ExecutiveBiz sat down with Sterling Phillips, CEO and President of GTSI. Phillips shared his thoughts about how to lead in tough times and in a competitive market.
ExecutiveBiz: Can you talk about your background?
Sterling Phillips: I was CEO of Analex Corporation for six years. Analex was a public company and a government contractor that was sold to QinetiQ North America in March of 2007. Our largest single investor was FirstMark Capital and after the sale FirstMark offered me an opportunity to join them. For the past three and a half years I’ve been a venture partner at FirstMark Capital. In that role I got a great look at lots of different companies. I had responsibility for software companies, manufacturing companies, services companies and had the opportunity of looking at companies from the perspective of an investor rather than an operator. My career had been totally in operations and it was just a terrific experience to get out of the operations for awhile and look at the world through the eyes of a private equity investor. As I come back now, I think I’m even more prepared having worn the hat of not only an operator but of an outside investor. I feel even better prepared to lead a company.
ExecutiveBiz: Can you talk about what it means to lead change in tough times?
Sterling Phillips: In some ways tough times make it easier to institute change because people are dissatisfied with the status quo and are looking for a new direction. When everything is going great you have the situation where people think ‘why mess with success’. If there is a need for change, it is when an organization has hit a pothole or some sort of crisis and folks are inherently more perceptive to new direction. The SBA event for us was a very serious event in the company’s history but it’s not indicative of the broader cultural values or ethics of the workforce. We had an isolated incident with a handful of people that is at the heart of the SBA allegations, and what you find as you come into the company is a workforce that is highly ethical, dedicated to operating the federal space in a compliant manner and who are not only shocked by the SBA action but who are embarrassed by it and really open to working hard to put that behind us. Setting aside the SBA action as a topic for a moment, we’ve also got a group of professionals who are very interested in expanding our business model from the historical reliance on the resale of hardware and software into the professional services arena. I find this team is very open to the new directions and changes that I think that we need to make as a company. Obviously the Board supports the change in direction and that was part of the rationale for recruiting me. We know where we want to go, we know what we want to do as a company and so I think our principal challenge is execution. We’ve got a game plan. We’ve got a strategy. We’ve got to go out there and execute. If we execute well I think we’ll put the SBA episode behind us in the near future and be on a more aggressive growth track than the company has seen in the past.
ExecutiveBiz: How do you view the market?
Sterling Phillips: The federal contractor market is a very competitive market. As we’ve all seen, there is lots of pressure on budgets. That said, the market we address is a very, very large market and I think there are opportunities for us to grow by being a better competitor and expanding our business and winning more business. I think there is a growth opportunity but I have a healthy respect for the challenges of the federal market. It is hard to predict where the market is going over the next two years. From a public company point of view our business model doesn’t have as many fans on Wall Street as I would like. One of the reasons our share price trades lower than we think it should, and one of the reasons the trading volumes are lower than we would like to see, is that Wall Street doesn’t view our business model as having a very high value add. We are viewed as being more of a commoditized business. Part of what we need to do with our diversification into services is grow the part of the business that has the highest value add and that creates a recurring revenue base. That will find more favor with the institutional investors that dominate Wall Street. Part of increasing share value is to generate more interest among investors. We need more people that want to buy out stock. Obviously earnings per share will drive our share price, but if you only trade 1,000 shares a day that’s not good for our shareholders.
ExecutiveBiz: What do you want your legacy to be when you leave?
Sterling Phillips: I want my legacy to be two things. Number one I want the record to have been a blemish free, compliant, highly ethical company. I want the recent episode with the SBA to be a distant memory to the company. Secondly I want to put the company on a path for consistent sustained growth in share value and, when you do the arithmetic that means improving earnings per share which requires growing revenue and operating efficiently as well. If you look back five years from now I would want this company to have operated in a flawless manner and to see a share price that is several times higher than we are today.
ExecutiveBiz: Whom in business do you admire and why?
Sterling Phillips: There are a lot of business leaders that I could talk about that I admire, but one that over the last year or two I’ve been watching who I think has done an excellent job is Alan Mulally who is heading Ford Motor Company. He came from outside the industry. He came from Boeing. He brought an aerospace background and has really turned Ford Motor Company around and did so with much more limited assistance from the government than anybody else in his industry and in the process has protected his shareholders and creditors in getting to where they are today. When you look at the financial performance of that company today and what the industry says about their brand line-up, they are clearly a leader. It is a terrific renaissance and the fact that Mulally came in without an industry background and was able to achieve that to me was just a terrific personal accomplishment. I don’t know him personally but that is something that I have a lot of respect for.
ExecutiveBiz: What is something most people don’t know about you personally?
Sterling Phillips: I’m an avid boater. I’ve got a fishing boat right now high and dry in South Carolina because I think it is going to be a while before I can get back out fishing. I love boating. It is one of my passions but it is a hobby that requires a little bit of time.