Intercompany Work Orders (IWOs) provide the divisions of BAE the opportunity to take advantage of available resources from other BAE divisions.

BAE Corporation is a British owned defense contractor, formerly known as British Aerospace, with over 30,000 employees in the United States. Their growth, primarily through mergers and acquisitions, enabled them to become one of the biggest players in the US Defense industry.

While attending a leadership conference I had the opportunity to ask the President and COO, Walt Havenstine if he was familiar with the IWO process. He smiled and shook his head, and said, “Tom, that’s been in the works for over six years!” I responded, “Can you tell me to go fix it?” And he said, “Have at it –  good luck!”

The Intercompany Work Order process, or IWO (Eye-woe), is the means by which one division of BAE could take advantage, and “purchase” the use of products or services from another division. The synchronization of the financial systems that were acquired or merged with could not keep pace with the rapid growth of the business, and what should have been a simple transaction was virtually impossible to complete. 

In 2008, Intercompany Work Orders represented over $1.2 billion in revenue.  And it was a “broken” process. 

Bruce Jarvie, the BAE CFO was overseeing the project when I joined the team, and he introduced me to the lead, and told her I was taking it over.  She was relieved, both literally and emotionally. This was a sideline task and just one of her many duties. Joining the biweekly call, it was quickly evident that was the case for every participant, and therein was the issue. Bruce realized he needed someone to bring it all together, and I was happy to do so.

It took a year to do it.

There were five or six different accounting systems that needed to be addressed, and the owners were located across the country, More than 50 stakeholders were invited to participate on the calls, and some were located in countries around the world. 

The solution came down to tying the required inputs for each accounting system on the receiving end of the transaction to the output capabilities of each transmitting system. A digitally completed single page form was the answer.

In my local division, I established a team to develop a parallel process to document a standard template for implementing the policy. This is where “the rubber would meet the road,” and was keystroke guidance underneath a template for standardized execution. Every iteration was tested throughout the year-long process.  When the final policy was signed and approved, the process was ready two weeks later.

• The lessons learned from this project were numerous, with the most significant being how to build an effective consensus across an incredibly wide variety of skills, interests, egos, and participation.
• Organizationally, I conducted a poll among the business developers and sales teams, all of whom had been frustrated by their inability to acquire resources from their own company!  A very conservatively estimated impact was a $300 million annual swing from external to internal purchases of products and services.
• Bureaucratic failure at the highest level. Despite the CFO implementing the policy, partnerships between the divisions did not ensue. The powerful leadership among the divisions made “forcing” the change problematic.
• Sweeping change followed Linda Hudson’s appointment as the first female CEO at BAE. She led by example, cutting many leadership positions. That was followed by over 3,000 others, largely ignored in the news.  I was one of them.
• I was asked to remain on the staff for another six months to complete another project, and during that time worked diligently to get a single division to partner on the process.  When I left, I wrote to Ms. Hudson and offered her summary and recommendation.
• I never heard from Ms. Hudson, nor any of the other leaders I sent notes to for several years after I left, reminding them of this policy and the opportunity they were passing up.