Insights into the forces shaping our industry.

The Comforts of Being Inbred

Blog, Industry Commentary

Our clients range from Fortune 100 to ‘Will Never make a Fortune’. We range from multi-billion dollar global corporations to pre-revenue startups; and virtually every size in between. There are a lot differences across those companies, with smaller companies reveling in their relative nimbleness to make changes and the larger corporations reveling in the fact that they’re not worried about making payroll next week. But one common characteristic across all companies is their relatively narrow view of the market.

Large corporations have marketing and financial analysts that do regular competitive analysis and benchmark themselves against those competitors. If they’re on NEMA’s committees, they then create elaborate market share calculations based upon the size of the top 4-5 or maybe 10 companies and extrapolate the size of the market. The reality is that their view of the market is limited to their determination of who a competitor is.  From that starting point, they discount a significant number of competitors, thereby shrinking the ‘real’ market size and arriving at a share point value that pleases them… and serves no one.

Smaller companies have no marketing and financial departments to create a competitive landscape, so they tend to focus on their customer niche strategy and create programs or strategic plans to get more of those customers, or a larger share of existing customers’ business. Market share is irrelevant to a company who simply wants to grow rapidly and profitably… until they grow large enough to be invited into the ‘large corporations club’. Cree is such a company.

In both examples, companies become inbred to their own ideas and where they see themselves in the greater market. If you are a $2B company in the electrical industry; you represent over 2% of the entire industry. At that size, your view of the market greatly overlooks the 1,000+ companies who are selling $2M- $20M of similar goods each year. In perspective, we have 31,000 companies in our database exclusively in the electrical industry.  Many of those companies are direct competitors to your market share.

If you’re a $10M company selling to electrical distributors, you probably can’t see the ESCO, or property management firms or hardware stores within blocks of your headquarters. Your defined channel strategy limits your awareness of alternative channels. In both examples, I call this being inbred. Large companies are limited to viewing the industry by size; small companies are limited to viewing the industry by market.

We’ve been in business for over 14 years and part of our value proposition is our expertise; both industry and the talent within in it. Our reluctant clients tell us that they already know everybody. We have over 100,000 contacts in our database and we’ve had 100,000’s of conversations and/or interviews over that timeline. Our view into the industry is vast and yet we start every assignment with a new research campaign to identify people we’ve never met before. In reality, the only people you know are the ones who are most visible to you. The invisible is huge.

Inbreeding occurs in many areas.

  • The surge of new technologies disturbs the myopic. The first defense is denial: Electronic transformers are unreliable. LED is too expensive. Those new competitors don’t have the quality standards that we have. The second defense is to stall the market with disinformation and confusion. The final defense is to announce (belatedly) your new technology products.
  • Legacy channel relationships limit the ability to see the Blue Oceans of opportunity. Electrical distributors have never been the frontier of new technology, so how long do they wait to enter new channels before you lose market share?
  • Innovation stymies the staid. The philosophy of doing it the same way collides with the opportunity to do it faster, more efficiently, or more profitably by using technology or communication systems that are new and sometimes unproven. Conservative may lead to irrelevance.

The industry is changing rapidly. It is a renaissance that is transforming the way our products are designed, sold and applied. Not all of the changes will be positive. There will be significant disruptions to companies and people. The leadership skills of today are largely ill-prepared for the changes of the near future. The leadership for tomorrow will be different; the challenge is identifying who and how those skills will be developed for the industry by 2020.

Many of our larger clients have leadership development programs; MBA policies, deployment rotations, leadership councils, strategy meetings, etc. But most of those programs are legacy programs taught by legacy industry people based upon a curriculum that reflects legacy practices. The leaders of 2020 and beyond will likely come from companies who are at the forefront of the changes. Many of those companies are invisible to the legacy companies.

Attracting innovative leadership is a skill and it starts with the desire and ability to see the invisible.

2014 should be a remarkable year for the entire industry. Let’s hope we accept these good times as an investment into the changes of the future.

Ted Konnerth, PhD

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

By |January 23rd, 2014|Blog, Industry Commentary, Newsletter|0 Comments