CEOs Marillyn Hewson of Lockheed Martin, Leanne Caret of Boeing’s defense division, and Lynn Dugle of Engility discuss the challenges of leading amid hypersonic change.
“THE LAST MAN STANDING.” That’s what some on Wall Street have recently nicknamed Tom Kennedy, the chairman and CEO of Raytheon. After all, he’s the only leader of a top five U.S. defense business who isn’t on Fortune’s Most Powerful Women list—and for that fact, says Kennedy, “I couldn’t be prouder of our industry.”
This July, Northrop Grumman announced that CEO Wes Bush would step down at the end of the year and be replaced by the first woman to hold that office, current COO Kathy Warden. She will join an elite club of defense contractor CEOs that includes Lockheed Martin’s Marillyn Hewson, General Dynamics’ Phebe Novakovic, and Leanne Caret, who heads Boeing’s defense, space, and security division. Together, their companies generated a staggering $110 billion in defense-related revenue last year.
Warden’s promotion made waves across the corporate world, where diversity advocates marveled at the way the once male-dominated defense and aerospace industry had, in a few short years, blown up its own glass ceiling, elevating women higher and faster than most of the Fortune 500. “It isn’t a male-female thing, necessarily, but really just acknowledging that talent won,” says Lynn Dugle, CEO of military IT and cybersecurity firm Engility (EGL, +0.17%), which recently agreed to be acquired by rival contractor SAIC.
In the S&P 1500, women account for nearly 19% of the CEOs in aerospace and defense, according to the Pew Research Center, compared with just 5% across all companies. No sector works more closely with the government and military than defense, which may be one reason it’s closer to gender equality. With the armed forces making deliberate efforts to expand women’s roles and the emergence of a generation of female generals as well as Air Force and Navy secretaries beginning in the ’90s, “the defense industry has realized they need to mirror their customers,” says Patrick Gray, the aerospace, defense, and aviation practice leader at executive search firm Heidrick & Struggles. A decade ago, the companies redoubled their efforts. “It’s not an accident … that they’ve become C-suite or a CEO,” says Lareina Yee, a senior partner at McKinsey.
No one felt the shift more viscerally than Linda Hudson, who in 2009 became CEO of BAE Systems and the industry’s first female leader. When she launched her career surrounded by male colleagues, in 1972, “I needed them to forget I was female,” she recalls. By the end of her career, she says, “being female had somewhat turned into an advantage—that you had risen against all odds.”
On the battlefield, the U.S. has the odds on its side—and these women plan to keep it that way. Even as they compete for government budget dollars, the executives say they share a duty to the United States: “To ensure that there is an unfair fight—unfair in our favor,” as Caret puts it.
Yet maintaining this country’s lead in military might and technology has never been more difficult. There is rising unease in U.S. relations with superpowers Russia and China, whose technical prowess is increasing at a breakneck pace. Add to that the nuclear capabilities of rogue states including North Korea and Iran, and continuing atrocities by acolytes of extremist factions. There are credible threats of attacks (physical and cyber) even beyond Earth’s atmosphere. And heads of state have shown a willingness to disregard international law on chemical warfare and genocide. “Every year it seems to get even more dramatic,” Hewson says of the geopolitical risk climate.
Those fears have resounded in Washington, D.C., where a Republican-led Congress granted the Pentagon a budget increase of more than 15%—to $700 billion for fiscal 2018—with vocal support from the other side of the aisle. It hasn’t hurt to have a hot-tempered Commander-in-Chief who has been direct about announcing what he wants on the national security front, whether it’s cost reductions on Lockheed’s F-35 fighter jet or “smart” missiles to fire on Syria (both expressed via tweets). All told, executives describe what may be the best industry climate of their careers. “What makes this the perfect storm is that we really do have consensus around what needs to happen in our defense space,” says Dugle.
Against that backdrop, the female CEOs have had a chance to shine. Since Hewson took over Lockheed Martin in 2013, for example, the stock has returned 338%. Overall, since President Trump’s election, aerospace and defense stocks have outperformed the market by 29 percentage points. In separate interviews, Hewson, Caret, and Dugle discussed leadership when the stakes are the highest. (Warden and Novakovic declined to participate.) What follows is in their words, edited for length and clarity.
Trailblazing
MARILLYN HEWSON
Chairman, CEO, and president,
Lockheed Martin
Phebe Novakovic at General Dynamics and I started as CEOs on the same day in 2013. Phebe and I are good friends and have talked about what it’s like on day one as the first female leader of our companies. And early on, I kind of felt like, “Well, gee, I don’t want to be recognized that I achieved this just because of my gender.” I just wanted to be recognized that I achieved that through being in a company that gives us opportunities to learn and grow and be strong and demonstrate our capabilities in our performance. And through those results, ultimately we can achieve the most senior position in the company.
However, both Phebe and I discuss that we are role models. And that’s something that we should take very seriously because it inspires and motivates other women to say, “I can be in that job.”
Marillyn Hewson is #1 on Fortune’s 2018 Most Powerful Women list.
I can think back at times early in my career when I wasn’t quite sure if I was ready for something. Soon after I started at Lockheed Martin (LMT, +0.35%), they put me on a special general management development plan, and that is what really got me on a path. And I think back, gosh, over 30 years ago, this company recognized that you invest in talent. It’s up to the individual to perform, to accept those opportunities. So when the board offered me the position of running Lockheed Martin, I said, “I’m ready.”
When you look at Kathy [Warden] and Leanne [Caret] and others in our industry, it’s really a matter of them getting the experiences just like a male would get. We just named a woman, Michele Evans, to lead our $21 billion aeronautics business and the largest program that we have, the F-35. But she didn’t get there by accident. She got there because she has developed a long career at Lockheed Martin and gotten a lot of different experiences. She’s had profit and loss responsibility. And all of those things I think are what you look for, whether it’s a man or a woman, to take over as CEO.
LEANNE CARET
CEO and president of defense,
space, and security, Boeing
I was actually told I would never make management. My second level supervisor said I laughed too much, I smiled too much. But my immediate boss disagreed with his boss, and he said, “We need to get you to a different position because you’re not going to be who I think you can be if we don’t get you somewhere else.” It’s about making certain that we’re creating opportunities for everyone—for women, for minorities, for men.
But I never had any expectation I would be in this office. I was in a meeting with our chairman, Dennis Muilenburg, and the head of our HR, and all of a sudden, Dennis goes, “Hey, Leanne, can you just stay a little bit longer because I need to talk to you.” And they’re shutting the door, and I blurted out, “Oh, my God, you’re firing me.” And Dennis is like, “What? No. I want you to do this [job].”
Leanne Caret is #23 on Fortune’s 2018 Most Powerful Women list.
LYNN DUGLE
Chairman, CEO, and president,
Engility
I was the first woman in my family to go to college. And I would have never surmised 25 or even 15 years ago that you’d have women leading a Lockheed Martin, a Northrop Grumman, a General Dynamics. In my own career, many times I told myself “no.” I remember when the person who was going to be my boss brought me in at Raytheon and said, Would you like to be considered for the president of one of our businesses? And my response was, “Oh, gosh, I think you should think about Person X and Y and Z. They’re much more qualified.” And I later told a dear friend I had done that, and she said to me, “That is not only the stupidest thing I have ever heard, don’t ever tell that story again. You’re being a terrible role model.” So I was really fortunate that people gave me probably more opportunity than I was ready for.
I worry a lot with nation-state adversaries—if you just add up [the populations of ] a few of those big players, we’re outmanned. So to me, [gender diversity] is a national security issue. Our country benefits by utilizing every talent, every individual.
One place it is more challenging for women is Saudi Arabia, which has billions of dollars in deals with U.S. defense companies. I’ve been [there], and my advice to female colleagues traveling there is, don’t make rookie mistakes. Rookie mistake No. 1 is getting in the elevator when the doors open. No. Men and women ride in separate elevators. Rookie mistake No. 2: drinking too much coffee—no women’s restrooms. Rookie mistake No. 3: getting in the line when it’s time to go through security. That’s the men’s line. There’s a women’s area off to the side.
HEWSON: I spend a lot of time in the Kingdom. I wear an abaya and a shayla and honor the traditions that they have, particularly in women’s dress. But beyond that, I was never treated any differently as a female or differently than I would be by any other senior government official around the world.
Defense in the Trump Era
HEWSON: I travel a lot, meeting with world leaders, and what I hear is how significant the geopolitical environment is in terms of its unpredictability, its volatility. It’s asymmetrical; it’s intercontinental—the threats are just continuing to accelerate, and there’s a big concern. It’s across all domains, frankly—air, land, space, cyber. Russia and China and non-state actors and terrorists. So it’s critically important to maintain and continue to advance our technological superiority. Our adversaries or potential adversaries are progressing very quickly.
DUGLE: Leaders on the Hill from both parties realize that our readiness and some of our technology, certainly in space, were being contested in a way we hadn’t seen. There are more unknown variables in the equation with space and cyber because we don’t have decades of training technique, experience, exercise. I think they offer the biggest potential opportunity to outpace an adversary but probably the bigger challenge. And [lawmakers] stepped forward and gave us the largest budget that we’ve seen in a decade. It’s probably one of the most exciting times to be in this industry that it’s ever been.
CARET: The types of conversations this administration is having now, and the insight it’s giving us, are unique. They’re very good at candor, and you may not always like what you hear. But it’s a significant step toward a more collaborative relationship.
Space Wars
CARET: Many people don’t realize how important space is today to run our lives. But you’re not going to use that GPS in your phone to find your way without the satellites that are up there working. So I’m excited that folks are starting to have a better appreciation of how large this world is.
DUGLE: For years we were having a debate: Is space a part of warfare? Which really was ridiculous. Because war on the ground is driven by space. Think about all the satellite communications that allow us to know where troops are and how they’re moving and to communicate with them. GPS and precision navigation—if we’re going to target something, we need to know where that is. So if adversaries disable our space assets, we’re disabled on the ground as well. And it’s not just military or warfare. GPS is used for banking transactions. So if that system was somehow disabled, our banking community would be disabled.
HEWSON: Things like missile warning are supported by satellites. Or look at what’s happening with [Hurricane Florence] this week. This year we launched the most advanced weather satellite that the National Oceanic and Atmospheric Administration puts up—it captures images that are like going from black-and-white TV to high definition big-screen TV. It maps lightning. And it’s helping to save lives because it’s predicting earlier weather patterns and hurricanes.
Staying Ahead of the Pack
HEWSON: An important area that we’re working in is hypersonics—things that can travel over Mach 5 [five times the speed of sound], whether it’s weapons or [aircraft or spacecraft or something else]. Others outside the U.S. are ramping up in that area, and we need to stay ahead of the curve, so we’re investing significantly in it, as is the Department of Defense. And if you think others are spending on hypersonic weapons, you’ve got to be able to defend against them. So directed energy, or laser weapon systems, are very important. You don’t have to have the same replenishment of munitions, so it’s more cost-effective—and just more effective. We also have what’s called hit-to-kill technology that’s like a bullet hitting a bullet. Before the incoming missile could land or even fragment, we’re able to hit it, and it dissipates.
Autonomy is really critically important. In Afghanistan and Iraq, improvised explosive devices were unfortunately very harmful for men and women who were driving trucks [of supplies]. So our team identified a helicopter that was used for logging—taking logs up a mountain—and made it autonomous. And it took millions and millions of pounds of supplies forward. Who could count how many lives that saved because our men and women weren’t driving?
CARET: We have an autonomous 55-foot submarine that’s floating underwater—it doesn’t need to be towed out there, it’s self-deployable. It is our belief and our intent that autonomous air traffic is going to be just part of our normal day-to-day transportation. And Boeing (BA, +1.12%) is going to be at the forefront of that. There is absolutely no doubt in my mind that one of these days, we’re all going to get into our little car pod, and we’re just going to go traverse.
DUGLE: The speed at which technology is moving can be a blessing or a curse: If we’re the fastest mover, and we get to quantum computing before another country does, it’s great. If we get disadvantaged, not so great.
When 9/11 happened, it wasn’t because there was a super new technology. It was because an aircraft turned into a weapon. I’m convinced today, with all of the technology and processing power, we’d have a much improved chance of understanding what was happening by using all of that public information, from full-motion video to everybody having a phone that is an emitter. I’m quite confident our intel community does it on a day-to-day basis. One of the best examples is we really can overlay an analytic layer on all the social media data and get sentiment. With the Arab Spring, we knew it was happening early because of technologies. And we can use that situational awareness to protect our country. Still, everything is about a tradeoff—privacy needs to be very highly valued.
HEWSON: We expect the governments we do business for are going to be doing things that are appropriate. And I am confident that we are working on the right things to keep this nation safe. That’s evidenced by the fact that we haven’t had another situation like [9/11] happen. We’re still the leader [in defense and military capabilities], and will continue to be. What’s important is that we continue to invest in defense and make sure that as technology moves forward, we stay on the forefront.
A version of this article appears in the Oct. 1, 2018 issue of Fortune as part of the Most Powerful Women package with the headline “Show Of Strength.”
Source: http://fortune.com/longform/lockheed-martin-boeing-women-defense-ceos-trump