American Systems’ Competitive Advantage

July 15th, 2008 by JD Kathuria

This is an interesting time for companies within the government contracting space, as uncertainties abound on the economic and political front. But AMERICAN SYSTEMS’ President and CEO Bill Hoover is up for the challenge. In the following Q&A, Hoover shares his thoughts on what is sure to be a critical time ahead for area companies. “I think it’s going to be interesting; I believe interesting means change; and I am convinced where there’s change, there’s opportunity,” he says.

How did your Navy background help you as a CEO?

Bill Hoover: In retrospect, the experience that I gained as a division officer on a U.S. Navy warship was the first general management experience of my career. As a division officer, I was responsible for managing people (the sailors in my division); for managing budgets (called operational targets or OpTars); and for managing performance. In a way, I think the Navy probably provides more general management-type experience in addition to what I’ll call leadership experience. As you might expect, I think that the Army and the Marine Corps are very focused on honing strong leadership skills. In the Navy, you get some of the leadership—perhaps not to the degree that you get in the Army and the Marine Corps, but you get more general management experience.

What is new with AMERICAN SYSTEMS?

Bill Hoover: We are now in the second year of the presidential election “year,” which certainly qualifies as unusual and, in many respects, is unprecedented. This has resulted in politics intruding in the market for a more sustained period, over the course of the past two years, than usual. This has resulted in delays in some funding and procurement decisions. Additionally, there have been some real issues associated with the economy, the debt crunch and the energy situation. Having said that, what I tell my folks is that these are conditions with which every company in the sector must deal and which are out of our control. However, our job is to remain focused and execute our strategy. That is within our control. In fact, I believe that the impact of the politics and economy actually validates our strategy.

Regardless of who gets elected later this year, the reality is that their “Job No. 1” will be to defend our country against all enemies, both foreign and domestic. Our military is the strongest in the world because our uniformed services have the best young men and women available. We provide them with the best equipment possible — our acquisition and logistics strategic business area; we provide them with the best, most real-time battlefield information — our C4ISR and national security strategic business areas. We provide them with the best training that they can get in the use of that equipment and information — our readiness strategic business area. These four strategic business areas and one more — our citizen safety strategic business area — ensure that we are focused on the true national priorities of our government. As a result, we believe that despite the issues that are outside of anybody’s control, i.e., the economy … politics… the fact of the matter is that our strategy is both solid and good. Therefore, what we need to do is execute our strategy. It’s like the Nike commercial, we need to “just do it”!

You are one of the few ESOPs in the area; how does that impact your culture and your overall strategy?

Bill Hoover: We believe that an ESOP is a very effective retirement benefit for our employees that differentiates AMERICAN SYSTEMS from our competition. Because of the importance of the ESOP to our employees, we have adopted “Industry Best Practice” in management and governance. Although the ESOP is not a publicly traded company, with regard to its shareholders, we treat our ESOP as if it were publicly traded for our shareholders. We have a fiduciary obligation to them to ensure that we routinely enhance the value of the ESOP.

A couple of months ago you established a line of credit for potential acquisitions, how is that coming along? How do you view the consolidation of the marketplace?

Bill Hoover: We have a great credit facility in place with Wachovia, a great financial partner for us. We’re working diligently on pursuing strategic acquisitions, but the truth is, that there are fewer opportunities available due to the recertification regulations that went into effect last year. These regulations have resulted in fewer properties out there on the market.

What are your future plans for the company? What will the company look like in two or three years?

Bill Hoover: We will continue to execute our strategic plan of supporting national priority initiatives. Our objective is to move through what I will call the mid-tier status as quickly as we possibly can and get into the top tier of services contractors, which is probably a threshold of a billion dollars. I would hope that we would accomplish that in the next five years or so.

You have gone through a new branding and visibility program in terms of enhancing your profile, why did you do that and how has it helped your company?

Bill Hoover: What’s really humorous is that I’m an engineer by degree and probably less inclined to “brag” about things. However, as someone once said, “If you can do it, it ain’t bragging.” Therefore, the credit for what the company has achieved in this area goes to Mike Dolton, our director of corporate communications. Mike and Sage Communications have been very helpful to us in the rebranding and getting the communication out.

My past experience has taught me the importance and value of branding, the importance of public awareness. The company has been around for 35 years. We have done some very effective things during this period of time and we ought to tell people about it. We have found that by getting this information out — raising the level of visibility of the corporation — it’s easier for us to win new business because “new” customers are now more aware of whom we are. We’re not the unknown contractor riding into the town in the middle of the night, so to speak. I have actually had long-term employees tell me that they are pleased but at the same time very surprised that they have had friends come up and say, “Hey, I’ve heard what you guys are doing over at AMERICAN SYSTEMS, isn’t that great?”

People are now hearing about things that were taken for granted previously. I think it has helped us competitively in the marketplace by raising our visibility, and it’s helped us internally because I think the employees like having their friends and peers in other companies come up and say, “Hey, I heard Mark Danisewicz won the CFO of the Year award for Virginia.” Or, “I heard you guys were named the Government Contractor of the Year last year in 2007.” They like that because it’s their company. From my vantage point, I think it’s been a very effective part of what we are trying to do to execute the strategy.

Talking about leadership — and few people in town have a better reputation around the marketplace than you do — how have you built that reputation and why is it important to other leaders who are looking to move up the corporate ladder?

Bill Hoover: First, thank you for your kind lead-in. I try to treat everybody fairly regardless of who they are or what role they play. That’s just a fundamental requirement that I have of myself. When you boil it all down, leadership is the most important attribute that an individual can have. It’s really about building a team, establishing a vision for the organization, having clearly defined roles and responsibilities for individuals, and ensuring that those individuals selected have the authority to do their jobs. Leadership is about decisiveness. It’s about making decisions in a manner that enables the organization to move forward. When you have individuals who are decisive, you have organizations that are agile. In my opinion, for a company of our size, agility is a competitive advantage.

Is there anything else that you are working on that you think our readers might find interesting?

Bill Hoover: We are in a very interesting time right now, as I’m sure everybody is more than aware of, with the politics and the economy. I would say that the federal sector, in particular, is actually going to be a critical sector over the course of the next couple of years as the economy goes through whatever turmoil it’s going to experience. I think it’s going to be interesting. I believe that interesting means change, and I am convinced that where there’s change, there’s opportunity.

Is there any advice you would give a small business that would want to partner with American Systems?

Bill Hoover: I would say we are always looking for good and strong partners. Probably the key attribute that they must have, in addition to their capability to support a customer, is a reputation that they can be trusted. If they want to deal in a fair, open and honest way with an organization, we will deal with them fairly, openly and honestly. Then we can establish a relationship.
What is your favorite restaurant?

Bill Hoover: My wife, Jane, and I have enjoyed a small seafood restaurant in McLean by the name of “Ocean M”; the seafood is fantastically prepared and the service excellent.

What is the last book you read?

Bill Hoover: I am in the midst of, and nearly complete, Jack London’s book, “Our Good Name”.

What do you do to relax on weekends?

Bill Hoover: Jane and I are in a period of transition … our daughter, Christine, was married in April; our daughter, Pam, will be married in October; our youngest child, Mark, goes off to college in August. When he does so, it will be the first time in 33 years that Jane and I will not have a child at home. So, after five children and 33 years of being “child centric” and once the 2008 weddings are complete, Jane and I are going to enjoy spending some time together … just the two of us!

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