Insights into the forces shaping our industry.
Blog, Industry Commentary, Industry Events
We’re all commodities. Granted some of us are fatter, thinner, older, younger, racially or ethnically different… but we’re just a commodity. The median age of a US citizen is 37 years. Men weigh 195 pounds and are 5’ 9” tall. Women weigh 165 pounds and are 5’ 4” tall. Average IQ is 100, median household income is $53,650.
We’re all basically just the ‘same’. Which is why the rush to consolidation benefits us… we’re just this large mix of sameness so our collective buying power improves. And we face the growth of sameness everywhere: hotels have consolidated into a handful of mega-properties that basically have commoditized whatever a hotel ‘experience’ is. Grocery stores have consolidated and rationalized their vendors so that we can buy the exact same bottle of ketchup in any of their same stores in every city.
Airlines have consolidated and now provide the same level of disservice to every commoditized citizen who wants to sit in seats designed for overweight 5’4” tall humans. Retail shopping has consolidated and commoditized to a point where the exact same dress or pair of shoes is available in every clothing retailer in every city so that we can all look the same in our median-sized bodies.
Distributors are similarly commoditized; selling the exact same 20 amp breaker and #12 wire to the identical 5’9” contractors. And the manufacturers of those breakers, controls, wiring devices and lighting fixtures are all the same; they just differ by the price du jour.
Health care assumes health services are commoditized, because the insurers tell the providers what their prices are by the code of service; i.e. standardized, commoditized service. And recruiters…. Let’s face it, they all do the exact same thing, just as a lawyer does or accountant, or dentist. The only real difference is price.
Our core industry foundation is infrastructure which makes the rest of the world run. Without reliable energy transmission and quality practices of design and installation, there would be no shopping malls, airplanes, hotels or grocery stores (as we know it anyway). And we live in an era when the core foundations of energy are going through evolutionary tumult.
I attended Distributech last week. The booth session had roughly 540 exhibitors, and I would estimate that approximately 300 were software companies. Software at a T&D conference? Oh my…. There were demand management, asset management, energy management, smart grid analytics, grid edge management, big data aggregation, GPS systems, security systems and control room systems. And 20+ companies for each of those categories. All commoditized, I’m sure.
I attended the Utility lighting program and found it to be interesting for the pure scope of the opportunity. Georgia Power is changing out 120,000 outdoor lights every year. Duke Power has 2.3 million lights on its system, FPL has over 850,000 lights. The utilities are exploring smart lighting devices that can provide information on each fixture’s status; eliminating night time patrols to find defective equipment and group re-lamping disruptions. In addition, smart lighting can add services; internet for parking garages, variable light levels for events or accidents, simple asset management by defining where every fixture is on their system, and the potential for new services; chemical detection, radiation detection, security enhancement systems, traffic alert systems, etc.
Just when I had figured out that energy generation and transmission is a true commodity… along comes an industry that is incredibly vibrant with new ideas to protect the very visible assets of power transmission, and new approaches to managing their business to ensure safe, reliable energy.
Our energy providers have been challenged to meet energy standards that will require the eventual elimination of fossil fuels as a source for our energy. That process will happen and must happen, but the challenges for meeting those goals are varied: rate structures, competing forces for ‘owning’ alternative energy generation (from a local residence to a commercial/industrial site), the movement to DC power and micro-grid generation and the sheer economics of scale to remove massive coal plants and replace in-kind with alternative energy. And then balance all of those changes with preserving revenues and profits for their shareholders.
Burning coal or gas is a pure commodity process; with extraordinary climate and pollution impacts. The CEO of Vantage Point has described power generation as “a 100 years of boiling water”. That’s a commodity. The key behind the transition away from coal or gas-powered generation is to handle the logistics of change. With hundreds of software providers that can enable gigs of gigabytes, it’s remarkable how sophisticated of an energy delivery system we have and the beauty of the solution processes that exist inside of our IOU’s, muni’s and co-ops. The eventual elimination of fossil fuels will require infinite solutions to structural logistics. They’re changing, but it’s a thoughtful process.
Yet commoditization exists everywhere. Take retailers who have had diminishing profits and marginal revenue growth who are somehow inclined to expand through acquisition of another retailer; generating an internal process of regression to the mean; all in search of ‘synergy’. (see: Sears, Kroger’s and Macy’s as examples). How long will it take for Acuity to rationalize Juno into the sameness of their other brands? How well did General Cable’s acquisition strategy work?
The mindset of comparison to a mean pervades our assessments of people and vendors and customers as well as movies and restaurants. Yet what we truly enjoy is ‘different’: a doctor that actually talks about healthcare and wellness, innovative menu items, a selection of choices in clothes or food or hotels; an airline that adds bigger seats and more comfort. We tend to label people much as we label utilities; i.e. sameness. Bigger doesn’t necessarily prove to be better. Apple has been an exception as they’re driven by innovation. GE has largely fumbled their Lighting market away.
Our industry has a tremendous breadth of opportunities; new technologies, old systems and standards, rapid adoption of new talent, rapid rise in new entrants with new ideas or solutions and the sureness of growth. Infrastructure endures and requires continual maintenance and attention. We’re relatively immune to economics; only somewhat reliant on governmental incentives and generally profitable. In a way, that makes us ‘different’ and that’s a good thing.
Ted Konnerth, Egret Consulting Group’s founder and CEO, recruits on a retained basis, helping leaders in the electrical and lighting industry identify their next C and V-level hire. He is also the executive director for the International Retained Search Associates, allowing him to liaise with skilled recruiters around the globe. To learn more about how Ted can help your company attract talent view his biography, check him out on LinkedIn or email him at email@example.com.