Innovate Smarter

What the invention of electricity can teach us about turning innovations into scalable, profitable businesses.

On September 4, 1882, Thomas Edison flipped the switch on the world’s first central power station in New York City, bringing electric light to dozens of homes and businesses in lower Manhattan. Powered by his direct current (DC) electrical systems, Edison’s innovation promised to usher in a new era of progress. In cities like New York, Edison’s new technology began transforming daily life, replacing the dim flicker of gas lamps with a steady, reliable glow. But there was a problem…

While DC systems worked well in small, dense areas, they were plagued by crippling inefficiencies. Chief among them was DC’s inability to travel long distances. This limitation meant that DC power stations had to be located near their users, limiting scalability and rendering the technology wholly impractical for wide scale power distribution. This wasn’t just a technological limitation; it was an economic dead end. In spite of these challenges, and driven by excessive pride in the technical marvel he had created, Edison held fast to the belief that he could overcome the limitations of DC-based systems.

George Westinghouse, on the other hand, envisioned a bold new approach: alternating current (AC) transmission. AC technology would use high-voltage lines that could easily transmit power over long distances. This approach sliced the Gordian knot of DC’s limitations and opened up the potential to connect entire regions to affordable electricity.

Ultimately, through a protracted and at times ugly battle with Edison, Westinghouse’s AC technology prevailed. The episode would come to be called “The War of the Currents.” AC’s triumph unlocked massive opportunities, enabling long-distance power transmission and laying the foundation for the modern electrical grid. And Westinghouse reaped the rewards.

This pivotal phase in world history contains a powerful lesson for anyone operating in today’s CI channel; namely, about the dangers of tunnel vision and the inability to adapt in the face of challenges. DC power was an unprecedented technical innovation, but Edison failed to grasp its limitations and to see the bigger picture. Westinghouse, on the other hand, had both the ability to innovate and the vision to turn that innovation into a scalable, profitable business.

Today’s integrator faces a situation with some important parallels to the “War of the Currents”. Clients are increasingly demanding technology play a bigger role in their lives. And opportunities to scale and expand the scope of services provided are everywhere. However, similar to electricity in the late 19th century, headwinds abound. Labor shortages continue to plague the skilled trades industry in general, and the CEDIA market in particular. Low barriers to entry have led to fierce competition for market share. Inflationary pressures are driving up the costs of goods, labor, and operations, squeezing margins and challenging integrators to balance pricing with client expectations. And product reliability issues continue to leave integrators scrambling to address client support requests around the clock. Innovation is clearly needed. The question is: What kind of innovation? The War of the Currents highlighted two contrasting approaches. Will you be like Edison, focusing narrowly on technical prowess and trying to push your existing approach forward using brute force? Or will you be like Westinghouse, acknowledging the limitations of current approaches and finding innovative new ways to grow your business?

This is not to dismiss Edison entirely. He was no doubt a prolific inventor and creator, holding over 1,000 patents and playing an instrumental role in creating many foundational technologies, including the incandescent light bulb, phonograph, and motion picture camera. However, while it would be an overstatement to say that Edison saw no commercial success, the War of the Currents highlights his limitations as a leader and businessman. His pride led directly to an inability to pivot strategically even when faced with clearly superior alternatives. He also had a reputation for being controlling and resistant to incorporating ideas from others, further limiting his adaptability in an environment where new approaches were clearly needed.

While Westinghouse wasn’t as prolific an inventor as Edison, he was no lightweight, holding dozens of patents of his own. His real strength, however, was in seeing the big picture and turning innovations into successful businesses. In the War of the Currents, for example, it’s worth noting that Westinghouse didn’t invent AC technology (Nikola Tesla did). Westinghouse saw the technology’s potential and invested heavily to make it commercially viable. He was also a visionary business leader known for pioneering worker-friendly labor practices in a time when this was practically unheard of. This built loyalty from his team and further fueled innovation at his companies.

Fast forward back to today. Technology in people’s living spaces is becoming less of a novelty and more of a baseline expectation. And these shifting expectations mean that the brightest futures belong to the businesses that can innovate not just along narrow, technical lines, but with new approaches that take into account the big picture. The specifics of what this will look like will vary from business to business, but a few examples will help to make the point more concrete:

• Investing in New Verticals: Expanding into new market segments like lighting fixtures or energy management to meet the growing demand for efficiency and a unified technology ownership experience. These markets offer high-margin opportunities and further solidify your position as a comprehensive solution provider. 

• Adopting Managed Service Models: Implementing proven best practices from the world of managed service providers (MSPs) to layer on top of today’s project-based business models. These approaches can help stabilize long-term client relationships, framing your company as an ongoing partner and provider of support and service, not simply a transactional vendor.

• Leveraging Emerging Technologies: Adopting tools like AI and automation to streamline operations and enhance client satisfaction.

• Reevaluating Supplier Partnerships: Revisiting supplier relationships to ensure access to reliable supply chains and performance that meets the demands of your clients. 

• Leveraging Outsourced Services and Expertise: Taking advantage of the growing number of third-party providers offering services an expertise tailored to integrators in areas like service and support, financial best practices, marketing, recruiting and hiring, sales force development, and more. This approach allows you to focus on your core expertise while benefiting from the specialization and efficiency of outsourced relationships.

The key is to challenge the status quo. Success in today’s business climate demands more than technical expertise and existing approaches—it requires a strategic mindset and the willingness to embrace change. The future will reward those who can see the big picture, identify opportunities beyond their current offerings, and adopt innovative approaches to drive growth. 

Whatever specific approach you take to driving this innovation, the goal is the same: to position your business not just to survive but to thrive in a complex and unpredictable business landscape. 

Like Westinghouse in the War of the Currents, the big winners won’t necessarily be those with the most inventions or technical breakthroughs. They’ll be the ones who take the innovations available to them, and leverage them to drive scale and to build enduring, profitable businesses. So, which approach will you take?