Robert J. Stevens last night informed Lockheed Martin’s board of directors that he intended to retire as the company’s Chief Executive Officer, and the board then voted to elevate his long-expected successor, Christopher E. Kubasik, to the CEO post effective January 1, 2013. Stevens will remain Chairman of the Board until January 1, 2014, subject to the approval of the board. Marillyn Hewson, currently Executive Vice President of the company’s sprawling Electronic Systems segment, will succeed Kubasik as Chief Operating Officer of the world’s largest defense contractor.
This succession has been in the works for some time, and should unfold seamlessly. Kubasik and Hewson are well known in the investment community, and have deeper understanding of Lockheed Martin operations than just about anybody other than Stevens himself. Kubasik, a certified public accountant, served as head of the Electronic Systems business, Chief Financial Officer and Controller prior to becoming Chief Operating Officer in 2010; his interactions with Wall Street during the time he was CFO played a crucial role in restoring investor confidence in the company’s performance. Hewson headed a diverse array of company units focusing mainly on logistics and sustainment prior to becoming EVP at Electronic Systems; she also chairs the board at Sandia Corporation and is a director of chemical maker DuPont.
There will be plenty of time for shareholders and stakeholders to learn more about the new team before Bob Stevens vacates the chairman’s job 20 months from now. But a moment of reflection is indicated right now about what a huge loss to the defense sector Bob Stevens’ departure from active management will be. Like several other senior executives who have run Lockheed Martin in recent times, Stevens is a person born in modest circumstances who made himself into one of the leading intellects and industrial leaders of his generation. His career trajectory is not unlike that of Carnegie and Rockefeller, progressing at a startling pace once it took off because his talents were so well-suited to the changing needs of a major economic sector. In Stevens’ case that sector was the defense industry, which by the time he joined it had become an engine of innovation for the whole nation. Surrounded by managers who were developing lasers, digital networks, stealthy airframes and the Internet, Stevens ultimately became more successful than any of them.
Success in his case was about a lot more than money. When Bob Stevens became President and Chief Operating Officer of Lockheed Martin in October of 2000 following a series of company mis-steps and purges, it had a corporate culture worthy of former Yugoslavia and business prospects to match. The company was losing key competitions left and right, and Stevens might not have even made it to the ranks of top executives had so many of his superiors not been forced out. But as he rose to become CEO in 2004 and Chairman of the Board in 2005, a remarkable corporate transformation began to take hold. All the legacy rivalries that divided employees began to melt away and teamwork became the hallmark of Lockheed’s culture. Lost franchises were wrested back from competitors not up to the task of sustaining them, and troubled programs were gradually put back on track. At the human level, Bob Stevens’ humility and attention to detail took hold as a model for other executives, so that Lockheed Martin now has the most open and collaborative culture in the sector.
Most outsiders will never fully grasp how important Bob Stevens’ tenure has been to the long-term strength of the enterprise. But if you just look at how far Lockheed Martin has come over the last dozen years, you can get some sense of his contribution. Lockheed Martin dominates virtually every market segment in which it operates, from information systems to tactical aircraft to naval electronics to military space to missile defense. And because of the business practices that Stevens helped put in place, it will be a leading player in other markets that are only now coming into focus, like cybersecurity and next-generation tactical vehicles. Lockheed Martin has been blessed by a number of advantages over the last several years that have helped it to consolidate sector leadership, including a strong management team, extraordinary technical depth, and competitors who repeatedly over-reached. But if you want to know what its number-one advantage was in the new millennium, that asset is easy to identify. It was Bob Stevens.
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