Collaboration is Increasing in the Smart Building Industry But We Can Do More?

“… & … collaborate to accelerate smart building development,” proclaim many recent headlines within smart building’s industry media, marking a significant rise from just a few years ago. In an industry where inter-connectedness is king and adoption is struggling, collaborations offer a means to spur market growth through joint efforts and combined offerings that give the customer clarity and confidence. There is still much more that could be done, but collaboration is certainly increasing in the sector.

Weeks like the last one are becoming more common as companies realize that a disconnected industry wastes time, energy and money. Furthermore, the confusing smart building solution landscape only diminishes the confidence of potential customers, holding back market growth. Interconnectedness is fundamental to the performance of smart building technology, so it may seem strange that it is taking so long for the industry itself to unite for the greater good.

The smart building industry has long been considered “highly-fragmented” by most analysts, but that rhetoric has subsided somewhat. A steady procession of mergers and acquisitions (M&A) has brought some order to the industry in recent years. “The number of acquisitions in H1-2019 (115) was also broadly equivalent to the record level of 116 acquisitions in H1-2018, indicating a similar level of M&A activity this year,” states our M&A and Investments in Smart Buildings H1 2019, part of the Memoori bi-annual smart building deal tracking service.

While M&A levels are expected to continue, as leading smart buildings companies seek-out innovative startups that can fill-out their offering, collaboration is still critical to industry growth. For all our progress, smart building adoption only represents a tiny fraction of its potential, held back by confused consumers that are unwilling to spend big on unconvincing solutions. Customers want to know that their investment will get the solutions that will work alongside existing and new technologies from other providers. Meaning market growth depends on the industry working together.

“Established energy service and building technology conglomerates know customers want integrated, comprehensive solutions, but they’re structured to market individual portfolio company products and often hesitate to cross organizational boundaries,” says Bert Valdman, former CEO of Optimum Energy, VP of Edison International, and COO of Puget Sound Energy. “One way to break down these boundaries is to adopt a collaborative business model akin to those sustainability leaders have used to advance fair trade and resource conservation,” he adds.

Take the food industry, for example, where various forms of pre-competitive collaboration have become commonplace. When social and environmental responsibility became growth threatening issues for coffee, chocolate, and “forest products,” those sectors came together to lessen the issue and raise awareness through fair trade certification. While in the seafood industry, unprecedented collaboration was used to solve unsustainable supply chain practices, as discussed in the GreenBiz article: It’s all hands on deck to save seafood supply chains.

“Any time you’re dealing with pre-competitive issues, the first challenge is to get everyone to think that if they work together, they are all going to make money together, and it’s OK if you make money and your competitor makes money,” said John Connelly, president of the National Fisheries Institute, during a SeaWeb Seafood Summit interview. “That’s the most important thing: A rising tide literally will lift all boats.”

A lot of energy is wasted through competition in the smart building industry. A large proportion of products and services offered in our sector are complementary, and a significant amount of money is spent on sales, marketing, and educating. All focused on highlighting each company’s very similar smart technology offering to the same set of customers. Would it be so crazy for the industry to come together to present a cohesive view of smart building technology to the market — knowing it would increase adoption and market growth for all companies?

“A highly skilled and trusted shared services organization that marketed members’ products in a fair way would get technologies and services to market more efficiently. It would also address barriers that prevent large corporations from moving forward on energy initiatives: complexity, a lack of familiarity with the technology, and trust,” says Valdman. “In concert with this planning and education tool, the organization could present integrated solutions that meet an enterprise customer’s particular financial, operational, and sustainability goals.”

An idea like that would face opposition, of course, but that opposition would primarily come from a ‘maintaining the status quo’ type mindset or a general risk-aversion. However, we can avoid these issues by limiting complex deals and negotiations. If the sector came together under the simple goals of presenting a more coherent view of technology to the market and reducing unnecessary “competitive” costs — then we could accelerate the smart building tide and all rise together.

“A collaborative effort can scale faster, deploy technology faster, and drive innovation into the DNA of an organization faster. If we are willing to work together, we can create the intelligent buildings we’ve all been seeking, but somehow always remain in the future,” concludes Valdman. “We just have to care enough to invest the effort.”

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