# Presentation: 767902

## Lessons Learned in Transitioning to Alternate Organizational Models

- Robert E. Fenton
- Adjunct Senior Lecturer in Engineering Management
- The Catholic University of America
- December 15, 2004

## Agenda

- A model for organizational transition
- The nature of an FFRDC
- Some lessons learned on FFRDCs
- Case study:  New FAA Air Traffic Organization
- Recommendations

## Transitioning to a New Organization:  The Eight-Stage Process to Creating Major Change

## The Nature of an FFRDC

**Strengths (1)**
- Strategic partnership with sponsor
- Long-term continuity
- Comprehensive knowledge and corporate memory
- Adaptability
- Objective, high-quality research
- Independence (B-2 vignette)

## The Nature of an FFRDC (cont’d)

- Freedom from conflicts of interest
- Access to sensitive governmental, proprietary information
- Quick response capability
- (1) GAO/T-NSIAD-96-117, 03/05/96

## Potential Risks

- Issues over scope of work, appropriate FFRDC roles
- Erosion of capability (e.g., system development)
- Possible loss of objectivity if development occurs
- Lack of competition = poor performance
- Lack of needed values (e.g., competition, risk-taking, entrepreneurship)
- “Capture” by sponsor
- Crucial role of leadership, governing institutions
- Congressional restrictions, micromanagement

## Some FFRDC Lessons Learned

- Most FFRDCs based on preserving existing capability
- Leadership/personnel are crucial, *not *structure
- Technical knowledge/management skills
- Integrity
- Washington maturity
- Communications/negotiation skills
- Sources:  ex-USAF/USN, space, industry; academia for technical skills

## FFRDC Lessons Learned (cont’d)

- Understand needs/issues of governing body
- Understand culture of sponsor and Congress
- Agree early on core mission/work, core competencies, fee structure and use, expected staffing/funding levels and any non-core or diversified clients

## Case Study

- The FAA Air Traffic Organization

## The FAA Air Traffic Organization

## The FAA Air Traffic Organization

**Technical Operations**
**VICE PRESIDENT**

**ATO Transition***
**SR. VICE PRESIDENT**

**Operations**
**Planning**
**VICE PRESIDENT**

**Acquisition & **
**Business Services**
**VICE PRESIDENT **
*Federal Acquisition Exec.*

**Safety**
**VICE PRESIDENT**

**Communications**
**VICE PRESIDENT**

**Finance**
**SR. VICE PRESIDENT**

**System Operations**
**VICE PRESIDENT**

**temporary*

**Chief**
**Operating Officer**
**(COO)**

**Terminal**
**VICE PRESIDENT**

**En Route & Oceanic**
**VICE PRESIDENT**

**Flight Services**
**VICE PRESIDENT**

**Administrator**
**&**
**Deputy Administrator**

**Support Service Units**

**Operating Service Units**

## The Sense of Urgency - A “Burning Platform”

- If OMB funding estimates for the next few years are accurate, we face severe funding deficits.  In spite of rising demand, we must control costs and better manage our finances.

## Transitioning to the Future

- Organize around our customers
- Define products/services from external perspective (service model)
- Change our leadership model
- Change “personality” (stovepipe) to “organizational” management
- Simplify basis of performance for the organization
- Develop metrics based on “value-based” units of output

## Transitioning to the Future (cont’d)

- Baseline our resources
- Understand our basic resource and cost drivers
- Develop a rolling five-year business plan
- Establish forward revenue and cost management practices
- Execute the plan
- Drive operating and financial management goals from top to bottom

## Accomplishments

- Business Plan briefings
- Early-out offering
- Implemented three Service Areas across nation
- Air traffic controller hiring plan
- Chicago O’Hare agreement on number of arrivals per hour
- FY04 Flight Plan success
- Developed draft milestones for FY05 Flight Plan

## Lessons Learned from ATO Transition

- Organizational locus is sub-optimized
- Possible alternatives:  privatized entity, Government corporation
- Selection of guiding coalition based on continuity of ATC services and desire to change ATO service model/culture
- “Burning Platform” acceptance is crucial to ATO  organizational change and long-term success
- Change from highly structured, paramilitary FAA culture to entrepreneurial, cost/ customer-focused culture will be very difficult
- Dealing with Congressional dual personality will be very difficult

## Recommendations

- Create a mission-based sense of urgency
- Focus early on selection of “Guiding Coalition”
- Build around an existing capability
- Establish early agreement with Sponsor/Congress on core mission, etc.
- Consider pay-for-performance approach akin to private sector

## Recommendations (cont’d)

- Consider mentor/protégé relation with existing FFRDC (e.g., RAND, CNA)
- Consider partnership for development akin to Aerospace/TRW for ICBM; erect permeable wall
- Consider consulting agreement for FFRDC start-up with Dr. Donohue (former RAND VP, Project Air Force)