Disintermediation, it’s real and it works everywhere. Even HVAC.
When I was a small child in business (I think 28 years old) I worked for a monolithic company that some of you may remember — EDS. I sat in on a talk given by a high ranking EDSer on one of my many visits to Plano. The subject was about disintermediation, and how many industries were or about to be radically changed by fast moving, typically startup businesses that simply saw a better way of doing things through redefining the pathways between products and the consumers that buy them, thereby reducing the overall cost structures of the sale. This principle was at the heart of the concept of Blue Ocean Strategy. What I found in the ensuing years is that this concept could be applied to virtually any industry and marketplace and is at the heart of the success of Uber, among many others.
As a consultant, I have had the opportunity to work across a variety of industries (consultant ==> jack of all trades master of none) and 2 years back came across a company that actually specialized in providing services into the commercial HVAC space. Essentially these services connected HVAC contractors with the equipment they needed to make the overall experience more efficient for the consumers of those services — which were primarily commercial property owners. The disintermediation and resulting benefits accrued by removing a step in the distribution chain by providing a direct-to-contractor relationship with the manufacturers of the requisite HVAC equipment. In fact, there were at least three points of disintermediation:
- Provide a direct to contractor relationship with the manufacturer
- Organize a national network of contractors who would order that equipment, and work off a standard price list for labor on jobs, and
- Digitize the entire process from job initiation through invoicing through by building a technology platform that interacted with all parties in an automated fashion (primarily through mobile), removing backend costs. This was the primary part of the process that I was involved in as the consultant.
The result? A significant reduction in costs and increases in efficiency of an industry (commercial HVAC repair and replace) that few would have thought of as ripe for disintermediation. This division of the original business has been re-branded as Motili, www.motili.com, and spun out as a separate entity. More details on this fascinating project and company will be covered in several subsequent posts. Several ppts about Motili have been posted on Slideshare as well.