March Of The Lunar Penguins

At Raytheon, Louise Francesconi's teams think way beyond missiles

On the morning of Sept. 1, Louise L. Francesconi sat anxiously with colleagues in Tucson, receiving regular updates about a test of the government's ballistic missile defense system. As head of Raytheon (RTN ) Missile Systems, a position she has held for a decade, she was monitoring the progress of what's called the kill vehicle, which her company had developed for Boeing Co. (BA ) A little after 10:30 she got word that the refrigerator-size weapon, moving at 15,000 mph, had destroyed a mock warhead 100 miles above the Pacific Ocean.

She issued a public statement that afternoon: "This highly successful test...clearly demonstrates the maturity of our technology and our ability to provide this critical capability to the nation." Then she turned to the other part of her job: trying to lessen the dependence of her $4.1 billion company and 11,000 employees on legacy programs such as this one, which began 23 years ago.

Francesconi, the highest-ranking woman in the defense industry, worked her way up in the company only to find, once in charge, that she needed to disrupt the entire ecosystem. Raytheon is used to success on its own terms. She hopes to coax it into becoming more responsive to its customers, whoever they might be, and more creative when thinking about the future. "It can be a very orthodox business," she says. "You have to shake things up."

Francesconi, now 53, grew up in the business--her father was an engineer at Hughes Aircraft Co.--but her early ambitions had nothing to do with that world. She came of age in Santa Monica, Calif., in the 1960s, the middle of three children. She suffered from mild, undiagnosed dyslexia, played the guitar, wrote children's songs, and thought she would be an elementary school teacher. Then a summer job helping a neighbor set up a music company "turned me on to being in the business world," she says. Later, at Scripps College, in Claremont, Calif., she studied economics. She ended up at Hughes one summer, trying to hedge company contracts against inflation. After graduating in 1975, she got a full-time position in the finance department.

Francesconi was young and impatient, but she had no technical expertise. The company was dominated by male engineers; its pace was deliberate. She turned to her father, who worked at Hughes for four decades before retiring, for help sorting out the politics. "There was more than one day when I told him: `This is the day that I'm quitting,'" she recalls. "He inspired me to change the organization instead of letting it change me."

So she stayed, earning her MBA at the University of California at Los Angeles while continuing to work. By the time General Motors Corp. (GM ) bought Hughes in the mid-1980s, Francesconi was a manager in the finance department and deeply involved in preparing Hughes for life as a public company. It was then that she got to know Barb Keeler, who worked in Hughes's finance department in Tucson. Keeler retired in 1996, and the two remain friends. When asked to describe the working environment for women, Keeler chooses her words carefully. "You had to recognize that to be in management would mean you'd be in a room full of men most of the time," she says. "You don't ask people to act differently because you're a woman. It had to be a nonissue."

TURN UP THE MUSIC

The turning point in Francesconi's career came with Hughes's acquisition of General Dynamics Corp.'s (GD ) missile business in 1992. "I was in the finance department, but ultimately I became the central coordinator for all issues," she says. "I became a CFO out of that experience." Keeler says that Francesconi's decisiveness impressed the old-timers.

The promotion meant moving her family from the San Fernando Valley to Arizona, an unhappy consequence of success, as far as her husband was concerned. It also led to their decision that he would retire from Hughes, where he was the director of quality, to stay home with their young son.

The arrangement is unusual enough that Francesconi's friends are intent on dispelling the image it might conjure up of her as a woman concerned only with work. They invariably describe her as more than happy not to talk about her job, and quite willing to go on boating and camping trips where she can't easily be reached. Jan Hastreiter, a Tucson real estate agent who has sold houses to Francesconi and other Raytheon executives, says: "Louise is fun. She likes to turn up the music and dance in the kitchen while she cooks. You would never know what kind of a job she has, in terms of responsibility, when you first meet her."

In 1996, three years after becoming CFO, Francesconi was named president of Hughes Missile Systems Co., the first woman, youngest executive, and only non- engineer to run a major business at the company. Being a woman was not her only problem. "To be honest," she says, "all those differences mattered." She regards dwelling on them, though, a total waste of time. When Raytheon bought Hughes a year later, she was put in charge of its missile division, which accounts for some 20% of Raytheon's sales.

About five years into the job, in the wake of integrating the businesses, September 11, and the advent of the high-tech battlefield, Francesconi started to worry that if the company didn't change, "we would become the buggy whips of the industry." One thing most colleagues mention about Francesconi is how persuasive she can be. As she puts it: "My job is to make people see how they fit into the future." She can also be blunt. "She always emphasizes that we have to think differently or the business will die," says Kevin Peppe, a retired submarine captain who joined Raytheon in 2003.

Francesconi created what she calls an innovation tank: two groups of about 650 people focused on developing new technologies for use on and off the battlefield. She also set up a Bike Shop where engineers and machinists quickly develop prototypes of weapons altered to the chan ging demands of urban warfare. She describes her approach this way: "I want to co-opt the group that maintains the wheel. But I don't want them to feel obsolete. Then I have a group of futurists. I tell them their job is to make the others feel obsolete. I foster a creative tension." She devotes 40% of her discretionary investment fund to these programs and technologies.

Sales at Raytheon Missile Systems are up 17% since 2003, but it's not because the company has succeeded with anything totally out of character. "Have they done a lot yet? No, but they're trying. They're imaginative," says Heidi Wood, a Morgan Stanley analyst.

The "Lunar Penguin," just a proposal for now, is an intriguing example of Raytheon's ambitions. NASA, which is looking for water on the moon, needs a probe that can fly to precise locations where hydrogen has been detected. Michael W. Booen, a retired Air Force colonel and "the guy who pushes into new markets" at Raytheon, sent engineers to talk with NASA's engineers about the problems they were encountering. Eventually, Raytheon came up with a lunar lander the size of a small coffee table that uses the propulsion system, guidance electronics, and software from its Tomahawk missiles.

The rest of her employees, Francesconi hopes, are learning from that kind of free thinking. "Does the main organization look at the innovation group with disdain sometimes? Sure. If I didn't write the check, they'd be starved," she says.

When describing how she overcomes lingering resistance, Francesconi talks about being a mother. "You go home frustrated and tired. Your kids are going in one direction, and you want to go in the other," she says. "The same kinds of skills are required in the workplace: It's all about getting people to move in the same direction."

By Susan Berfield

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE