Kathy Warden, Chairman, CEO, and President, Northrop Grumman
Interviewer: Pattie Sellers, Chair, FORTUNE MPW Summit, and Co-CEO, SellersEaston Media

MPW Summit 2020: Moving The Defense Agenda Forward

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Space and defense and innovation—we’ll hear the outlook from the CEO.

I'm patty sellers with fortune today. We have Kathy Warden the chairman, president and Ceo of Northrop Grumman. Kathy was elected chairman of Northrop Grumman last august a year and a half ago and she's been Ceo and president of the company since january 1st 2000 and 19. She's been on the board since 2000 and 18. Welcome Cathy, thank you Patty. I'm really pleased to be here with you today. So Kathy is one of the many women who are in charge of these multibillion dollar space and defense businesses businesses. These this phenomenon of women at the top of our of our of our defense system in the United States. And we were joking before we came on here because I told her it's hard to keep track of which company which Marilyn Houston is responsible for and what what defense system, Stevie Novikov IQ is responsible for general dynamics. So here's what Cathy is responsible for. Northrop Grumman is the company that built the lunar module that put men on the men on the moon. I would like to say women on the moon, but we still have the same man on the moon. Um North of Drummond makes fighter jets from fighter jets to I. C. B. M. Missiles to radar systems for air, land and sea commercial satellites and currently in development the world's most powerful telescope ever. So that's just a little bit, about a little bit about Northrop Grumman, which has 90,000 employees. And Kathy, when Covid hit, you kept more than half of your workforce in the factories, in the plants. They weren't working from home. How did you handle that? Well, patty, it was a really interesting time for everyone at the beginning of March When it became clear that COVID-19 was going to spread across the United States. And as you said, given the important work we do for national security, we needed to have our people still come to work. We were deemed an essential business, which means we were asked to keep operating. So the first thing we did is pulled our team together and knowing that safety and well being of our people was going to be our number one priority. We worked really quickly to get in place the capability to bring our people into our facilities that included cleaning, providing math and creating social distancing requirements. But we also recognize that employees needed to deal with things in their personal life. At the same time, we were asking them to meet their professional commitments. So we offered additional leave. We provided elder and child care, just things that help to alleviate the burden outside of the workplace. But equally important, we came to realize that communication was going to be essential, That we needed to build people's confidence in what actions we were taking and that they would be safe in the workplace. So we started communicating on a regular basis and continue that for months and months. And there were times when I knew we were writing things that didn't change much from the prior week's communication, but it was just important for people to hear from us and know that we were continuing to work and keep their safety in mind. And we also engaged more with customers, more frequent communications and quality of communications and with our suppliers because they equally were hurting and needed our support during this time. So how much, I mean, I believe, did you did you start writing weekly emails to your employees? Is that is that right? I did eat and every week for about five months. And did you get any advice on Communicant and um who sort of who who's counseled? Do you do you seek at a time like that about how should I manage my 90,000 workers at a time like this? I don't know if I don't know if I would ask a man that question. You can accuse me of that being a woman to woman question. But but seriously, who do you turn to your at the top your chairman, President and ceo? Well, I certainly turned to my leadership team and it's times like this that I was so pleased that we have a diverse leadership team. It has men, women, people from different backgrounds and race. And as the diversity of that team came to light, it really reflected what our organization needed to hear from us because different people around the table had different perceptions of what was important. And it highlighted for me that if you don't have a leadership team that reflects the population, then you're really missing out in being able to lead all people within the organization. And I think it's just interesting that Covid happened and then shortly on its tail we were dealing with social justice issues within the U. S. And these two things really were related in so many ways. But the diversity of our team was part of our strength in responding to the Covid crisis. So Cathy I want to talk a little bit about the business and how you kind of redirected it since he became Ceo in the beginning of 2000 and 19 1 area that you've really emphasised even greater than it was than than the company had been emphasizing it before is space. And I realized that it's the fastest growing part of the Department of Defense Budget. I think it's growing at like a 12% rate. Is that right? Talk about talk about kind of the future of space and your call to develop new technologies to um in that area. Well, space is going to be such an important domain for all of our lives and certainly will have an impact on national security as well. Our government needs to be able to operate, it will from space just as we are able to do in other domains like air, sea and land. And as a result, there is increased expenditure, as you said on new space programs that will help to provide our country, the situational understanding that we need in and from space as well as the capability to engage in national security matters from space and the Northrop Grumman portfolio positions as well to support the many facets of capability that are needed in the space domain. Um, the um, Talk about how much of, I think about 85% of your businesses defense and 15% is commercial, is that right? That's right. Talk about what your priorities are in terms of um preparing, preparing to secure America at a time when threats are clearly increasing and your background Cathy is actually cybersecurity. So I know that's part of it. But what are your priorities as we're dealing with increasing threats of all of all of all types? Well, teddy, there are a couple of really important things right now for the United States. One is that we have the ability to defend our country against adversaries who may choose to engage us in any domain. Uh, certainly we all who are over the age of 20 can remember or know the story of what happened on 9 11 in our country and we never want to see an adversary bring a tragic event like 9 11, 2000 and one to our soil again. So we're very focused on national security from all domains. And the threat environment, as you noted, continues to elevate. There are more actors today who might pose a threat to the safety, safety and security of our nation than ever before. And so we are working with the government to provide them the capabilities they need to defend uh the U. S. But also our allies around the globe. And in order to do so, they need capability. But also speed. And the importance of getting capability fielded quickly today is just an absolute imperative. So two things that we're working on in our company is continuing to innovate and that's helping us to win new programs like the ground based strategic deterrent, but also increasing the agility of our organization so that we can respond very rapidly to what our customers need as their adversaries, evolving their capability as well. I want to talk a little bit about your, your career. You mentioned 9 11. You are actually in the commercial Kathy by the way, is from a town of 3000 people in Maryland. I bet you never heard of it. Smithsburg Cathy is from a blue collar family. You and your sister were the first in your family to go to college. You went to James Madison University, then you got your M. B. A. At George Washington University. Um You worked at G. E. In primarily commercial businesses and then tell us what changed and and you're kind of fork, you hit a fork in the road, didn't you? I did. So as you noted, I was working in commercial tech and I thought that I would spend my entire career working in that field And then 9 11 happened. And I happened to be working with an organization that also had worked with the U. S. Government. It wasn't something I was exposed to at the time, but I was asked if me and my team would take the capabilities that we had and bring them to the U. S. Government and help with information sharing across government to prevent The issue of 9 11 again in our country. And at the time I thought it was something that I would do for a short period of time. I think often as we hit forks in the road, we don't realize they're a fork in the road. We just see it as a decision at a point in time. One that can be reversed and go back to our normal and that's what I intended to do. But when I got into the work with the U. S. Government and specifically working on national security issues, I came to realize that my work had more meaning than it ever had before. I felt like I was doing something that could make the world a safer place for this generation and the next. And I had just had my first child at the time. So I was particularly attuned to what legacy I'd leave behind and what the world would look like for my Children. And so it was a fork I took and I am so glad that I did and I haven't looked back and I'm thrilled to be working in this industry today because of the meaning that it has brought to my life. But at the time I never would have thought that I would go on stay in the industry and be able to do what I'm doing today. Yeah, well I, you know, I know that you were you joined Northrop Grumman in 2008, was it? That's right. And it was in cybersecurity and uh I think, you know, a couple years after that, less than a decade ago, you were a vice president at Northrop Grumman, uh vice president of cyber intelligence division. And that is a very fast ascension to ceo. So congratulations, congratulations on that. You mentioned Kathy that you're diverse workforce. I uh in your letter to shareholders, you mentioned that um Female representation on our executive leadership team has increased from 8% in 2010, 258% in 2020, that's that's a big increase. Good for you. What's your goal? You're at 58%. Executive leadership now. What's your goal? So our goal has been and continues to be that our team in all levels of leadership and senior technical roles would mirror the communities in which we live and work and we have set goals because I believe that what gets measured is what gets done and we have tied those goals to incentives for executive team. And that's allowed us to focus and clarity on what our representation should be so that we can meet that broader objective of looking like the communities that we serve. And in doing so, we've made a lot of progress. But I'll tell you, we're not done. And I think most organizations would say that their diversity, inclusion and equality objectives are ones that evolve over time because our environment evolves, the diversity of our communities evolved. And so while I'm really pleased with the progress we've made and the statistics bear out some of the results that we've seen. There are other areas where we still have improvement and we have targets that we have not yet met. And even more important than diversity representation is the work that we're doing around creating an inclusive environment. Because it's not just enough to have diversity around the table. We want to make sure that everybody's voice is heard, that people feel respected and a sense of belonging in the environment that we're creating here at North of Drummond and that's our ultimate goal. What's the biggest thing you're doing to advance inclusivity? Well, there are so many things, you know, certainly having open and hard conversations about the barriers that prevent us from having an inclusive environment. We do a survey every year. It's a really important tool for us to collect feedback and see how the environment feels to different parts of our population and then take actions to address those issues that might exist. We also believe that setting uh engaging our teams through employee resource groups and setting targets for their involvement in helping us move our inclusivity forward is really important, and that the community work that we do so demanding that our suppliers also have diversity and inclusion programs and working with those in our local communities who would further the opportunity for diverse candidates to have pathways to roll that. Northrop Grumman or other companies in our industry are all really important steps that we take, and I tell our team all the time and my leadership team agrees it's not just about what you do inside the the walls of the corporation, but it's about what you do outside that creates the community that our people want to live in and can thrive in. Well, I was gonna ask you one more question Cathy about what if we have a change in the White House uh in january, probably fortunately for you, There is no time for that. I know if you probably would have told me that the long cycle business and when we understand that Kathy thank you so much for joining us, we hope you come back to most powerful women again. And uh it's been delightful having you and thank you patty. It's been a pleasure.