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William Swanson

Published: 9 March 2009

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In his 37 years at Raytheon, William Swanson has held 14 jobs, starting out of college interpreting blueprints on the factory floor. From the prototype shop, Swanson moved to manufacturing, program management, systems engineering, quality control and other areas. He was named Raytheon's chief executive in 2003 and chairman in 2004.

William Swanson is chairman and CEO of Waltham, Mass.-based Raytheon Corp. (Johnny Bivera)

Swanson credits the wide range of his experience at the company for his deep technical knowledge of Raytheon's varied programs. His tenure as CEO has included the re-emergence as a major program of the Patriot missile defense system - a system Swanson oversaw as the youngest plant manager, then the youngest vice president in the company's history in the 1980s.

"Once you work on [a program], you become part of a very small club," Swanson said. "It becomes part of your family, so you remember every system you worked on."

A. We're a company that has 8,000 programs. We only have one that represents about 4 percent of our sales. The rest of them are all thousands of smaller programs, broad-based, a very diverse portfolio.

It makes us hard to understand. If you look at a Lockheed and you say describe Lockheed, you go F-22, JSF, LCS, presidential helicopter. Describe Raytheon - 8,000 little programs. Hard to understand, hard to model.

The thing I like about it is to affect our business, you have to affect a lot of programs. A lot of them have to go away to have an impact. And I guess I don't see that.

A. People that like our stock or like our company view that because we're broad-based, we can react better, that there are more opportunities. For us, I think it has to do with our portfolio. I think it also has to do with that we have about an 80-20 mix between domestic and international. We expect our international to grow to 25 percent. We predicted we'd do it in about five years. I think we'll do it in about three.

Secretary Gates said he doesn't see an across-the-board cut. An across-the-board cut is a peanut butter approach that will provide short-term savings, but it lengthens every program. So you're going to not only spend that money, but you'll spend more over time.

And so they really have to look at bigger things.

A. You get some of it by osmosis. I have the best network in Ray-theon. All 73,000 employees can e-mail me directly, and they do. It creates a very networked society, and people know they're going to get an answer.

There are key aspects to innovation. It's all about having an inclusive company. It's all about collaboration and respect.

I read a lot. We have operation reviews every month, so all our businesses report out. We have our financials. We do our program highlights. And I'm on distribution for all our program wins and press reports. The other nice part is I only need four or five hours' sleep.

A. We're a little bit like the government when you look at cyber, in the sense that we want to make sure that we can protect the information but can also share it. We don't want to smother it, because you can overregulate it, overcontrol it, and then you lose the advantage of the networking for linking together the parts of your business. Whereas when you look commercially at business, they want to connect with everybody. They want to be as open as they can, and they want to grow as fast as they can.

For us, we see both sides because we probably do work for every intelligence agency in the government, and we also do work for Fortune 100 companies.

In this business, there's a sword part and there's a shield part. The sword is the information operations. It's highly classified. But then there's the shield portion, which we call information assurance. You want the best sword you can have. If you have the best sword, you'll have the best shield.

That's the way we come at it to keep making us as good as we possibly can be.

A. We see it as a growth market. We see it as a market that will grow at double digits. But it's hard to [put a dollar amount on it]. I think we were the first to talk about this over two years ago. It's nice to see things that we saw early on in the market now others are doing.

I think this is where Raytheon has a leadership position in the sense that we can do vulnerability assessments. We can do insider threat analysis and detection and protection. We can do security consulting in the sense of helping others to identify weaknesses, and we can do what we call cross-domain information sharing.

The government has now really got this high on their priority list. It took near the end of the Bush administration to get the attention, but you look at the new administration, it's high on their priorities.

A. It got the eighth-best invention last year in Time magazine. It's going through development testing, but we have hit a bullet with a bullet. I think our company probably has done that more than anybody else. When you say what are we noted for, people like to say we're the largest missile producer. But I always like to say we're the best technology company.

From our standpoint on APS, we have demonstrated it. I think it's an unbelievable technology. If you see it, it happens in the blink of an eye.

A. I don't know where it's going to go, but if one presupposed, 10 years ago, or let's go 15, did you ever think we were going to have the amount of UAVs that we have today? So you now go 20 years in the future and say, "OK, what's it going to look like?" Part of our job is we've got to be the Wayne Gretzkys of defense and aerospace. Where's the puck going to be, and do we have what it takes to be ready and are we thinking about it?

I think those are the companies that are needed in the 21st century.

A. We have not seen the Navy's plan. The Navy's really talked about building three DDGs, three 51s, but we have not seen the 2010 budgets, so we really don't know. There's not going to be a lot of discussion on the 2010 budget until it comes out. When it comes out, we'll decide what we have to do, how we do it.

The point is we're not building the hull. We build the electronics, and those electronics are both forward-fit, backward-fit. We see the SPY radar being the most advanced X-band radar of its kind in the world. It's not only on DDG, but it'll be on the next carrier, so that's a good endorsement of that.

A. Organic growth is the hardest, but to me it's the one that returns the best shareholder value. We've looked at acquisitions in the sense that we do a capability-based gap analysis.

Cyber was a good example: We wanted vulnerability assessment, and so we went out and looked and we added SI Government Solutions to our portfolio. We wanted to be able to handle insider threat, penetration, detection, passive analysis. We got Oakley Networks. We wanted to make sure we understood the whole end-of-the-systems aspect and architecture of it. We acquired Telemus. These acquisitions are all capability-based, and they bring us full service when we do it.

We don't grow by acquisitions. Some of our competitors do.

A. We're constantly looking at a gap analysis. There are things that are always there on the table, and we look for the right opportunity. The other thing is we want to make sure that when we acquire something, we pay the proper price for it.

A. What we see is that in middle school is where they make or break it. In the fourth grade, the United States is in the top 10 in math and science rankings worldwide. By the eighth grade, we've dropped off the list. And by the 12th grade, we're not with any other industrialized nation. Our research has shown that if we can get middle school children interested, then we have a chance.

If you look at the top 10 jobs for 2014, they haven't been invented yet. What it basically says is we need students that are well-versed in the fundamentals, that understand science and technology and that can read and write. So if we make them adaptive and creative and innovative, they'll be ready when those jobs come.

I started out as a mechanical industrial engineer on the factory floor. The jobs I went up through, that wasn't my formal training. But my formal training was well-versed in all the fundamentals of engineering. If you're a lifelong learner, which your education should develop you for, then you're ready for those assignments. ■

By Antonie Boessenkool in Washington.

■ 2008 revenue: $23.2 billion

■ Headquarters: Waltham, Mass.

■ Employees: 72,800

■ Major products: Patriot missile defense system, Tomahawk and AMRAAM missiles, radars, sensors, electronic and combat systems for the DDG 1000, fire control systems, battlefield communications, training for military and commercial sectors

Source: Raytheon