Part Two on Power: The Structures
In every industry and organization, there are underpinnings of power called power structures. Power structures are overall systems of influence between any individual and every other individual within any selected group of people. They are both formally and informally created to build authority and fairness.
In some ways, this is how norms start. You hear it when people say, "that is how it has always been," "this is how we do it," or "we tried that years ago." The good news is that power structures ebb and flow with change and evolution.
In some industries, it happens fast. In our industry, it seems to move slowly with a dash of resistance.
The reality is, whether we like it or not, new power structures are coming, and some of the old ones are going away. As I have said before, the industry is molting.
In summary: We need to hold on to the power structures that make sense and allow new ones to form.
Let us dig into some of them:
- The old guard power structure: Predominantly, a white, middle-aged, tenured, male cohort power structure in the midst of a challenge from an empowered diverse, talented, and young power structure. As an industry, we should accelerate, partner, and blend the power structures versus fight them, make excuses for why it can not or has not worked. And before all my fellow white, middle-aged males with tenure, of which I am one, gets mad because this was said out loud, keep in mind that this does not mean we are no longer wanted or needed—stating it is not an attack. There is plenty of room for everyone. Let us be the industry that leads here.
- The channel power structure: This power structure contains dealers and distributors. I believe this power structure will stick around but will start to evolve and look very different. The value-added distribution model will continue to integrate and consolidate vertically. The dealer will continue to morph into a software-centric systems integrator. Costs and margin structures, especially around hardware and installation, are going to continue to shrink. New ideas and companies are starting to put pressure on our conventional business practices, which will only worsen. Look for manufacturers or outside the industry system integrators to take on more considerable coordination and programming work. The result will be the extraction of value. Both the dealer and distributor are at shift or squeeze crossroads.
- The lock company power structure. This historically significant power structure is precarious. All the business models, way the locks fit within the ecosystem, value creation, mix of hardware and software, market acceptance, and expectations are changing. Some will see this, do something about it, and a new power structure will form. Others will hold on to yesterday only to see the power structure they are hugging collapse. Not necessarily negative, this part of the market is most volatile.
- The incumbent access control software company power structure. Speaking of volatile and precarious, this power structure is also red hot with change. The current market and makeup of this power structure for the majority of players is unsustainable. The definition of access control software is being morphed by every 1 and 0 written in software code. The few $50M+ a year players are evolving their go to market strategy while the majority sub $10M a year providers will find it hard to grow and compete without changing. Their market share is being eaten by high security larger incumbents, new VC backed players, and external companies from the consumer or tangential markets flush with great software, money, and bravado. To survive, these companies are trying to promote "open" via Mercury as a selling point but are walking themselves down the tunnel of nowhere. Instead, they should focus on specialization and owning every dollar of their value creation they can. The new power structure formed is one that redefines the definition of value in access control, and it is not around the architecture. I repeat it is not around the architecture. I look forward to the day we stop seeing articles written about cloud, mobile, and open vs closed architectures.
- The high security and then everyone else power structure. I love this one. Challenging this power structure brings out all the myopic industry experts. I am trying to figure out why. I think it is due to our roots as an industry, and I think it has more to do with where many of the old guard find value and the desire to be pure. This is the industry cottage where we thumb our noses at the mainstream and try to fight it with BHMA ratings and two mantraps. The crazy thing to me is, it does not have to be binary. The high-security power structure will be around but not instead of the mainstream more convenience over the security power structure being formed as you read this. The epic business move will be the companies and people that master both power structures. Someone will do it. Might as well be you.
- The Associations power structure. This one includes ASIS, SIA, ESA, and others. A positive of COVID, if there can be one, has been the bridge-building and collaboration our industry associations have shown. Sometimes we need to be reminded of the value they bring, and during this tragedy, we were. I am curious how the expectations of Associations has changed by its members. It has become evident that the industry lacks an organized centralization of news, information, and resources. I would love to see a more forward collaboration and a consolidation of tradeshow, knowledge, and resources by our Associations. It feels like there is an opportunity to reimagine this power structure, use the momentum, and build off of what has changed with COVID.
- The project-based business model power structure. I feel this power structure is massively holding back the industry as it goes mainstream and beyond high security. We lack creativity in our business models. We take a one size fits all way to do business, no matter the customer, vertical, segment, or product offering. We restrict ourselves by leaning on one business structure but trying to solve all problems with technical or product solutions. Not everything is going to be proposal or bid driven. eCommerce pressures, software models, and different industries, like HR and consulting, that start to incorporate access control as a feature will force a more fluid sales process. A new power structure on how we sell will emerge.
- The Big Tech power structure. The three quietly driving change are Apple, Google, and Amazon, and they have not even really started. The attack is multidimensional and, in some cases, hard to get your head around for several reasons. What is very well known and fretted is the influence this power structure will have in the future. They are going to influence our industry technically (back end, front end, mobile, and commerce - they are involved in all of it), in experiences (on hardware, end-user expectations, etc.), and in customer expectations (features, speed to market, capabilities, etc.). They are also going to impact policy, pricing, and promotion. If you are not engaged with them and treating them as a partner now, you are way behind the eightball.
- The VC backed startup power structure. This power structure is relatively new and causing churn already. The increased influx of money and valuations is part of the industry going mainstream. External players see a direct and indirect opportunity. Now that the opportunity is identified, the plan is to get it. A lot of it comes down to money and different metrics than the traditional industry has. This creates a different set of rules. This power structure is already in place, and it is different than any other time in the past. So do you fight this power structure by moaning a groaning and making comments about how "they just do not get it," or do you find a way to use it to your advantage? I would suggest the latter. This power structure formation is exceptionally positive. We have arrived.
That is a good start for this week. Next week we will discuss more of the power structures impacting our industry, including:
- The Industry Media power structure: Trade publications and blogs
- The End-User power structure
- The Way Manufacturers Go to Market power structure
- The Product Marketing power structure: Storytelling
- The Specifier power structure
- The Hardware power structure
- The "Open System" power structure
There is a good chance I missed some of the power structures that are here and coming. Please let me know what they are? Agree or disagree with the above? Please let me know.