Name: Lockheed Martin CEO: What Makes F-35 the Most Advanced War Plane
Uploaded: 2018-11-15
Duration: 18 min 44 s
Description: Marillyn Hewson speaks at Fortune’s MPW International Summit.

[ APPLAUSE ] So, what was it like? I mean given number 3 not too shabby but was it different to be name number 1. [ LAUGH ] Well I have to say you know I wouldn't be on this list if I didn't have the opportunity and the privilege to run a great company. So for lucky and more on it just really special. For 100, 000 men and women at Lockheed Martin that we get recognized this way. And, as the leader, I'm very happy to represent all of them. So you didn't have a party or anything? No, we didn't have a party. Let's talk about Lockheed Martin. Lockheed is one of the world's biggest defense companies with revenue last year, $ 51 billion. It's the largest supplier to the US government. One reason why your number one is your performance. Since you took over in 2013 the total shareholder return is 286 % vs 115 % for the S and P. That's commendable. You were awarded more than a billion dollars in contracts in 2018 alone. What I want to first ask you is, we are living in this time of heightened geo political threats. You have said things seem to get more chaotic and more Unpredictable every year. So is this good for business? I travel around the world and I meet with world leaders, I meet with our leaders in Washington DC and what I hear from them is that this is one of the most unpredictable and just chaotic threatened by [ UNKNOWN ] they have ever faced since the cold war, and frankly when I think about that. You know what they want is somebody like Lockheed Martin and other companies to come and help them, determine how they protect their citizens, how they protect your home, my home, our families. And so that's really whether you call that good for business or not, we are in the business of safety and security and helping governments. Protect their citizens. One of the most important I guess milestones of your tenure has been the roll out of the F- 35 which is for those of you who don't know anything about fighter jets, is the world most advanced war plane, it's the biggest program in US department of defence and most expensive US weapons program ever. It's a quarter of your business now. Can you tell us a little bit about this Fighter Jet 101? Just what makes this jet so advanced? Well, it is the most advanced jet. It's stealth. It really has advanced sensors and sensor fusions so that not only is it the most advanced jet in the world, but it also makes the rest of the elements in the battle space more Effective because it can communicate with all of them. So it brings for not only the US services that actually are purchasing the jet but also for our partners around the wold. We have 11 partners around the world that are also buying the jet. It just takes it to the next level for them to protect their citizens. It had some challenges with the rollouts, and costs overruns, and delays There was also a famous tweet by President Donald Trump. One of his first kind of corporate tweets was targetted to you although he didn't name your company by name but he said it was the cost were out of control and this was in December 2016 and your stock price fell 2 % that day. How did you address that tweet and the claim? I mean what was that like? Well I must admit we were very surprised by that tweet because we were in Israel at the time when they were receiving their first two jets and so to be there and to celebrate with the country about them receiving F- 35 on the same day that president elect Trump, it was before he got into his current role as president. Tweeted about the cost of the aircraft. So we were in a midst of a lot of dialogue Did they ask for a disount? Well yes in fact they did. When I met with the Prime Minister Netanyahu that's exactly what he did. He said if your new president's is gonna get a better deals on those jets how about a rebid for me. But what I understood from that, it took a little bit kind of So to speak a bit to understand what was this is about? But what we do know is that this administration and really it's by partisans support in the US for defense spending. They were gonna spend more in defence. And what President Trump wanted to communicate to citizens is that he was gonna be a wise buyer, that he was gonna make sure that What he bought on defense he was gonna get a good deal for and so he made that point on the largest acquisition for the Department of Defense. We had an opportunity to spend time with him and talk about the aircraft. We also met Lee. His push helped us get a negotiation done. With the Department of Defense and in fact add a better price, so I would say it was very effective in accelerating the negotiation and getting a better price for the tax- payer. The USS government is most of your business, but you have growing international business under your tenure. One big customer to all the defense contractors is Saudi Arabia. The topic of doing business with Saudi Arabia has become a lightning rod in the wake of the murder of journalist Jamal Khashoggi. We spent a lot of time talking with CEO's at our global forum a few weeks ago in Toronto about this. But what is your take on that? I know it's complicated for you because you're involved in the government's relationship with Saudi Arabia. But Did it give you a pause? Most of our businesses with governments. We don't have a lot of commercial business in our company. We have some commercial helicopters and commercial sattelites, a few things. But predominantly governments around the world About 30 % of our business is outside of the U. S. in terms of the governments, and one of which is the Kingdom of Saudi Arabia. The situation with Mr. Khashoggi was just unacceptable, an egregious situation. But what we do is we do business through the US government, so we take the lead from the US government on what we sell to 70 countries around the world and so we will do that in this particular case. It's a matter of following the regulations that the US government puts forward and that's the situation we're in. Were there ever Be an instance where you ahead of [ UNKNOWN ] so violated something that you would say that the U. S. government were pulling out of everything, you just don't have that option. We don't sell to them, we sell to the U. S. government, the government then makes the sale to the country. Okay. I wanna ask you about a trend that we wrote about in the [ UNKNOWN ] where an issue which is this fact that Women run four of the top five defense companies in the US anyway. Tom Kennedy, the CEO of the fifth, Raytheon, is known as the last man standing. [ LAUGH ] It's a really, I mean it's interesting. There's you, there's Phebe Novakovic of General Dyamics, Leanne Caret who heads Boeing's defense division, and Kathy Walden will take over at From it in January. Is this just a coincidence or there is something to it? Well, I think this is a situation in the defense industry where if you look at those women including myself, we've been in the industry for a number of years. I mean, I'm celebrating 35 years this year at [ INAUDIBLE ] and what we've seen over the years is that women have moved up through the pipeline, gotten experience, continued to perform and deliver results and so competing with men in that marketplace. We just sell to take over in the role of CEO and I think that's what you see with these women. I don't think it's a coincidence. I think if you talk to each one of them, they worked hard, they performed and they competed, and they achieved the role of running the company. But we don't see that kind of ratio at the very top in any other industry really, I mean it's really unique Well, we're a small industry if you think about it. I mean we just have five prime contractors at the top that you just described. So that as opposed to maybe retail or other industries. So it's a little bit different in that sense. But if you think about years ago I was the only woman in the room when I first became a manager at Locky Martin. I started as an industrial engineer and moved up into management. And often I was the only woman in the room. Over time more and more women today. About 20, 22 % of our leaders are women, so we've made a lot of great strides at Lockheed Martin, I think the industry as a whole. I want to ask about your personal background. You grew up in Kansas, one of five kids, and your father died when you were nine. What was your childhood like after that and was there anything about that experience that shaped you as a leader? Well yes, it was a pretty challenging situation, my mother had five children, I was a middle child of five, between the ages of five and fifteen, and my dad passed away at a very young age, he was forty one years old. It sort of knocked the props out of what was for us [ UNKNOWN ] family and so we have to learn to be more self reliant. My mother that was an incredible woman she had been a nustering over to, she had raised her family on her own and she basically gather children up and said you gonna learn how to, to do things that maybe I didn't do because I never expected to lose my husband at this young age. So she engaged just in And out paying the bills and buying the groceries and just pushing us out to say, you've got to learn how to manage on your own. What it did for me, I think it made me more independent, more self- reliant, and so I do think it shaped who I am today. And when and how did you get the spark of being interested in business, and then when did you know that you had leadership potential? Well I had to work my way through college. And back then before the internet cuz it's so many years ago. You know I'd get out the classifieds, some of you may not even know what that is. But it's a list of jobs and I knew I was gonna pay my way through school and I knew I needed to get a job. And I saw accounting, there's always accounting jobs, I heard you had CFOs and others here. Accounting jobs are always there, so I said, well I'm gonna go into the business school and I just took an interest in accounting and economics and that was the direction I took. And I just over time, really had a passion to continue, passion for business in general and that was the root of it. We're gonna open it up for questions in a minute, but I know you have strong thoughts on talent and the topic of re- skilling to meet the future needs with the disruption coming from AI and everything. But you're particularly passionate about building the stem pipeline. Can you talk about that a little bit? Yes. Ya know I think it's really critically important cuz if you look at the twenty first century and what's happening with jobs Science and technology is critically important. In our company we have 50, 000 scientists and engineers. We have to have that pipeline of students that are coming into our company with backgrounds that are pursuing. Men and women. Men and women, we have of our philanthropic dollars we give 50 % of it. We focus on just STEM, from K through 12 and beyond into university, that's where we focus our dollars. The other half is for military and their families, because that's another very important constituent for us in our business. But on the STEM side, what we're finding is that there is a gap. In nearly every country around the world, there's a gap in the jobs that are there, or that will be there in the future with the whole digital transformation, with all the Changes that are happening in the work place and people that have the skills to do it. And so we are working with various administrations around the world on how we can support more rescalling more [ UNKNOWN ] internships things of that nature in order to give More student to come in to Stanfield's. You made an interesting point that I had never heard before. Which is that even Hollywood plays a role in this and the entertainment industry. Can you explain that a little bit. What you mean by that. Yes [ INAUDIBLE ] and I have been focused on this since I was an industrial engineer. Because back 30 years ago we also saw this gap coming. We weren't getting enough Women into STEM back then. And we could just see that this gap was gonna continue to grow. And one of the things that I looked at back then was, well, what are young girls seeing? What are the role models that they see in entertainment, in media, on TV and In the movies and other things, and they don't see engineers as a profession that they wanna go into, and that's something that I think the entertainment industry needs to focus on. Cuz if a trade is socially awkward or- Well there you might see somebody that is Really smart, and really a fine innovator and engineer. But they don't portray them as somebody that a young 12 year old would say, I want to look just like her. And I want to do what she does every day. And I think it's a responsibility. Certainly parents and teachers and all of us, those of us who are engineers have a responsibility to be role models. But when you think about how much our young girls look at others, and want to model after others, we need to portray it all throughout entertainment as well. Like a crime scene investigator is seen as more, you know. Yes. Right. Like the hero. Who has a question for Marilyn? I certainly have more, so I will keep going if Okay, I'll keep going. We, I wanted to ask you about leadership a little bit, your own leadership. Words to describe you include pragmatic, passionate, possessing integrity, poised, relentlessly methodical, but in your mind, what personality quality has been most critical to your success? We can have a passion for work. I mean, I really enjoy my job, I enjoy work and working with other people so that's one thing and what I've learned in that is that the key to that is communication but you have to be an effective communicator starting with listening. So, in dealing with customers or employees or other stake holders, whether it's your investors or. Or other stakeholders that you deal with. It's about listening and understanding what their priorities are and aligning with that and then objectively communicating. And in our business, I find that for our workforce, the more that I can give them A vision of where we're trying to take the business and communicate that effectively and clearly, the better that they can line up. And then to focus on how we make the environment for them the most inviting for them to have an environment where they can do their best work. We also ask you for your biggest productivity tip and you said something interesting which was have bias action in all you do. What do you mean by that? Well, I think, things just don't happen on their own I mean, you've gotta make change. And I think as a leader you are a change agent. You are the one that recognizes where you need to take the business. Or if there is an issue sometimes there are issues that A leader really has to step up. When you look at changes that are happening in digital transformation or what's happening with things around the world, a leader can't just sit back and wait for it to happen to him. You've got to make it happen, and so I think that's really important. Years ago we had one of our flagship programs get cancelled. And rather than all of a sudden saying my gosh you know what would we do now? I said I want the leadership team and we outlined. Here are the things we can control, here the things we can't control. But what we can't control we gonna go focus on and address and move through this and get more stability for our team because They're looking for stability, they're looking for hope, they're looking for compassion in what you're doing so that they can make their way through a challenging business situation. Looking to the future, what are the biggest, we do have a question back here and then I'll maybe get my question in. Thank you, hi, again, Marilyn. My name is Jennifer Flanagan, I'm the CEO of [ UNKNOWN ] I wonder if you could expand a little bit about the point you just made about communication skills and there's that very important and significant conversation happening about skills for the future of work and not specific just to girls but to girls and boys. Could you talk about what you're seeing as missing currently and what you think the most critical skills for the future work are? Yes. Thank you. Well we've talked already about stem. I think getting focused in the math and science and technology and getting those kinds of skills, so that's critically important. But it's also leadership skills and communication skills that we need to instill at early ages with our students. I mean, when you get in a workplace, you come out of school with great technical backgrounds or Or functional backgrounds that you learn, but if you can't communicate in the workplace, if you're not using your writing skills, your communication skills effectively, your leadership skills, then you're gonna be behind. And I think that's something that should start in the earliest part of education, from kindergarten on up, to getting students into groups, allowing them to see and test their leadership skills. And continuing to focus on that all the way through their college days. We're gonna give the last question to Alan, if we have a mic handler, has to be really quick and then the answer has to be quick. I hate saying that, but. First of all, thank you for letting a guy ask a question, I spent the weekend with a group of people who were talking about the effects of AI. On business and on society. And there were two issues that generated a lot of controversy I'd love to hear your views on. One was this Google letter signed by a bunch of engineers saying, we don't wanna work on weapons at all. And then the other was a smaller group of AI experts who said, yeah, work on weapons But not autonomous weapons where humans being are taken out of the decision loop. And I'd love to hear your views on both of those things. But first I'll start with the need for having security and safety. I mean, you don't have economic trade, you don't have Economic growth if you don't have a safe, secure environment. So a lot of weapons are there to deter other nations from coming into your nation and I think that's important that we can protect our citizens so that they can trade and invest and have economic growth. In regard to AI and having a human in the loop, I think that's critically important. And working with the Department of Defense in the US and other departments of defense, ministers of defense around the world, we look to them to be clear on how they go about prosecuting their Their initiatives and war fighting are another initiatives. And so I think their both very, I think it's important. First of all, you do have to have a way to protect the nation and number two, I do think that it's important to have a human in the loop for sure. Great, Marilyn, thank you so much for being with us. We really appreciate it. Thank you. [ APPLAUSE ] [ BLANK_AUDIO ]

Lockheed Martin CEO: What Makes F-35 the Most Advanced War Plane

Marillyn Hewson speaks at Fortune’s MPW International Summit. 