I attended a fantastic conference this week where the keynote speaker challenged the audience to think strategically about market segmentation and specialization. One of the mega-trends that he pointed out was that a systems specialist (as opposed to a generalist) within a defined niche will likely become the new breed of integrator. Taking it even one step further he predicts that as we move into the services business model more integrators will become segmented by vertical market in order to develop the necessary level of expertise the clients will demand. Perfect example – providing only A/V in the education market.
His speech reminded me of a far different conversation I had on a recent member visit. When I asked the owner what they do, “we specialize in almost everything,” he said. No kidding, I replied! I just couldn’t let that drop so I asked him to explain in more detail. What he said shortly thereafter was a little more accurate; he explained that they really do have a very strong reputation and expertise in building automation and control systems but have recently been “forced” by the customers to offer electronic security, CCTV, access control, intercom and paging.
This company, like many, didn’t start out in business to be where they are today. In this case, their largest end user customers enjoyed the business relationship, the value they provided in a different scope of work and before long had requested they perform other functions. We’ve all been there. In this particular case the interoperability and integration model made some sense. We’ve all had various degrees of success and some failures when stepping outside our core business focus as we look to expand and grow.
Looking further ahead, it doesn’t take too much imagination to envision how the many A/V, building automation, energy management, or security applications that reside on some form of a network will entice our customers to want a single provider of all their communications technologies. Where and when does the benefit of sole source responsibility give way to the merits of specialization? Likewise, when is it best to bring in a real specialist underneath your contract to accomplish those tasks you may not be up to speed on?
In my experience, I’ve found that a company’s location and the population centers drive this more than any other factor. In the more rural markets, it’s very common to find companies doing a wide variety of electronic and communications systems, while in the larger urban centers, segmentation and specialization is a far more common practice.
The manufacturers and their field sales force sometimes wish all integrators were the same as it would be far easier to match the right product lines with companies. That’s just not the case, every integrator is slightly different. Some markets allow for a one stop shop, others simply don’t. The most successful integrators have a very keen sense of what works best in their marketplace and they know when to pass on expanding based on customer requests.
The specialization debate, like many topics I’ve challenged you with recently, is first and foremost a business decision for your company. The long term strategy and investment to become a true specialist in a particular area of expertise should be considered prior to determining an expansion of scope. In reality, the company I visited wasn’t really a specialist beyond their core business… they simply had access to the products. That’s a big difference! CW