Four-star Management

IN THE CLEAR SKIES OVER SOUTHERN Nevada, a major air battle is raging. Fifteen Russian MiGs are swarming like high-tech hornets as Air Force fighters close in at twice the speed of sound. One of the MiGs lets fly an air-to-air missile, sending an F-15 Eagle banking into a nine-G evasion turn. Another F-15, locking its sights on an MiG, launches a Sidewinder missile and blows the enemy out of the air. Moments later, a handful of A-10 Thunderbolts, cruising in at low altitude, open fire on a column of Soviet tanks as four F-16 Falcons suddenly appear from behind a mountain to bomb a Soviet troop formation.

The Russian troops are only simulated, of course, as are the missiles, bombs, and bullets. The planes, however, are real. At nearby Nellis Air Force Base, several controllers in a darkened room are watching the battle unfold on huge screens, the world's biggest and most expensive video game. It is something straight out of James Bond -- and, as we'll see, straight out of Tom Peters as well.

This is one of the Air Force's Red Flag training exercises, a mock war that rages year-round over several million acres of Nevada desert. On one side are the men and planes of the Tactical Air Command (TAC), which is charged with defending American interests in the skies anywhere in the world. On the other, squadrons of F-5 Tigers sporting Warsaw Pact paint jobs, flown by American pilots who have been specially trained in Soviet air tactics.

On this day, the good guys win. But it wasn't always that way. A decade ago, when Red Flag was just beginning, the Tactical Air Command was in a sorry state. At any one time, half of the planes in its $25-billion fleet were not battle ready and more than 220 airplanes were classified as "hangar queens" -- grounded at least three weeks for lack of spare parts or maintenance. Because of equipment problems, TAC pilots -- trained at a cost of $1 million each -- lacked the flying time necessary to keep their skills sharp, and the best of them were deserting the Air Force in droves. So, too, were mechanics and technicians, frustrated in their jobs and disappointed by the deplorable living conditions at almost every TAC installation. Perhaps worst of all was the soaring accident rate that resulted in tragic deaths, unnecessary loss of expensive airplanes, and embarrassment for the service.

Into this mess in 1978 stepped General W. L. (Bill) Creech. As the new commander sized up his domain from TAC headquarters at Langley Air Force Base, in Virginia, it looked to him like a potential national security disaster. "The U.S. military was coming apart," is how he remembers it. "It was worse than you think."

This is the remarkable story of how, in six and a half years, Creech turned his command into one of the bright stars of the defense firmament. TAC fighters today are in superb condition, its pilots fully trained, its installations sparking. The number of hangar queens has declined from 200 to just a handful. Reenlistment rates are way up. And a dramatic reduction in the crash rate has saved dozens of lives and billions of dollars' worth of airplanes.

Perhaps most remarkable, Creech was able to work his magic with no more money, no more planes, and no more personnel than were available when he started. Creech's strategy was to force a bottoms-up management style on an organization that had always been strictly top-down -- pushing responsibility and authority down into the tiniest crevices of his command. And so stunning was his execution that the Pentagon has now begun to apply his techniques throughout the U.S. military. Says one Defense Department official, "It's probably our biggest success since MacArthur's Inchon landing."

Any chief executive officer would have been daunted by the challenge of simply running so sprawling an operation, let alone reviving it. At the time that Creech settled into his post, he was in charge of 115,000 full-time employees working at 150 installations around the world -- plus another 65,000 men and women trained and on call. The assets under his control were valued at more than $40 billion, including some 3,800 aircraft -- more than twice as many as all U.S. airlines combined. He had a discretionary budget of $1.4 billion, with billions more reserved for fuel and spare parts.

Creech was no stranger to TAC. By 1978, he had already spent nearly 30 years in the Air Force, a career that took in the first jet-age dogfights of the Korean war, a military position with the United Nations, and wing commands in Europe. But perhaps most crucial to his views on managing TAC was a stint he had put in at the Pentagon during the days of Defense Secretary Robert McNamara.

The watchword of the McNamara regime was centralization, for which there was a dual imperative. Politically, the Kennedy Administration came into office as suspicious of the military as the military was of the new President and his advisers. McNamara's assignment was to curb interservice rivalry and bring all of the services under greater civilian control. In addition, as the former president of Ford Motor Co., McNamara was a disciple of the management gurus of the day who preached that centralization was synonymous with efficiency. While his whiz kids fashioned new military strategies for the various services, battalions of cost analysts and systems planners cranked out new rules and regulations that reached into every facet of military life. Commanders in the field sensed that they had been stripped of much of their autonomy. Decision making was jealously guarded within the Pentagon.