 Okay, great. Good evening. Welcome to today's policy talk featuring former Secretary of the Navy, Don Winter. Special welcome to all of you who are serving or have served in our armed forces. Thank you for your service. I'm Alec Gallimore, Robert J. Velasquez, Dean of Engineering, and I'm pleased to join our colleagues from the Ford School of Public Policy and the Ross School of Business as co-sponsors of what promises to be an engaging evening. After his introduction, Secretary Winter will present his remarks. Then he and Ross School's Dr. Mark Barger will have a dialogue about the topics raised. We will have some time to where they end for questions from the audience. Please hand your questions to the two Ford School students who are collecting them, and please be sure to silence your phones. Don Winter served as the 74th Secretary of the Navy from January 2006 to March 2009. As Secretary of the Navy, he led America's Navy and Marine Corps team. He was responsible for an annual budget in excess of $125 billion and nearly 900,000 people. Previously, Dr. Winter held multiple positions in the aerospace and defense industry as a systems engineer, program manager, and corporate executive. From 2010 to 2012, Dr. Winter served as chair of the National Academy of Engineering Committee charged with investigating the causes of the deep water horizon blowout for the Secretary of the Interior. Today, he is an independent consultant and a professor of engineering practice at Michigan Engineering. He teaches graduate level courses on systems engineering, space systems, and maritime policy. He consults in the US and oversees on defense and civil matters and serves on multiple corporate, civic, and academic boards. He's chairman of the Australian Naval Shipbuilding Advisory Board and his DOD Senior Defense Industry Advisor to Ukraine. Dr. Winter is a recipient of the Department of Defense Medal for Distinguished Public Service. He's a member of the National Academy of Engineering. Dr. Winter earned his doctorate in physics from the University of Michigan. Please welcome Dr. Don Winter. Well, thank you very much. It's good to be back. Good to be back here. Let me see if I can get this working right here. Whoops. Okay. What I'm going to try to do today is just provide you with a brief synopsis of a few thoughts that I've developed over the years of dealing with various organizations and trying to understand how those organizations are able to perform and in particular the resiliency of those organizations as they face different challenges. One of the things I've found in the process is that there are certain concepts here, concepts associated with the recognition of responsibility, the assignment of authorities, and the whole concept of accountability. It really has a significant impact on how organizations are able to perform and how they're able to work through such matters. One aspect that you can see here is that these concepts are not all that well understood, I will have to say. The whole idea of what is authority? What is responsibility? What is accountability? They're not commonly understood and as a result we wind up in many cases of having a different perspective on such matters. I want to see if I can get the computer here to work properly for me. Very good. What I was trying to get to here is that people don't have common understandings of what these concepts mean. I have three postulates that I like to put forward that I think help explain what all of this means. First of all, authority, the power to execute, authorities need to be delegated. I've seen senior executives try to do everything themselves, invariably a failure. One has to be able to delegate authority to be able to have an efficient operation. When you're doing that, however, you don't delegate responsibility. You share responsibility with those people that you are delegating authority to. And all by the way, along with that responsibility comes the concept of accountability. And accountability has to be measured, has to be appropriately structured in such a way as to further the objectives of the organization. And it should not be politicized, although it often is. One of the best examples I've found of politicalization has to do with the Laquilla, Italy earthquake that occurred roughly 10 years ago. This earthquake, basically a Richter 6 earthquake that occurred at 3 o'clock in the morning killed over 300 residents of the town of Laquilla. They were killed because they were asleep in their beds and the earthquake destroyed many of the structures in that town. Interesting thing was the government there decided to arrest and try six scientists on the grounds they had not properly predicted the earthquake. And had not warned the people of Laquilla of the risks of going to sleep in their own homes. They were actually convicted initially. You have to ask whether that represented a misuse of the concept of accountability, whether a concept of accountability even was appropriate given the limitations of science at the time. One interesting footnote is that while the scientists were acquitted upon appeal, the deputy director of the Civil Protection Agency was not. And he actually served time for providing overly aggressive assurances, if you will, of the safety of the town and caution people or failed to caution people about the risks associated with the tremors that had existed just before then. Now, most of the time when we're dealing with the concept of accountability, we're typically not dealing with issues associated with natural disasters, but we're typically dealing with other safety incidents, in particular major system failures that result in significant loss of life, and in many times have very high public perceptions. Arguably one of the best examples of this has to do with the loss of the Challenger, the Space Shuttle Challenger back in 86. And this was a very traumatic incident, I have to tell you, not just for those of us who were working in the space industry at the time, but I think for the general population at large, there had been such an attachment to the Shuttle Program as part of the U.S. continued leadership in space. President Reagan commissioned an investigation, a commission, to investigate the matter and understand what had happened, make a determination of cause and identify who should be held accountable, and he asked the former Secretary of State, William Rogers, to lead that commission. Actually, a very notable group of individuals included a number of test pilots and astronauts, as well as one Nobel Laureate, Richard Feynman, who provided a degree of technical expertise to the panel. I won't go into the details of the technical assessment, for those of you who are interested in that, please come by, space 583, next term we will go through all of this. I will just say that the commission had very little difficulty in identifying the direct or what we sometimes refer to as the proximate cause of this, and it had to do with the way in which the solid rocket boosters were assembled, which was basically that they were built in pieces and put together with joints in between those pieces, and the seal, the critical seal of those joints was made using elastomers O-rings that were susceptible to low temperature conditions. In other words, they did not have the resiliency at low temperature that was necessary to be able to seal properly, and this particular launch was the coldest launch. It was actually 20 degrees Fahrenheit cooler than any previous launch that had been done with the shuttle, and it resulted, those conditions in addition to very high crosswinds resulted in the tragedy. In addition to assessing the direct cause, one of the things that the Rogers Commission did was to assess what we call the contributing and the systemic factors that added to the problems associated with this disaster. In particular, there was a lot of focus on the decision to launch, and this became an issue because of several considerations, one of which was that the engineers at the organization that designed and produced those solid rocket boosters, THIA call, advised NASA initially not to launch, and in fact several engineers there were very vociferous in their objections to launching based on the predicted temperature at the time of launch. Their objections were overruled by THIA call management under pressure from NASA. THIA call management initially was behind the engineers, but they basically were strong armed by NASA Marshal to rescind their rejection and actually put their approval in writing. By the way, in addition to the issues associated with the O-rings, one of the other issues that was raised just prior to launch had to do with ice buildup, in this case on the service module, the service structure. The ice in particular on that day included icicles of over a foot long, and to a certain extent this posed another risk to the shuttle, presaging if you will the loss of Columbia later on. Both of these issues were raised at what's called level three in the review process associated with getting approval for launch. In both cases the issues were adjudicated at a low level and were never passed on to the higher levels and never made evident, never made known to NASA leadership. The commission basically said, well this was a problem with communication. This was a problem with the review process. It should have been done differently, but oh by the way, the commission is strongly of the opinion, and I can't quote it exactly, but effectively what they said was, we're comfortable that had that information been presented to NASA management, they would not have approved the launch. Failure of communications, a failure of culture, basically an exoneration if you will of the NASA leadership at the time. I mentioned Richard Feynman. Feynman had a problem with all of this. He had such a problem with it that initially he refused to sign off on the commission report, which was a real issue for Rogers because not having a universally commonly accepted report would be considered politically a disaster. The compromise that was cut there was that Feynman got to write an appendix, which was added to the report and you can pick it up online if you're interested in it. And basically Feynman goes after NASA leadership and says that your overall assessment of the shuttle safety is off by roughly three orders of magnitude. Just a little detail. And the whole idea that the shuttle is safe because it has to be safe is part of your foundation here, and none of this is appropriate, and the whole approach of NASA to safety was inappropriate. Interesting. Who is culpable? Who is accountable for such matters? Let me switch to another example here. I'm going to talk about the Macondo Well, commonly known as Deepwater Horizon. Deepwater Horizon is actually the name of the oil drilling rig that was used to develop the Macondo Well. About 10 years ago, 11 workers were killed when there was a blowout, an explosion in fire associated with the Macondo Well. And this not only killed 11 people on the rig, but also caused just tremendous environmental, ecological, and economic damage to the whole Gulf region. This was an interesting challenge here in part in terms of understanding how all of this work was done and how all of this came about. By the way, my personal involvement in this was that as you heard, I got to chair the committee that oversaw the investigation here of the cause. One of the things we found was that we were challenged. Challenged why? Well, Department of Justice made a very public statement that they were going to try to figure out who should be jailed for this event. Who should be thrown into jail? And all of a sudden, all the witnesses that had previously offered to provide us with insight into what transpired and how all of this was occurred. Those witnesses were unwilling to testify in any proper form. That said, we did find out what happened. And not unlike the issues with Challenger, much of this has to do with decisions. Decisions that were made at the tail end of the development of the Macondo Well. I don't want to go through the technical details here, but effectively the Well had been drilled. There was a decision made to do what's called a well of sealing and abandonment with the idea that they would come back to the area after the infrastructure was installed. That would provide a mechanism of taking the oil from that area and sending it back to shore. The way of sealing the Well was using cement. That cement was tested multiple times and that cement was found to be wanted multiple times. Nonetheless, the decision was made to go ahead and abandon the Well. That precipitated the start of hydrocarbon flow. The crew did not respond to that effectively. And then that was we had a total loss of control of the Well, what's known as a blowout. Again, contributing in systemic factors here, you see the word safety culture. What is culture? Culture is what you do when no one tells you what to do. Why is that important? Well, when you're dealing in a world of regulations that are carefully prescribed, you find that you can't anticipate all the different things that might happen. Prescriptive regulations are inherently incomplete and out of date. You need to have a culture to be able to deal with such matters. Figuring out who is accountable in all of this was complicated furthermore by the just the business arrangements that are used offshore. It's a very complex business. There's a joint venture who actually has the lease. One of the members of the joint venture in this case, BP, is deemed to be the operating contractor. That operating contractor hires a rig that is operated actually by the rig owner. And by the way, the operating company BP hires the people that are going to do many of the other services like cementing, in which case the subject was Hal Burton. By the way, if you go and take a look at a typical rig, you'll find there's maybe 120, 130 people on the rig, of which typically no more than two represent the operating company. So who's accountable for this? Well, the focus was clearly going to be on BP for a variety of reasons, not the least of which was the terrible experience that they had experienced just a few years earlier with the Texas City Oil Refinery Disaster which killed 15 and injured 180 people, arguably the worst industrial accident that's occurred in the oil and gas industry. And by the way, BP is now wound up between the actual direct costs of dealing with the disaster, the liabilities, and the fines that they've paid. They've paid roughly $65 billion in total costs, fairly significant. But we get into the question of, well, who is really responsible? Is it just the company or is it the people in the company? And one of the things if you go and take a look at BP's answer to this, because they had their own report. First of all, their argument is the principal culpable individual, the principal individuals that should be accountable, were Halliburton, the people that were doing the cementing. And by the way, if there's anybody in BP that's accountable, it's the two people that they had as representatives on the rig. It's an interesting process. One of the things I find fascinating is that if you take a look at the people on the rig, out of 130 similar people, you might find a handful who had anything more than a high school education. This is the highest compensated blue collar community in the United States and arguably in the world. And they learn their jobs on the job. It's OJT on the job training. And yet they're making critical decisions. The decisions are made offshore. Now, why is that? Well, some of this is just the history of what comes out in the maritime community. In the old days, a ship that goes out of port. Pretty soon it's over to horizon. And the massive of the ship is responsible for everything. No other way of dealing with it. And that concept initially came up in the offshore oil and gas industry. The people on the vessel on the rig have to have the total and complete control and have all of the authorities necessary to conduct their business. Even though in many cases they really had limited formal education on many of the matters that they were dealing with. At the time that this event occurred 10 years ago, we were starting to see a way out of all of this with satellite communications. It is possible to have real-time information associated with wells all over the world shipped back to a common area where they can be overseen and where people can be brought in to be able to assist in any critical decision. The real-time operations center here shown in the photo is Shell's facility at the time just after the Deepwater Horizon blowout. They were watching wells. This was Shell now. Was watching wells in a Caspian Sea from New Orleans. Easy to do. Not all companies bought into the idea. They didn't buy into it for several reasons. One of which was they thought that having somebody overseeing what was going on in the rig undercut the authority of the people out in the rig. The people out in the rig would expect to get second-guest and would not put their best thoughts into the matter. Also, quite frankly, I think it also detracted from some of the responsibility spreading that was endemic within the industry. The industry had gone from an area where vertically integrated oil and gas companies took full responsibility for all aspects associated with offshore exploration and development to an area where they were really just managing a process and having multiple subcontractors do the majority of the work. To a certain extent, they liked that. It was a spreading out of the liabilities associated with this type of a process. I think that to a certain extent one of the difficult aspects of these real-time operations centers is that all of a sudden it is possible to bring in senior management to help make decisions when you're having to trade off costs and schedule and safety. Contrast this a little bit with the experiences that we have in the Navy and we're going to talk about offshore activity. I think we need to talk about the Navy. Commanding officer accountability. It's a very simple concept in the US Navy. It's a concept of strict accountability. CO is responsible and the discussion. It doesn't matter how long they've been in command. As soon as that CO says, I am my orders, I am in command. They are responsible. They are accountable for everything that goes on, whether they're on the bridge, whether they're in a mess, whether they're asleep, it doesn't matter. I had a few cases where I was asked by members of Congress actually challenged by members of Congress who were interested in supporting their constituents and who asked very seriously whether it was fair. My response to that was very simply, it was fair to the Navy. Why was it fair to the Navy? Well, we made it very clear what the expectations were on the commanding officer. You can't go ahead and say, well, we'll give you five minutes. We'll give you five hours. We'll give you five days. We'll give you five weeks. How do you do that? Who's responsible during that time period? You need to have somebody responsible and accountable. Clearly, it was the CO in command. And oh, by the way, that motivated the commanding officer to as soon as he could or she could to determine what was the state of their ship what was the state of their crew. What was the state of the subordinate officers and to actually make decisions recognizing those matters and those limitations. And we actually have had cases where new COs have come in and said, no, I'm not in a position to get underway. I can't do it. Sometimes that happens. Sometimes that doesn't happen. And sometimes people do bad things and that happens. We wind up disciplining COs and more senior officers. And all of this happened in the aftermath of the McCain and Fitzgerald disasters that occurred recently. Both of these in seven fleet of operations, McCain off of Singapore, Fitzgerald off of Japan. Ten sailors were killed in the incident with McCain. Seven with the collision and Fitzgerald. One thing I find very notable there is not only were the CO and EXO, the executive officer held accountable, but so was the squadron commander and the seventh fleet commander. No question as to the hierarchy there and responsibilities that are shared as authority is delegated. One of the things we find all the time is that organizations don't like that. They don't want to identify their own leadership as being accountable for significant disasters. If they do, they're basically begging for liability determination, whether that is direct in terms of litigation or whether that's indirect in terms of the way to stock market values that cooperation. They like to say suppliers, they like to have lower level people held accountable. Invariably, very well, very rarely do they hold their executives accountable. Yes, Tony Hayward, the CEO of BP lost his job as a result of Deepwater Horizon, but I would argue that he really didn't lose his job because of the blowout. He lost his job because of the way he managed the blowout and the very bad PR that he created for the BP organization. And oh, by the way, the board of directors were never held accountable, but you have to ask, shouldn't the board of directors after the Texas City disaster, after being told that the cost of exploration and development that BP had was the lowest in the industry, significantly lower than their competition, what risks they were taking by pursuing that very, very low-cost activity. These are questions that need to be asked because an organization has got to make these trades, whether you're dealing with, pardon me, environmental health and safety issues, how to work off of trade, with cost, what the priorities are for investment, and what type of organization culture do you develop. And oh, by the way, as we look in the future at new roles perhaps for both government organizations and private industry, are we going to ask for accountability from those organizations, are we going to ask for accountability of their executives, and can you have one without the other? Just a few thoughts, and we can have a conversation now. Excellent. Thanks, sir. Which side would you prefer? I was told to take this side. Excellent, fantastic. I'm not sure why, but it'll work fine. Super. Well, thank you for those opening comments, and again, welcome everyone to Michigan Ross. It's good to have you all here in the spirit of Veterans Week. Thank you to all of our uniformed vets in the audience for their service. Thank you for that. Excellent, good to have you here. And certainly thank you to all of the non-uniformed vets from previous times, like myself. So I was a naval aviator from 1986 to 1999, flew F-18s for a few years, and then left the military to start a little company called JetBlue. Maybe you heard of that. But I've spent the last 20 years exploring military leadership lessons and how they can be applied in kind of the business environment, and that's how I'm going to frame up our conversation tonight. And in the spirit of thank-yous, sometimes the non-uniformed folks don't get the attention they deserve. So thank you, sir, for your service and leading the Navy. I'm a little disappointed I didn't have the opportunity to serve under you. But that's something we can talk about all the time. So our agenda, just to be clear about ROE, so for about 15 minutes or so, I've got some prepared questions that I'll ask Mr. Secretary. And I am hoping that the opening talk generated some thoughts in your minds. And if it did, record the questions as you were asked to do, and we have folks walking around collecting those. If anything comes up in our conversation for the Secretary, please write it down on a note, and we will spend the last 20, 25 minutes or so of our conversation today with your questions, which is what we really want to hear, because these are the shares, but these I came up with these. So as we get started, so of all the things that you could have chatted about with us this evening, you chose these topics. Why? Well, two reasons. Of all of the things that I've been involved in, putting aside the issues associated with being in charge of a military organization at the time of war and dealing with the casualties that come back. The next most significant thing that I dealt with had to do with accidents and the loss of life of people who were not in the military. I will argue that the state that my absolute worst experience as Secretary was having to fly out to California to pay a condolence call on the family that was devastated when an F-18 augured into their home just outside of Miramar killed a mother, a grandmother and two infants and I had to apologize on behalf of the United States for what we had done to that family. Those are things that really get you and live with you forever and I find that all too often matters associated with safety are taught with a little bit more of an academic and analytical perspective than is appropriate. When I've done my lectures on safety I try to explain to my class that my principal objective is to hopefully help them avoid some of the situations that I've felt myself get put into and if they can, if I can do that that would be great. In the lectures I typically give over in College of Engineering more focused on the technical aspects more the procedural aspects. The management aspects though I think are equally important and the whole issue of how an organization deals with such matters and how it establishes the appropriate culture and deals with these trade-offs is absolutely critical. One of the unfortunate experiences that I had dealing with Deepwater Horizon dealing with some of the companies that thought they had good safety programs but really didn't and invariably I was told we were told as a committee that oh we never compromise safety well I'm sorry the minute you start drilling a well the minute you send people offshore you're compromising safety. The question is what is a reasonable compromise of safety? What are the standards that you want to use? How do you establish those trade-offs? We throw around buzzwords like it's called ALARP as low as reasonably practicable okay that's in the regulations great phrase what does it mean? How do you make a determination and who makes that determination? And oh by the way I've been on corporate boards and now being responsible for organizations and having one of those corporations have a fatality here recently it kind of brings it to a head one more time this is a continuing issue that needs to be addressed so I'm pleased to be able to bring the issue here. Well I hope that especially for our Ross students here both our undergraduate BBA degree we call those general management degrees and I'd like to think that the notions of accountability and authority and responsibility are front and center to those students that are achieving those degrees so I'll ask the audience here if they're interested in this question or we can move on even having served myself for 13 years I can't even fathom what it's like to live a day in the life of a military secretary would you be willing to share a few minutes of just what that experience is like is that something that would interest you? I see at least three nods that was my threshold so three is good so what's it like to be secretary of the Navy? I was Gordon Englund's relief when Gordon became Deputy Secretary of Defense and he told me that you gotta realize that with close to a million men and women under your authority and that's active duty, reserve, civilian and military both Navy and Marine Corps you gotta find out that on any given day somebody somewhere is doing something really really stupid and one of your challenges is going to be to deal with all of that and the consequences of it my day always started out early in the morning got picked up by NCIS and in the car were three books that I was to go through very quickly on the way into the Pentagon first book was the casualty reports from the day before this was in the middle of Iraq Al Anbar province we were taking casualties every day what happened it was wounded how they're being treated where are they physically at any given point in time really gets your head into what's really important of all of this next book situation reports what's going on with the fleet where the ships mechanical casualties on the ships things of that nature in the last is press clippings why is that important minute you hit the building you're going to be inundated with questions got to be able to deal with all of that that's how the day started you never know how the day is going to end or when it's going to end and the calls keep coming late at night worst experience was call at two o'clock in the morning by the way those calls at two o'clock in the morning tell you how well things are going night but that call was sir we think we lost the sub and by the time I got into the building which was 3.30 in the morning they had finally figured out that what we had lost was communications with the sub not the sub itself but all by the way in that short interval getting ready to stage their part of the submarine rescue program that we do jointly with a number of countries and it was amazing to see the response you never know what's going to happen you got to just be resilient I'll just say that when I went in I thought I was reasonably well prepared for the job I had managed the five, six billion dollar a year business before I went into the Pentagon I had people all over the world I knew how to deal with deployed organizations and I knew the technology so I thought I'd be well prepared for it the emotional side though the dealing with the casualties the dealing with the families was a totally different level and that took some time I'll just say that there are some Goldstone mothers that I still stay in touch with excellent was it it sounds like every day was certainly an interesting unique challenge was it satisfying were you able to sleep looking back on it look it's not a fun, fun job okay but it is without a doubt the most satisfying experience I've had professionally in my life I would tell anybody who has that opportunity to take advantage of it well if you knew that it was me you were handing a 30 million dollar airplane to you to go fly around I wouldn't have slept either I get that so I've got a couple specific questions about leadership just generally so we talked about authority accountability and responsibility in your talk having led large organizations both in the military and business are there some perhaps two or three suggestions that you have for business leaders lessons that maybe you were able to hone in the military and talk about today just good leadership lessons that shape who you are as a senior leader I think first of all having an organization that tests the boundaries of what might happen and understand the level of preparation that you have for dealing with any one of a number of incidents this was something we had to do with the Pentagon because we really didn't know what was going to be happening and it's easy to fall into the mode when you've got a business organization that's doing well that's turning product that's cash flow is good profits reasonable what's not to like about this never get comfortable with that situation think about what might happen and think about the worst thing that might happen and it's going to be worse than that and it may never occur but if it does you'll be much better prepared for it and being able to assess how your subordinates deal with all of that is an interesting process in and of itself one of the things I'm a very strong advocate of is something we call desktoping it's an exercise and you just go and you say good morning gentlemen guess what just happened today just as an example of one that I'm structuring or structured for a company that I'm on the board of good morning I just got in an email your files have all been encrypted and you are now requested to provide 100 bitcoins to this address what are you going to do who are you going to call how are you going to manage the day tell me and it's kind of an interesting we've done all of this stuff we've prepared we've got cyber security what happened to you tell me how you're going to deal with it well can we talk about this later no of course it could happen tomorrow you don't get a chance to prepare try that out on an organization see how they respond to it excellent well it's interesting because one of the questions I had prepared later on was I teach a crisis leadership course here to MBAs and they make the claim at the beginning of the class that my military experience taught me and my business experience validated that crises are no longer ifs they're whens they're going to happen so my question for you was would you agree with that statement and how important is it to be prepared for the inevitable crisis look I mean it's been said many times that there are two types of organizations now in the world that don't know that they've been hacked and I think it's just getting worse and it's very obvious that this is a problem that we're just starting to come to grips with and the consequences of it are going to be even more so more important in the future when we start talking about the internet of things when we start talking about the potential networking of vehicles autonomous operation when we talk about autonomous aircraft the consequences are tremendous and the consequences of somebody taking control of one of these vehicles it's incredible so yeah these crises are going to happen if you asked me if you asked anybody in the business 10, 15, 20 years ago would we be having ransomware attacks people would say well you know we've got some kids and you know living with their parents operating out of their basements playing around proving to their buds that they can get into a computer no this is big stuff and I don't think we've seen any small fraction of what's going to be the problem in the future so yeah be prepared I hope we have some questions then I will ask one last one and then we'll move to questions from the floor this is a question about diversity and diversity of thought so clearly in organizations in military business all over are really focused on diversity as an objective I know as I was concluding my time in the Navy there were lots of early movements and I'm certain although I wasn't keeping close tabs on you that that was a major part of what you had to deal with on a regular basis so how do you from your experience how do you think about the not only the importance of diversity but how organizations should go about it I think organizations need to think about diversity relative to what their objectives are for diversity why are you doing diversity what is your objective in it one of the things we used to focus on quite a bit when I was doing my Navy bit particularly in the Marine Corps but also for the Navy was making sure we could make the numbers we have an all volunteer force and if we're going to have an all volunteer force we need to be able to have an addressable market if you will of recruits we need to have a a good understanding of the hospitality of the United States we can't be focused just in one general area and it was frustrating I will tell you we had members of Congress who would not nominate candidates to the Naval Academy did not feel it was appropriate for them tremendous loss of opportunity we have geographical disparity the proclivity to serve is so geographically distributed in the United States it's very unfortunate I think we when we went to the all volunteer force we did that also at the same time we adopted something called BRAC that I'm sure you're aware of Base Realignment Enclosure we used to have bases up and down the East Coast to the United States those facilities here in the middle of the Midwest most of those have been closed it's more efficient to have fleet concentration areas in Tidewater, Norfolk, Virginia San Diego very efficient operations but what it means is the vast majority of people in the United States have no connection anymore to the military how do we work that? what's our objective? how do we get people that have the diverse backgrounds so that when you're going out and you're recruiting people say oh hey that person looks like me maybe I'll go and see if this works for me and oh by the way you get into other issues we want language skills where are we going to get some of the language skills well you got people not too far from Ann Arbor a little town called Dearborn who have more people who understand some of the languages that we're interested in nowadays than any place else in the United States how many of them feel comfortable in joining the military so I like to think diversity is critical but we need to think about what is our end objective for that diversity and how do we accomplish that and I will just suggest that the measures you take to ensure you have diversity need to be tailored to what it is that you're trying to effect through that diversity excellent does that make any sense it makes total sense and thanks for opening the old brach wound I'm sorry about that I was running the Topkin School in San Diego when we turned Miramar over to the Marines and moved up to Fallon Nevada which was a great place to fly but that's about it anyway that said I would love to turn the Q and A over to our guests here from the Ford School yes and what's your name good evening thank you so much for being here sir my name is Karuna Nankumar and I'm currently a junior in the Ford BA program I'm hoping to pursue a career in national security and diplomacy just to start us off I was wondering what are the constraints and constraints of the way that responsibility is structured in the Navy for example with the CO and do you think that this kind of accountability structure is implementable or should be implemented in other industries and organizations well first of all I think that there's two issues there one of which is who accepts accountability and I'm a very strong believer or has to be held accountable from the moment they say I am in command to the moment that they are relieved now it's not just that commanding officer there's also more senior officers as we saw with McCain and Fitzgerald that that passes up but there also has to be a recognition of how do you use that concept of accountability Mike Mulling who is a CNO chief naval operations and later on chairman of the joint chiefs used to remind people that his ship had actually run aground at one point in time when he was CO of that ship absolute accountability we're going to go ahead and say your career is over just because of that incident not necessarily who's accountable no question the CO is accountable but how that accountability is used needs to be tailored to the severity of the event and the potential for use of that as a learning experience as opposed to just a pure punishment aspect there are cases where yes you want to put up on the expression ahead on the post outside the village gate it's very clear to everybody as to what is expected and I note that of the three service secretaries who went in at the same time myself and the Secretary of Army and Secretary of the Air Force I was the only one who was not asked to resign and those other two cases were arguably more about making a point than they were truly in punishment it was a matter of tailoring the issue and I think that's really what needs to be done how that applies to a corporate world is something that also has to be done in an appropriately tailored manner when you take an individual like Tony Hayward and you give him a wonderful package to make it easy for him to resign by mutual agreement which was the phraseology you know by the way he didn't totally resign from BP he became a member of the board of BP's activity in Russia and got a very nice year's worth of compensation and all sorts of other things you know what message are you giving what is the objective of holding somebody accountable to what extent are you trying to send a message to what extent are you trying to remove somebody who has shown bad judgment to what extent are you trying to deal with the politics of the situation what are the objectives and structure your concept of accountability appropriately thank you thank you for being here with us this evening my name is Edward Elliott I'm a master in public affairs student at Ford School I've been working for several years in London and UK Foreign Policy issues just also to add for everyone on the way out there's a whole bunch of information there on Veterans Week here at the University of Michigan to do grab some on the way out so my question is that you noted that board of directors usually escape being held personally accountable but what occupies that role when it comes to the policy world are they more or less often held accountable and who occupies that equivalent role there are on occasion boards that oversee government activities that are responsible for policy making decisions I will suggest that we have a similar problem in the government board structures that they are really held accountable and yet the responsibility that they often receive is very significant it is a challenge people say well why should I take a position on a board why should I take an overseeing responsibility there's a lot of risk to that professional risk reputation risk liabilities in all cases you have what's called D&O insurance directors and officers insurance that covers most of these matters for the most part when you go into say the policy shop in Pentagon what is their accountability their accountability is their job as with any other job they are at risk there not in a sense of financial risk because we don't operate the amount of discretionary compensation variable compensation government is nil is a small amount but it's really not significant and so basically it's all through people being able to retain their job and people being able to move up into positions not particularly effective but that's what it is alright thank you the next question comes from the audience you talked about the importance of culture in an organization as the leader of an extremely large organization such as the Navy how do you identify and implement these culture changes first of all you gauge culture by seeing how the organization responds to challenges and there are all sorts of challenges there are challenges like what we've talked about today there are challenges of individuals who do not do well within an organization who do things that are improper and what you have to do is you take all of that in and you can make an assessment very quickly I think of whether or not you've got an effective culture the type of culture that you want and the need of improvement and the way in which you get the culture you want is basically by rewarding people for doing the right thing and yes punishing people for doing the bad things but I find that more times are not rewarding somebody for doing something good catching doing something good can be as beneficial as putting that head on a pike outside the village gate and so what you want to do is you want to try to tell people this is the behavior that we want to see this is good we're going to stand behind this individual and yes this person violated the normal standards but they did the right thing and we'll stand behind them and we'll defend them Excellent So my question is in relation to a recent case of relation to the US and the UK and diplomatic community and how American woman who I think was a partner of someone who was working in the US Embassy in the UK was driving on the wrong side of the road and killed a 19 year old British citizen in that case because the structures she left immediately back to the US that resolution from a responsibility but where does that responsibility lie in those situations and that's a sort of specific example but I guess it can be expanded more broadly to the concept of diplomatic community or other political immunities That's a difficult situation and I do recognize and I work with the people over at state all the time and I expect that they're challenged of trying to defend the concept of diplomatic immunity because of the potential downside should we start compromising it and it's always this question of the slippery slope All of that said it's very disappointing that somebody should try to escape that type of situation I would have expected her to stay in the UK and face the music and not argue diplomatic immunity that's what's expected of our people they're expected to behave appropriately Yes, diplomatic immunity is something that you rely on in some very difficult situations especially in cultures that have very different mores and expectations and in particular in countries that will use purported criminal matters as a way of executing their own policy objectives but when it comes to a matter like this no, it's disappointing very disappointing is state going to direct her to go back? I'm not the right person to answer that question We have time for one maybe two questions if they're short This one's a good one comes from Craig Pote and Navy Vet in the audience as AI proliferates in public and private organizations and makes more and more of our decisions who is or should be accountable for the decisions that the systems make That is really a fascinating question we could spend the entire evening talking about that I had the opportunity to engage on some matters dealing with automatic systems and dealing with systems that perhaps could respond very quickly to challenges in the field and one of the questions that always came up was how can you be sure whether those systems are going to work properly and so we always invariably result came back to the position of saying we need a human involved final decision to be a human even recognizing the frailty of human behavior and never knowing what that human is going to do that's obviously getting encroached more and more decisions are being made I have to tell you I worry about two aspects of all of that I worry about not just whether or not the algorithms are being developed properly but whether they are implemented appropriately and the difficulties the challenges of what we call verification and validation of complex software is just so tremendous and you can see it right now you take a look at the 737 MAX situation and all the issues that are coming up associated with the verification and validation not just of the MCAS the specific software module that's under question here but other related matters it's really really hard how many updates do you get to your operating system on your phone or your laptop people are finding mistakes problems, challenges whether it's a coding error or whether it's just a vulnerability or it's not foreseen ahead of time these are happening all the time we have to make a quantum leap in terms of how we do verification and validation to be able to really move to the next generation of software dominated systems the other thing that I worry about is the whole question of cybersecurity and can you really trust an AI system can you trust that it's not going to be impacted by somebody who doesn't want it to work properly or somebody who is just trying to see whether or not it can be affected these are tremendous challenges and I think they represent some of the most significant potential impediments associated with going to that next generation of autonomy of AI of all those potential advantages associated with the computing power which is just within reach right now one more quick question so we'll ask one more quick question but also for everyone in the audience whose questions haven't had a chance to be read we will be sharing them with the secretary after the event so this last question here as Secretary of Navy how did you balance delegation whilst also maintaining a level of accountability that you felt comfortable with the critical issue for me in terms of delegation was being able to gauge the people that you were delegating authorities to and I will say that the most difficult decisions that I had was associated with putting the right people in the right positions and being able to assess how somebody is going to be able to deal with a new situation is a very very challenging problem but that's what you got to do and yes we wind up relieving a lot of individuals in command responsibility and who have significant command responsibilities and that's because you can only do so much in terms of assessing how they will do I personally believe that our processes associated with officer promotion all wanting we've gotten so far into the mode of taking measures to avoid any potential misuse of the system with promotion boards and limiting the information that can be used by those promotion boards to make decisions that in some cases we're making it difficult to use that which is really should be available to be able to better assess how an individual will be able to do at that next level I've had to remove people I've had to remove people in very senior positions it is not fun especially if you put them in that position in the first place because you got to get up and say I made a mistake oh by the way I never relieved anybody too early it was always later than it should have been and that's not a good sign well sir thank you very much for being with us tonight it would have been a joy to spend another couple of hours here unfortunately time is time any reflections from your conversation that have come up this evening any closing thoughts that that you'd like folks to take away from this discussion I just think it's interesting that we have this activity co-sponsored by three different parts of the University of Michigan and I will just say that I've had only a few activities few opportunities to go outside of the College of Engineering I've enjoyed them all especially with the law school okay I don't always enjoy dealing with the lawyers as something associated with that but I think this is good I've enjoyed it and I think we need to figure out other mechanisms of doing more of this sort of thing because it's so easy to just deal in a very simple structure of the colleges and schools departments within those colleges and oh by the way the courses within those departments and very soon you get very narrow, very structured and you lose the value and nothing else to go back to your comment about diversity one of the values here is getting a diverse conversation going not just people that come to the problem from an engineering perspective or from a military perspective but looking at it from a management perspective a policy perspective and sharing those different thoughts I couldn't agree more please join me in thanking Secretary Winner for his question excellent