Knowledge Management- Hidden But Alive & Well Leveraging Knowledge at Raytheon June 30, 2004

1. Knowledge Management- Hidden But Alive & Well Leveraging Knowledge at Raytheon June 30, 2004 Roberta Preve Manager, Business Information Center Telephone 781-522-5183 roberta_j_preve@raytheon.com

2. Quote from Bill Swanson “As we focus on performance, relationships and solutions, all of us have the opportunity to learn from each other, regardless of what time zone we may be in. It is the diversity of our worldwide team that provides us with so many different experiences to draw upon and share. Thank you for putting this knowledge to work to help our customers succeed and to enable our company to grow.” Bill Swanson Chairman, CEO - 2004

3. Raytheon Six Sigma The Burning Platform -- 1998 Suppose you were on this platform. Taking “no action” is no longer an option. There is a clear and pressing need for change! We must take Action! Burning Platform = term used to describe our Pressing Need for Change

4. Current State Future State One Company, One CultureCodified Language High Performance Culture An Improvement "Machine” Create Value for our Customers Make our Customer successful Results: - Now - Future Disconnected Culture(s) Stakeholder Discontent Backward Focused Factions Weak Stock Price Low Expectations of Performance Improvement(s) No Standard approach toimprovements Dan Burnham’s Vision - 1999(ex Chairman & CEO) “Raytheon Six SigmaTM …is a whole new way to think about work… It’s going to touch everything that we do.” Dan Burnham, Chairman, CEO Raytheon Leadership Forum - Jan. 14, 1999

5. Raytheon Six Sigma An Integrated Business Strategy Our Operational Definition Raytheon Six Sigmais a Knowledge-Based Process we will use to Transform Our Culture in order to Maximize Customer Value and Grow Our Business Customer Culture Tools Principles The Same Process at Every Level of Our Business 1. Specify value in the eyes of the customer 2. Identify value stream and eliminatewaste/variation 3. Make value flow at pull of the customer 4. Involve and empower employees 5. Continuously improve knowledgein pursuit of perfection Visualize Achieve Commit Improve Prioritize Characterize

6. Raytheon Six Sigma & KM embedded aspects to the Process Collect & Search for knowledge to shape the vision Document & Share Best Practices, Lessons Learned, & Success Stories Use reusable knowledge to gain commitment Capture - Share - Reuse Improvement plan based on Benchmarks Continue learning as you improve, create new solutions Use past R6S projects, Best Practices & Lessons Learned

7. R6 KM Strategy -- Scope • Help Raytheon Six Sigma community leverage our knowledge across projects • Create a holistic/blended approach that leverages both Explicit & Tacit Knowledge • Focus on continuous improvement & deploy company wide • Initiate a cultural transformation to achieve knowledge sharing and reuse as a core competency • Coordinate KM efforts to align and be “one company”

8. R6 KM Communities/Users • R6Community • Leadership • Master Experts 41 • Experts ~1,275 • Specialists ~30,000 • Project Team members • Projects - many • KM Champions 22 • KM Brokers - many • Goals • 78K employees • 25% specialists • 1% Experts Company Govt Business R6 Our R6KM Strategy is being deployed across Raytheon

9. KM Working Definition • Knowledge Management – The systematic processes that create, capture, share, and reuse knowledge within the company The four action sub-processes that bring meaning to KM

10. KM Deployment Approach KM Key Result Areas People By Benchmarking KM leaders, we found that there are four key areas that must be optimized to build, grow and sustain a KM strategy Enabling Environment Process Tools All four KRA’s must be worked and integratedto form a successful strategy

11. Tools/Technology One step, focused role-based approach Easy capture and share – Knowledge Representation CoP locator & collaboration SME Locator Webpage  Portal Intelligent Search Process KRA’s - Create, Capture, Share, Reuse CoP Process – APQC license After Action Reviews/ “Peer Assist” Knowledge Café Forums Content Management Knowledge Management StrategyKey Result Areas People • KM Office • KM Champions • KM Brokers • Communities of Practice • Subject Matter Experts Enabling Environment • Management priority • Communication • Sharing and Reusing is a core competency • Recognition & Rewards • KSARA – Knowledge Sharing & Reuse Awards • “How we do work”

12. SHARE Abstract our Knowledge CAPTURE Learn from Others REUSE Leverage our Knowledge KM Process Lifecycle • Six Sigma Projects • Internal Benchmarking • External Benchmarking • Best Practices • Lessons Learned • Communities of Practice • Many other sources • Forums • Load KM Repository • Put in Project Library • Becomes Intellectual asset • Tacit knowledge Explicit Knowledge • Communicate success • Knowledge maps • Match gaps to Solve our problems • Reuse proven solutions • Lower risk • Agile customer response Create

13. KM Enabling Environment • Goal: The Raytheon working environment supports creating, capturing, sharing, and reusing knowledge. Key KM aspects: • Part of our Corporate Strategy • Recognition and reward is key • Communication is continuous • People see KM as a help to do their job to arrive at better solutions • Emphasizes “one company” philosophy • KSARA – Knowledge Sharing & reuse Awards It has to be cool to share & reuse!!!

14. KM Enabling Environment Example: Recognition & Reward Recognition for employees and expressing appreciation are key to sustaining the effort • Most sites have a photo board Rewards are important also…. but • We carefully choose rewards that will motivate people to support the process and use the rewards to celebrate milestones on the journey

15. 1200 0 Gross Benefit $M/Year $3 Billion R6: Cumulative Achievement 250 0 Net Benefit $M/Year $776 Million 300 0 Operating Cash Flow $M/Year $1.2 Billion Germination Institutionalization Optimization 1200 0 Experts 1% of Population People 25000 0 Specialists People 42% of Population 1999 2000 2001 2003 2002

16. Wrap Up Summary • Our Raytheon KM journey continues • It takes committed People, a simple Process, easy to use Tools/Technology and a supporting Environment • You may be challenged with deploying across large groups. We use Knowledge Champions & Brokers to facilitate deployment of KM. • Knowledge Sharing & Reuse is NOT a Natural Act!!! We are talking about personal cultural change • It’s all about speed; can you learn & implement solutions faster than the competition

17. Questions???? is an organization recognized for knowledge sharing 2002 APQC Best Practice Company 2003 North American MAKE Finalist 2003 APQC Best Practice Company 2004 North American MAKE Winner