Ethics at Work: Creating Virtue at an American Corporation

2 | Success and Scandal

chapter two Success and Scandal L   is the size of a small city, but its reach is global. Its , employees work in nearly  facilities scattered around forty-five states and dozens of foreign countries. Each year in the twenty-first century, the corporation has sold more than $ billion worth of airplanes, missiles, detection systems, information platforms , launchers, surveillance devices, and a host of services to support and maintain all of this equipment. During the  Iraq War,  Lockheed Martin airplanes flew thousands of sorties, four different Lockheed Martin “smart weapons” were among the , guided missiles launched during combat operations, and these were just the beginning of the corporation’s equipment and services put to use during the con- flict. In early , in the wake of the September , , terrorist attacks and the Iraq War, the corporation had a backlog of more than $ billion of equipment and services on order, the vast majority of it for the Department of Defense and other agencies of the U.S. government. Although a single corporate entity (LMT on the New York Stock Exchange ), Lockheed Martin consists of more than two dozen “heritage companies”: units, divisions, and even whole corporations that have become part of the Lockheed Martin family through merger and acquisition . It is a hulk of a company, spread liberally across the landscape, a producer of some of the world’s most sophisticated, deadly, and speedy technology. Yet as large as its shadow looms today, the corporation’s self-image is of a much nimbler creature. The Lockheed name is associated with the first unlikely human experiments with flight in the first years of the twentieth century. Nearly a century later, the corporation still likes to think of itself as a pioneer at the cutting edge of human knowledge and exploration, a risk taker, an adventurer, a hothouse of innovation and independent thinking.A devil-may-care spirit lives, of course, in tension with the demands and bureaucracy of a Fortune  company, a tension that has profound implications for the nature of the company culture. The scandals that led, eventually, to the development of Lockheed’s ethics program began to take shape during the period when the company was making its transition from one of dozens of scrappy builders of airplanes into a bulwark of the U.S. defense establishment. The productiveness of the company’s engineering culture depended on a harddriving spirit of experimentation,a willingness to live outside the boundaries of the conventional, and a confidence in eventual success even in the face of initial evidence to the contrary. That spirit of pluck—some might call it hubris—made Lockheed a success where most others failed. It also helped to create a zealousness about the company’s cause that made it easy to put the company’s best interests before fussy standards of business conduct. Lockheed grew too important—and too selfimportant —to fail. Taking Flight Before the “merger of equals” with Martin Marietta, before the acquisition of the mile-long hangar in Fort Worth where General Dynamics built the F- fighter planes, before biting off pieces of Loral and IBM and General Electric,even before the space and missile divisions,there was the Loughead Aircraft Manufacturing Company, established in a small warehouse in Santa Barbara, California. The company was founded by two brothers, Allan and Malcolm Loughead, who were among the legions of young American men tinkering with the mechanics of speed and flight. Born to a hardy mother who had survived the departure of the boys’ father by working as a journalist and a miner, the Loughead brothers grew up and made their way in California working on and selling bicycles, automobiles, and anything else that moved. Flying was a natural extension of their mechanical gifts; the brothers built their first airplane in  and coaxed it into the air over San Francisco Bay on a sunny June day, where it circled over Alcatraz and Sausalito at a top speed of  miles an hour before returning safely to land.1 The fledgling company’s fortunes ebbed and flowed over the next two decades, as it took different shapes and tried to establish its niche in an emerging industry. The Loughead brothers virtually handcrafted their  : Ethics at Work first wooden planes in southern California, making their first sales to wealthy hobbyists, and, ironically, developing a model suitable for military use too late for deployment in World War I...