By Aaron Gregg | The Washington Post
Phebe Novakovic is one of the most influential yet least visible leaders of America’s military-industrial complex.
The General Dynamics chief executive started her national security career at the CIA and appears to have inherited the agency’s obsession with secrecy. In calls with investors, her answers to analysts’ questions are terse and to the point: heavy on financials and light on elaboration.
And she rarely interacts with the news media. Even when she was named to Fortune Magazine’s list of “The World’s Most Powerful Women” four years ago – a publicity opportunity that would make some executives salivate – her company declined interview requests, according to the magazine’s 2015 profile.
But in a June 11 discussion at Boston College’s Carroll School of Management, she offered some of her most extensive comments to date on her national security career path.
She detailed how growing up in Europe during the Cold War gave her “a sense of enemies at the gate” and taught her the value of patriotism. She addressed the challenges women face in the male-dominated national security sector. She took Silicon Valley to task over its fraught relationship with the armed forces. And she described America’s “divisiveness as a nation” as a “cancerous and corrosive” national security threat.
“You can destroy yourself much faster than an enemy can destroy you,” she warned, without saying who she thought was responsible for those divisions. “And typically great empires fall from the inside out.”
Novakovic’s quiet profile is not out of the ordinary in the Washington area’s insular defense contracting industry, where marketers court government weapons buyers rather than mass consumers. Loren Thompson, a defense consultant who works with General Dynamics, said Novakovic “doesn’t give much thought to branding or to her image.” She prefers to stick to financials, he said.
“It is interesting that in a sector that depends almost entirely on the government for its revenue, so many executives are reserved about stepping into the spotlight,” Thompson said. “I just can’t think off-hand of any [defense industry] executive who hands-down enjoys doing media interviews.”
It may be telling that some of Novakovic’s most revealing interviews have not involved journalists. In her June 11 discussion in Boston, she was interviewed by Raytheon Corp. Chief Executive Thomas Kennedy. In a 2016 appearance at the Economic Club of Washington, D.C., she took questions from David Rubinstein, the private equity magnate who co-founded D.C.-based Carlyle Group.
“I’ve lived in this town for a long time and I’ve learned it’s best to fly underneath the radar screen,” she told Rubinstein at the time.
In Boston earlier this month, Novakovic made patriotism the bottom line of her interview: “I’m fiercely patriotic. I’m proud of that. I think we need to have more of a national dialogue about the importance of patriotism and shared values, so I’m not shy about it,” she said.
She described her journey to General Dynamics’ top job as “a little bit iconoclastic … by many people’s standards.”
The daughter of an Air Force officer, she spent most of her childhood in Europe during the Cold War, something she says “really gave you a sense of both being an American and the potential threats to America.”
Rather than follow her father into the military, she landed at the CIA.
“I don’t think the military was for me because I didn’t do so well with the rule thing, and there’s a lot of structure in the military that probably I would have suffered under, so I looked for other ways to serve,” she said. “And one of them was in the CIA.”
She later held high-level posts at the Pentagon and Office of Management and Budget, and earned an MBA from the Wharton School of Business at the University of Pennsylvania. She joined General Dynamics in 2001, became a senior vice president with the company’s land systems business in 2005, chief operating officer in 2012, and CEO in 2013. The company reported net earnings of $745 million in the most recent quarter, earning Novakovic a total reported compensation of $20.7 million, including stock awards and other incentives.
In her six years as CEO she has seen General Dynamics through a period of industry-wide financial turmoil, in which the congressionally imposed “sequestration” budget cuts led to declining revenues for many Washington-area government contractors. She helped engineer a $9.8 billion acquisition of CSRA, a government IT contractor.
She is also part of a new wave of gender diversity at the top of the U.S. defense industry. In 2012 the five largest U.S. defense contractors were all headed by men; now four of them have a woman in charge.
Novakovic took the helm at General Dynamics in 2013, around the time Marillyn Hewson became chief executive of Lockheed Martin. Boeing appointed Leanne Caret CEO of its defense business in 2016, and Kathy Warden ascended to the top job at Northrop Grumman last year.
That doesn’t mean the business community always met Novakovic with open arms. In her most recent public discussion she recounted an early job interview at an unnamed steel company soon after she finished business school. She was seven months pregnant at the time, and didn’t get the job.
“I think it was the world’s fastest interview,” Novakovic recalled. “In about 30 seconds [they said] ‘We’re not hiring.’ I got the message, ‘We’re not hiring you.’”
Novakovic says her industry has mirrored changes happening inside the government. While there has never been a female defense secretary, women have held influential positions in the Pentagon bureaucracy. One of the Pentagon’s top weapons buyers is Ellen Lord, the former chief executive of Textron Systems.
Heather Wilson served as Air Force Secretary for two years before she announced her resignation in early March. And President Trump’s nominee to replace her is Barbara Barrett, the former board chair of the Aerospace Corporation.
“I think that when your customer looks a certain way, we look a certain way,” Novakovic said. “And I think that really drove that sense of inclusion. The military’s a meritocracy … and people of all colors, and increasingly, different genders, have been able to excel because it is a meritocracy.”
She added: “Men will follow women and they’ll work with women if they believe that you are as committed, as top, as relentless.”
When asked about the threats America faces today, she offered a surprising answer.
“I worry profoundly about our divisiveness as a nation,” she said. “Democracy requires shared values, and I don’t see that we have…we’re not having a national narrative about our shared values.”
Without saying who was responsible, she said “anger and hatred” could have a profoundly negative affect on the United States.
“I worry a lot about the corrosive and cancerous effects of that level of anger and hatred,” she said. “Sometimes it’s flat out hatred, and that I think is scary. You can destroy yourself much faster than an enemy can destroy you. And typically great empires fall from the inside out.”
She also took an unprompted jab at Silicon Valley tech companies over what she said was their reluctance to work with the government.
An employee revolt at Google last year prompted the company to discontinue its involvement with a military project to analyze drone video using artificial intelligence, and the company has pledged not to allow its algorithms to contribute to weapons development. Purported employees from Amazon and Microsoft expressed similar views in a pair of anonymous posts on the website Medium, prompting executives from both companies to publicly re-affirm their support for the military.
“I’m frankly alarmed when I see some companies, to whom much is given, not want to work with the U.S. government,” she said. “Who do they think provides them this freedom? Where do they think the platform for their technology and innovation comes from? It comes from the security and stability of this nation.”
