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Gen. Anthony "Tony" Zinni, USMC-Ret., Chairman of the Board of Directors, BAE Systems, Inc. Part 4 of 4

Anthony C. “Tony” Zinni is the chairman of the board of directors of BAE Systems, Inc., the company’s wholly owned U.S. subsidiary that employs approximately 55,000 employees in the United States, United Kingdom, Sweden, Israel, Germany, Mexico, Switzerland, and South Africa. Zinni joined the Marine Corps in 1961 and was commissioned an infantry second lieutenant in 1965. His 39-year military career included command of a Joint Task Force and a unified command. His final tour of duty was as the commander in chief of U.S. Central Command. After retirement from the U.S. Marine Corps in 2000, Zinni served in numerous diplomatic positions, including U.S. peace envoy in the Middle East and the special envoy to the Henri Dunant Centre for Humanitarian Dialogue (Indonesian, Philippines, and Sudan peace effort). Zinni is also a Distinguished Military Fellow for the Center for Defense Information, a part of the World Security Institute, and he has been an instructor in the Department of International Studies at the Virginia Military Institute. He is a graduate of Villanova University with a bachelor’s degree in economics. He holds master’s degrees in international relations from Salvae Regina College and in management and supervision from Central Michigan University, as well as honorary doctorates from Villanova University, The College of William & Mary, and the Maine Maritime Academy. His books include the bestsellers Battle Ready and The Battle for Peace, and his Leading the Charge was published in August 2009. Zinni sat down recently with John D. Gresham and Susan L. Kerr for an exclusive and wide-ranging interview.

What have you learned, in the time that you’ve been with BAE and other companies, about the state of the business of defense? What do you see that needs to be changed on both the government and business sides to get more out of the budgets that we’ve got?

The defense industry is obviously big business. It is powerful, as Eisenhower pointed out. It certainly has delivered a tremendous set of capabilities to our armed forces that made them dominant on the battlefield. There are many dedicated, patriotic men and women working in the industry who want to deliver the finest technology, support, and systems to our troops. The industry has to always remember those whom we are supporting, and to be conscious of their responsibility as well to the taxpayer whose hard earned money pays for that support. It is closely scrutinized and held accountable, as it should be. We need the best defense industry, for obvious reasons, and it should always be held to the highest standards of business conduct.

BAE is an international consortium, and it’s more likely than not to add foreign components, certainly in the Far East, the rim of the Pacific, South Asia. What are the differences that you encountered when doing business with foreign ministries overseas versus places like Europe and the United States?

You have to adhere to U.S. law and ethical standards, like the Foreign Corrupt Practices Act, wherever you do business. You may lose business because others do not have the same standards, but I think in the long run it will enhance your credibility. There can’t be any compromise on this, and I’ve seen instances where companies fail to understand this. Each company must have an established, strict, and understood code of business conduct. Their people must know the code, believe in it, and live it. It must be part of the company culture. You must also be careful to protect technology that cannot be shared. Strict compliance and inspection to meet U.S. security rules in this matter are an absolute necessity for every company doing business internationally.

So, you have to establish security compartments within your corporate structure at BAE?

Not only that, but the reason that we have a separate board of directors that I’m chairman of is for that primary purpose. We have a government security committee within our board of directors, made up of outside directors that report to the Defense Security Service [DSS], and we are required to monitor the company on behalf of the U.S. government and ensure compliance with this. DSS conducts rigid inspections on the company and we ensure compliance with the regulations, corrections of findings, and implementation of policies. Since BAE’s parent company is foreign, we, the U.S. subsidiary, operate under a Special Security Agreement [SSA] that the outside directors are responsible to see complied with to the fullest.

Your control and access processes must be very demanding.

We have exceptionally thorough processes, which we have to monitor, ensure compliance with, update, and enforce. Every BAE Systems, Inc. board meeting begins with the Defense Security Service coming in, meeting with our Government Security Committee separately, and reporting the current status of inspections and other security matters. It is the first, and primary, order of business. The full board is then briefed on the issues and status.

Welcome to the world of defense globalization.

I think there is a place for international defense cooperation. It can provide for standardization with allies, sharing of technology where appropriate, and give the U.S. access to other technologies. As we saw with the MRAPs [Mine Resistant Ambush Protected vehicles] that provided the best protection for our troops in Iraq and Afghanistan, sometimes the best capabilities can come from somewhere else. In this case, from a South African design out of our operation there.

I remember reading in a press release when it came out that you had been named acting president, CEO, and chairman of the board at BAE. What was the back story on that?

I’d been a board member of BAE since 2001. The CEO was also the chairman of the board. When our chairman/CEO left, I was asked to temporarily assume both roles while we did a search for a new leader. After we appointed our CEO, I was asked to stay on as chairman. It made sense due to the many responsibilities for both positions.

And did it have to be an international search?

No, we didn’t do that. We only did Americans. We could only have an American because of the SSA.

And your duties as chairman of BAE Systems, Inc. today are?

One is to ensure compliance with the DSS Special Security Agreement. That’s number one. Second, obviously, is to look internally at the governance, ethical behavior, and code of conduct, all that within the company. Third is to monitor and oversee the business end, the financial and fiduciary aspects, and the strategic planning. We are directly involved in work with acquisitions, and mergers, and any divestitures that the company does on the U.S. side. Obviously, that has to go through a government regulatory process. Those are our primary responsibilities. We also work and help with the company’s leadership program and its relationships here in the United States with our customers, Congress, and with the media.

So as you personally downsize the responsibility from three jobs at BAE to one, how do you feel the “fit” is for you right now?

The fit is good. I think that since I’m the first chairman, or sole chairman, we’ve had to figure out how to do this. I really have to work very closely with the new CEO. Linda Hudson is great to work with. We also have a great team in place who work in a truly cooperative way to get things done well.

Right now, you’re part of what may be the most diverse defense conglomerate in history. I was looking back to see if there had ever been anything quite like it, and while there have been big defense consortiums, be it Krupp’s, General Dynamics in the ’80s, or Lockheed Martin today, I’ve never seen anything quite like BAE with the footprint it’s got right now. How do you balance those diverse product lines and then match it up to that international customer base that you serve?

We are truly a global company with a number of home markets as I said. We have to run on a strict set of processes and sets of standards due to the complexity of the business and its global footprint. It requires a strong company culture that is commonly understood and accepted throughout. We invest a lot in educating our employees in the requirements, and a lot in our leader development to ensure our standards are met.

A common corporate culture?

The corporate culture is critical. We have – the American company – 50,000 employees; we’re in 38 states and six countries. We need a common, bonding code and identity. Every component must be on the same set of procedures, processes, and set of company values. Same with our parent company that spans the globe with over 100,000 employees worldwide.

Let’s back away from the business side real quick and let’s talk about the BAE product line a bit. You don’t just do services. You make stuff.

Yeah, extraordinary stuff. I’m constantly dazzled by what they produce. We take pride in our innovation and technology.

If you were to sit down and look at some of the exciting potential game-changers you folks are doing, not just here in America but around the world, can you reel off a few things that you make that excite you?

Well, one was a few years ago, when the troops overseas faced the growing IED threat, and we were involved with the deployment of the protective systems like the MRAP, Mine Resistant Ambush Protected vehicles. There was the need to produce them and get them out there right away and be effective. That, probably, in the past couple of years, has been our crowning achievement, that we’re able to get the product, get it into production, meet the requirements, get it out to the troops as quickly as possible. There are other things, like detection devices. We have a thermal imaging system called Check-6, that you put on the back of vehicles that can look to the rear. We’re also working with the troops on redesigning existing vehicles. For example, the troops were telling us that HMMWVs, with the doors opening the normal way [gestures with hands turning outward in same direction – like a conventional four-door sedan], need to open this way [gestures with hands turning apart in a “V” like a mid-1960s Lincoln Continental]. If the doors are armored when they step out, they have protection then.

So, we work with the troops. We bring a lot of troops back to get feedback on our products and get ideas, like that on the HMMWV redesign. We did the Bradley fighting vehicle upgrades, and initiated the idea that you can put hybrid-electric energy packs on armored vehicles and HMMWVs. That is just some of the work we do with hybrid vehicles, which are not only for military applications, but also commercial applications. We have the biggest hybrid-electric production capability for buses, with bus systems in western states using our hybrid technology to save a lot of fuel and energy.

I think our engineers are the heart and soul of what we do. We are a technology company. We might do a few other things out there, but basically it’s high technology. The frustrating thing about that sometimes is that’s not what the government wants, especially nowadays when the bucks are tight. You compete counting on quality, performance, and innovative technology getting major weight in decisions to acquire capabilities, but price often overrides.

In other words, I know you’ve got a son who’s a Marine in combat and that’s got to give you at least some perspective on what you’d like to give him to better ensure his chances for success and survival. In your own experiences and as an observer for almost five decades now, if you could send the warfighters out 10 and 20 years from now with things that you think they need, what would those be? What do you see in the future?

I want to see us give our troops the highest-quality capability, but I want to lighten the burden on our troops by reducing the load they must take into combat. We need rugged, reliable capabilities that retain the mobility our troops need. That is an infantryman speaking.

For centuries, there’s been the debate of “guns or butter.” Spending national treasury funds in development of new weapons and building up forces is never a popular thing. Where do you stand on defense investment, and what sort of policy do we need to develop to go ahead and do a better job of balancing the guns-and-butter debate?

Those decisions are based on the current environment. If security concerns are great, guns win out. If the economy is tight, it may be butter. Normally balance is sought, but you can’t afford everything so understanding risk and setting priorities is key.

It’s 2010. Tony Zinni is a Marine Corps elder statesman.

That’s another word for a has-been! [Laughs]

Today you’re a business executive in one of the most powerful business conglomerates in the history of the defense business. You’re an academic. You’re a best-selling author. Are you having fun, sir?

I’m content. The one thing that happens when you leave the military is that you sort of lose a sense of purpose, not that you don’t still have one. I love the other things that I do, but it isn’t quite the same as being a Marine. The idea that what you do day to day can be critical to our nation’s security, and the adventure, the sense of purpose that’s been there, it’s hard to find that if you’ve done that for 40 years somewhere else. That’s not to say that the things that I do aren’t really interesting, and I do find contentment in them. I don’t think I could have retired and done one thing. I still keep my hand in peace mediation work, because I find that fascinating. I love the students on the campuses. I’m on my ninth university academic chair now. I’ve had one every year since I’ve been retired. The business world, the writing, and all that, it’s all interesting. I think now I find my contentment more in doing a lot of different things as opposed to that single focus of a Marine. That sort of fills it up, along with seven grandkids, which makes me more happy than anything else.


John D. Gresham lives in Fairfax, Va. He is an author, researcher, game designer, photographer,...