How can digital transformation change a company’s culture? Heidi Wood, senior vice president for strategy and technology at L3 Technologies, speaks with CXOTalk about how the U.S. defense company uses IT, data and SAP to keep a radically transparent focus on the future.

“True strategy involves really looking out into the future. Many of us can look into the near term. It’s very comfortable. But, the deeper and farther you go out, the darker it gets and the scarier it gets,” Wood says. “You have to embrace innovation. You have to make that part of your corporate culture. You have to encourage risk-taking because that’s a necessary, and frequently not enough spoken about, element of innovation, which is the willingness to take risks, the willingness to be bold, put yourself out there, and be courageous.”

Wood is the SVP for strategy and technology at L3 Technologies, the eighth largest U.S. defense company. She previously worked as a SVP for strategy at Spirit AeroSystems and as managing director and senior aerospace/defense analyst for Morgan Stanley.

Transcript

Michael Krigsman: We are live at Sapphire Now 2018. I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. I'm so thrilled, right now, to speak with Heidi Wood, who is the senior vice president for strategy and technology at L3 Technologies. Heidi, how are you? Thanks for the time.

Heidi Wood: Very nice to meet you. Yes, I'm glad to be here.

Michael Krigsman: Tell us about L3.

Heidi Wood: L3 is a really unique defense company, so we're the eighth largest defense company in the United States. What's unique about us is we're a combination of a lot of entrepreneurial companies that have been laced together into a single conglomerate. What's nice about that is that we get the power of small company capabilities, technology, innovation, and entrepreneurship, laced over a large company leverage.

Michael Krigsman: Now, you are senior vice president for strategy and technology, and so what does that mean? What is your role?

Heidi Wood: My team is the one that really pushes for the growth, both organic as well as inorganic growth. I have the privilege of being able to be the agent that pushes for L3 to be growing going into the future. The interesting thing is that technology is always changing, and so we always want to be on the cutting edge, and so we need to be peering over into the abyss of what's possible and what is conceivable into what might be inconceivable now.

Michael Krigsman: Heidi, how did you decide to bring together strategy and technology?

Heidi Wood: That's a great question. The thing is that strategy, true strategy involves really, again, looking out into the future. Many of us can look into the near term. It's very comfortable. But, the deeper and farther you go out, the darker it gets and the scarier it gets.

In order to try and anticipate the way the world is going to head, you really want to be connected very tightly to what technology can provide so that, again, you can start to imagine the next steps and the next steps in technology. But, it's not technologies for technologies sake. It has to have a true business application because strategy is always reviewing technology within the realm of: well, what is the business case; what is the art of the possible; and how can this make the company stronger, not in a quarter, not in a year, but five years from now?

Michael Krigsman: Are there factors, drives in the competitive environment serving as a forcing function regarding transformation and how you think about strategy?

Heidi Wood: Well, I guess the way that I'd answer the question, Michael, is that the one thing that's permanent in life is change. Once you have a company culture that embraces that and, in fact, rather than tries to fight it, embraces it, challenges it, and says we can never rest on our laurels, we can never stick with status quo, we always have to be improving, challenge ourselves to be better, and also thinking about what's the new thing that's going to obsolete. Whatever our customers are relying on or that we think we're good at, we have to be ahead of everybody.

You have to embrace innovation. You have to make that part of your corporate culture. You have to encourage risk-taking because that's a necessary, and frequently not enough spoken about, element of innovation, which is the willingness to take risks, the willingness to be bold, put yourself out there, and be courageous.

One of the things that I talk about from a strategy is, I tell people, "I want you to be unreasonable. Don't give me anything reasonable. I'm totally bored with that. I want to see your daring, courageous, bold things that have never been heard of before." Crazy: that's what we want to hear because if you're really on the edge, then it won't look right in the near term but, three, five years from now, people will say, "Wow. That was prescient. Who imagined that this would be the case?"

Michael Krigsman: How do you drive that inside a large organization, because we're

Michael Krigsman: We are live at Sapphire Now 2018. I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. I'm so thrilled, right now, to speak with Heidi Wood, who is the senior vice president for strategy and technology at L3 Technologies. Heidi, how are you? Thanks for the time.

Heidi Wood: Very nice to meet you. Yes, I'm glad to be here.

Michael Krigsman: Tell us about L3.

Heidi Wood: L3 is a really unique defense company, so we're the eighth largest defense company in the United States. What's unique about us is we're a combination of a lot of entrepreneurial companies that have been laced together into a single conglomerate. What's nice about that is that we get the power of small company capabilities, technology, innovation, and entrepreneurship, laced over a large company leverage.

Michael Krigsman: Now, you are senior vice president for strategy and technology, and so what does that mean? What is your role?

Heidi Wood: My team is the one that really pushes for the growth, both organic as well as inorganic growth. I have the privilege of being able to be the agent that pushes for L3 to be growing going into the future. The interesting thing is that technology is always changing, and so we always want to be on the cutting edge, and so we need to be peering over into the abyss of what's possible and what is conceivable into what might be inconceivable now.

Michael Krigsman: Heidi, how did you decide to bring together strategy and technology?

Heidi Wood: That's a great question. The thing is that strategy, true strategy involves really, again, looking out into the future. Many of us can look into the near term. It's very comfortable. But, the deeper and farther you go out, the darker it gets and the scarier it gets.

In order to try and anticipate the way the world is going to head, you really want to be connected very tightly to what technology can provide so that, again, you can start to imagine the next steps and the next steps in technology. But, it's not technologies for technologies sake. It has to have a true business application because strategy is always reviewing technology within the realm of: well, what is the business case; what is the art of the possible; and how can this make the company stronger, not in a quarter, not in a year, but five years from now?

Michael Krigsman: Are there factors, drives in the competitive environment serving as a forcing function regarding transformation and how you think about strategy?

Heidi Wood: Well, I guess the way that I'd answer the question, Michael, is that the one thing that's permanent in life is change. Once you have a company culture that embraces that and, in fact, rather than tries to fight it, embraces it, challenges it, and says we can never rest on our laurels, we can never stick with status quo, we always have to be improving, challenge ourselves to be better, and also thinking about what's the new thing that's going to obsolete. Whatever our customers are relying on or that we think we're good at, we have to be ahead of everybody.

You have to embrace innovation. You have to make that part of your corporate culture. You have to encourage risk-taking because that's a necessary, and frequently not enough spoken about, element of innovation, which is the willingness to take risks, the willingness to be bold, put yourself out there, and be courageous.

One of the things that I talk about from a strategy is, I tell people, "I want you to be unreasonable. Don't give me anything reasonable. I'm totally bored with that. I want to see your daring, courageous, bold things that have never been heard of before." Crazy: that's what we want to hear because if you're really on the edge, then it won't look right in the near term but, three, five years from now, people will say, "Wow. That was prescient. Who imagined that this would be the case?"

Michael Krigsman: How do you drive that inside a large organization, because we're averse to change, we don't want to disrupt our revenue streams, and don't want to spread risk to our customers?

Heidi Wood: Yep.

Michael Krigsman: How do you balance these things?

Heidi Wood: I'm a big proponent of radical transparency. In order to get to radical transparency, you need to see data. In order to get the entire group of people to move along with you, you need to move towards being a data-driven enterprise.

Again, what we're talking about at L3 is being data-driven, being radically transparent, brave, [and] courageous. Again, when you do it collectively, then people can better see. When I talk about seeing, this is something that we innovated with Project Sumo, working with SAP, we were able to fuse.

The way I like to describe it is, we took all of the different systems that we have, and we piped them together into a fused system. It helps us come back to better decisions. Together, we can move with speed because all of us are seeing it at the same time and it's based on fact, not anecdotes.

One of the things I like to write on the board is, you take that Greek symbol for the sum. I put the sum and then, in parentheses, anecdotes, and then not equal data. In other words, sometimes when you say, "How is something working?" they say, "Fine."

"How is this other thing?"

"Oh, good."

I'm sitting there thinking, I don't want an English word for the answer. I want the data.

Michael Krigsman: The decision-making and the discussions, then, are around the actual numbers rather than, well, I think this; you think this.

Heidi Wood: Exactly.

Michael Krigsman: And, there's no way to prove it.

Heidi Wood: One of the things that I didn't like when I joined, and it's common in corporate culture but I wanted to change within L3 is, somebody would ask a perfectly reasonable question, and another person will say, "Well, we don't know the answer. We'll get back to you."

Well, now the conversation is dead. But, what you want is an active, "Well, let's see what the data says," because it exists, right? That's the thing that drove me crazy. Somebody has got the data. How come it all isn't in a giant warehouse so that we can peal things back to the infinite level that we want to? Sort of like an onion. You peel back the layers and peel back the layers to get down to the answer to say, "The reason why this isn't working or is working so well is because of this."

Michael Krigsman: What about the cultural dimensions? They have this data, so what happens culturally inside the company?

Heidi Wood: There is a little bit of a change because people have to get used to having all the data being so available because, again, it's human nature to want to shade, right? You want to show your better parts. But, you kind of get to a stage where everybody gets comfortable with, look, this is the truth; this is where we're really, really at. It enables more collective contributions because people can see the areas that are ailing and say "Well, I've got some guys that can help with this thing that you're working on because now we can see that that area needs work.

Sunlight, if you go from dark to sunlight, there's that moment where you go, "Oh, it's blinding." But then, as soon as your eyes adjust, everybody is going to say, "I'd rather be in the sunlight than in the dark cave," right?

Michael Krigsman: That's what transforms the company.

Heidi Wood: Voila. I think one of the exciting things about IT is that, if you want to change culture with what we're doing with this radical transparency, you actually have an angle where IT is helping change the culture of a company.

Michael Krigsman: I love it. Heidi Wood, thank you so much.

Heidi Wood: Thank you so much. It was a pleasure.