INNOLOG Diversifies Its Defense Base
The McLean, Va., company has seen a 2,000 percent increase in revenues since its inception in 1989
In March 1989, Verle Hammond set off on a big adventure, using his 28-year military experience to start Innovative Logistics Techniques Inc. Since then, INNOLOG has grown from a $250,000 company into a worldwide logistics engineering firm with $12.3 million in revenues in 1994. Hammond expects sales to double this year.
"Had anybody told me six years ago that my company would be doing $24- to $25 million a year and that I'd be asked to testify before Congress, I wouldn't have believed it," he said. In 1992, the McLean, Va., company developed its first long-range strategic plan, projecting INNOLOG's revenues at $28 million in five years.
"Obviously, we're almost there. In August, we'll have to reevaluate our plan. I expect that four years from now, we'll probably be in a range of $35 million in sales. And we've always been profitable," he said.
The success of a small business depends on learning about the niche it serves and making certain a market actually exists, he noted. As an Army colonel working in systems development, integration, networking, logistics management and support for the Army Materiel Command, Hammond knows firsthand the logistics problems the Pentagon faces.
He saw the opportunity to become a leader in logistics systems engineering, the science of dealing with logistics problems through information technology. That meant Hammond had to have the right blend of people in the company, individuals with a personal understanding of logistics issues such as distribution and material management and the knowledge of the technology itself.
Hammond recently made some strategic personnel additions, hiring retired Army Lt. Gen. Merle Freitag, former Army comptroller, and John Town, a former <$ishl systemhouse="" executive.="" both="" serve="" as="" senior="" vice="" presidents="" with="" freitag="" concentrating="" on="" logistics="" engineering="" and="" town="" focusing="" on="" information="" technology.="">$ishl>
With about 200 people nationwide, the company's largest contingent is in Dayton, Ohio, home of the Defense Department's Joint Logistics Systems Center. INNOLOG was one of the first 8(a) companies hired by the center, which will identify and field systems that can be used defensewide.
The company works with integrator giant Electronic Data Systems Corp. on a major enterprise integration contract. In fact, INNOLOG got calls from EDS competitors Computer Sciences Corp. and Boeing Information Services to perform similar work.
Amazed by INNOLOG's 2,000 percent revenue increase in its first five years, Hammond now faces the challenge of managing growth. "If you grow too big, you lose the flexibility of a small, niche-oriented company," he said. One thing he might have to give up, though, is the personal touch he gives every contract.
"I always sit down personally with the senior representative from our customer. I call my customers all the time and ask how we're doing. I want them to know it's a personal commitment," Hammond explained.
Another aspect of growth he knows well is one of diversification. Ninety percent of its contracts come from defense organizations. "We want to make sure we don't lose that," he said, "but we need to establish a model of transferring our defense experience into the commercial and state and local sectors."
A Florida native, Hammond set up a state and local marketing effort there two years ago. "It's been a learning experience. You have to be very tied in to the local politics," he noted.
INNOLOG Founder Defends 8(a) Program
At a time when some small, minority-owned companies distance themselves from the 8(a) program that benefits them, Verle Hammond, founder of Innovative Logistics Techniques Inc., won't stay silent.
"I feel strongly about the program and what it's done for me and the 216 people that work with INNOLOG. The program is suffering from this sound bite mentality," he said. The Small Business Administration's program has allowed individuals to start businesses that can compete on a level playing field, Hammond explained.
"The contracts we win are not giveaway contracts," he stressed. One bid proposal cost INNOLOG $100,000 just to prepare. The program has been good for the country, Hammond defends. Just like many other 8(a) companies, "we have always been moving to get to the point where we're going to be able to compete without the program," he said.