I still have a full head of hair, maybe it’s because I’m a consultant and have never been in the distribution business. Tough business, I agree, with some very savvy professionals, some with hair and some very bald. Tough businesses can do that to you……
Talk about losing your hair……In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide. They really knew the photo paper business. Within just a few years after that, their business model all but disappeared, and they went bankrupt. What happened to Kodak? Did you ever think in 1998 that 3 years later you would never take pictures on paper film again? This will happen in a lot of industries in the next 5-10 years and most, like Kodak, will not see it coming. Software alone will dramatically disrupt most traditional industries as we know them today in that same time period. Two rather striking examples: Uber is no more than just a software / app tool. They don’t own any cars, but are now the biggest taxi company in the world. AirBnB is now the biggest hotel company in the world, although they don’t own any properties — just software. It’s clear, any business model designed for success in the 20th century is doomed for failure in the 21st century.
I always believed that if you don’t know what you are doing, you are not going to be very good at it. The lighting companies know about lighting and have been very good at it for centuries. But lighting is not just about light anymore. I keep going back to the cell phone in your pocket that you are lost without when you forget to put it there. You lived most of your life without it, certainly if you are my age, so why are you so dependent upon it now. I believe because your personal cell phone is not just about long distance communications anymore. If the phone companies had figured that out, then maybe a computer nerd would not have innovated the mobile entertainment center in your pocket that you cannot live without. When every light source will be replaced by SSL, and lighting could become the core connector to every device we own, your business needs to know what you are doing. That to me is a new business model… unless you create a disruptive business model that matches the disruptive innovations coming at an unprecedented rate, the end is near. (I explain more on this in my article in Electrical Wholesaling: http://ewweb.com/commentary/speaking-out-12-tips-reinventing-your-lighting-business
Chris Brown is concerned about disintermediation and rightly so. If you are in the distribution business, ask yourself – what’s in it for me in the future. What’s your vision? Opportunity or disintermediation? In any changing industry, the big question is: can you or do you want to reposition your company to take advantage of this change. The pain comes when you know you must change just to survive and still don’t. Manufacturers are repositioning their traditional businesses, just look around you (Acuity, Apple, Eaton, Cisco, GE, Gooee, Opple, Osram, Philips, on and on) and they expect to work with traditional Electrical Distributors and traditional Lighting Distributors that change and reach new levels of high technical competences and provide new services / solutions to serve their customers. Remember, it’s their customers too. One threat and it’s just one threat is disintermediation and my true belief is that it can only happen if you let it. We have talked about this for years…… manufacturers are going direct……what a nightmare! There are other threats to your business……do you know what they are? Figure it out but that’s the question. The answer is always the same: focus on your strengths, get it right, add to the process. Bring value to the proposition or someone else will. My past experience is that manufacturers go direct because their channel of distribution stop being relevant and stop serving the needs of the mutual customer. It’s not their choice. They are not in the distribution business, they have other fish to fry and they know they will never do it better than you.
But you have to get better, much better. It’s time to prepare to win in the lighting industry. Allow me to repeat myself, the one over-riding, most infectious opportunity we have ever seen in the lighting industry is that every single light source now burning will be replaced by a better mouse trap. If that has happened at any time in our history, please let me know as I have only been at it for 50 years. If you are in the traditional lighting business, you most likely sold what’s out there. Now it’s time for you to prepare to replace them all with intelligent lighting and get closer to your customers than ever before. That spells OPPORTUNITY!