr. Calder: Yes, I'll do that very briefly, Paul. The Agency is really built on four pillars. One of those pillars is the Directorate of Intelligence. That is really responsible for the evaluation, analysis, production, and dissemination of all source intelligence on key foreign-policy issues. This is really the key analytical core of the Agency, and they provide all source products to consumers throughout the government.

The second pillar is the Directorate of Operations, and they do clandestine collection of foreign intelligence, including human source intelligence. This is the directorate that does clandestine operations overseas and provides the product that our analysts find critical to doing the analysis and reporting that they do.

The third pillar is the Directorate of Science and Technology, and they're responsible for creating and applying innovative technology to meet today's intelligence needs. They are engaged in all phases of the intelligence process.

And the fourth pillar is the directorate for which I am responsible, and that's the Directorate of Administration. And while we do not do mission we enable mission. We do provide all the critical infrastructure pieces, and this is from finance to human resource to logistics to medical services, information technology, and communications, all of those things that make any vibrant organization work well.

Mr. Lawrence: Dick, you've had a distinguished career at the CIA. Can you tell us a little bit more about your career at the Agency and the various positions you've held?

Mr. Calder: Yes. I've actually been with the Agency for about over 30 years, hard to believe. Started in the mid-1960s actually as a communicator. I worked one overseas tour and decided to go back to the university and finish my degree. I came back to the Agency again in 1973 as a career trainee.

Following about a year of training I took Arabic language training and then spent six or seven tours overseas, mainly in the Middle East but some tours in Europe as well.

After that I came back and ran some of the senior offices in the Directorate of Operations, mainly for human resources and operations and management issues. And then I moved into the job that I'm in today in 1995.

Mr. Lawrence: Was it difficult to shift from field operations to administration?

Mr. Calder: Initially, yes. I had been a customer of the Directorate of Administration, so I understood how it worked, but now actually becoming the provider of those services and having to deal with some of the very difficult issues that we deal with in a demanding, ever-changing environment, it took me a little time to actually to begin to understand and figure out what areas I wanted to focus on. But because I understood the culture of the organization, the culture of the Agency, the change wasn't that difficult.

Mr. Lawrence: What are some of the biggest changes that you've seen in the CIA since you started, and what changes have you seen in the federal government overall?

Mr. Calder: In many ways I think the Agency has changed more in the last decade than it did in the previous 40 years. For up until the start of the 1990s the biggest strategic threat was the Soviet Union, and that's really gone and that's not going to come back.

Threats today are more diverse and dispersed. Our intelligence priorities shift continuously, presenting a much tougher environment for our collectors and for our analysts. The post-Cold War challenges are increased by the information revolution and by telecommunications. Fundamentally, all those issues are transforming the globe, transforming the way that we look at policy concerns and the way we look at security issues.

And the one thing that I think is really critically important is that everything seems to be moving much faster today than it ever did before. We seemed to have much more time to plan, much more time to make thoughtful considerations. Today we just simply don't have that luxury any more.

The one thing that I see is that Director Tenet has recognized this clearly and has really set a strategic direction for the Agency that calls on us to try and step up to these challenges in ways that we haven't done before. And he recognizes more than ever that the intelligence business is fundamentally about skills and expertise, and this really means it's about people, people in whom we need to invest more in order to deal with the vast array of complex challenges we face over the next generation.

And he has made this the center- piece of his strategic direction, and the centerpiece of what we're trying to do right now is develop the skills, develop the talent, develop the people that we will need to meet the many challenges that we are going to have to face in the next decade. And, of course, there are new technologies out there that we are going to have to master as well. So these are the kinds of changes that I'm seeing today at the Agency.

Mr. Lawrence: How about the changes that you've seen in the federal government overall, the entire government operation?

Mr. Calder: In some ways I think that those are some of the things that we're talking about, particularly in the information revolution. I just filed my taxes and I filed by e-mail. Today you can go online to just about any government organization and pull down the information that you need to get whatever thing that it is that you have to have done. This is a much different world that we're living in terms of the government's need to meet the consumers' demands in different ways.

No longer are people content with 800-numbers. No longer do people want to write letters and wait 3, 4, or 5 weeks for responses. Again, it's that speed issue. People want to deal, they want answers to their questions, they want those now, and over and over I see the government trying to respond to this.

Even the CIA has a Web site today. In fact, if I can plug it, I'd like to do that for those that would like to have a look at that Web site. It's www.cia.gov. All of us are trying to reach both the consumers of our products and those interested in us in a variety of ways that just simply weren't there 4 or 5 years ago.

Mr. Lawrence: What are the challenges managing at the CIA versus another organization? I mean, I think it is interesting that you have a Web site, but I would expect that the Web site is somewhat particular and unique given your mission. So what are the challenges of managing in this environment?

Mr. Calder: Well, one, I think it's the shifting and the uncertainty of the external environment which requires the organization to be much more flexible today than I think we were in the past. As I said, when the Soviet Union existed that afforded us a certain degree of stability, a certain degree of ability to focus on a single target. Today those targets are much more diverse, the interests of our policy community is much more diverse, and the time float, if you think about a crisis that erupts in one part of the world, CNN and others are almost immediately there.

So the pressure on our policy makers to make decisions, the pressure on our customers to respond, are much greater. Therefore, we have to be much more responsive in terms of being able to meet the needs of those customers as they try to address these issues.

In terms of the administrative side, this means that as our internal customers respond to these issues we also have to be there in a more agile fashion so that we can enable them to do the kinds of things that they understand have to be done from information technology, our communications, even being able to help them file travel claims more quickly. The expectation is that we will be much more responsive than we have been in the past.

It's the dot-coms that are killing us. Everybody has experience. Today if we put out an application that is three mouse clicks or more there's little tolerance for that. So people say why can't you do it better, why can't you do it like I do Amazon.com or one of those others that people are familiar with? So that's a real challenge for us.

Mr. Lawrence: It's time for a break. We'll be back with more of The Business of Government Hour in just a minute. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Dick Calder, deputy director for administration for the CIA. And joining me is Ian Littman, also a partner at PricewaterhouseCoopers. Ian?

Mr. Littman: Dick, let's spend some time talking about your current experience in reinventing the CIA. Before you took your present position in the Directorate of Administration, the Washington Post reported that you'd spent a lot of time criticizing it. What motivated you to take your present position, and what did you want to change within the directorate?

Mr. Calder: Ian, before I answer, I don't want to misrepresent myself. I'm not really trying to reinvent the CIA. It really is the Directorate for Administration over which I have responsibility. The Post did, I think, accurately capture what I said, but I want to really clarify that I wasn't criticizing the people in the directorate. It was really the bureaucracy that we have to deal with.

As someone who had to travel often, as someone who had to deal with a series of regulations often in environments where the regulations didn't quite apply it was always that battle back and forth about how do you fix this or how do you make it work here, and that was always a little bit frustrating for me. So that was the criticism.

And as I came into the job I said how can we make ourselves much more responsive, how can we take people who are imprisoned in this hierarchy that they work in and make them understand better what our customers need from us and therefore be able to shape and formulate policies that made the most sense to the people that were really depending on us.

And I think that in general I've read several articles of late that talk about the death of bureaucracy, people trying to move out of this command-and-control hierarchy of trying to restore some authority down into the ranks, and that was really what I was looking to do. Instead of having a series of policies and procedures that force things to march up through the organization, to try to restore to people who really work the front lines and understood the issues, to give them the authority and the capability to take care of problems on their own. That's what I was looking to do.

Mr. Littman: We note that one of your first actions was to perform an activity-based costing study. So I'm wondering for those of us at home if you could explain what that is and how you used it to drive your change initiatives.

Mr. Calder: Very, very simply, activity-based costing helped us to understand the cost of our processes. I think that one of the biggest problems with government is the free good syndrome. We could talk a lot about this, but basically I don't think any of us can get enough of a free good, and the administrative processes that we do, the services that we provide, were basically free to our customers.

And what I was trying to do was begin to understand what those processes, what those services, cost so that we could understand how better to deliver them. We could do some benchmarking outside.

For example, we learned very early on that a corporation, I guess I can mention the name, Hewlett Packard, has a very low transaction cost for some of the vouchering that they do, when compared to ours significantly lower. And it was only by beginning to understand the individual or incremental process costs that we were looking at that we could begin to see how we might do ours differently. So we needed to know those costs in order to drive some different behaviors within the organization.

Mr. Littman: Dick, as we all know, organizational transformation can be very difficult. What have you learned about changing large organizations?

Mr. Calder: Not enough. I would say Machiavelli says that change has no constituency, and I don't know when he said that, obviously many, many years ago, and I think that's very, very true through today. Change is great as long as it's happening to somebody else, and I think that what I have learned, one thing, is that change is never an event. It's a process, and it's a process that takes some time to get through.

What I found was that many of the things we were doing were more or less on auto-pilot. We had done them so well for so many years that the idea of thinking of doing them even slightly different was anathema to some of our people. What we had to do was to try to get people to reframe issues, get people to reframe problems, get people to think differently about what they were doing.

The biggest problem that I see in the government right now, though, is that we really do favor incremental change. I remember Nicholas Negroponte who wrote the book Being Digital. I think he argues that incrementalism is the worst enemy of innovation.

Now, there is a reason for this. Incrementalism limits the downside, but incrementalism also doesn't get you to where you really want to be. It makes change I think sometimes much more difficult, and it makes you have to settle for a solution that is probably less than where you really want to be.

I've had some luck in trying to push beyond the incremental change, but this seems to be the preferred road and this is going to make change, I think, in the government more difficult down the road, particularly as we have to deal with external changes that are even more different, more demanding, than we face today.

Mr. Littman: One of the things we noticed was that a major part of your strategy was to create an internal market for administrative services. Could you tell us more about this, what it is and how it works?

Mr. Calder: Basically, this is complicated, but let me just say this. What we did was take the money that was appropriated to our components after they had written a business plan, after we were satisfied, and after we had approval from our executive board, take the money that was given to those components to do their services and return all of that money back to the customers.

In other words, the customers now would have an opportunity to spend some, all, or none of those resources on us as providers. They could go to alternative providers, they could spend less for a certain service or a certain good, but they had the option.

And the reason here is we were looking at two behavioral changes. One, the incentive on us was now to deliver our services, our goods, much more effectively, much more smartly, much more competitively than we had in the past. So this forced us to look at our processes. It forced us to look at really trying to understand what our customers wanted.

It also had the effect of changing the behavior of our customers because now that our customers had the opportunity to understand cost-benefit analysis, the opportunity to make decisions and have an actual incentive for making a smarter decision, they chose to do the kinds of things that made the most sense for them and could use the savings, if there were savings, to be driven back to mission.

Mr. Littman: And did it change behavior?

Mr. Calder: It did in many, many cases. We found that a lot of our customers stopped doing some things. For example, we recently put telephones into this environment and we found that we had a reduction of around 8 percent in usage of telephone lines. People just gave up telephone lines. We had people now going back trying to figure out how many cell phones they had, how many beepers they had.

So it drives changes, it did drive people to focus on this, primarily because they would benefit from making a smarter decision.

Mr. Lawrence: It's time for a break. We'll be right back with The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Dick Calder, deputy director for administration for the CIA, and joining me is Ian Littman. Ian is also a partner at PricewaterhouseCoopers.

Well, Dick, let's talk about the employees at the CIA. What are you doing differently today than what you did in the past?

Mr. Calder: Well, basically, what we're doing is challenging people to think differently about how they do their work. Historically, we have worked in this bureaucratic pyramid which had very well defined rules, procedures, processes, and in some ways was frustrating. If I looked out at all the things that we've tried to do over the past, things like total quality management, business process reengineering, all those things were attacks and how you get around this bureaucracy, how you get around this hierarchical structure.

What we decided to do was to really drive decisions down to the employees. I hate to use this word, but what we're really talking about is empowerment, try to give to the employees the opportunity for them to make the decisions about how best to deliver their services, about how best to deal with the customers, about how best to do their individual processes.

I think that this is working. We have seen people really engage. In fact, if I had a meter, say, to measure where we see the most innovation today within my directorate I would argue that it's in those areas where we have moved them into a business environment. These are people that are constantly focused on the customer, and these are people that are consistently looking at how they do their business, consistently thinking about how they might do things differently.

Again, I was talking in the previous segment about our telephone people. They, on their own, started to monitor cellular bills in the Agency, taking the top 100 phones each month just to try to understand how they could help the customer perhaps drive their bills down. Why did they do that? Because I think that they have a better sense, a better linkage, with the customer but more importantly because they feel they actually have the authority, the power, to make those decisions.

So I think that what we're seeing is that people are finding novelty, they're finding meaning, they're understanding that they're having impact, and I think that these are very important elements in making a work force content, making a work force really feel that they are needed and that they are valued.

It's not just salary. Today the government, I hear this over and over and over doesn't compete well if you're looking at salaries compared to the private sector. At the Agency we have a tremendous work force, a very, very good work force, and I think what they are looking is to add value to what the mission of the Agency is. I believe the way that we are trying to organize them today allows them to feel that they are really adding that value.

Mr. Lawrence: Dick, what kind of changes have you wanted to make in the way employees at the CIA are hired, retained, rewarded, and developed?

Mr. Calder: Let me just if I can take one little quick diversion here. A lot of people talk to me about job security, job security being an organization that will offer you a job for life. I think in the world that we live in today any organization that offers that claim has to be suspect, even at an organization like CIA.

To me an organization that really offers you job security is an organization that if you choose to leave tomorrow you can walk across the street and feel assured that you can get another job commanding a salary that is commensurate with whatever you were making when you left or maybe even at a higher level.

In other words, keeping people so that their skills are marketable, so that they're marketable, so that they feel like they are constantly performing at the top edge of their business. That's how you retain people in any organization, and that's how we are trying to retain people at the Agency; the CIA is giving people opportunity, making sure that they have the skills that they need to do the job that is required, making sure that we give them opportunity to train and develop new skills, making sure that we are using them in a team format, making sure that we reward and recognize them when they add significant value. It is all of those issues.

It's not just a simple training program or a sheep dipping in some new technology that allegedly makes them more capable. It is really having them feel that they have an impact and making sure that we give them the opportunities to continue to expand their own skill base and do that regularly, and that's what we're doing at the Agency.

Mr. Lawrence: Are you worried about attracting young people or new people into the organization?

Mr. Calder: No, in fact we have a major recruitment campaign we have had and have had for the last couple of years. Again, the director, George Tenet, has really made this a centerpiece of his strategic direction. He wants to bring the right people into the organization and, quite honestly, part of it may be just the simple brand name, CIA, the attraction of what that might represent. But I think that gets them in the door. What really keeps them there is the wonderful mission that the Agency has, and our capability of really challenging people to perform at levels that probably surprise them.

Mr. Lawrence: And is that true for technology people? We noticed from talking to a lot of people in the federal government that it's particularly difficult to hire technology people. You mentioned earlier the dot-com environment. Is that also true?

Mr. Calder: It's true that we do attract people that have excellent skills in the technology areas. We do it both in the scientific area and the technical areas. And we do retain them. I would say that we probably lose some people to the private sector. Frequently we will get people already trained in certain technologies, only to find the company that trained them to come along and perhaps turn their head.

But I would say in the main we are as good as any other government Agency at being able to give people the types of jobs that are so attractive to them, putting them in teams that they feel so committed to that they are quite willing to turn their head at an offer that might exceed the salary that they are making today because of the satisfaction they are getting, because of the work they are doing.

Mr. Lawrence: Dick, coming from operations you knew your customer well. You were your customer. How do you get those folks to become more cost-conscious and efficient?

Mr. Calder: I wish I had a silver bullet that I could talk about here. I really think the issue here is the incentives. If you're going to ask people to think more critically about how they do something there has to be something in it for them. And one of the things that we have tried to do through having an internal market in CIA is to make sure that those people who are making smarter decisions, those people who sit down and do that cost-benefit analysis, those people who think through how they want to use our services and as a result effect a savings, that those people are able to benefit from those savings.

And the Agency I think has been very forward leaning on this. I know the comptroller and others have made sure that we have set our systems up such that those people who are making the right decisions are benefiting from those decisions, and I think it's the incentives that are more than exhortations, more than promises. It is seeing the benefit from the incentive that really does make a difference.

Mr. Lawrence: Do those internal customers resist change when you've presented it to them?

Mr. Calder: This whole effort, yes. As I think I said before, change has no constituency, so there has been some resistance. Everybody today is from Missouri - everybody says "I hear it all, but you got to show me." So it has taken some time to convince some of our customers that we are serious and that there are benefits to be had from using this internal market.

Not everybody is on board. We still have some work to do. I really believe that we what we're involved in is not a mile race, it's a marathon. We're only several miles into it. This is going to take some time. This is about changing cultures. A whole variety of issues are involved here.

But I think over time, if we can be consistent in the quality of the services that we deliver, and if the customers can come to recognize and trust in the way we are running these internal markets, I think more and more will sign up to the benefits of them and more and more will really engage in this change process.

Mr. Lawrence: You just mentioned it takes time. How long does it take if someone were to undergo the kind of changes you've just talked about, costing, internal markets, and incentives?

Mr. Calder: I've been at it now for 50-plus months and, as I said, I don't think I'm at the halfway point in this marathon. I think it takes organizations a significant amount of time to get there.

One of the things I think that is needed, and unfortunately in many organizations it's very difficult to get, is the persistence of leadership on these issues. I have been fortunate. I have had the backing of my director in what I have been doing.

I have been around for over 4 years now. I have been fairly consistent in the values that I have espoused. I have been consistent in the formulas that we have used or the methodologies that we have used. I have been blessed to have a wonderful team to work with. So it has been that consistency and also, quite honestly, we have been buoyed by the fact that it does seem to be working.

I can honestly demonstrate that we are saving the organization money, and I think that I am getting better returns out of our employees. The people who are engaged in this as they come up I can see it in the excitement. I can see it in some of the successes that we're having.

Mr. Lawrence: It's time for a break. We'll be right back with more of The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Dick Calder, deputy director for administration for the CIA. Joining me in our conversation is Ian Littman, and Ian is also a partner at PricewaterhouseCoopers.

Well, Dick, that's just finish what we were talking about in the last segment as you were reflecting on your pushing the CIA towards entrepreneurship and forward thinking. Any lessons learned that we can summarize?

Mr. Calder: There are a lot, but let me just pick out a couple here. I think one is the willingness to talk about things that don't go well, the mistakes. Let's say it as the right word here.

Historically, bureaucracies, particularly federal bureaucracies, don't tolerate many mistakes, and I would say at the Agency we have to be very careful about the mistakes that we make. But when you're trying something new, when you're trying to work through new issues, you're not always going to calibrate correctly.

And we have made an effort to be straightforward about good tries, talking about good tries, things that didn't work; things that we thought would work. We put the planning into it, we thought it would be the best way to approach it, but it just wasn't.

And I think we have developed a little bit of an ethos now, I don't want to over-exaggerate this, of being able to say hey, let's try this. Let's not be timid about this. Let's try this, and if it doesn't work too quickly, go back and make sure that we recover and that we give people credit for the trying, not necessarily only for getting it right.

The other thing that I would say is that I believe new ideas come from new voices, and the new voices tend to be on the periphery of the organization. And so one of our challenges has been to try to reach out to those new voices to try to be sure that we are getting their ideas.

One of the things of living overseas is that you get to see a lot of different cultures, a lot of different hierarchies, a lot of different bureaucracies. And I can remember working in one particular government. Its' economy was booming, it was really quickly coming into the 20th Century, and it didn't have sufficiently trained people to do all the things that the economy demanded of it.

It reached out and hired people from a variety, from Europe, from South Asia, from all over the world, and I was struck by how effective having that broad base of people was in making this work. And, in fact, I thought there was a richness of ideas there that I didn't see in some of the other environments that I worked in.

So I've become a believer in trying to reach out and bring together as diverse a group of people as possible to try and solve ideas, and I think that's been one of the factors that have made us successful, that we have tried to cut no one out but to try to be very inclusive.

Mr. Lawrence: Dick, let's talk a little bit about technology in the future. Technology has become increasingly important to the success of all government agencies. Can you tell us what role technology has been playing at the CIA?

Mr. Calder: Absolutely, a critical role. One of the things, I will again take it down to where I am, which is in the back- office business, and whole world of doing back office, of doing the support work around not only in our organization but in the private sector and other elements of the federal sector as well, there has been an increasing use of technology to dis-intermediate, to take people out of the circuit that historically were there when we were passing paper from-out box to in-box to out- box, et cetera.

We have been trying to leverage that technology to drive process costs down, to actually take steps out and in fact to blow up processes. Instead of just going down and trying to automate the status quo, we have been trying to use the technology to force us to rethink how we do processes.

We instituted a new payroll program not too long ago, and part of that whole effort was aimed at using the actual technology to drive us to think differently about how we did payroll. And we've seen this in several other areas. Technology, to me, is a real force multiplier in how we look at processes and how we're doing business at the Agency.

Mr. Lawrence: Now, technology often cuts two ways for employees, right? First, it's hard for people to learn because it's new. And, second, you just described a process where you could imagine fewer employees as a result. How does that work for you?

Mr. Calder: This is the real conundrum of government. If you think about government, government is basically people, most of your costs are people. If you now think about technology and you now think about making improvements, what you're really doing is threatening employees.

So, the issue for many of us who are trying to manage is how do you get people to engage when the outcome may be a real threat to their job? And what we have tried to do, particularly at the Agency as I said earlier on, is to make sure that we have outlets, to make sure that people understand that the way that they continue to add value in the organization is to be as flexible as possible in learning new jobs, in cross-training.

In our directorate we have a lot of guilds. We have logisticians, we have finance officers, we have people who for a career have worked within these small silos. And what we are trying to do now is to move, using technology, using information, and allowing these people to have broader opportunities. And, not surprisingly, we're seeing a lot of people step up to that challenge.

So that's how I think you deal with that dichotomy of all of your costs are in people, if you drive the costs out, you're going to put people at risk. How then do you ensure that people will play? I think it's by making them comfortable that they will have other opportunities as they work through some of these issues with you.

Mr. Lawrence: Dick, commercial organizations are deeply involved in the new economy. How do you envision e-commerce playing any type of role at the CIA?

Mr. Calder: Many of the ways we provide services in the Agency today have moved to having Web pages, and this I think is becoming very common across the federal government, certainly in the private sector.

One of the issues that we are struggling with and we want to fix very, very quickly is that you can get all the information on our Web pages that you want, when a service is available, how much a service costs, how to actually sign up for the service, how best to get it delivered to you. What you can't do today is do the transaction.

And we are working on it. We are spending a lot of time on this. If we can develop that final step so that you can actually do the transaction, this will be of enormous benefit to our clients, to our customers. But much more importantly, I can see thousands of process steps. I can see paper being saved, trees being saved, forests being saved, by not having to do much of the processes that we do today by using the technology as the process enabler rather than having paper backup, and that's really where we're trying to get to.

This means the use of credit cards, the use of other devices. As I said, we are fairly close, and we have a lot of people that are working on this, a lot of experimental ideas going on, and it won't be that long before I think we are on that edge.

Mr. Lawrence: Dick, what are some of the other key issues the CIA will be facing in the future years to come?

Mr. Calder: Well, we wrestle with a variety of new issues today. We have weapons of mass destruction. There's international terrorism. We have narcotics. We have organized crime. I think it was former Director Woolsey that talked, in referring to the Soviet Union, that we had managed to slay the dragon and what appeared in its stead were literally dozens of venomous snakes.

I think the challenge for us is almost impossible to predict. If you look out there you have information technology, you have telecommunications, biotechnology and robotics. You have all those issues out there. None of us can predict what they're going to be. I think the real challenge for us is to develop the agility and the adaptability so that no matter what happens we are capable of addressing it.

Mr. Lawrence: I'm afraid we're out of time. Thank you very much, Dick, for spending time with us tonight. Ian and I have enjoyed our conversation very much.

This has been The Business of Government Hour, conversations with government leaders. To learn more about the Endowment's programs, visit us on the Web at www.endowment.pwcglobal.com. See you next week.