San Diego Union-Tribune December 21, 2004
SAIC boss building team, minus splash
But he's made his mark during 40 years overseeing classified Pentagon contracts
By Bruce V. Bigelow
In an age of celebrity CEOs, Ken Dahlberg hasn't made much of a splash. And after a year at the helm of SAIC, he hasn't left much of a wake.
That's just fine with him, though. As chairman and chief executive of the goliath San Diego defense contractor also known as Science Applications International Corp., Dahlberg prefers to operate at periscope depth.
"I'm not one to hype who I am or what I'm trying to do," said Dahlberg, who took over at SAIC about 13 months ago. "I've spent a lot of time in the broad national security, defense industry, and there you are not frocked with respect. You earn your respect by doing what you say you're going to do."
Dahlberg, 60, has undoubtedly accomplished that in the 40 years he has spent overseeing Pentagon contracts on various classified programs.
He even worked in defense as an engineering student at Philadelphia's Drexel University. Under a cooperative program with General Dynamics, Dahlberg worked at the Electric Boat shipyard in Groton, Conn. His job included doing communication system designs and going on shakedown cruises aboard nuclear submarines.
By the time he graduated, "I thought I had the best of all worlds," Dahlberg said. "Not only did I have a degree, but I had two years of practical experience. I actually had some designs under my belt. That's a lot to say for a kid who'd just turned 21."
At SAIC, which ranks 289th on the Fortune 500 list of biggest U.S. companies, Dahlberg oversees a research and engineering conglomerate that he has likened to a mutual fund holding thousands of government contracts.
Many of those contracts concern classified programs. So it's hard to glean many details from the need-to-know world where Dahlberg has made his career as an engineer and industry executive.
His corporate biographies from Hughes, Raytheon and General Dynamics provide only a general outline of his rise from engineering and program management jobs to executive positions of increasing responsibility.
"Ken is a terrific executive," said Ronald D. Sugar, Northrop Grumman's chairman and chief executive. "He has earned his stripes in the industry at Hughes, Raytheon and General Dynamics, and he was a particularly good choice to take (SAIC) forward."
But what, exactly, does that mean?
After joining Hughes Aircraft in 1967, Dahlberg rose from doing technical design work to leading larger and larger engineering groups. He remembers being the youngest division manager at Hughes, overseeing a business before he was 40 that was generating more than $350 million a year in sales.
As a business leader, Dahlberg came of age at a time when big defense corporations were developing sophisticated ideas about managing Pentagon programs that continued for 10 years or more.
"That was just about the days when teams and empowerment were not written in books, but a few of us were starting to get it," Dahlberg said. "Getting people passionate around where you were trying to take a business just gave you untold leverage and opportunity."
'On schedule, on cost'
In a speech he gave as a Raytheon executive, Dahlberg emphasized that flawless program management is the life blood of a Pentagon contractor.
"Your future is determined by what you win," he said. "In our marketplace, the customer wants programs executed on schedule, on cost and with stated performance."
Dahlberg also spent much of his executive career refining his skills in building a business internally, by putting different units together in new combinations.
At Hughes, for example, Dahlberg was the executive sent to Tucson, Ariz., to integrate the unmanned missile businesses that Hughes acquired from General Dynamics in late 1992. The former GD missile units, which had more than 7,600 employees, included Convair's former Tomahawk and Advanced Cruise Missile programs based in San Diego.
"That was where I really started understanding differences in (corporate) culture and how to win the hearts and minds of people by creating an integrated vision and sharing that," Dahlberg said. "It was fun. I really enjoyed my time there."
The experience that Dahlberg has acquired in putting pieces together seems especially relevant at SAIC.
After taking over, he reorganized SAIC's decentralized federation of high-technology businesses, which nuclear scientist Harold Agnew once described as "a farmer's market with central heating."
The process of establishing a more traditional corporate hierarchy prompted many senior managers and others close to founder J. Robert Beyster to leave the company.
"Clearly, he has to think about changing the infrastructure and the plumbing of the company, and in some sense the 'head set' of the company in terms of how they operate," said Northrop's Sugar.
Dahlberg also has vowed to double SAIC's $6.7 billion in annual revenue by 2009.
That goal clearly includes making some major corporate acquisitions. But the surge in federal spending on defense and homeland security also has created a target-rich environment for big government contracts.
"At a time when everybody is talking about trying to get the intelligence community to talk to itself and achieve virtual integration, I think SAIC would be an obvious candidate to bite off a piece of that work," said John Pike of GlobalSecurity.org, a defense and intelligence think tank in Virginia.
As part of that process, Dahlberg has begun to reorganize the government contractor around its principal business in defense research and development and information technology services. Among other things, SAIC recently agreed to sell Telcordia Technologies, its telecommunications subsidiary, for $1.35 billion.
The Telcordia sale is expected to add almost $1 billion to the $2 billion or more currently available on SAIC's balance sheets. So far, however, Dahlberg has not indicated what takeover targets he might have in mind.
"He saw Hughes grow dramatically, from about $3 billion to a 16-or 17-billion-dollar company, then he saw Raytheon do the same thing," said former Navy Adm. John C. Weaver, who worked closely with Dahlberg at Hughes and Raytheon.
"With Hughes at Fullerton, which was essentially a subsystem supplier, Ken put combinations of systems together," Weaver said. "So data from one sensor went to another sensor, which fed another sensor and together they amalgamated the data to provide a more comprehensive picture."
Years later, Dahlberg oversaw the combination of Hughes' radar and electro-optics businesses.
"Each one had strengths, but together he created synergies that were not previously realized," Weaver said. Nowadays, it is common for senior Pentagon officials to seek development of such "systems of systems" as part of their vision for what they call "network-centric" warfare.
GM switched gears
By 1996, Dahlberg was probably in line to succeed Weaver as president of Hughes Aircraft. But General Motors, which owned Hughes, decided to sell the Hughes defense subsidiary and focus on its Direct TV and satellite telephony business.
"Actually, it turned out to be the best thing that ever happened to me," Dahlberg said, chiefly because "I had worked only in one corporate culture, one company, for 20-some years."
Raytheon CEO Dennis Picard tapped Dahlberg to lead the consolidation as president and chief operating officer of the Raytheon Systems Company.
Dahlberg's reputation for being direct became evident in one meeting with Picard, Weaver said. The Raytheon CEO was discussing the outlines of a classified program with people who didn't have a need to know, when Dahlberg turned to his boss and abruptly told Picard to "shut up."
Dahlberg described his 2½ years at Raytheon, however, as the toughest of his career because the businesses proved to be much more overlapping than complementary.
"I really did not like that part of my career, shutting down millions of square feet of facilities and thousands and thousands of employees having to be let go because of this overlap," Dahlberg said. "But I did it, and I think Raytheon as a result is in a very good position to continue to grow and prosper."
Among the upper ranks at Raytheon, Dahlberg also gained renown for his brilliance playing pool. In one match watched by dozens of top Raytheon executives, Dahlberg trounced Peter D'Angelo, who was then Raytheon's chief financial officer.
Asked about the match, which has attained near-legendary status, Dahlberg confirmed he "wiped him out."
Dahlberg said he learned to hustle pool in his hometown of Camden, N.J., where there were a lot of pool parlors.
"I enjoyed the cue in my hand and learning about English and how to position the cue ball," Dahlberg said. "I got very good at it, good enough that . . . on average I'd win more than I would lose. I made a significant amount of money doing that."
At SAIC, the engineering executive with the hustler's eye says he wants to capitalize on the company's deep expertise in fields important to the Pentagon and intelligence agencies.
"You also could say that unlike Minnesota Fats, Ken believes in running with a skinny staff as fast as he can go," Weaver joked.
Because SAIC does not manufacture computers or networking equipment, Dahlberg sees advantages for the company as a systems integrator "without iron" that has the ability to work on projects with any technology.
"What I'm looking for in the company is a better way for us to collaborate when we have to," Dahlberg said. "I call it acting bigger than we are."
He envisions opportunities to win extremely large systems contracts by bringing together SAIC's resident experts from a broad swath of business units. He cites as an example the inter-disciplinary team that SAIC put together to install a security network for the Olympic Games in Greece last summer.
"Even the employees don't quite understand what I mean by occasionally acting bigger than we are," Dahlberg said. "That does not mean that I want every business unit to take on large-scale systems roles. We couldn't. We don't have that kind of capability and expertise. But we certainly can take on more than we have heretofore."
Copyright © 2004 Union-Tribune Publishing Co.
