Electrical contractors are hungry for change. The new economic model has altered the way they grow and mature their firms. Although product manufacturers still play a vital role in dictating contractor offerings, it is technology that’s making a surprising entrance into the strategic visioning process of the electrical contracting profession. Technology has emerged as the predominant driver for leveraging success in the new economy.

Arguably, there are several drivers that define the new economy. My earlier articles have highlighted the need to evolve from a pure services-only environment to a model that encourages a product-centric business solution to arrive, once again, at double-digit profit margins. Likewise, business size, international exposure, and self-generated funding (i.e., bootstrapping) will all play into the future success of the individual contracting firm. But it’s the future evolution of the industry that remains a mystery. What will manufacturers bring to the table? Are there opportunities in the broader technology market that will have an immediate and longer-term impact on the electrical contracting industry (see Future Technology Trends)?

Driver versus enabler

Since its arrival in the early 1980s, mass market technologies have always been defined as business enablers. Businesses were encouraged to build their operating and organizational models and, subsequently, seek technology solutions to mechanize these functions. Accounting systems and spreadsheets were used to improve efficiency, not change the overall structure of the business operations. As such, technology enabled the operations of the business.

During the ill-fated dot.com bubble of the 1990s, technology firms were committed to developing products for a marketplace that had yet to arrive. The adage of “building solutions for nonexistent problems” soon led to the demise of all but a handful of technology ventures. It was during this era that the presumption of enabling technology grew even stronger. After all, what value was technology when the application of it was neither identified nor quantified?

Today, this long-standing premise is being challenged. New technologies are appearing at rapid rates, and businesses are experimenting with their application — often changing their operating and organizational structures to accommodate these new innovations. While many of these technologies are still in their infancy, businesses are more poised to realize that leveraging a new form of innovation may, in many cases, be an appropriate strategic direction for the future. Technology has begun its evolution from business enabler to strategic driver.

Social networking is an example of an unproven but highly used new technology. Businesses are quickly jumping on shared communication platforms, such as Facebook and LinkedIn, with little basis more than it is “presumed” to be a business necessity. In fact, many larger firms are dedicating significant resources to updating and managing their firm’s social brand. Yet, at this point, there remains no definitive rationale for such a business move.

There is a strategic decision facing electrical contractors today — remain stuck in the traditional methods of business operations that worked in previous economic eras or leverage the new technologies that are effectively leading the charge out of the recession and formalizing the foundation for the new economy.

Technology today

Technology has already had a substantial impact on the electrical contracting community over the last five years. For example, smartphones have eliminated the need for some paperwork as field technicians are able to be dispatched to a customer site, fill out a work order, and accept payment — all while interfacing with the business’ online accounting system; GPS systems have saved business owners hundreds of dollars with an ability to pinpoint the location of their vehicles at any time of day, ensuring employees remain engaged throughout their shift; and CAD systems have eliminated the need to hand-draw electrical schematics while allowing multiple contractor types to use a single set of building drawings.

Beyond the technologies that have already been implemented into the contractors’ operational processes, several new innovations remain that are slowly being explored by those adventurous enough to push through conventional boundaries. Here are just a few examples.

  • Online video (e.g., Skype) has created an ability to interact face-to-face with a customer without ever leaving the office. No longer is it necessary to drive great distances to resolve a potential issue. Instead, existing customers can request a virtual visit. Through a video question-and-answer session, many issues can be resolved or, at the very least, the anticipated resolution can be determined. Not only does this approach help increase face-to-face interaction — a key component to a satisfying customer relationship — but it also allows for any triage to be done immediately, thereby eliminating guesswork on the part of the contractor.
  • Online payment of an outstanding invoice using either a credit card or third-party payment system (e.g., PayPal) creates an opportunity for the contractor to receive payments at the convenience of the commercial customer. As many customers have opted out of traditional hardcopy checks in favor of credit cards, the contractor is now equipped to handle these payments — again without even being in the office. Although many contractors do charge an additional fee for customers that use credit cards, it’s assumed that this practice will diminish as the majority of the population changes their approach to interacting with financial institutions.
  • Electronic newsletters provide perhaps one of the most intriguing uses of behavioral-based technologies. Through both their websites and electronic mailings, contractors are able to literally chart the actions of their existing and targeted customer base. As opposed to the “olden” days — where direct mail was used to build visibility — contractors can now segment their targeted populations, test messages to market, and, most importantly, see the results of their efforts. This ability to “see” customer behaviors decreases cost of sales as only those targeted entities that have exhibited behaviors consistent with the contractor offerings are pursued.

These technologies represent the present tense for innovation. The technologies and their applications have already been perfected. There is a business case for each. Not doing these activities already puts you behind your competition.

Early adopter or pack follower?

When we talk about implementing technology or any form of change, there are two camps — the early adopters or the pack followers. Early adopters are those individuals who see uses for technologies that are appearing in the marketplace and strive to incorporate those innovations into their business operations (see Hire a Chief Technology Officer). For this group of innovators, there is a dual-edged sword. On one side is the possibility for untold riches, as these new technologies open up market opportunities and thwart all forms of competition. Conversely, the promise of value associated with an innovation is unproven —merely a hypothetical discussion that is begging for a rationale result. As such, the level of risk and the counterpoint reward are exceedingly high.

Most individuals fall into the “pack follower” mentality or those who have to be convinced that there is a tangible value for making any change. While the risk is relatively low, the upside rewards are also muted. Not only is there no competitive advantage being sought, but the reality is the status quo is also remaining intact.

Of greatest concern are those contractors who are still waiting on the sidelines. As discussed earlier, the current technologies highlighted previously are already in use by your competitors. Not staying current puts an unfair strain on your overall infrastructure. Sure, your services may be the very best, but the impression left with your customer may be tarnished.

The future

From a business perspective, technology has already made great strides at forever changing the traditional organizational structure of an electrical contracting firm. Remember that a traditional firm is comprised of three functional divisions: sales and marketing, operations, and finance and administration. Of these functions, only operations is a core activity of any business. The remaining components are not perceived as unique business activities.

With this in mind, accounting software firms have already made the move to offering their products through on-demand platforms — jettisoning the marketplace that presumes every contractor will buy and house their own accounting system. These product providers understand that the primary business of an electrical contractor is not accounting. They are making the evolutionary step that accounting (along with the ancillary administrative functions) will effectively be outsourced in the new economy. Now, with one level of evolution already in play, that traditional business model has been forever changed.

It does not take much imagination to believe that all forms of non-core business activities will, eventually, be replaced by sourced product and service functions. On the sales and marketing front, the best example is with websites. For years, an effective website necessitated the hiring of technical and editorial resources as well as the purchase of complicated website development packages. Today, nearly every website hosting service provides, free of charge, simple tools to create and modify your website online. The time is coming in the not-too-distant future that the organizational model for a typical electrical contracting firm will morph to being predominantly one function — an operations function devoid of “housed” non-core functions.

This is one possible set of scenarios that could happen in the next several years. Of course, based on your strategic visioning, another completely different set of circumstances could evolve. The key is to logically understand the movement of these technology drivers and position your firm to reap the rewards of the new innovations.

Dawson is managing director of LTV Dynamics, an international sales management and business consulting firm in the suburbs of Washington, D.C. He can be reached at BLDawson@LTVdynamics.com.