Massive transformation is sweeping across the once stable and conservative lighting industry. New technologies such as LEDs, digital networks and wireless communications are displacing legacy products. Lighting is also no longer about discrete applications - it is now an essential element of broader smart grid enablement. The sales strategies and distribution models that worked in the past are becoming obsolete. New companies are emerging. Legacy companies are needing to adapt to survive.
At Evergreen Growth Advisors we've been closely tracking and analyzing this industry disruption and applying our learnings and expertise to help our clients navigate these turbulent waters. One development we have been anticipating is the advent of new sales channels and yesterday's announcement that Redwood Systems entered into a distribution agreement with Anixter whet our appetite.
This deal is interesting and significant on several levels:
(1) It is further evidence of the accelerating merger between lighting and networking that is being catalyzed by networking technologies and digitally addressable lighting fixtures.
(2) It signals the entry of a whole new industry into the lighting value chain -- structured cabling. It was unimaginable a few years ago to think that structured cabling professionals could become significant players in lighting. Now it may be possible.
(3) It provides a path for Redwood to take its business to the next level. The knock on Redwood has been that their reference customers -- Google, Facebook, SAP -- have all been fellow travelers in the Silicon Valley scene and byproducts of Rolodex connections. People questioned whether Redwood could sell its technology outside of Silicon Valley, particularly in the fly-over States. The alignment with Anixter may be the ticket to prove these naysayers wrong.
Before too much high-fiving takes place it is important to realize that the business world is littered with distribution agreements that never gained traction. For this deal to succeed, Redwood and Anixter will need to collaborate to create a comprehensive channel program for putting Anixter's customers -- the structured cabling professionals --into the lighting and energy business. Availability of innovative product alone will not suffice. Redwood and Anixter will need to offer a tightly scripted playbook and training program on how to position, sell, deploy and support this new technology. Although they will not want to cross the legal line into the franchise realm, franchise systems are they antecedent they should look to as they think about making this relationship a success.
Comments